Gildan Activewear Inc.

Thank you, Tay, and thank you for standing by. Welcome to Q1 2022 Gilda and ActiveWare Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your first speaker today, Ms. Sophie Archirio, Vice President, Investor Relations. Please go ahead.

Thank you, Christine. Good afternoon, everyone, and thank you for joining us. Earlier, we issued our press release announcing our earnings results for the first quarter of 2022. We also issued our interim shareholder report containing management's discussion and analysis and consolidated financial statements. These documents will be filed with the Canadian Securities and Regulatory Authorities and the U.S. Securities Commission and are available on the company's corporate website. I'm joined here today by Glensham Andy, our President and Chief Executive Officer, and Rod Harries, our Executive Vice President and Chief Financial and Administrative Officer. In a moment, Rod will take you through the results for the quarter and a Q&A session will follow. Before we begin, please take note that certain statements included in this conference call may constitute forward-looking statements. Such forward-looking statements involve unknown and known risks, uncertainties, and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. We refer you to the company's filings with the U.S. Securities and Exchange Commission and the Canadian Securities Regulatory Authorities. During this call, we will also discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable IFRS financial measures are provided in today's earnings release and in our MD&A. And with that, I'll turn the call over to Rod.

Thank you, Sophie. Good afternoon, all, and thank you for joining us today. Let me begin by saying we're off to a strong start to 2022 as we delivered record net sales up 31% and record adjusted EPS up 58% over last year for the first quarter. Great results as we shift to our Gildan Sustainable Growth Strategy, which is focused on driving growth and margin performance as we invest in and fully leverage our world-class large-scale vertically integrated manufacturing platform. This platform, together with an efficient product portfolio and go-to-market approach, is providing us with strong capability to service our customers in an environment where many apparel companies are facing supply challenges. Further, because of our industry-leading ability to produce at low cost, we have been in a strong position to be able to price to offset inflationary pressures and to deliver margin performance. Beyond our strong operating results, we were also pleased about our ability to execute on our capital allocation priorities during the quarter, including repurchasing 5.1 million shares, or 3% of our float, and returning more than $200 million of capital to shareholders while maintaining a strong balance sheet. Turning to the details of our results for the quarter, total net sales of $775 million reflected an increase of $185 million, or 31%, over the first quarter last year, largely driven by volume growth and net selling price increases with some favorable impact from product mix. Activeware sales of $667 million were up 38%, and hosiery and underwear sales of 108 million were up 3%. Volume growth in activewear was driven by strong demand in North America, particularly in the distributor channel, with strong sell-through driven by the continued recovery of large events, travel, and other end-youth markets. Volume growth with distributors was also driven by our ability to better service seasonal inventory requirements and to support growth given our improved production levels this year versus last year. Also contributing to the activewear sales growth was higher net selling prices, which reflected the impact of base price increases that were implemented starting in the fourth quarter last year, as well as the impact of lower year-over-year promotional discounting. We were also pleased to see that ring-spun and fleece products were key contributors to our strong sales performance in the quarter, driving favorable product mix. Finally, the 3% increase in the hosiery and underwear category was primarily driven by higher selling prices, which drove strong results when compared to industry sales for these categories, according to MVD data. So overall, strong top line delivery for the quarter. Moving on to our strong margin performance, adjusted gross margin of 30.9% was down slightly year over year by 20 basis points. You may recall last year we received a one-time cotton subsidy, which benefited gross margins in the quarter by 300 basis points. Excluding this benefit, adjusted gross margin expanded by 280 basis points in the quarter. The improvement was largely due to higher net selling prices and favorable product mix, which more than offset the impact of higher cotton costs and inflation across our manufacturing expenses. Turning to SG&A. expenses for the first quarter of $81 million were up approximately $8 million compared to last year. The year-over-year increase was primarily due to higher volume-driven distribution expenses and the impact of inflation on overall costs. SG&A expenses as a percentage of net sales improved two percentage points to 10.4% compared to 12.4% last year as the benefit of volume leverage and our continued focus on cost management more than offset inflationary cost pressures. Bringing it all together, our strong sales and gross margin performance combined with SG&A leverage translated to adjusted operating margin of 20.4% for the quarter, which compared to 18.7% last year was up 170 basis points, and which led to record adjusted EPS for the quarter of 76 cents, 58% above the prior year quarter. Moving on to cash flow and balance sheet items, we consumed 86 million of free cash flow during the first quarter, which included working capital investments to support growth and seasonal requirements, as well as 34 million of capital expenditures related to capacity expansion. As mentioned earlier, from a capital allocation perspective, we were also active on our share repurchase program during the quarter, and combined with the share repurchases we have done in April, we have now completed more than 60% of our current NCIB program. Our net debt position at the end of the quarter increased to $829 million and our net debt leverage ratio of one times was at the low end of our one to two times target range. On the debt side, I would also highlight that as we focus on ESG as a key pillar of our strategy and reinforcing our commitment towards our ESG targets, During the first quarter, we amended the terms of our existing $1 billion revolving credit facility to incorporate sustainability-linked terms. In this regard, we are proud that Gildan is the first Canadian apparel manufacturing company to tie financing costs to the achievement of important ESG targets. Let me now give you a quick update on our Gildan Sustainable Growth, or GSG, strategy. As part of our capacity-driven growth initiatives, We are pleased with the progress we are making on our overall expansion plans in Central America and Bangladesh, which all remain on track. Further, as part of our efforts to strengthen our vertical model, we are also making good progress with the integration of frontier yarns as we increasingly internalize and optimize production. Finally, on the ESG side, beyond the sustainability-linked loan, which I mentioned, We were also pleased to launch the Gildan Respects marketing campaign during the quarter. Now, before concluding with my remarks, let me share some commentary on what we are seeing in the current environment. As I mentioned earlier, throughout the first quarter, we saw strong demand for our activewear products in North America. More recently, while we have seen some deceleration in POS over the last few weeks, overall demand for activewear remains healthy. Similarly, We have also started to see some slowing in sell-through for certain hosiery and underwear category products that could be related to broader economic factors, including the impact of the non-recurrence of stimulus and other support payments which consumers received last year. However, although it's difficult to predict how macro concerns will play out, we believe the favorable industry dynamics which we discussed at our investor day will remain a tailwind to demand. This, combined with the continued recovery in areas impacted by the pandemic, including tourism, travel, and the progressive comeback of large events, together with inventory levels in the distributor channel, which remain below pre-pandemic levels, is expected to provide support for demand going forward. Further, on the cost side, our vertically integrated model and the disciplined pricing strategy we have followed so far puts us in a strong competitive position. and provides us with good flexibility to navigate inflationary headwinds and deliver against our profitability goals. Consequently, we are pleased with the start to the year and the progress that can be made in 2022 towards our three-year objectives as we execute on our GSG strategy, driving strong organic growth and margin performance by focusing on capacity expansion, innovation, and ESG to create long-term value for our shareholders. This concludes my formal remarks, and with that, I will turn it back over to Sophie.

Thank you, Rod. Before moving to the Q&A session, I ask that you limit the number of questions to two, and we'll circle back for a second round of questions if time permits. I'll now turn the call over back to the operator for the question and answer session. Go ahead.

As a reminder, to ask a question, you will need to press star 1 on your telephone. To resolve your question, press the pound key. Please stand by when we compile the Q&A roster. Your first question comes from the line of Mark Petrie of CIBC. Your line is open.

Hey, good afternoon. With regards to the outlook and the slowdown in POS trends that you were calling out in recent weeks, can you just give us some more color on the products where you're observing this and In your discussions with your customers, given their low inventory levels, are these slower POS trends translating to slower order flow, or is there some replenishment underway?

Well, I would say that the POS is somewhat pretty much consistently across the board. There's no one area that's slowed more than another. But let's put in context slow. I mean, we still have pretty good... you know, the beginning of the year we had, you know, pretty good growth. So although it slowed some, it's still very positive for us and we're still pretty optimistic about as we move forward. So I'd like to just taper a little bit that comment. But, you know, partly it's hard for us a little bit to understand too because, you know, over the last four or five weeks we've had, you know, a huge spike in COVID across the United States. We've had pretty bad weather. And, you know, we think we're still well positioned as things open up and travel and events continue to evolve as we continue to transition out of the pandemic. So, you know, we are pretty optimistic, I would say. You know, we were guns blasting, record sales. I mean, you know, it's slowed down a bit, but it's still pretty good. Our inventory in the channels are still low. They've gone up slightly in Q1, but probably in the same level as our sales. In other words, whatever growth we had in terms of unit volume sales is somewhat the inventory that increased in the channel. So channels are relatively low, specifically relative to pre-pandemic levels. And we haven't seen any cancellation of orders. I mean, order flow is strong. We've got a very good order book and I think we're just poised to continue having a good year. A little cautiously optimistic and we don't have a crystal ball, so we're just making sure that we're managing ourselves through the environment, whatever's thrown at us.

Yeah, no, that's very helpful context. Definitely appreciate all of that. And I guess just the second question, just with regards to the continued escalation in cotton prices. I know you are generally leaning towards supporting top-line growth, but can you just talk specifically if there's any kind of change in how you're thinking about pricing or if you've observed any changes in the competitive landscape in the last couple of months?

Well, obviously, price was a a big part of our sales in Q1. I mean, we've had to take price to offset inflation, but we're pricing off a very low cost of manufacturing and very low pricing, which we've set in the market. So our pricing gap between us and our competition has allowed us to increase prices and maintain the equivalent operating margins, I think. So that's the good news. And As we move forward into the future, we have pretty good visibility on our cost structure as we move through this year. As we move into next year, if we need to continue to take more price, we'll look at it at that point in time. Nobody knows where cotton is going to be, but we have good visibility on this year's cotton so far, and we'll take price accordingly.

I appreciate all the comments. All the best. Thank you.

Your next question comes from the line of Luke Hannon of Canaccord Genuity. Your line is open.

Thanks. Good afternoon. Just following up on that line of questioning on the cost of cotton, Glenn, I think you've mentioned in the past that should the cost of cotton eventually fall back to more normalized levels, that there won't be the same level of price incentives or price decreases, rather, That won't be necessary should it happen in the future like it was in the past to be able to spur demand. And I'm just curious to know what sort of exactly underlies your conviction that that's the case this time around.

Well, because a large part of the price that we have attained in Q1 was just a reversal of promotional discounts that we provide to our customers historically. So what we've done is we did take some price increases in Q4. and a little bit in Q3, I think, in certain areas. But the biggest part of the price associated with the price increases in Q1 was the reversal of discounting that we normally have done in the market. So if cotton comes back down, we'll just increase our discounting again, and therefore we won't have to adjust pricing in the market.

Okay. And I wanted to get a better understanding of moving towards the balance sheet. The accounts receivable had jumped up pretty materially quarter over quarter. And there was mention of there was some impact relating to the timing of the payout for annual rebate programs. I didn't quite understand that. I wanted to know what exactly that relates to and that difference than what you guys would have experienced in the past.

Yeah, I think that was probably a small loop. If you look at the receivables, they were up, but obviously the sales were up. And if you look at what our Our growth stays outstanding. They're well in line with where they have been. So I would say we're very comfortable with effectively what's going on with our receivables. And, again, mostly what you're seeing is effectively just an increase related to the increased level of sales that we've been seeing.

Okay. I appreciate that. Thank you very much. Thank you.

Your next question comes from the line of Stephen McLeod of BMO Capital Markets. Your line is open.

Thank you. Good evening, guys. Just wanted to follow up on a couple things here. When you think about the quarter and notwithstanding some of the relative slowdown that you've seen over the last couple weeks, can you talk a little bit about how some of those categories that have are continuing to make up ground to pre-pandemic levels like travel, tourism, corporate, how those end markets fared in the quarter?

Well, we don't have specific data on any area, I think, in terms of what's growing a market. But look, at the overall market, obviously, you can follow what's happening in the recovery, especially from COVID. I mean, travel is back. Tourism is coming back. Events are happening. I mean, I personally believe over the last month, we saw a little bit of our slowdown was due to the big wave in COVID. But nevertheless, it's hard for us to tell. But I would say that what's driving our business, I think, really is our fashion basics and our fleece sales, which are really the pillar of growth for the company and also are benefiting our overall mix of product mix. And that's been... pretty much a consistent theme probably for the last 24 months. I mean, we've seen our fleece business continue to grow. It's a growth category. It's a lifestyle change, I think, which is people are more casually dressing today. And so we're pretty bullish on those. Through the acquisition of Frontier, we've been able to obviously increase our capacity in fleece substantially. So that's also been a big positive to us. So we're very optimistic about our position in the market, and, you know, we'll see where the market goes. You know, we're cautiously optimistic as we go forward.

Okay. So that's great. Thank you. And then just secondly, you know, if I look through the outlook section, is it fair to assume that you would still expect at this point in time to generate sales growth in that 7% to 10% range for the full year?

Yeah, I think, Steven, if you look at the full year, I mean, I think, as Glenn said, we are cautiously optimistic as far as what we see from a volume perspective. We have seen some slowing down in POS, but I would say, again, more broadly, we are fairly optimistic. So if you look at the volume that we would expect, it would be effectively reflective of that. And then if you look at the price that we would expect for the full year. Last quarter, I called out price being mid to high single digit. I think probably when all is said and done now, we see how things are playing out and what's going on with promotions. It's at the higher end, I would say, than the lower end. And so the combination of the higher end of the pricing and the volume would give you four-year sales, I would say it would be on the higher end of the range that we've given. So we're not giving guidance, but I would say that 7% to 10% is a three-year CAGR, and I would say that's why we feel we're off to a good start against that target in 2022.

Okay, that's great. Thank you.

Your next question comes from the line of Jay Sol of UPS. Your line is open.

Great. Thank you so much. Maybe can we dive into the gross margin a little bit because almost 31% well above, I think, what the consensus had been forecasting, obviously well above where it was. And, you know, pre-pandemic, you just talked about some of the drivers. Was it really all price? Can you talk about some of the efficiencies maybe from the back-to-basics strategy that has allowed you to have a higher gross margin? If you just maybe give us some breakdown of the pieces, that would be helpful. Thank you.

Well, thanks, Jay. So, look, we called it out in the remarks that if you look at our gross margin, we were very pleased with the performance. We were down, but again, that's versus a comp that was tough because of this cotton subsidy last year. I think if you look at ultimate, you know, at a base level, our performance is being driven by our manufacturing, right? If you fundamentally look at the business, it's our vertical integration, it's our scale, it's the way that we are our leveraging our platform is allowing us to be very, very competitive and to really manage, I would say, because of our very low cost base. So, you know, that's the starting point. I think for the quarter, effectively, we did see price coming through. We did see mix coming through. And, of course, we did have inflationary costs and we did have higher cotton costs, as I called out. But the combination of all of this is driving that strong margin. So as we go through the year, we'll see how that progresses. We will have more inflation coming through. But again, I would say we're very pleased with the way that we are running the manufacturing. We are ramping up. We're doing the vertical integration of Frontier. And that will allow us to offset some of these inflationary costs and allow us to maintain our low-cost position. So There will be some gross margin pressure as we move through the year. You would expect that. But all in all, we're very pleased. And it all really starts with our manufacturing. That's really what sets us apart, I would say, from our ability to deliver gross margin and ultimately against our operating margin targets.

Maybe if I can ask one more. You mentioned group events are coming back. Maybe just give us a sense of where that business is right now relative to you know, before the pandemic, is it, are the volumes there back to maybe, you know, fully a hundred percent where it was, or maybe it's only like 50%. Can you give us a sense of where that rebound in that business stands?

Well, look at, I mean, it's, it's, it's hard to totally get a grasp on it today, but I mean, you can probably look at travel and, you know, airlines and, you know, data points, but, you know, concerts are pretty much in full swing and, I think we have a lot of trade shows happening back in Las Vegas that are starting to pick up. The big things are there's a lot of different elements. There's summer camps. There's Little League baseball. There's seasonal travel and tourism. There's corporate and promotional, which is probably maybe the only area that we probably would see that could still be a little bit weak. message pressure on corporations because of higher costs, let's say, for example. But, you know, it's hard to say where all the puts and takes are because we don't have all those data points. But I would say overall the market has been very robust. And I think one other, I think, key element for us, which is also, you know, growing our revenues, is don't forget is that, you know, people are still looking to onshore their products. I mean, either screen printers, large national accounts, some of our private label customers, brands that we do business with, and some retailers. People are looking to buy more product closer to this hemisphere, which is also a big positive for us, which we're seeing lots of opportunity to continue growing sales. All these things together, we feel we're in a very good position. We don't know if the world's going to fall apart, but so far we've had a good run in Q1, and we're A little bit more cautious is what we're seeing today, but, you know, hopefully we'll continue to have the same type of results as we move through the balance of the year.

Got it. Okay. Thank you so much.

Your next question comes from the line of Paul Leshvi of Citi. Your line is open.

Hey, everyone. It's Brandon Schiedemann for Paul. I just kind of want to get a sense of – I think in the past you've talked about the restocking opportunity. Was any part of 1Q restocking? Do you think that you'll be able to catch up on some of that in the second quarter?

Well, we think that the second quarter is still going to be relatively strong. I mean, we don't anticipate what we said earlier in the year is we didn't anticipate any restocking until 2023 is what we called out, I think, in the beginning of the year or so. I think we're still somewhat in that mindset. I think that's probably what we're still feeling. I mean, we'll see what happens. But both our inventories are in a pretty lean position, and I think our customer inventories are also in a pretty lean position today, which is good news.

Okay, so you wouldn't say you have any spare capacity currently or kind of expect to have excess capacity this year based on what you're seeing so far?

No, we're running full. I mean, our sales are pretty robust, 31% increase on a year-over-year basis. So we're running pretty hard, and our inventories are low, and our customer inventories are low. So those are two positives. And, you know, we're still optimistic about the marketplace. So we'll see how things transpire as we go forward in the year.

Okay. If I could just follow up on pricing. You know, how much of – was that fully flowed through in the first quarter? Or, you know, do you get an incremental benefit in the second quarter as well?

No, no. If you look at what we've done from a pricing perspective – It did fully flow through in the first quarter. If you look at the way we've been adjusting prices in the back part of last year and the price increases that we took at the beginning of this year, they were reflected in the first quarter. And then we'll see where we go from here. I mean, I think what's going to happen is that the comps are going to get tougher, obviously, as we go into Q2, Q3, Q4, because we did start to adjust price in the back part of last year. So there you'll see the uplift from pricing that we saw in the first quarter, together with very strong volume. We'll start to obey. But right now, we're going to just watch the environment, see where it is, and we'll go from there. Got it. All right, I'll turn it back. Thank you. Good luck.

Your next question comes from the line of Brian Morrison of TD Securities. Your line is open.

Yes, thank you. Kind of follow-up questions, please. Rod, you talked about your outlook. You gave a little bit of guidance with respect to revenues at the high end of the range. I'm wondering if you can just go back and talk about the parameters of your slowing growth comment with respect to sell-through. You know, Q1, Glenn just mentioned you were in the 30% neighborhood. Maybe just some parameters where you are in recent weeks.

Yeah, I mean, I think if you look at basically the first quarter, I mean, I called out Effectively, the quarter was driven by, there was a little bit of mix, not a lot, but if you take the mix out, then effectively it was driven, I would call 50-50 between effectively volume and price. And so if you look from a volume perspective, that means that we were, in North America, we were seeing, particularly in our printware business, we were seeing double-digit type POS. And as we look at where we are in April, that has moderated back, but it's still healthy. So we've effectively moved down to what I would call sort of the mid-single-digit range. Could be pushing up a little bit from that. Depends. As Glenn said, it's a little hard to read, right, because of weather, because of COVID. So it has stepped down, and we'll see where it goes from. from here. And, you know, obviously that to a certain extent will dictate where we go. But, you know, I would say it's still at good levels and still at healthy levels.

Okay. Thank you for that. And then maybe, Glenn, you did mention nearshoring. I'd like to follow up on that if I could. You've had some lockdowns in China recently. which has got to be affecting the supply chain even further. I just wonder if you're seeing a material increase in demand from national accounts and GLB and whether this is increasingly looking like it'll be a permanent benefit to you.

Well, I think it's going to be a permanent benefit to us, but I think, you know, it's not, these companies plan well in advance. So we have, and working together with our customers as they plan to increase their volumes in this hemisphere. So I think that's a, general trend that's transpiring and some quicker and you know for example the large national account type customers they're looking to buy you know quicker that business is a bit more responsive but the larger brands are a little more um systematic about how they approach their supply chain as their global it's not everything's in china they're global manufacturers but At the end of the day, the onset of this hemisphere will continue to grow, and I think we're going to be a big beneficiary of that opportunity.

Relative to your current benefit, could you just double over your three-year horizon?

Well, yeah, I would say that that's realistic. I mean, there's a lot of volume to be had.

Thank you very much.

Your next question comes from the line of Jim Duffy of Stevo. Your line is open.

Thank you. Good afternoon. Thanks for taking the question. Given trends in cotton prices and historical precedent, no doubt tomorrow I'm going to get calls from clients who argue that strength is in part from distributors pulling forward purchases to build inventories out of further anticipated price increases. How would you guys respond to that? And what, if anything, can you do to prevent recurrence of that dynamic in the current environment?

Well, one, you can do channel checks, and obviously that will confirm that the inventories in the channel are very low. I mean, I think that's the first thing. So inventories are in pretty good shape within the overall channel. So there's not an abundance of inventory. That's one thing. Look, we're managing our sales. We're managing the levels of inventory in the channel. And what I said earlier was that it was up slightly, but it's based on the performance of the business in Q1. And we'll be in a position to continue to service our customers as we go forward. And we're going to make sure that we And I'm not sure the point you're trying to get to is that, you know, we're not going to bring over abundance of inventory in a channel just because the price of cotton is moved up and potential prices. We are comfortable with our pricing where it is today. And, you know, this could be potentially a 2023 scenario in terms of, you know, further price increases. But, you know, who knows where cotton will be in 2023. So that's a risk I don't think anybody's going to want to take. So. At the end of the day, our business is strong. We're managing with our customer relations and making sure we're fulfilling as much as we can the requirements to keep our product in stock. We're tight on product right now because sales have been very strong, and we're going to keep to manage ourselves as we go forward and our capacity continues to come online.

Got it. Thanks for indulging me in that. So, Glenn, with distributor inventories still lean, it sounds like you're suggesting Q1 is a normalized baseline. There's not much to work with on guidance here. Should historical seasonality apply that act of our business for the balance of the quarters of the year, or does that sound like an ambitious assumption?

Well, I think you would see sort of normalized seasonality. We talked about it. One of the things we were doing, obviously, was providing inventory for the seasonality, Jim. So I think, you know, it's not – I wouldn't say it is a normal type of, I would say, cadence that we see going forward. You know, again, I would say that if you look at the first quarter and you think about, you know, how that translates in the second quarter, third quarter, fourth quarter – Obviously, we've talked about price and, you know, what unfolded there. And we have talked about the, you know, what we've seen from POS perspective. And Glenn also highlighted how we are planning to be disciplined. So I think if, again, if you sort of first quarter was very, very strong and POS was very, very strong. So the demand was there. And as we go forward, we would expect to see that moderate as we move into the year. But still, you know, the seasons are the same, right? There's lots of travel. There's lots of events. There's lots going on in the summertime, and, you know, that will drive demand.

Very good. Thank you, guys, and good luck. Thank you. Thanks, Jim.

Thank you. Your next question comes from the line of Mark Petrie of CIBC. Your line is open.

Yeah, thanks. I just wanted to come back to the topic of private label. You guys have spoken about this as an opportunity, and certainly the market is moving that way and has been for a while, both from a consumer and retailer perspective, but haven't really heard too much with regards to sort of new wins, be it contract or shelf space. So can you just update us on that?

Well, look, we don't really want to get into individual specific programs, but I would say in general – um you know the business is still moving forward um i think that the you know the like i said earlier the big opportunity for us is continued growing with uh our big brands that um that we do business with um that business is definitely materializing and uh and moving forward so you know overall um you know as we move forward into the future we've been very tight on on capacity right now so if you look at where we are Currently, I mean, our sales and our POS has been so strong for the last two, three quarters. We've been focusing our energy and our resources on our core, you know, framework business, to be perfectly honest with you, because those other pieces of business take a little bit of time to leverage and to materialize. So I think as we go in the future, you know, that's something that it will continue to help us to maintain our growth objectives of the CAGR to 7% to 10%. It's always embedded into all of our planning processes as we go through into the three-year period that we discussed at our investment day.

Thanks for that.

If there are no further questions at this time, please continue.

Okay, well, thank you, everyone. Before we leave you all, just a quick reminder that we will be holding our virtual annual shareholders meeting tomorrow morning at 10 a.m. Eastern Time. So with that, I'd like to thank you again for joining us today, and we look forward to speaking to you very soon. Have a good evening.

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