Lifetime Brands, Inc. (NASDAQ:LCUT) Q2 2024 Earnings Call Transcript

Lifetime Brands, Inc. (NASDAQ:LCUT) Q2 2024 Earnings Call Transcript August 11, 2024

Operator: Good morning, ladies and gentlemen, and welcome to Lifetime Brands Second Quarter 2024 Earnings Conference Call. At this time, I would like to inform all participants that their lines will be in listen-only mode. After the speaker’s remarks, there will be a question-and-answer portion of the call. [Operator Instructions] I would now like to introduce your host for today’s conference Carly King, Ms. King, you may begin.

Carly King: Thank you. Good morning, and thank you for joining Lifetime Brands’ Second Quarter 2024 Earnings Call. With us today from management are Rob Kay, Chief Executive Officer; and Larry Winoker, Chief Financial Officer. Before we begin the call, I’d like to remind you that our remarks this morning may contain forward-looking statements that relate to the future performance of the company and these statements are intended to qualify for the safe harbor protection from liability established by the Private Securities Litigation Reform Act. Any such statements are not guarantees of future performance and factors that could influence our results are highlighted in today’s press release and other factors are contained in our filings with the Securities and Exchange Commission.

Such statements are based upon information available to the company as of the date hereof and are subject to change for future development. Except as required by law, the company does not undertake any obligation to update such statements. Our remarks this morning and in today’s press release also contain non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Included in such release is a reconciliation of these non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP. With that introduction I’d like to turn the call over to Rob Kay. Please go ahead, Rob.

Rob Kay: Thank you. Good morning, everyone and thank you for joining us today. Our second quarter results were in line with our expectations, even though macroeconomic pressures led to weakened demand across end markets. Despite these headwinds, we are pleased to report that we continue to execute on our plan for the full year and are making progress towards completing several strategic initiatives which will bolster our full year performance. This includes increasing market share in the majority of our categories, delivering year-over-year e-commerce growth in our core US market and expanding gross margins. Our ability to deliver solid performance despite challenges in our operating environment is a testament to the work we have done to strengthen our business model and we are pleased to have delivered another quarter of outperformance in comparison to the market and our peers.

In the second quarter, we delivered $141.7 million in net sales, compared to $146.4 million in the same period last year. Over the last 12 months, we have generated adjusted EBITDA of $56.6 million. The drag on net sales reflected a sluggish market in combination with overall seasonal timing impacts in the second quarter for our core US business. Despite weakened demand, we grew market share across the majority of our categories on a year-over-year basis a testament to the fact that our leading portfolio of brands continues to resonate with customers. The level of decline observed this quarter was in line with our expectations and the macroeconomic headwinds were largely baked into the guidance we provided last year for the full year. We believe that Lifetime’s results will improve through the back half of the year as we execute our operational plan and we continue to expect to deliver in line with our expectations for 2024.

Turning to our international segment. In Europe, the impact of the UK’s economic recession has persisted which has prevented any meaningful recovery in demand. We continue to take action to offset the recessionary impacts including implementing changes to our UK sales strategy to shift our legacy focus away from independent retailers and specialty cook shops and prioritizing larger national accounts. This pivot is already paying dividends as we were able to maintain relatively flat sales for the segment despite turbulent market conditions. We are also seeing the impact of the ongoing conflict in the Red Sea as rerouted shipments are taking longer to reach Europe. This has resulted in a need to increase safety stock and therefore, an increased investment in additional inventory which will help mitigate these impacts.

In Asia Pacific, we continue to gain traction in terms of both listings and brands in Australia and New Zealand, as a result of our change in go-to-market strategy. We are now in the second phase of this two-step process where we would discontinue our partnership with our distributor in the region and move to building out our own infrastructure. Once complete, this will allow us to implement a fully direct APAC sales strategy. Turning now to some of our growth initiatives. We are pleased with the incredible success of our Dolly Parton line of products, which was successfully launched in this second quarter and has performed above our and our customers’ expectations. While last quarter we signaled that we did not expect to be able to begin shipping until the third quarter we were able to begin shipments in the second quarter.

While the majority of the shipments have not yet completed, initial sell-through numbers have greatly exceeded expectations. We expect that this outperformance will continue through the rest of the year and translate to revenue impact in the third and fourth quarters. We now believe shipments of Dolly to the dollar channel will exceed $10 million in 2024. Building on this strong initial momentum, we are already in discussions with additional customers for 2025 shipments. In our food service business, though we experienced a slight slowdown in these end markets this quarter we continue to gain market share and remain optimistic based on the continued new listings that we have won that we’ll see meaningful growth this year and in 2025. Our e-commerce business continues to be a major growth driver.

This quarter e-commerce sales represented 18.9% of revenues compared to 18.1% in the same period last year. We once again had a very successful Amazon Prime Day with total company sales up 23% over the prior year. This compares favorably with the overall Amazon Prime Day sales growth of 11%. Turning now to our supply chain. While ocean freight costs have been increasing as a result of geopolitical conditions and due to vessel and container availability levels, we believe these levels have now stabilized and will remain fixed at the higher base for the foreseeable future. We are managing all input costs across the business and have been successful in decreasing product COGS in many areas. This has translated to margin expansion this quarter despite these ocean freight increases.

In Mexico, our plastics manufacturing facility remains on schedule to reach full production capacity this year. We have taken a measured approach to ramping up this facility to ensure we achieve high-quality output and build the appropriate product mix being produced in this facility. Additionally, we continue to drive forward on our efforts to have approximately 25% of our spend on goods being sourced outside of China and remain on track to meeting this target. We are focused on expanding our sourcing capability in additional geographies with a primary focus on Southeast Asia and expect to begin shipping out of new locations in the near-term. Our manufacturing partners in the region are working with us to set up new factories outside of China in order to accommodate this expansion and we are already in the process of transferring production of one of our largest SKUs, which represents nearly 10-million-unit sales a year to one such facility.

I’d now like to provide some high-level color around our balance sheet which Larry will discuss in greater detail shortly. Typically, liquidity is most strained during the second quarter as a result of seasonal business trends. However, our continued focus on operating the business efficiently and using disciplined cash management has allowed us to maintain strong levels of liquidity. For example we are paying close attention to challenges facing retailers in this environment and have placed certain customers on credit hold to limit our exposure. While a credit hold has a negative impact on near-term sales, we believe this is operationally prudent. We are comfortable with our leverage ratio and pleased with our cash generation levels, despite headwinds in the environment.

We continue to view the market as favorable for acquisitions and have an active slate of M&A opportunities in our pipeline. We expect to continue to progress discussions regarding these potential opportunities in the coming months and we’ll keep the market updated of all strategic initiatives. I’d like to briefly touch on the noncash loss we recorded in the second quarter related to our equity investment in Grupo Vasconia, a housewares company in Mexico. In the second quarter, the company discontinued the equity method of accounting for this investment, which resulted in a non-cash loss of $14.2 million to record the investment at its fair value. It is important to note that this does not negatively impact our cash flow and is consistent with our view that this stranded asset from an investment made in 2007 is not strategic to our company.

Let me expand further on our financial guidance for the full year of 2024. In our press release this morning, we revised our guidance for net loss as a result of the noncash loss related to the noncash write-down of $14.2 million, on our Grupo Vasconia investment. Apart from this adjustment, we continue to expect results for the full year in line, with our previously shared expectations for all other metrics. We are carefully monitoring the headwinds we saw over the last few months, and as we head into the next quarter however, our reiterated outlook reflects our confidence in our ability to continue executing and delivering results, driven by the strategic initiatives we have in place. As we look ahead to the remainder of the year, we believe we are well positioned to continue to grow market share and create value as demand rebounds.

We have a strong foundation in place thanks to the significant work completed over the last several years, to increase the resiliency of our business model. We look forward to keeping you updated on our progress, as we continue expanding our leading portfolio of brands, driving innovation and delivering operational excellence. With that, I’ll now turn the call over to Larry.

Larry Winoker: Thanks, Rob. As we reported this morning, the net loss for the second quarter of 2024 was $18.2 million or $0.85 per diluted share as compared to $6.5 million loss or $0.31 per diluted share in the second quarter of 2023. The net loss for the current period included a noncash loss of $14.2 million, related to our investment in Grupo Vasconia. Adjusted net loss was $0.6 million for the second quarter of 2024 or $0.03 per diluted share as compared to $0.3 million or $0.02 per diluted share in 2023. Income from operations was $1.2 million in the second quarter of 2024 as compared to income of $4.4 million in the 2023 period. Adjusted income from operations for the second quarter of 2024 was $5.6 million compared to $8.4 million in the 2023 period.

And adjusted EBITDA for the trailing 12-month period ended June 30, 2024 was $56.6 million. Adjusted net loss adjusted income from operations and adjusted EBITDA are non-GAAP financial measures, which are reconciled to our GAAP financial measures in the earnings release. Following comments are for the second quarter of 2024 and 2023 unless stated otherwise. Consolidated sales declined by 3.2%. US segment sales decreased by 3.3% to $130.5 million. As Rob commented, macroeconomic pressures have led to weakened demand across end markets. Within this segment the decrease occurred in the kitchenware and home solutions categories. Kitchenware decline was from kitchen tools and measurement products. Home solutions decline was due to lower hydration products and Taylor bath measurement products.

The segment’s decrease was partially offset by sales, for a new licensed product brand in the kitchenware and home solutions categories, and an increase in the tableware category from a new warehouse club program. International segment sales were down by 2.6% or $0.2 million or $0.3 million in constant US dollars to $11.2 million. As Rob commented, the impact of the UK’s economic recession has persisted which has prevented a meaningful recovery in demand. The decrease was due to lower replenishment orders for e-commerce and brick-and-mortar customers, partially offset by higher sales in Asia. Consolidated gross margin increased to 38.5% from 38.2%. US segment gross margin increased to 38.7% from 38.3%. This improvement was due to favorable product mix.

For international gross margin, which decreased to 36.6% from 37.7% was driven by higher mix of distributor sales to Australia. US segment distribution expenses as a percentage of goods, shipped from its warehouses was 9.5% for 2024 and versus 9.7% in 2023. Lower freight out expenses more than offset the impact of lower shipments. And despite inflationary pressures, continuous improvements in labor and other expense management and lower inventory levels mitigated the impact. International segment distribution expenses as a percentage of goods shipped from its warehouses was 25.1% for both 2024 and 2023, as higher occupancy costs were offset by favorable freight rates. Consolidated selling, general and administrative expenses increased by 6.7% to $38.3 million.

US segment expenses increased by $2 million to $29.4 million. As a percentage of net sales, expenses increased to 22.5% from 20.3%. The increase was driven by inflationary factors, most of which related to employee costs the largest component of SG&A. Other increases included expenses related to the start-up of manufacturing operations in Mexico. This was partially offset by a decrease in the provision for doubtful accounts. International SG&A expenses decreased by $0.2 million to $3.8 million and as a percentage of net sales, it decreased to 33.9% from 35.1%. The decrease was driven by lower advertising and commission expenses, partially offset by higher employee expenses. And unallocated corporate expenses increased by $0.6 million to $5.1 million due to high incentive compensation and professional fees.

Our interest expense, excluding mark-to-market adjustment for swaps decreased by $0.3 million, due to lower average borrowings, partially offset by higher interest rates on our variable rate debt. And as Rob discussed, with respect to Vasconia, due to a reorganization resolution by Vasconia under the Mexico bankruptcy law, a company which we have a 24.7% investment, we determined that we no longer had significant influence over our investment. This resulted in the discontinuance of the use of the equity method of accounting. Upon discontinuation, $14.2 million of related foreign currency translation losses, previously reported in accumulated other comprehensive loss statement were reclassified to the investment balance and then written-off.

This write-off was non-cash and had no effect on our ongoing operations or business strategy. For income taxes in the current period, the effective income tax rate differs from the federal statutory rate, primarily due to equity-based awards where the book expense exceeded the tax deduction and foreign losses for which no benefit was recognized. The effective tax rate for the prior quarter, differs from the federal statutory rate, primarily due to state and local tax expense, the impact of non-deductible expenses and foreign losses for, which no tax benefit is recognized. Turning to our balance sheet. It continues to be quite strong. As of June 30, 2024, our liquidity was approximately $119 million, which included cash plus availability under our credit facility and Receivables Purchase Agreement.

Since year-end 2023, we further de-levered our balance sheet, reducing our net debt by $70 million and as of June 30, of this year, our net debt to adjusted EBITDA leverage ratio was 3.3 times. As provided in the release, we are reiterating our financial guidance for the full year of 2024, except for the non-cash loss of $14.2 million related to the investment in Vasconia. 2024 financial guidance is as follows. Net sales of $690 million to $730 million, adjusted income from operations of $49 million to $54 million, adjusted net income of $15 million to $17 million, and adjusted EBITDA of $57.5 million to $62.5 million. This concludes our prepared comments. Operator, please open the line for questions.

Q&A Session

Operator: Thank you. [Operator Instructions] And your first question comes from the line of Anthony Lebiedzinski with Sidoti. Please go ahead.

Anthony Lebiedzinski: Hey, good morning, gentlemen, and thank you for taking the questions. So Rob, you talked about the sluggish demand in the second quarter, also seasonal timing of shipments, just wondering, if you guys could provide any more details as — in regards to that whether or not more of the sales decline was because of just market sluggishness or just help us out, maybe just understand as far as how the quarter progressed?

Rob Kay: Yes. Good morning, Anthony. As we talked about in our remarks, we had — saw a lot of this coming when we issued the full year guidance. So we — directionally, we were not surprised. The end market demand was a little greater than we thought, offset by some new initiatives, particularly Dolly and success in growing our e-commerce sales offset that. And our market shares, as we talked about, overall increased which again offset the greater market direction. Aside from that, and as we had expected, some timing, which particularly applies to clubs which are sizable orders, on a year-over-year basis will be second half, whereas we had more in the first half of the year last year in that channel and that accounts for the remainder of the decline in the second quarter, that —

Anthony Lebiedzinski: Okay. Got it. That’s very helpful. And in terms of Dolly Parton products, I mean, did I miss — did you guys say, how much of that was in the second quarter or was there anything material to call out?

Rob Kay: We didn’t expect it to be that much, but we ended up shipping $4 million in the second quarter.

Anthony Lebiedzinski: Got you. Okay. So for the full year, I think you said, you expect to exceed $10 million for Dolly Parton products?

Rob Kay: Correct. Into the dollar channel, we may have some sales beyond the dollar channel that will hit 2024. I’m not certain yet, whether that’ll hit 2024 and 2025 based upon availability since it’s exceeded our expectations, getting availability of product in time.

Anthony Lebiedzinski: Got you. Good. And then, how would you characterize your own inventories and inventory at retail? One of your competitors last month came out with lower than expected results. And they had some own internal issues but they had talked about just seeing kind of a stretched consumer out there. So what are your thoughts there as far as inventory at retailers and retailers’ willingness to replenish orders? What are your thoughts?

Rob Kay: Sure. Well, the first part of your question in terms of our own inventories, we’ve been very focused on the inventories for years now and our inventory levels are appropriate and we react very quickly with any changes in volumes as well as on whether it’s SKU level or other basis such as with the outperformance of Dolly we reacted very quickly to get in more inventory, right? So we think our inventory levels are appropriate and streamlined. In UK we’ve needed to — and Europe, our hub in the Netherlands, we needed to increase those levels as a result of the fact that shipments are now coming around the Cape and not through the Canal and the Red Sea and that adds a couple of weeks, so you need to offset that by counting higher levels of inventories not significant but definitely higher levels.

So we’ve increased there. In terms of the bulk of your question at retail, in more challenging economic times, particularly the larger and the more sophisticated retailers, lower their investment and want more replenishment from their customers. A bigger player like us, it actually benefits our market position but there has been definitely a shift and we’ve seen that for quite some time and that always gives a leading indicator of where we see the market is going. So, there’s definitely some pullback in levels at most of our customers. So they are leaner on their inventory levels than they have been in better times.

Anthony Lebiedzinski: Got you. Okay. And then last question for me. So as we look to update our models for Q3 and Q4, is there anything that we should be aware of in terms of just timing of shipments other than what you already talked about or is there anything — timing of cost that we should be aware of?

Rob Kay: No. I mean nothing that we haven’t stated. The big cost increase besides the overall inflation, I think the big cost increase has been ocean freight which we have an experience as we mentioned, it’s stabilized. We don’t expect it to change from where it is. So on a year-over-year basis, ocean freight is up but stabilized at a level less than our expectations, which is good. So we factored it all in and we don’t expect it to change much. And the big driving factor is in geopolitical conditions, a big driving factor are the ocean carriers and them taking a lot of tonnage off-line and therefore, supply and demand it created an increase in the costs that they were able to charge. We’ve offset that, particularly, on a cost of goods sold basis by driving the cost of what we’re paying for our goods.

So there should be no change beyond our expectations and — from a timing perspective, there is some upside if we can get more product for demand on Dolly, but basically everything.

Anthony Lebiedzinski: Okay. Well, thank you very much and best of luck.

Rob Kay: Thank you, Anthony.

Operator: Your next question comes from the line of Linda Bolton Weiser with D.A. Davidson. Please go ahead.

Linda Bolton Weiser: Yes. Hello, hi. So I was just curious if you could give us an update on the S’well acquisition sort of a State of the Union on how that brand is doing since you acquired it?

Rob Kay: As we talked about at the time of the acquisition, the biggest known challenge centered around the stuffed — the overseas channels as well as e-commerce and particularly, Amazon. So we knew there’d be a lag. That’s all gone through and therefore, it’s picked up as a result. The other thing that has been successful is — and if you go on our website and social media, you’ll notice there’s been a tremendous amount of new product introduction, because we inherited no pipeline basically. So that’s created newness, which is driving new opportunities, particularly in the e-commerce channel where when you’re just selling the same thing, there comes a decline in your demand. But now, that we’ve replenished the offering we’ve seen both in swell.com, Amazon and other channels a nice uptick.

One thing we did not anticipate when we bought the business is that we were very interested in — we find the promotional direct corporate channel that’s S’well had to be very attractive and we got a lot of talent with that. The talent has exceeded our expectations, but the relationships that they were selling through needed to be completely redone. That’s why we took a charge last year and that’s — this year we’re doing much better and we’ve seen a tremendous increase and that helped actually in the second quarter as we’ve solved the issues that we faced last year and did that in a manner that exceeded our expectations. So S’well is doing well we need to — with that division the whole BUILT and S’well division is one division. There has been — with the tremendous growth of Stanley the category has done well.

But besides Stanley most people have not. There’s been a decline in share. So we’ve been winning back some share and that should benefit us on a go-forward basis.

Linda Bolton Weiser: Okay. And then we get the Nielsen data the POS data which covers just the US and it doesn’t include e-commerce. So it’s only tracked channels. So it only covers some of your sales. But nevertheless, it shows a really bad trend like really big year-over-year declines. So this would be a Walmart and Target — other channels. Is there any way you can explain to us why the declines in the Nielsen data look so much bigger than the decline in revenue you actually report?

Rob Kay: So again it’s well-covered. We purchase a lot of data and it’s all Circana data right so NPD IRI. And that’s — it covers a lot of the universe. There is to your point less data overseas. We do have some but not as much. So part of it is what channels. So like we had growth in the dollar channel. I’m not sure if that’s captured in Nielsen right which explains part of what you’re talking about. In Walmart — and so if we look at the data that we purchase and we compare that on a 12-month versus 12-month basis this year versus last year not every category but by far the majority of our categories we’ve increased share. In Walmart and Target, we’ve gained in a lot of areas but we did as talked about we lost some share in the KitchenAid line with those retailers which we saw an impact on a year-over-year basis in the second quarter along — just three months and that might be skewing what you see versus what we have actually shipped.

Linda Bolton Weiser: Okay. And then given — I guess, we’re expecting around $6 million of shipments of the Dolly Parton at least maybe more in the second half, I would think more of that would come in the third quarter than in the fourth quarter. So is it fair to say your sales growth and year-over-year change in third quarter will be maybe better than in fourth quarter or is that a right thing for me to assume?

Rob Kay: It’s a good question. I don’t have the answer. I can say that we will exceed the $10 million, right? So you can expect more than the $6 million. And we’re not sure how that all falls in the third quarter versus fourth quarter yet. We’re still working on that based upon again timing of the shipments and the like. Most of it is replenishment. So the majority of that comes through our warehouses not directed for, right? So it’s working with the customers and when it ships. So that’s not necessarily the case.

Linda Bolton Weiser: Okay. And then my last question has to do with when you talk about a little bit of a change in your marketing focus in Europe to go a little bit more for the larger retailer accounts instead of the smaller ones. I’m wondering if that changes the margin profile of the business there? Do you expect similar margins or lower or higher as you kind of change that channel strategy? Thanks.

Rob Kay: Yes. No good question. So just to explain the core businesses that Lifetime had acquired their core customers were independent stores and what’s called cookshops particularly in the UK. They’re in big decline. So we’ve been shifting to the larger accounts like Dunelm and Next who are doing well. And the growth in those have been offsetting the general growth — or a decline in the homewares market in there. In general, the answer definitely is, yes, that the margins that you’re selling to those customers would be lower than you’re getting in a cookshop. Though the caveat is the reason why we’re not necessarily experiencing that and what you’re seeing flowing through the numbers is we’ve cleaned up a lot of business and improved the gross margin in what we sell in terms of what we’re selling product-wise.

So, that’s picking up and offsetting what you’re seeing otherwise. If you were just substituting one for the other, you would have seen a bigger decline in margin. That makes sense, Linda?

Linda Bolton Weiser : Yes. Yes. Thank you. Thanks very much and good luck with everything.

Rob Kay: Thank you.

Operator: Your next question comes from the line of Brian McNamara with Canaccord Genuity. Please go ahead.

Brian McNamara: Good morning, guys. Thanks for taking the questions.

Rob Kay: Thanks. Brian, good to hear.

Brian McNamara: So sales growth has proven a bit elusive over the last few years kind of post-COVID and your H2 guide, I think, implies a plus-8% kind of run rate. What gives you confidence in that kind of hockey stick recovery, particularly with $4 million of Dolly Parton product maybe being pulled ahead as we haven’t seen kind of growth like that since 2021?

Rob Kay: So two things that are driving that, I guess, three things. One is just seasonal timing on a year-over-year basis, right? So, it’s — some of it is what shipped first half 2023 versus second half 2023 and the cadence of what’s shipping this year. So, that’s driving some of the growth. Some of it is newness such as Dolly, which is all incremental business. A little bit is we changed our — a lot of what we were doing online, which we were doing fine in terms of our e-commerce sales. And we’ve already seen tremendous outperformance, and that is should continue, and we have a high degree of confidence in executing on that, which will drive that. And the other is just as we continue to roll out, while the markets that were particularly in Europe and the continent and the U.K. have — we don’t expect that to pick up.

We’ve gained new listings in Leclerc, Carrefour, Lidl. In Australia and New Zealand, we used to — through the way we went to market, we were basically selling only one brand to one customer. Now granted in Australia, there’s one major retailer, and that’s who being sold through and they’re very big, but now we’re selling to many people and to that one major retail, we’re selling many products and many brands. So, that’s all just rolling through and will drive incremental growth versus prior year. So, we’re not expecting a market pickup to drive this.

Brian McNamara: Okay. What’s your view on innovation in light of today’s consumer expectations for products that kind of perpetually keeps increasing? Are you guys investing more in R&D to kind of propel sustainable growth?

Rob Kay: Without a doubt and actually one of the things that I didn’t really talk about that is driving substantial growth and will this year based upon what we have in firm orders — is provision. We introduced for Farberware called Build-A-Board. And it’s been unbelievably successful will be the single — we expect it, and we add up all the numbers at the year, the single biggest launch that Lifetime has ever made and it’s all incremental product and incremental business, obviously, to existing customers. It’s all U.S., we’re going to look to expand that internationally, but at this point, it’s all U.S.

Brian McNamara: All right. Then just one more. International just continues to be kind of a tough slog there. I’m wondering if it still makes sense to be there despite your strong internal efforts to restructure the business, you’ve made a lot of effort there. It’s a $55 million kind of annual run rate business despite these new listings that you’re talking about. Does it require too much management focus just given size relative to the total business?

Rob Kay: No. Management focus is not the issue there. It is not draining management resources. That is not the problem. We do recognize that we need to show progress there and take action accordingly based upon how it rolls out.

Brian McNamara: Okay. Great. Thanks guys. Appreciate the color.

Rob Kay: Thank you, Brian.

Operator: [Operator Instructions] There are no further questions. I will now turn the call over to Mr. Rob Kay for the closing remarks. Please go ahead.

Rob Kay: Thank you, Angela. Thank you, everyone, for listening to our call today and for participating in this and your interest in Lifetime Brands. We hope that we were able to answer your questions on the second quarter and for the full year, and we look forward to further discussions with everyone in the future. Have a good day.

Operator: That concludes today’s call. Thank you all for joining. You may now disconnect.