Haverty Furniture Companies Inc (HVT.A) 2002 Q1 法說會逐字稿

Good morning. My name is and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Haverty Furniture first quarter earnings release conference call. All lines have been placed on mute to prevent any background noise. Media and individual investors will be in a listen - only mode for the duration of the call. After the speakers' remarks, there will be a question - and - answer period. If any institutional and analyst participants would like to ask a question during this time, simply press star, then the number one on your telephone keypad and questions will be taken in the order in which they are received. If you would like to withdraw your question, press the pound key.

With us today from Haverty's is Mr. Dennis Fink, executive vice president, and Mr. John Slater, chief executive officer. Mr. Slater, you may begin your conference.

Good morning. Thanks for joining us for our first quarter earnings conference call. Sales for the first quarter of 2002 totaled $175 million versus the prior year's $167.6 million. This represents an increase of 4.4 percent over the prior year and comparable store sales increased by 3.4 percent. Despite the modest increase in sales, we are pleased to announce that earnings were 30 cents per diluted share versus the prior year's 20 cents, an increase of over 50 percent. These earnings also represent a record first quarter tied with the previous record set in the year 2000 when the economy was robust.

The 30 cents per share was actually - took a charge of $1 million pre - tax for an anticipated unrecoverable cost as we abandon certain leased local market warehouses over the next 12 months. The strong earnings were the result of improved SG&A as a percent to net sales which totaled 40.92 percent for 2002 versus 42.66 percent in the prior year. This, combined with outstanding gross margins of 48.16 percent versus the prior year's 47.43 percent and lower interest expense yielded the $6.7 million net income versus the year 2001's $4.3 million.

We continue to manage our assets carefully, allowing total debt to be reduced by $19.8 million during the quarter and by $43.0 million compared to the year - ago levels. Debt as a percent of total capital now stands at 41.4 percent. I'd like to post you briefly on the recent furniture market. Imports continue to gain strength as well as to improve their style, finish and overall quality.

We have also seen a movement towards bringing in upholstered products from the Orient, Mexico and South America, particularly in leather, but also in some fabric upholstered frames. We are seeing more coordinated leather goods with wood trim and matching tables. Leather is the growth leader, but we're seeing a customer acceptance of sectional and chaise lounges and the microfibers or ultra-suede fabrics are strong.

Imports play an important part in Haverty's branded products which allows us to achieve better gross margins and margins on name brand products which are more widely distributed. This allows us, however, to be the low - cost provider to the retail public on name brand products and still achieve strong overall margins. Prices on introductions are holding steady but providing more value, again, thanks to imports. Thomasville in particular had several new introductions and they look very nice. One was an import grade.

We're on schedule with our expansion plans for both retail and our distribution centers. As the economy improves, we believe we will continue to be the furniture retailer of choice for our targets customers.

At this point I'd like to turn it over to Mr. Dennis Fink, our chief financial officer. Dennis?

Thank you, Jay. The first thing I wanted to talk about was the accounts receivable portfolio and the bad debt losses for the quarter. They were up about - up by about $100,000, $150,000 to a $1.187 million for the quarter. This was all in write-offs. There was no increase in the allowance for doubtful accounts. That's a little higher obviously than it's been running.

We're finding that the delinquency and the engine looks very good but that again as people become delinquent there's a higher percentage of them that go all the way to write-offs, just probably based on the unemployment rate and the difficult economy that there's been. We don't expect the write-offs to go up from here and we'll probably level out at this level or even perhaps a little bit lower in total expense - total bad debt expense. Bankruptcies have moderated somewhat on an incoming basis and we feel comfortable again with the credit quality because of the customer we target.

Looking at the debt side, during the quarter the company has renewed and increased the size of its bank revolver. We had $105 million facility with five banks involved. We now have a $125 million facility with six banks involved. Eight million dollars of the facility is a 3 - 1/2 year commitment and there is $45 million that we have under a 364 - day commitment. The covenants have been updated to be a little more in line with the market deals, a little bit tighter, that is to say. And the pricing has also been brought up more in line with market and we probably will have a cost of variable rate debt about 125 basis points higher going forward based on the higher spreads in the deal.

We had a very - very much a sweetheart deal based on timing of our prior revolver which was negotiated in early 1998 when the market conditions were very favorable for borrowers. Overall on the debt side, we are pleased we were able to reduce debt almost $20 million in the quarter and over $40 million from a year ago. The average cost of variable rate debt which was about half of the total debt that we had outstanding was 3.2 percent and obviously that was expected by most to go up based on rates coming back up on the short end of the curve and also with a little higher spreads and our fixed rate debt which was also about half - the other half of the total is about a 7.4 percent average rate so we're averaging just around 5 percent in total interest rate on an annual basis on our debt.

Looking at the cash flow for the quarter, the depreciation figure was $3.9 million and the total cash provided by operating activities was $24.6 million for the quarter. Purchases of property and equipment was $4.6 million and that's lower than last year and we have a very big year in terms of expansion. Our expected total capital expenditures of approximately $50 million. So the pace of that will dial up considerably in the next - second and third quarter. As I mentioned, total debt was reduced $19.8 million.

Turning now to the outlook, we're expecting for the month of April that comp stores sales will come in at very high single digits. Last year's results were poor. The comparison is not difficult. And we're expecting somewhere in the range of $52 million in sales for the month of April on a delivered basis. We're expecting the business to pick up some in May and June like it normally does.

March and April are typically the two slowest months of the year for incoming volume, for written business, as we call it. And we have a - in fact we have a very important sale in the next four days. A mailer went out to our customer list inviting them into the stores for some special values. We had a similar event last year that was a little shorter in duration and we've had good success with this in the past.

We're expecting that in the next two months that comp store sales will also be in the mid to high single digits, such that for the quarter we should end up with high single digit comps, perhaps in the 80 percent range. And based on that, we think that we're - we are comfortable with the lower end of the range of earnings estimates that are presently registered with First Call. The range is 16 to 18 cents per share, diluted share, for the quarter.

And so we're comfortable at the lower end of that. The start - up expenses from our expansion we've talked about before and they are substantial. And they start fairly heavy in the second quarter. We were expecting about $1.2 million in such expenses. All of those will be in the SG&A costs. And then in the third quarter we're expecting about $3.3 million of those expenses and in the fourth quarter about $1.1 million. We've had approximately $400,000 of such costs in the first quarter so that would be about $6 million for the year in increased SG&A as we're starting up our new distribution center in which will handle all of the Eastern states for us, replacing two other warehouses. And as we also start up in southern Virginia our home delivery center.

In the press release we talked about a $1 million accrual that we took a charge to other income expense for leased warehouses that we'll be vacating over the next year. So there's a lot going on here at Haverty's in addition to the 11 new stores that we're opening and the start - up costs are fairly significant this year.

In addition, we have a little more comfort now that we can give you on some sales of our existing facilities and we believe we'll have pre - tax gains in the neighborhood of $3.8 million to $3.9 million in the third and fourth quarter combined. Probably $3.1 million in the third, and about $800,000 in the fourth quarter. This cannot be assured, but it is very likely that that's how it will fall. That will show up as positive, as a gain in other income.

So with that I think that people can work reasonably well with their own models. We're not giving any guidance on the top line or earnings performance specifically from the company for the second half. Obviously, a lot depends on the tone of the economy and the confidence of the consumer. We're expecting that both should go very well and that we should have a strong business as we're incurring a lot of these operating expenses.

With us today we also have our senior VP of marketing, Tony Wilkerson, and he's going to join Jay and myself to answer any questions that the audience may have at this time.

Operator, if you'd go ahead and poll them.

At this time I'd like to remind everyone, in order to ask a question, please press star, then the number one on your telephone keypad. If you are using a speakerphone, please pick up your handset before asking your questions. As a reminder, ladies and gentlemen, only institutional investors and analysts may ask questions. One moment while we compile the Q&A roster.

Your first question comes from with Merrill Lynch.

Good morning, everyone. I wondered if you would comment on how you found the introductions at the furniture market. I know you - or I thought you were going to limit the purchases because of the warehouse adjustments that you told us all about. Did you in any way reduce the number of floor samples that you might choose to refresh? And can you tell us whether you added any new suppliers for the first time or for the first time in a number of quarters in the selections that you made?

This is Tony Wilkerson. How are you doing, ? I might comment that yes, we've put a stronger management on the number of goods we're going to bring into this market because of the warehouses changes. However, we still have a mandate to have those best values and customer. And so what we've done is where we've picked up new groups, a number of those will be scheduled to come in after we've consolidated these warehouses. This allows us to select products we needed and at the same time minimize the impact of new products at the same time we're consolidating these warehouses.

So we'll have a few month period there where those products will not be coming in although we do have each month some coming in that have been scheduled previously to come in. And I might say that, Jay, just to follow up on a couple of Jay's comments, we did continue to see strong values from imports. They continue to be compelling, both in price and value. And I think that's indicative of not only the fact that we've had previous companies such as Lane move their complete sourcing overseas but the fact that Broyhill continues to import complete groups and we also now for the first time have seen Thomasville import complete groups.

In the past, a lot of times merchandise was brought in and partially or totally finished, run through the finishing process in plants here. Part of the group may be imported. We still see some of that, where maybe the bed is imported as a value. I think Sam's Furniture does that while they manufacture all their goods, they're bringing in beds now to try and offer values in that category. So we continue to see import values and Thomasville is and one of the largest importers now .

Jay did make some comments also about the carvings. Carvings continue to be important. some transitional looks. Some contemporary. Everybody is saying that, you know - I look across the board at my assortment of imports and there's a lot of carvings there. Carvings represent value but all customers are not interested in . Broyhill's Group I thought was particularly important and it represented what we're beginning to see more of in non - carved groups and that's styles that are more casual, a little more contemporary.

We're also seeing more lighter finishes. Everybody has plenty of the dark, traditional finishes on the floors and we've had requests made at our retails and so we began last fall and we saw a continuation of that this spring in making sure that we have lighter finishes on the floor. Large scale cases with carved , maybe shaped side panels and drawer fronts. They're using a lot of on the cases where we're not using carvings but they're still using value in terms of those aspects.

And we're also seeing leather coming into the bedrooms now. Leather is a great value in upholstery, as Jay mentioned, but leather beds are becoming more important. We're seeing more of them. We saw a minimal amount in the fall. We're seeing more now. There are manufacturers trying to add leather beds to groups and a lot of nice styles . Of course metal beds continue to be very important, primarily in youth. A lot of the groups in youth are beginning to include metal beds because we're finding that the application to retail is better for the customer and they're being very successfully received.

In upholstery, as Dave mentioned, the microfiber - that's the big story in covers right now. And of course as he mentioned, upholstery and leather is important. While we previously a lot of leather being brought over and applied here to frames in this country, we're not beginning to see completely upholstered leather groups by more and more manufacturers so they're bringing them over in containers and not even bothering to apply them over here.

But overall, it was a very positive mood at market and people certainly felt a lot better than they did last fall and also last spring when everybody saw a potential downturn in business coming. So attendance was good and we understand from manufacturers that the attendance was good and a lot of early buyers were there. A lot of people came in early in the week. In fact the large market actually opened up on Wednesday on Wednesday with a regular pass this time which was kind of a first, so -

OK. If I could just ask two more questions. I think, as I recall, Dennis said that since everybody was so tight on their inventories that - including manufacturers, you had a little bit of trouble delivering as much as you might have liked in the month of March. Can you give us an idea of whether production has cranked back up from your suppliers and whether the cycle from order to delivery is narrowing?

Absolutely. And, you know, I'll tell you, Haverty is - I've got a - I'm just glad that I'm with Haverty's right now having come through the first quarter because supply, especially from overseas, did get tight. Business picked up substantially from mid - November through January. A lot of domestic factories of course closed down. They had a week's vacation for Christmas and then you jump into February and the Chinese like to take off some time.

So they took their time off right in the middle of a time when a lot of factories were trying to ramp up business. All of this was on top of manufacturing facilities that had been reduced. A lot of lines had been closed, manufacturing lines had been closed because of the economy earlier in the year and 9/11 after that. Everybody was - a lot of the factories were - just had not yet had the business. So it started coming in later in the fourth quarter and it just took some time to get everything ramped up.

And on imports, you had the transit times to cycle there from placing the order to getting it over here, getting new product placed in a line. You're looking at 60 days, 90 days, on a good paced scenario. While Haverty's received - we receive preferential treatment from our suppliers and we're there - we pay the bill when it hits and we have great support from them. Several of them ran into difficulties, but I will tell you that what we've done in the first quarter has been to not only certainly fuel the sales that we generated but we have also been able to bring up some of our basic levels at the regional warehouses, at the five regional warehouses where we store merchandise, to about 5 percent.

We lifted that up about 5 percent so that we can flow through into this second quarter's business with quicker deliveries. And most of the manufacturers at the end of April - right now, we have about cleaned up everything. It was about from January, mid - March to late April was basically the time that we saw our own arrivals basically reduced. So, Pam, a lot of these factories are back on line shipping and gearing up for business ahead. I think that will help certainly the industry also, in availability.

Great. Thank you. I'll let somebody else answer - ask questions. Thanks very much.

Thanks, .

Your next question comes from which Wachovia Securities.

Thanks. Good morning, Jay, Johnny and Dennis.

Good morning.

The sales forecast is a little bit lighter than we've been thinking and certainly at the low end I think of your expectations. Could you discuss calendar promotions, advertising - you know, all the things that would go into driving sales and any nuances year over year that might explain it? Or is it just a little bit slower since the end of February?

Yeah. John, we're continuing with our promotional calendar that we set earlier in the year and we're running about 33 of our full color tabloids. You've seen those. You know, the magazine with the color shots that drops out of your newspaper on Sunday. And, you know, we've had real good success with those so they continue to be our primary print vehicle. And we run about 30 percent of our ad budget with those, about 28 percent in . Primarily that's done out of major markets.

We did more in our larger markets than our smaller markets but we supplement our business and so forth. We still have in place what we put in - we think are a relatively strong promotional calendar. So we haven't reduced that or stepped back at all. And then of course we think there's a possibility that calendar can be what we're budgeting.

Warehouse sales, any calendar shift, Dennis? Can it help us how they look in April versus year ago?

We have had a Dallas warehouse sale this year and last year, both in April. So that's a similar extra event. We did have of course the Easter shift which took a little bit of business out of March and - since it was in March this year and April last year. But I think really - I think business probably was a little softer than we had expected the last six, eight weeks. But we are comparing against a very poor last year of course, but then as you look at the years going back to 2000 and 1999, the comps in the second quarter of '99 were 13.8 percent and in the second quarter of 2000 had been up 11.8 percent.

So we've got some strong numbers underneath. And obviously in the first quarter we were 12.5 percent up comps in '99 and almost 10 percent up in 2000. So I think it was - we've had a little stronger second quarter in both '99 and 2000 and, you know, maybe our expectations were a little aggressive but we think that the two stronger months, May and June, ought to be pretty good.

OK. Is there - I was a little confused on your comment about bankruptcies. You said the write up was up but the incoming rate of bankruptcies was down or something. I was confused. What -

Sorry about that, John. We looked at - when bankruptcies are filed, we kind of gauge that and the money of money that people owe us at that moment - we just track that. So every month we know how many dollars worth of our outstanding accounts receivable has just had bankruptcy filed. And some of those you get some money on, the Chapter 13s. And just looking at the most recent monthly numbers, we're seeing a - we saw it trend up in the middle of last year and towards the end of last year and it's come down a little bit in the first quarter.

So that's just a little bit earlier indicator of the natural write-offs. And it was - nationally it's gone up quite a bit. I don't know about first quarter nationally, but just to give you a little more early indication of what's happening.

OK. Back on the sales - I know you at corporate are extremely focused on the distribution and store roll outs. Would there be any issues in the field, if you will, in terms of focus?

You mean that might be causing ?

Yeah.

John, I don't think so. I just made a swing - this is Jay Slater speaking, and visited five of our smaller stores in Alabama and Texas. And these people are as excited as they can be about it. Our system which we rolled out several years ago has worked extremely well. These guys told me - you know, we look at the bottom line and everything you all have done has just made our profits go up and therefore my bonuses go up.

So these guys are excited about it and I don't think they're taking their focus off at all. I do believe that, as Dennis or Tony mentioned, the last six or eight weeks were a little bit less than we were looking for in terms of volume and, you know, if we're going to err with you guys, we want to be on the side of making things better when they come out. But as far as we can tell, based on the last six or eight weeks, I think our expectations look pretty accurate.

OK. And I'll make just one more question relating to the expenses you outlined. I think those are in line with previous guidance. But can you update us on the status of - you know, maybe the key conversion issues and when we're going to see - and really is everything on track time-wise?

Kind of two parts to that, John, the first being the store roll out with expectations that we're going to open in the second quarter. There's three new stores, two of which are replacing existing stores. And then the third quarter we're going to open six stores and then one more replacement store in the fourth quarter. And we're very close to the timeline that we set up originally, right at the start of the year. It's a matter of a few days here or there, nothing really significant.

So the remodeling is going well and the time line looks good. I think the staffs will be there and be ready to go. There's - of course two new cities for us that we're into with Orlando and Washington, DC, Virginia area. So there's a little more to those than the others because the other new cities we're serving are really an extension of Jacksonville, Daytona and then Tampa with . So that's going very well. The construction side is going extremely well. At , it's slightly ahead of schedule and we hope to be in that facility in July.

And enormous effort is being put forth into training and getting the systems ready. And they appear to be coming along very well. I think that, you know, those are our challenges, to do everything - you know, to a new kind of realm with management and control. So we expect it to go very well. But there still is a lot of work to do with kind of getting coordinated on actually operating the new facility and a little different distribution method. But we know of no problems there. We have to be very focused on that because that's the - you know, that's really in the critical part of serving the customer.

Dennis, without giving me a detailed answer - you are kind of flipping the switch gradually. What exactly - are you going to test a store, a region? How does that kind of come on line? What weeks or months or quarters should we be worried about conversion problems if there are any?

Well, it will be in late July as we start making regional shipments. That's full trailer loads of goods in cases just like - we're really just replacing our Eastern region warehouse function. And then we're bringing on over the next month - I think it's three or is it four cities? Three cities. And they will have the remote deliveries prepped in and shuttled to their local areas for home delivery. And then Atlanta, I believe, starts when? Is it in September? September.

The big relief is when the Atlanta deliveries are being made from the new facility which is testing the new systems really heavily because it's - you know, again, rather than delivering to a single city, we've changed the systems to allow deliveries to be over a direct to the home over a wide region. And then after that, it's - I guess October is a month where several of the cities come on and we're staging it all the way through February. And we're moving - I think we're moving November and December, status quo in terms of not - those are the two busiest months of the year and we're not adding any new facilities to the distribution system those two months.

Great. Well, congratulations on the earnings and the balance sheet improvement. Thank you.

Thank you.

Your next question comes from with UBS Warburg.

Hello, guys.

Hi.

I'm in for today. Can you talk a little bit about the Haverty's branded product? What percent of sales that currently is and how that's doing?

Yes, we have a brand. We've had about - I think our goal was to reach 25 percent a year. We're about 26. We're looking to - as Jay had mentioned earlier, reach about 30 percent of our and quite frankly we're going to be a couple months ahead of that. We're moving ahead on that.

We - it ended last year, the Haverty brand was our actually fourth largest supplier. We were our fourth largest supplier to ourselves. At the end of the third quarter we're actually our third largest supplier now and it's interesting to note that at the end of the first quarter we were number three. And at the end of April we will be number two. We were number two also in the month of March.

So we're continuing to have great acceptance at retail with the product. It's selling. It's growing in business and as a piece of the business and our salespeople accept it very well. We've had meetings down in the stores and visited them, talked to them about this of having brand issues and make sure it folds in right. If our people in the field have any problems with it, then it's an issue you certainly have to take to heart. But the worst thing .

About - right now, a little over 60 percent of what we're doing with the Haverty brand. about 23 suppliers. And those suppliers have given us commitments on that. We have about 22 states that we have exclusive distribution on all that product. Those are states we border states and some other locations. So we have - we want to protect is the reason for the distribution areas that we've tied down with that. So it's very successful.

OK. And can you also - you guys talked a little bit about how you're starting to import more upholstery pieces. Can you talk a little bit about the selection and the quality and the delivery times that you're seeing on those?

Certainly. We do - Haverty's - we bring a lot of imports in leather from Mexico. They're our primary import source and we have a four - week turn around time on that. In other words we require them to be able to - from the time we place the order have the product at our warehouse in four weeks and they've got about a - we run about 85 percent success on that which we consider pretty good since they have time - coming across the border issues so to speak now and then.

So we have a great . We have - we're buying a couple of frames from Italy and in those instances we're not interested in importing those where possible so we've required those manufacturers to basically warehouse them over it. So we have it warehoused and we are able to still buy it and reach those price points at retail that we want to reach. They've agreed to do that for Haverty. So we have a pretty quick turn around time, but that's because we basically make that a requirement for buying the product from these suppliers.

OK. And one last question, kind of changing gears here. The credit service charges and the provision for that . Credit service charges have been decreasing as a percent of sales over the past like two years or so. How should we be forecasting those going forward? Will they continue to decrease or -

Yes, they will. And that relates to the kind of promotions we're running. More and more free interest promotions offered by our competition and therefore we have to emphasize the same thing. So I think you should see that scale back a couple hundred thousand dollars a quarter sequentially and I don't really see an end to it scaling back. Maybe in a year or two as rates go back up they'll be perhaps less aggressive promotions in the marketplace and then perhaps some - that's really where we get our interest is from people taking a deferred payment plan where there is interest accruing. And they haven't had to do that based on promotions .

OK. And what about provision for doubtful accounts? Now that you guys are outsourcing?

We're outsourcing a piece of the business and that was about $20 million of sales, net of down payments that was outsourced in the quarter. So it was about roughly 12.5 percent I think of sales for the quarter. And over time that should come down because of that. But right now we still have a similar level of accounts receivable and I would think after the next couple of quarters that ought to come down really in line with however much receivables come down. And we're thinking, you know, receivables will come down $15 million, $20 million this year and maybe that much next year.

All right. Thanks, guys.

Thank you.

Your next question comes from with Legg Mason.

Hi, Jay, Dennis and Tony. Congratulations on a great quarter.

Thanks, .

First question is for Dennis. Dennis, can you give us a little bit of guidance on interest going forward? You talked about the new bank line. First quarter interest was actually lower than I expected but it sounds like it may trend up a bit from here. Is that right?

Yes, that's right. We're probably going to look at an increase of $300,000 to $500,000 from the first quarter level and in the second quarter and probably that much again the third quarter. Just based on borrowings going up and rates coming up a little bit. You know, I think LIBOR is going to come up and that's what our loans are based on. And then we have another transaction that we're looking at, and I'm not factoring that in. It's a sale leaseback of approximately $40 million and we would expect we would close on the transaction in the second quarter some time.

So ultimately that would reduce interest expense and you'll see a little higher SG&A expense. But - I'm not trying to put that in the model in the comments I just gave you. I think we need to make that arrangement or change when we actually have a closed loan - or closed lease.

OK. Also, a question on the gross margin. Obviously you all have done a terrific job on that. Any reason the gross margin can't remain at the first quarter level or perhaps climb a little bit from here.

Well, I'll say, Sally, that we do have some warehouse inventories that we're going to be clearing out in the next six months so assuming that our margins, our overall margins remain the same as they were the first quarter we would see a drop in the reported margins because of these extra sales from the warehouses and it probably - 25 to 50 basis points lower over the next three quarters, just the impact from the sale of that inventory. But, Tony, would you -

Yeah, I would concur with that. We want to and make sure we don't end up with anything in them at the end of the day . There again, keep in mind we have only a few of them beginning to clean up and that will come about as we begin shifting their receipt of merchandise from the regional warehouse to the delivery centers delivering directly to the market. So it's going to come about on a gradual basis and we'll manage that.

But I think there's no reason for the ongoing margins to go down. And if anything, we're going to try to move those up modestly as we go forward.

So you'll have - temporarily you'll have slightly lower margins than we saw in the first quarter but that should be temporary and then you bounce right back?

I believe so, yeah.

OK. All right. Also, another question for you, Dennis. Accounts payable or I think it's actually called accounts payable and accrued expenses, up almost 50 percent year over year. What's going on there?

Well, that's where the - a year ago slow business. We kept our inventory in check pretty well last year as business slowed down in the first quarter. And to do that you slow down on your purchases and payables come due and they go down. And we were in the opposite mode this year. Business was good and we were actually building our inventories a little bit to getting a better supply, a response to order position. So it's the same kind of terms and dating. It's just a matter of the most recent six, eight weeks of purchases have been a lot higher this year than last year.

OK. And then finally, two housekeeping questions. What was square footage at the end of the quarter, and shares outstanding?

The shares outstanding I believe is - Well, I guess you're asking - the weighted average or the -

The actual shares at the end of the quarter.

It was 21.6 million shares at the end of the quarter. And the footage was 3,572,000 square feet. We increased 51,000 feet in the quarter.

OK. And what's your estimate for the year - end square footage at this point?

We estimate that we're going to increase square footage by 292,000 square feet which is 8.3 percent and that would bring us to 3,813,000.

Great. Thank you very much.

OK. Thanks, Sally.

At this time there are no further questions. Do you have any closing remarks?

Only to say thank you for our participants and we look forward to a good quarter and a good year. Thank you very much.

Thank you for participating in today's conference. You may now disconnect.