iMedia Brands Inc (IMBI) 2011 Q1 法說會逐字稿

Welcome to ValueVision Media's fiscal 2011, first-quarter teleconference. Following today's presentation, there will be a formal question-and-answer session. At that time, instructions will be given. Until that time, all lines will be remain in a listen-only mode. At the request of ValueVision Media, today's call will be recorded for instant replay. If you have any objections, you may disconnect at this time.

I would now like to turn the call over to Teresa Dery of ValueVision Media. You may begin.

Thank you, operator and good morning. I am joined today by Keith Stewart, CEO; Bob Ayd, President; and Bill McGrath, SVP and CFO. Bill will open the call with the Q1 financial review. Bob will touch on our overall merchandise strategy, and Keith will provide an overview on the company strategy and goals and industry outlooks prior to opening the call to questions.

Before we get started, let me briefly go over the safe harbor language for forward-looking statements. Comments on today's conference call may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as anticipate, believe, estimate, expect, intend, predict, hope, or similar expressions. Listeners are cautioned that these forward-looking statements may involve risks and uncertainties that could significantly effect actual results from those expressed in any such statements. More detailed information about these risks and uncertainties and related cautionary statements is contained in ValueVision Media's filings with the Securities and Exchange Commission.

In addition, comments on today's call may refer to adjusted EBITDA, a non-GAAP financial measure. For reconciliation of adjusted EBITDA for GAAP results and a description of why we use EBITDA, please refer to the Q1 news release, which is available on our website. All information in this conference call is of today, and the Company undertakes no obligation to update these statements.

I will now turn the call over to Bill McGrath. Bill?

Thanks, Teresa. Good morning, everyone. We appreciate you joining us. As you've had a chance to review our Q1 news release issued earlier today, I will focus my remarks on just a few highlights. First quarter continues our trend of double-digit net sales growth. Net sales increased by 14.8% to $143.5 million. Our gross margin improved to 37.2% versus 36.6% in the year-ago period. The improvement in margins was a result of product mix as well as continued reduction and promotional discounting and free shipping. Continued operating discipline enabled us to reduce total operating expenses by 2%, creating further leverage. Adjusted EBITDA improved to $3.1 million in Q1 2011, a $7.4 million improvement over Q1 2010, marking our third consecutive quarter of positive adjusted EBITDA.

As anticipated, ValueVision reported non-cash net extinguishment charges totaling $25.7 million in Q1, reflecting the accelerated amortization of the preferred stock discount. The preferred stock discount essentially reflected the difference between the roughly $41 million redemption value of our preferred stock and its carrying value on our balance sheet. That discount was being amortized over the 5-year redemption period through February of 2014. In April, we retired the GE preferred stock and accelerated the remaining unamortized discount of approximately $24.5 million. An additional $1.2 million accelerated accretion resulted from a $2.5 million preferred stock payment that was made earlier in the quarter.

As a result of the non-cash debt extinguishment charge, ValueVision reported Q1, 2011 net loss of $28.9 million or a loss of $0.71 per share. This compares to a year ago net loss of $11 million or a loss of $0.34 per share. Excluding the debt extinguishment, the net loss this quarter would have been 0.08 per share. Due to the impact of our December 2010 and April 2011 share offerings, our weighted average shares outstanding rose to $40.7 million in Q1, 2011 as compared to $32.7 million year-ago period. Going forward, ValueVision has approximately 47.4 million shares outstanding, and this month we will issue approximately 693,000 shares to Comcast NBCU as payment for our Shop NBC brand license extension.

Moving to the balance sheet, we generated net proceeds of $55.5 million from the sale of 9.5 million shares of common stock at $6.25 per share. We utilized $47.3 million of those proceeds to retire the outstanding 12% redeemable preferred stock and all of the accrued preferred dividends. The remaining $8.2 million was deployed for working capital. Our decision to redeem the GE preferred at this time was based on a number of objectives and took into account the substantial appreciation in our share price over the past several months.

The first objective was to eliminate the cash sweep mechanism contained in the covenants for the preferred stock. The cash sweep required us to apply adjusted cash balances in excess of $20 million to pay down our preferred obligation, limiting our financial flexibility and our ability to fund growth opportunities. Second, the instrument carried a high preferred dividend rate of 12%. By redeeming the preferred prior to its scheduled redemption in 2013 and 2014, we have also limited the payment of $17.5 million in future dividends, which would have been recognized as interest expense.

With regards to some of our key operational metrics, our average selling price rose 8% versus last year. As a result of our increased sales of higher priced products, such as high-end jewelry, big screen TVs, and mattresses, our Q1 return rate increased to 21.2% from year-ago return rate of 19.2%, primarily due to these products' mix influence. Average homes increased by 3.4%, reflecting subscriber growth within our distribution partner's footprints.

Transactional expense declined to $2.96 in Q1, 2011, as compared to $3.54 in Q1, 2010, reflecting efficiency improvement and increased Internet penetration over the past year. During first quarter, we continued to utilize our value pay installment program as a promotional tool at a similar level to Q4. Value pay is a cost-effective alternative to promotional discounting and to free shipping. During Q1, we reduced free shipping to just 11% of all transactions as compared to 17% in Q1 of last year.

In summary, Q1 demonstrated continued operational improvement as well as capital structure achievement. We are stronger, and we have greater flexibility to fund the growth of our business. Having improved our balance sheet with the equity raised and the preferred stock redemption, we are now focusing on our $25 million term loan, which bears interest of around 11%. Before year end, we anticipate replacing the term loan with a lower cost, higher availability facility.

I will now turn the call over to Bob Ayd, who will provide a brief overview of our merchandise strategy and some key initiatives in the quarter and going forward.

Thank you, Bill. We are very encouraged by the customer's response to our merchandise assortment in Q1, as well as our team's ability to drive margin improvements versus the fourth quarter. We achieved strong performance across 5 of our 6 business groups, with particular strength in sales and margin dollar improvements in jewelry, health and beauty, and consumer electronics. Our Q1 for 2011 gross margin was a healthy 37.2%, a solid improvement over both Q4 and the year-ago first quarter, which was the result of a merchandising and planning improvements across the businesses.

Our overall merchandising strategy is focused on 3 key goals, increased top line sales; diversifying our product and brand assortment with new products and concepts; and, optimizing our merchandise margins. We executed on those goals in Q1. We further diversified our programming at ShopNBC, aimed at surprising and delighting the customer with the accelerated introduction of 43 new concepts. This compares to 29 in the first quarter a year ago. In doing so, we welcomed 98 new vendors to the network, including successful launches of Simmons mattresses, international fashion designer Christian Audigier, Sur La Table kitchenware, Anne Klein fashion accessories, and merchandising concepts tied to the Royal Wedding, National Geographic, and the NBA.

We also continued to focus on delivering more predictable performance. In doing that, we further diversified our categories and merchandise mix by focusing more air time on reorder products. This is the term we use for products that have already proven successful on our platform and that we reorder from our vendors, often at optimized margins. Q1 revenue from reorder products represented about half of our total business.

In summary, we are confident in our merchandising strategies and new concepts planned for the remainder of the year. We successfully introduced some high-profile, exciting brands this quarter and continue to feature topical programming to attract new customers. We believe we have the right team in place and there remains much opportunity for continued success.

I will now turn the call over to Keith.

Thanks, Bob. Thanks, Bill. Let me begin by congratulating and thanking our talented team for another great quarter of continued progress. Aside from the amazing work they are doing in executing our vision, they are also helping us to progress on a number of key initiatives that we believe will contribute to our future success, both in the short-term and in coming years. With respect to our team, which in my view is clearly our most valuable asset, we continue to strengthen our talent pool in the quarter to ensure we have the right expertise and experience to properly pursue key opportunities and address our challenges.

Certainly, the addition of Annette Repasch as Vice President of Soft Lines is an exciting development for ShopNBC. Annette is a multi-channel retail executive of 25 years. Many of us worked closely with her in the past at QVC and have seen what she is able to accomplish in driving growth, margin contribution, particularly in apparel and accessories. Annette will oversee merchandising strategies and product development for jewelry and watches, health and beauty, and fashion accessories at our network. She is a very talented multi-channel retailing executive with vision, energy, and strong industry relationships.

The other 3 additions are in strategic consulting roles given us the benefit of their expertise and experience, but on a more flexible structure as we focus on keeping G&A low. Rob Cochran is an IT guru with over 30 years of experience in our industry. He will help us create efficient IT processes to further enhance the customer experience online and across our platforms. Nancy Cockrell is a logistics and customer operations rock star with 25 years of experience. She is focusing her process engineering skills to help us streamline our product and content creation efforts and to build upon the customer retention initiatives. And, Dennis Russell, a multi-channel veteran of 25 years, is assisting us in some merchandising and other initiatives aimed in creating a number of incremental revenue streams.

Of course, I would be remiss not to highlight our continued progress in driving sales traffic to the Internet. Our on-going Internet sales penetration success is a reflection of our strategy we initiated back in late 2009, in which we made sure that all aspects of our business were working in close coronation to drive awareness and traffic to our Internet site on a 24 by 7 basis. Targeted broadcast promotions, on air graphics, and host commentary about ShopNBC.com, social media content, and special online only boutiques have paved the way to a growing base of Internet transactions. This trend is a clear benefit of lower transaction costs, the potentials for more interactive relationships with our customers, and helps us gain market share outside the TV shopping sector.

In our previous earnings call, I mentioned our work on a possible relationship with the prominent retailer, and that we expected to have some more information soon. To update you, our team is still working on an agreement, and we hope to conclude negotiations in the near future. I should clarify that while the potential areas of cooperation and synergy with this retailer are substantial, are contemplated in initial engagement is appropriately small in scope. This will enable us to develop a relationship and mutual understanding of each other's strengths and goals and build from there.

Finally, I'd like to touch on our distribution platform as this represents both a powerful and unique asset for our Company and a substantial investment. Our national footprint is grown to 79 million cable, satellite, and fiber homes today with an annualized cost of approximately $103 million. While our larger industry peers have structured distribution fees to be variable based on sales, our contracts are built around fixed fees per household. At a cost of approximately $1.34 per household in 2010, we believe we have the lowest distribution cost in our industry. Though it may cost us a bit more as a percentage of revenue today, we believe the fixed cost structure is the right path for us over the long-term as it will provide greater leverage and scale.

We have restructured most of our distribution agreements to the likes of 1 or 2 years to enable us to take better advantage of changes we expect in the TV and media landscape. And, through this process, we've reduced distribution costs by about $24 million per year area. We have looked to maintain or reduce our distribution costs going forward and while also trying to improve our reach and channel position.

Looking to the end of 2012, we have a substantial opportunity to reduce our distribution costs. As the last of the legacy contracts comes up for renewal, and it is one of the most onerous terms dating back to the 13-year-old agreement, we believe there is a real opportunity to trend as much as $15 million to $20 million in annual distribution costs at that time while maintaining or improving our channel position. I think you for your time and interest in ValueVision, and I look forward to seeing you at the upcoming conferences or other trips later this year. We will be at the Benchmark Companies Conference in Milwaukee tomorrow, at the Piper Jaffrey Conference in New York in early June, and the Telsey Advisory Consumer Conference in New York in September.

Operator, let's now open the call to questions.

Thank you, sir. (Operator Instructions)

Mark Smith with the Feltl Company.

Hi, guys.

First off, can you talk about ASPs versus the plan and the outlook if you still stand by with your long-term goals, there?

Sure, Mark. This is Bill.

Our ASP's were up in the quarter, and that is entirely a function of product mix. As we have talked about before, our anticipation is over the long-term. Our ASP's will reflect a gradual to decline. By the long-term, I am referring to our 5-year window. It's probably coming down to the range of in the low to mid-80s in terms of an expectation.

But in the interim, we are going to be influenced by the product mix within a given quarter. Frankly, the business will move in response to what the customer is finding attractive within that quarter. For us in this period, jewelry, and a little bit of a higher price point jewelry, was a very, very strong attraction to the customer as well as consumer electronics and mattresses.

And I'll add to that, Mark.

The reason for the 5-year horizon is that we have very low penetration in our apparel business. It's somewhere around 6%, and that business has got the longest lead time and the most difficult to build, so it will be very gradual.

And then, Bill, just to confirm, can you just go over again what the share count was today and how many shares you guys will give out later on this month?

Sure, Mark.

Our common shares traded today are about $47.4 million, and on May 15, we will issue about 690,000 shares to NBCU for the 1-year extension of our NBC license agreement. That would be from the period of May 15, 2011 to May 15, 2012.

This question might be for Bob. Just looking at new products. It looks like you've been pretty aggressive here in April, continuing the trend of adding new products, can you give us any insight into the reception of these new products and categories?

I think the reception of new products and categories are best seen in our results, but we are very, very happy with the new brands we have introduced and the acceleration of new concepts that we have introduced, and I think it all translates into our results.

And the success rate that Bob is referring to simply said, broadens our product mix, and thus, broadens our reorder pool which creates additional predictability and sustainability.

The other piece of that is, I am very pleased that the new brand introductions and concept introductions went across all categories of business. It isn't centered in 1 or 2 places.

Last question.

Keith, you talked a bit about the team and some of the new additions that you made. Do you feel like your team is nearly complete now, or are we going to continue to see more people coming on board?

We are never done. I'm looking for a good CFO, if you've got one. (Laughter)

Seriously, we turn over 10% to 15% of our organization intentionally each and every year to bring in young, bright, talented people that can engage with our customers, so it's going to be a continued process.

Perfect. Thanks, guys.

Greg McKinley with Dougherty.

Thank you.

I wonder if you could talk a little bit about your long-term revenue growth, you in the context -- we've talked about this household penetration in the past. Still very low relative to your peers. It would be my sense that a key driver of getting that penetration up has to do with adding new customers, and we talked about ASPs being higher this quarter. I am guessing there is some inverse relationship between a higher ASP and new customer accounts just because there'd be a smaller population of customers who can afford to buy high-priced products, but can you talk about what type of new customer growth you need or expect to drive in the business to migrate your household penetrations to where you can sustain this mid-teens revenue growth?

Yes. The short answer is high single digits in the near term, Greg. The influence of ASP, as Bob and Bill referred to, is primarily into higher-priced TVs , mattresses, and higher-priced jewelry. And then also there is a categorical shift. You have a lowered new named rate with jewelry and fashion to an extent to get to health and beauty and nutrition.

You have a lower what? I'm sorry. Reorder rate?

New name rate.

Okay. I'm sorry.

Onto the penetration, we are just at a 1.5% penetration, so to hit our stated targets of $1.1 billion in revenues, we just need to go from 1.5% to 3%. Now, it's just not about customer growth, Greg. There is a significant growth in multi-purchase customers, so we would expect on an annualized basis and to a lesser degree, quarterly basis, for the new name -- the percentage of our business is done with new customers to dwindle, but not because -- not an absolute rate, but as a percentage, because simply, those customers are going up the strata; they're getting into multi-purchases. We actually have a nice percentage starting to see that our customers are purchasing once a week from us.

Okay. Thank you.

And then, I guess this is the first time I heard you guys talk a little more detail about the anticipated benefits from the renegotiation of this last legacy distribution pact. Obviously, for a company that is just recently started generating EBITDA consistently, a $15 million to $20 million opportunity is a significant one. At this point in time, what gives you the confidence that you think the order magnitude is that significant? Is that reflective of the fact that you've begun discussions with them and see significant opportunities? Maybe just give us some context for why you feel the cost reductions could be that material.

Well, I will backed into that. We expect our distribution costs to remain flat at $103 million for the next 2 years.

Okay.

These distribution agreements really are negotiated at the last day of the contract renewal, and we have a very strong legal position with our competitors through something called MFN, most favored nation status. MFN simply dictates that we have the same rate as our direct competitor.

Okay.

And the fact that this has been a contract in place for, what did you say, 13 years or so, that MFN term is going to allow you think to price more at parity with where your peers are at?

Most certainly.

Yes. Okay, great.

Any color you can give us on the get to know you process with Comcast and help us understand what interaction, if any, has been occurring between the 2 organizations?

It's very early in the stages. We are having conversations with Comcast about our distribution, and Comcast as well as NBC Universal, regarding sharing our properties. We most recently helped them launch the voice across all of our sites in social networks. To my knowledge, it's one of NBC's most successful launches in the last decade, so we will continue in concert to work with those 35 properties to get the ShopNBC brand out to new and active customers.

Thank you.

You're welcome.

Jim Devlin with Penley & Company.

Hi. Good morning, guys. Great quarter. Continued future success. Certainly on the sales line, and obviously, the EBITDA line.

Hitting back on the last call, there was an article in the Wall Street Journal on the thirtieth of April, where the head of NBC Universal, Steve Burke, talked about driving synergies across all of the newly acquired NBC Universal media assets. Considering Comcast's large shareholder position now in the Company, are we in that mix?

We are in the mix. We are also actively on our website. If you dial it up, we are promoting Brides Maids, which is going to be a big blockbuster for NBC Universal, so -- further from us operating in the 35 properties of NBC Universal, when you have Christina Aguilera running spots and online, that is a tremendous amount of credibility for our brand, so there is instant brand recognition with these megastars. It just positions is very, very uniquely in the space.

Okay, great. Thank you.

You're welcome.

(Operator Instructions)Joseph Garner with Emerald Advisors.

Hey, guys. Congratulations on a nice quarter.

Thanks, Joe.

Couple of questions for you. Number one, it looked like from the Accounts Receivable line, you were able to take better advantage of using the value pay offering in the quarter, and I'm wondering if you could talk a little bit more about how important that is and having that kind of working capital available to drive the type of sales growth that you saw, which was well above what some of your peers saw this quarter.

Hey, Joe. Value pay is an important part of our promotional strategy, and it was a continuation of the strategy that we implemented in Q4, and in Q4, with the financing events, we had the working capital to invest. We were more conservative about that in the early part of last year. Value pay works well for us from a couple of standpoints. One is that the customer responds. It is a favorable promotional tool, both in terms of how the customer perceives the value under the installment program and additionally, it is an element of the show hosts can use in promoting the product relative to the occurrence of value pay.

Significantly for us, it is a relatively low-cost promotional tool as we measure the primary costs associated with an installment program. It would relate to the bad debt experience that you would anticipate. And, our write-offs have been pretty consistent in the range of about 2% sales, and if we look at that promotional option relative to other promotional options, which would be aggressive price discounting, promotionally or alternatively free shipping and handling, it's enabled us to throttle back on those two options and to use value pay us a broader element of the mix. The use of value pay and that low cost means has also helped us sustain our margin position in the quarter.

Okay.

And something else in the balance sheet as well. Inventories are relatively flat year over year despite the nice increase in sales volume, so better inventory turns. Can you talk a little bit about what you see there, what you would expect to go on in the inventory line item? Can we expect to see continued strong turns like this? Will you be investing more behind inventory as you grow into some of these new categories? What are your thoughts there?

We actually, Joe, expect to slow down our turns a little bit in inventory. We think there is opportunity to invest more. As our reorder business grows, we want to take deeper positions on products that we believe in. Keith had mentioned our intention to grow out the apparel base of the business. That's a slower turn classification by definition, so we are going to -- it will be gradual and subtle I think over the course of these remaining quarters, but we anticipate more of an investment in inventory in the remainder of the year.

And I joined the call a few minutes late, so sorry for that, but I'm wondering if you could quantify in any way what you've been seeing in terms of growth out of some of the categories like home, health, and beauty versus maybe where you were a year ago at this time?

Hey, Joe. This is Bob.

We can quantify it. Clearly, jewelry, health and beauty, consumer electronics is very, very strong. I would tell you that of our 6 main business groups, 5 of the 6 had double-digit -- I was very pleased with it. They had double-digit growth in either sales, productivity, or both, with accelerated growth in jewelry, health and beauty, consumer electronics, but very, very strong overall.

Actually, health and beauty in the quarter picked up about 200 basis points of total shares, so we are very pleased with the progress there.

Yes, and then jewelry's mix rose dramatically. Jewelry picked up, I'll say it, over 60% this quarter, so we've had some really highly, highly accelerated businesses and we are very pleased with it.

Where would you like to see health and beauty as a percentage of the mix?

Well, actually, that's a great question. I think when we originally did our projections -- we see health and beauty -- originally, I was at 12%, then I changed it to 14%. Health and beauty is great for us. It's a very high margin business. It's a very, very high gross margin dollar per minute business. Right now, 14%. We may change that. I would add, it was at 5% in 2008.

And one final question.

Just go back to the distribution expenses, we saw distribution in selling relatively flat year over year despite the sales increase. I would assume that we are seeing in there the benefits of some of the renegotiated deals there.

Actually, the benefit you are seeing there is more an influence of our transaction cost, period over period. We did have, I will say, a slight reduction in our distribution costs coming into this year, and that kind of reflected a net change; we had rate reductions that were negotiated, and then we invested elements of that into, I'll say, improved placement and adjacency in those systems.

Distribution costs are, I'll say, comparable. The influence with in distribution and selling, however, was primarily affected by the reduction in the transaction costs, which is a function of the increased Internet penetration, certainly, but also continued operational improvements within our phone centers and our distribution center.

Great, great. Thank you very much. Great job.

Thank you, Joe.

Greg McKinley with Doherty.

Thanks. My question was answered.

Thank you, Greg.

Wilson [Gigelli] with Shop Well.

That's a good last name.

Gentlemen, congratulations on a strong continuing recovery here. We all appreciate it here as shareholders.

A clarification here on this distribution costs, a potential of getting rid of this long-term 13-year-old contract -- did I understand you to say that you want and expect to hold distribution cost flat at $103 million annualized rate, and yet you have a chance of a 15% to 20% -- $15 million to $20 million cost savings coming up here? Help me understand that relationship.

We actually -- for the next 2 years do believe that we will, ultimately reduce our distribution costs, as Bill stated. We'll reinvest in the systems to improve our channel positioning and adjacency. That is fundamentally investing back into the business.

Okay, so your affected costs will come down in the sense you have your position improvement here, but your dollar costs will remain the same around $103 million, is that correct?

Well, yes. Presumably, our productivity per system as we improve our positioning and adjacency, will improve.

But, the dollar costs, Wilson, will remain the same for 2011 and 2012. At the end of 2012, the contract that Keith was describing expires. We anticipate that with the expiration of that contract and the renewed negotiated price that we would achieve would give us that annual savings going forward beginning in 2013 between $15 million to $20 million.

I see.

Okay, so at that point -- and we are talking calendar years, here?

That's correct. Calendar year '13 is where we would begin to see that benefit.

I see. Thanks for the clarification.

Okay, operator. We will take one more question.

Doug Thomas with JET Investment Research.

Good morning. Just made it. (Laughter) Congratulations on a good quarter and the call.

You've done a great job today of describing a lot of the -- I don't want to say, low hanging fruit, but certainly a lot of initiatives from a financial point of view that you have underway and in some of the operational things to drive performance, but I was wondering, Keith and Bill, if you could put in perspective the changes that -- the potential changes over time from when you first got to the Company. I'm thinking primarily about some of the secret sauce type of stuff like supply chain and procurement and those kinds of things which really over time ought to provide you with a significant advantage over your competitors and help drive further profitability. I know that's kind of two questions, but maybe want to address them together?

We really call it the All-New Shop NBC, Doug. This Company would not be recognized 2 years ago. The business is now built for scale.

We have a seasoned group of executives that I have all worked with before. We can all finish each other's sentences. They have all made the movie before, two or three times in the past, so we have a very strong team, strong sustainable business model, and I would point out the competitiveness is really interesting. If you step back and you take a look at the NBC brand power compared to the other power -- other brands within our space, most notably NBC is significant instant recognition, and then you move to our premium positioning with our products, with our ASP roughly doubled that of the industry competitors, it gives us the ability to sell better products. I firmly believe that if you have a higher HP and you can sell higher end products as well as lower end products, your market and your potential is, certainly, much bigger.

And then in addition to the team, take a look at our business model. Our business model, as stated in the transcript, is a fixed cost business model. It is highly leveragable (inaudible) the variable costs, so we have a significant point of differentiation. This is a very different business model than our competitors. It has lots of lots of organic growth in years to come.

So, since I get the last question, I'd ask you to re-state your longer-term view as to really where you think ShopNBC can be a couple years from now, where ValueVision can be, and what is your -- what is the management's team -- I am not asking a question I think I know the entire answer to, but the alignment is very important, and clearly, you guys have put your money where your mouth is. Maybe you can also talk about what it is that -- from a financial perspective that drives management to achieve those things that are ultimately going to result in higher stock prices?

Well, we certainly eat our own cooking. The management is completely vested in the Company and certainly as aligned with any other company in America with the shareholders, and we are very proud of that. That's because we believe in our business model, so all that said it's just very, very encouraging to see this quarterly improvement, quarter on quarter, and I am very proud of the team and the accomplishments. And, certainly, supportive of our shareholder base.

Okay. Thanks, guys. Congratulations.

Thanks, Doug.

Thank you all for joining us today. With that, I will conclude the call.

This concludes today's conference. You may disconnect at this time.