iMedia Brands Inc (IMBI) 2012 Q2 法說會逐字稿

Good morning and welcome to the ValueVision Media fiscal 2012 second quarter conference call. Following today's presentation, there will be a formal question-and-answer session. Today's call is being recorded for instant replay. I would now like to turn the call over to Teresa Dery, General Counsel at ValueVision. You may begin.

Thank you, operator, and good morning. I'm joined today by Keith Stewart, CEO; Bob Ayd, President; Bill McGrath, EVP and CFO; and other senior management.

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 affect 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's SEC filings.

In addition, comments on today's call may refer to the adjusted EBITDA, a non-GAAP financial measure. For reconciliation of adjusted EBITDA to our GAAP results and a description of why we use adjusted EBITDA, please refer to our Q2 news release, available on our website. All information in this conference call is as of today and the Company undertakes no obligation to update these statements. I will now turn the call over to Keith.

Thank you, Teresa, and good morning, everyone. We demonstrated continued progress across the organization in our second-quarter performance. We returned the Company to top-line growth in Q2 and delivered positive adjusted EBITDA. Four of six business segments achieved solid double-digit growth in the period.

We also made advances in broadening our product mix and saw overall improvements within our customer metrics, especially in emerging businesses of Home, Beauty and Fashion. We view this as a primary strategy and a growth driver for the Company.

We continued to closely manage our operating expenses in the quarter. Operating expense growth was below 1%, enabling us to achieve improved operating leverage despite the cost of continued expansion in our cable and satellite household footprint. During the second half of 2011 we invested in improved channel position and the addition of a second channel in selected markets. We're pleased with the continued improvement in these markets. Optimizing our distribution productivity is a key strategy in leveraging our operating model. The Company remains poised to benefit from future distribution savings starting January 2013.

In the quarter, the Company also began to benefit from investments made in system improvements to improve our multi-channel retailing experience. As part of our ShopNBC Anywhere initiative, we upgraded our automated voice response phone system. Now a greater percentage of customers are completing telephone transactions and resolving inquiries electronically. This is meaningful for the Company because it yields improved customer satisfaction at lower transaction costs. Also benefiting operating performance were investments made in enhancing our credit systems, which is helping reduce variable expense.

With all this progress in Q2, ValueVision remains a business in transition and there's more work to be done. Our experienced merchandise and operational teams have identified a range of opportunities for improvement. We've developed plans to address these areas and are committed to implementing them over the next several quarters. Going forward, we are focused on the key drivers of our business and are optimistic about the Company's prospects. For financial overview, here's Bill.

Thanks, Keith. Good morning, everyone. Second-quarter sales were $135.2 million, a 2.3% increase versus last year. Sales improvements were achieved in the Watch, Fashion Accessories, Home and Health & Beauty categories. Improvement in these categories offset sales declines in the Jewelry and Consumer Electronics segments.

Gross margin decreased 60 basis points in the quarter to 38.2%, principally due to increased shipping and handling promotions. Gross profit increased 80 basis points to $51.7 million based on higher sales level.

Operating expenses increased 1% in the quarter despite higher carriage distribution expense related to a 4.5% increase in our average homes. Higher distribution costs were partially offset by reductions in variable credit card processing fees and reduced bad debt expense. Our television footprint increase reflects approximately 2 million homes added in the second half of 2011 as well as expansion of our distribution footprint with other cable and broadband [over-builders].

Transaction cost were flat in Q2. The impact of a 7% increase in net shipped units in the quarter was offset by improvements in our transaction cost per unit, primarily reflecting higher customer use of our automated voice response systems for order entry and customer service increase as well as the impact of lower customer return rates. Additionally, general and administrative expenses of $4.5 million were down around $900,000 from prior year. This reduction is primarily due to less non-cash share-based compensation expense being recorded in the current quarter versus prior year. This is due to equity grants which were both made and recognized in the second quarter of 2011.

We also recognize less share-based compensation expense during the current second quarter as a result of the timing of older brands no longer being expensed, and these older brands are now fully vested.

ValueVision achieved positive adjusted EBITDA of $700,000 in Q2 versus $1.1 million last year. Net loss for the second quarter declined to $3.8 million or a loss of $0.08 per share compared to a year ago Q2 loss of $4.5 million or $0.09 a share.

Our balance sheet position remains strong. As of July 28, 2012 the Company's net cash position including restricted cash was $40.3 million compared to $44.6 million at April 28, 2012. The net use of cash in Q2 included a $4 million payment for the trademark license of the ShopNBC brand through May of 2013 and approximately $1.5 million in capital expenditures. These uses of cash were partially offset by adjusted EBITDA and net cash provided from working capital changes within the quarter.

Looking ahead to the third quarter, we anticipate a net use of cash as we fund increased inventory levels in advance of the holiday season. I will now turn the call over to Bob.

Thanks, Bill. In the second quarter, we remain focused on the three primary objectives of driving top-line sales, broadening our merchandise mix and optimizing our margins. We executed towards each of these goals in the period. The emerging categories of Home, Health and Beauty and Fashion and Accessories achieve double-digit sales increases in Q2. Investments in these businesses serve to broaden our merchandise mix, which drives new customer acquisition and repeat purchase activity. Our Watch business was another strong performer in Q2, also achieving double-digit sales increases. The Watch category remains a core business and a strong driver of top-line sales. Jewelry and Consumer Electronics sales were soft in the quarter. We are actively adjusting our product mix for the remainder of the year in order to produce stronger results and we are confident the team is on the right track.

To further broaden our merchandise assortment, we brought on board 62 new vendors and added nearly 5500 new styles in the second quarter. We also delivered strong gross margin rates at 38.2%. This result was driven in part by reordering product that launched successfully in previous quarters. Our focus on reorders is a key strategy to optimizing margins.

During Q2, we also strengthened our merchant organization. This includes the appointment of Lee Goehring as the new director for Consumer Electronics. Lee is a consumer electronics retail veteran with 19 years of experience, including Best Buy and Target.

In Fashion and Accessories, David Miller joins us to lead the category, bringing over 25 years of experience, including CD Trends and QVC.

Finally, Theresa Harris joined the Company and leads our Beauty business. Theresa has over 13 years of category experience at HSN. These industry veterans should help us continue building a broader brand and product mix.

In our broadcasting division, we plan to soft launch our signal in HD in select markets in the third quarter through having made low-cost infrastructure investments this past year. This not only enhances our television production value, but also expands our channel presence on cable and satellite systems in an effort to attract new viewers. In addition, we continue to refine and elevate the quality of our on-air host score and guest experts. This helps us to be more relevant with our programming content and foster deeper engagement with our customer base.

With respect to improving our multi-channel customer experience in Q2, we implemented a number of new customer service and satisfaction initiatives. We drove process improvements and the timely delivery of customer orders, and made returns more convenient. We revised our customer retention campaigns and are seeing positive trends in this area. As Keith mentioned, our automated phone system was upgraded, which now delivers more cost-efficient orders, lower customer contact rates and more frequent one-call resolutions, should an issue arise. Overall, we are seeing improved customer metrics.

Looking ahead, our strategy remains focused on expanding our product assortment to advance top-line sales while executing our business at attractive margins and lower average price points. We believe the improved performance achieved during Q2 across a number of key areas provides a solid base for the remainder of the year. With that, I'll turn the call over to Keith for closing comments.

Thanks, Bob. In closing, I hope we have provided you a solid overview of progress in key strategies we're focused on to deliver long-term growth. To recap, management's key areas of focus include expanding and diversifying our merchandise mix to drive new and repeat customer activity, improvements in productivity of our distribution footprint through better channel position, dual illumination and the rollout of HD programming; enhancements to customer satisfaction through a variety of investments in technology, promotional activity and improved customer service policies that bring us more in line with prevailing industry policies; continuous improvement in our merchandising, operational and management teams; and aggressively addressing areas of business that are not yet performing up to our expectations. All of these initiatives are intended to drive further gains in productivity of our business by attracting new customers and increasing the value of our customer base. We believe our performance in the second quarter demonstrated these efforts are showing progress and affirm we are on the right path. Though we are making progress, there's still more work to be done. A substantial opportunity remains to improve our business performance and drive sustain growth and shareholder value. We have a clear vision of where we're going, a commitment to progress and a focus on operational excellence.

We certainly appreciate your time this morning. Operator, let's take some questions.

(Operator instructions) Greg McKinley, Dougherty & Co.

Guys, I'm wondering if you could share with us some metrics on a couple of the topics you just discussed. First of all, maybe indicate -- we saw some progress on transaction costs per unit. What were those during the quarter?

This is Bill. The transaction costs in this quarter were $2.69 per order. That compares to about $2.82 per order in the prior year. The primary benefiting factor within transaction costs in the quarter had to do with the reduction in our order entry and our customer service cost per call. As we mentioned, we had some improvements, systems initiatives that occurred in the latter half of last year and the beginning of this year that substantially improved the automated order entry and the automated customer service inquiry systems. Our rate of penetration on that for order entry went from about 12% in the quarter last year to about 21% this year.

Conversely, in customer service, a year ago about 17% of our calls were handled through the automated system; this year, about 30%. So they were the primary contributing drivers that affected the cost per transaction. That enabled us to basically keep transaction costs in line, in total, with last year despite the fact that our unit volume was up about 7%.

Perfect. Now, the 17 versus 30 -- that was specific to what element of the system?

Customer service. So if a customer is calling to check on the status of their order -- did it ship, did you get my return, things of that nature -- they are now able to do that automatically without having to talk on operator.

Okay, okay. Bob, you had talked about sales trends amongst a couple of your key categories. I wonder if you could maybe be a little more specific in terms of some of the growth rates you saw in those and maybe just remind us where your revenue mix is now by each of those categories.

And then finally, can you share any productivity metrics in terms of what you are seeing, how you measure gross margin dollars per minute, etc.?

This is Bob. As we said, in Jewelry and Watches, our business increased 1%, but we had a pretty good, a double-digit increase in the Watch category, which is a key driver of the business. In the Beauty, Health and Fitness area, we had a double-digit increase. We felt very good about that. Our Fashion business that we've been talking about for quite some time increased, I can tell you, almost 40%. So we were very, very happy with that. In terms of mix, I'd rather not discuss mix.

I do have some overall things we could share, Bob. Excuse me, Greg, it's Keith. As we take a look at our Jewelry and Watch business and our long-term strategy to shift our mix over time, we did dedicate air time from those product categories to others that generate more new customers and active customers. So the shift in mix from the previous year in the period was down about 200 basis points, much of which was intentional through that shift of air time, offset by Fashion, Health and Beauty, which was up almost 300 basis points in overall mix.

The Home business mix was up about 150 basis points. And if you broke out the CE separately from that, that was down about 240 basis points. Although the CE is not going to get to the point where wanted in Q2, obviously, and it will continue to improve in Q3 and Q4, the penetration of the CE in Q2 was double that of the penetration in Q1.

The penetration of -- I'm sorry, could you repeat that last sentence?

Business mix.

The business mix; the business mix of CE was 8.5% of the total mix this quarter compared to Q1, which was around 4.7%.

Okay, and Home was up 150, but within that was down 240 for CE?

Right, because we invest that in airtime into other product categories in the home that have lower price points. It's going to drive more new names and we will continue to invest in those businesses through inventory and through airtime.

Thank you.

Alex Fuhrman, Piper Jaffray.

Thanks, guys, and congratulations on a pretty good quarter here. I wanted to ask about the upgraded telephone response system. Is that why? I notice this is really about the first time in about five quarters that we've had Internet sales and phone sales both increasing at the same time. And I'm wondering how much of that might have been the result of the better service. Maybe there were some sales that just weren't completed under the order system when they were automated. I think you mentioned that 30% of your phone orders right now are going through this automated system. What is the opportunity for that to go higher? And how much of a margin impact does that have? I know, historically, your Internet sales have had a little bit of a better margin than sales placed over the phone. Does that dynamic start to even out as the percentage of phone orders increases over the automated system?

In effect, stepping back, our strategy in ShopNBC Anywhere, we are going to provide for her to shop anywhere she wants to shop. Typically, historically we've been under-invested in our IT systems. The voice response unit system is no different from the others. We made that investment into the system, and investment gained traction, as Bill shared the numbers with you. The customers will migrate towards the automated ordering system, continue to migrate towards our dot-com systems. And as an example, our mobile penetration doubled. So we continue to see the broadening of that mix. And all those effects in itself take phone calls away from call centers, and where we do not have human intervention, we are saving roughly $1 per transaction.

Also I wanted to clarify one point. You mentioned the 30% factor relative to telephone orders. The 30%, as I was mentioning to Greg, there's two components of incoming telephone calls. One is the order entry to place the order. And then a second aggregate of calls is for customer service follow-up inquiries.

In the case -- the 30% actually refers to the customer service calls, the percentage of calls are handled by the IVR, the automated phone system now, is 30%. A year ago, for that subset of calls in customer service, that was about 17%. For the order entry component, which was what you were referencing, the percentage of calls that are handled now via the automated phone system within order entry is just 22% of the total. A year ago, that was about 12%.

Okay, that's really helpful. Thank you for the clarification on that. And then, Bob, I'd like to talk a little more about these reorders. Is it really just a matter of faster lead time that's enabling you to chase product, or is it more just better analytics, or is it really more a matter of synchronizing your supply chain with those of your suppliers and brands that you are selling? And really, as we move into the back half of the year and next year, is there more of an opportunity just to tighten your lead times when it comes to these reorders?

Yes, it's a combination of all those things. But mostly what drives it is good initial product, because good initial product leads to reorders. So we have been very diligent about how much we buy, what categories we are in and the depth of buy. And we have the planning team focused on a quick reaction to reorders. In fact, most recently, we've changed some standards for reorders. And it has worked out well. And as you know, building reorders is a key, key initiative for us.

As well, we've integrated over the last two quarters responsibilities between the planning organization and the merchandising organization. That creates teamwork closer to the product and to the customer, allowing us to react much quicker at that point.

Thanks. And then just lastly, if we could talk about the fees you are paying to cable and satellite operators, it looks like you actually got some leverage here on the distribution and selling expense line in the quarter, even though your household growth slightly outpaced your sales growth and you had better channel placement in the quarter. Are we seeing -- I know we have this big drop-off in fees coming in January 2013. But have there been some smaller contract renewals year to date that have been driving that, or is it really more a matter of leveraging your fixed production expenses or taking some costs out of there?

No. The distribution costs actually were up in the quarter, in fact roughly coinciding with growth in households, so up about 4%. But within selling and distribution, that was offset by favorable credit card fees and favorable bad debt expenses as well as the transaction costs that we had separately referenced. And I'll comment on the two components of offsetting factors.

Credit card fees -- we had a beneficial impact of the regulatory effect of Dodd-Frank and the Durbin amendment, in which the debit card component of that fee dropped substantially to retailers. That began to take effect in the fourth quarter of last year, so on a comparative basis we've got a favorable outcome there. We also had implemented some systems changes over the fourth quarter and into the first quarter that facilitated a change for us in our credit card processor. And we realized some efficiencies and some favorable rate outcomes there. So credit card fees were a partial offset. And then, in addition to that, our bad debt experience in the period was down over the prior quarter. And our bad debt recognition -- we accrue based on an estimated bad debt provision as a percentage of sales. And then, as we go through the full collection window on accounts from prior periods, we will true up that bad debt experience with our prior accrual. And what we were beginning to see in the second quarter was that some earlier periods that are closing out in terms of our collection cycle that had a lower mix of Consumer Electronics -- that our collection experience in the Consumer Electronics tends to be a little bit less favorable than the norm. And so we had a slight true up of benefit within the second quarter that had occurred.

Yes, we really appreciate all of the granularity. It really is very helpful for us as we build our models. So I appreciate the time and thanks and good luck in the back half of the year.

Mark Smith, Feltl and Company.

First, Bob, you talked a little bit about new members of the team there. Can you talk about where you are? Do you now have everybody hired that you need, or are there still empty slots?

Well, we made a number of hires, and we're almost completely done. We're almost fully complete. So I would say that there's always going to be more people to hire, but the key jobs, as I see it, are filled.

Excellent. And then, second, just looking at the net online sales, kind of the mix there, this was the first time that we've seen it come down slightly year-over-year. And granted you are up against a really I guess tough comp, if you will, last year from the mix of Internet sales. Is there anything to read into that, or is it really just up against a tough prior-year comp?

No, great question. Just to remind everybody on the call, most of the shoppers who shop online are through our automated ordering system or on their phone originally come from the advertising that we have on television set. And once again, our strategy is to have her shop anywhere she would like for her to shop, where it's most convenient. And the improvements that were referenced in the automated ordering system have made it easier for people to order on an electronic basis. And instead of moving over to the web page, they would just merely order on their mobile phone or order on the IVR.

Overall, I think what's most important is that we are nearing 70% of our orders are being done electronically. And that's up about 90 basis points from the same period of Q2. And again, at $1 per transaction, it not only has a meaningful financial impact on the organization, but from a customer service impact it's much easier and much more convenient for a customer to order the way she wants to order.

Greg, that's very helpful. Thanks, guys.

Nick Zamparelli, CIP LP.

Last quarter you provided some detail about some of your -- you broke out the CE businesses from all other businesses and you gave us some color around the productivity of the other businesses. I think in Q4, you said sales were down 5%, productivity was up 10%, but in Q1 you saw a turnaround where productivity lifted 4%. So I'm curious just this quarter if you could give us some color around the productivity related to the other non-CE businesses.

In total, without CE we were up about 7%, so if you -- at CE, down about 19% in total in aggregate. If you go back to prior quarters, Q1 we were down about 73%, I think a comparable number in Q4. So somewhat of stabilization in CE and the other categories and total revenue up about 7%.

And the productivity in the non-CE space -- did you see a comparable lift to what you saw in the first quarter?

This is Bob. I have to look that number up. I would be able to tell you that the productivity in CE, because I broke it out, stabilized, and it was almost flat to last year, which is a very good sign.

Okay, so I'll just follow up on the non-CE productivity. And then just with regard to your improved channel positioning, and you mentioned on the prepared remarks how you are seeing some benefit there, maybe just talk us through exactly what you are seeing in terms of a productivity lift in the markets that you invested to get better placement.

Sure. As we had spoken about before, Nick, most of those upgrades had occurred in East Coast markets. And we are at the stage now as we look at it through the second quarter that in aggregate those homes that we've added, say the full population of homes, are producing at a comparable level of productivity, in fact, an increased level of productivity per home than the baseline prior to those additions occurring. The contribution margin within the systems are now positive. We like the overall trajectory and the benefit that adding the dual illumination provides for us. It was very much a lift in the markets that we've seen placement.

Okay, so should I expect you to continue expanding your market penetration with better channel placement?

Well, this is one of the benefits, Nick, of us initiating shorter-term contracts so we can build the analytics, the data, and the results that Bill referred to. And as we renegotiate these contracts annually, or every two years, it allows us to open up opportunities to continue the further improvement of channel positioning and explore dual or multi illumination. So this is just very much the beginning of what we see as a process to improve our overall affiliates sales.

But we are expecting a couple of additional tranches of cities. In fact, it may be on a cable system near you within the third and fourth quarter in terms of improving that channel position. So we are looking to do it on a graduated basis. We've got a yield in the cities where we anticipated getting a yield, and so we are going to be measured on that going forward, because not each location has the same potential.

And just one last one for me. You mentioned how you expect your use of cash to pick up in Q3, in preparation for holiday and building up some inventory. Maybe you could just elaborate on that a little bit? What should we expect to see in Q3 in terms of cash usage?

Yes, as a retailer, we build out our inventory positions in advance of the selling season. So we will have that occur in this year's third quarter. If you go back to last year's third quarter on a net basis, we had a use of cash of about $9 million in the quarter. We may be in that same range for the third quarter this year.

Great, thanks, guys.

Greg McKinley, Dougherty & Company.

So it looks like we added about 1 million homes in the July quarter. Can you give us a sense for how we should think about household growth in the remainder of the year?

At the beginning of the year, we had anticipated, and we still do, that total household growth will be about 3% to 4%, so say that's about 3.5 million of homes. My anticipation for the third and fourth quarter is that we will add in the range of 800,000 to 900,000 per quarter.

Okay, sequentially from Q2?

Correct.

And it sounded to me like Keith's comments -- your revenue production from these homes that you've added is starting to be in line with the rest of the base, if not somewhat positive. Is your view that we could actually move back into positive sales growth per household in the second half of the year? We are approaching it in Q2. It looks like it was down just about 2% year-over-year. Is it reasonable to expect that that could flip positive in Q3?

Well, again we're not providing guidance. We continue to improve our infrastructure and distribution and we continue to improve our mix and shift our mix. And as I mentioned in the prepared comments, some volatility could occur. But we will continue to improve the infrastructure and broaden our mix as our overall strategy.

And then just two final questions -- gross margins were better than I expected. I'm guessing part of that is product mix because Consumer Electronics is still a relatively modest portion. But margins were up meaningfully from April to July. I wonder if you can comment on the drivers there and whether they are sustainable, and then maybe just give us an update on your overall interactions in any direction the relationship with Comcast is taking.

Sure, let me speak to the margins. You are correct that the positive influence on margins within the quarter was a function of product mix that's partially offset by the level of promotional shipping and handling that we've done in the quarter. That's becoming a baseline level that's a bit higher, certainly, than where it was in prior years. So you've got that kind of counterbalancing influence that occurs.

And in terms of directionally, I'd say the considerations from a modeling standpoint would really be to recognize that we've discussed that from a mix standpoint among our considerations are to ensure that we are offering a mix that enhances the growth in our customer base. So as to the extent that that results in an increased allocation of airtime to categories such as Home and, to a lesser extent, Beauty, there's a margin dynamic there that margins in those categories are not as high as they would be in Jewelry, as an example. So you have that as a consideration going forward.

I did want to mention one additional point relative to considerations for the second half of the year. As a retailer, we are on a 4-5-4 regular weekly aggregate for our quarterly sales. And every six years or so, we have a true-up in that, in that we add an additional week to the fiscal year, recognized in calibrating basically to the 364-day calendar. And for us, that will occur in this year. So this year's fourth quarter will be a 14-week quarter rather than the 13-week.

Greg, there was a second part your question. Could you repeat?

Yes. I wonder if you could give us any update on the dialogue you have been having with Comcast recently and just maybe give us a sense for what direction that relationship is headed.

There's really nothing to report on top of Q1 in the Comcast area, Greg.

Okay, thank you.

Wilson Jaeggli, Southwell Partners.

Keith, is Lee Goehring in the room and available for comment?

Lee, is not in the room, no.

All right, well then, I guess I'll address it to Bob. Bob, obviously there's a lot of work to do here in CE. When do you think the -- [Lou's] effect will be felt here in revenues?

I think, as we've said, we are going to turn around CE, Wilson, and it's going to take some time. I think Lee has had an effect already. I'm impressed with his industry knowledge and his passion, and he's making an effect now, but I don't want to overstate that. CE has dogged us for a while. As you heard, we improved it dramatically in Q2. We will continue to improve it, and Lee will have a big part in that.

Could you talk a little bit to the HD soft launch? You talked about a couple of things. First of all, you mentioned it will be in the third quarter here. By the end of the third quarter, how many homes will be receiving HD, do you think?

It's just a soft launch right now. And we are broadcasting our signal up to the bird today and running tests back and forth. As an investor, I think it's most important to know that we have the infrastructure in place and the cost behind us required to have an HD signal. As we negotiate new contracts moving forward, Wilson, we will negotiate HD carriage into those contracts. We do have three meaningful contracts coming up this year, and that will be part of our conversations.

So does that -- by being able to broadcast HD in these new contracts, are we going to have to pay more on a per-home basis?

That's not the goal, no.

No? Good. I'm just trying to understand the dynamics here. As you offer a better quality signal, do you actually have to pay less?

Yes, it's all a negotiation.

Okay, and I understand you have already made the infrastructure change to -- the capital expense is behind us now?

The initial capital expense is behind us now. Any future expenses will be maintenance expenses. So, as we replace older digital cameras, we will upgrade those with the newest technology that of course would include HD.

Okay. And, as you look forward to it, can you give us an estimate, if you renegotiate -- assuming you renegotiate these three major contracts by a year from now, what percentage of homes might have HD available?

I really don't want to go there, Wilson. We are in the midst of conversations, and I don't want to impact the negotiations with the MSOs.

Okay, all right, thank you very much.

Thank you, and thank you all for joining us on the call this morning. And with that, we will conclude the call.

Thank you for your participation in today's conference. This concludes the presentation. Everyone may now disconnect, and have a great day.