Shoe Carnival Inc (SCVL) 2008 Q3 法說會逐字稿

Good afternoon, and welcome to Shoe Carnival's third quarter earnings conference call. Today's call is being recorded and it is also being broadcast by a live webcast. Any reproduction or rebroadcast of any portion of this call is expressly prohibited. This conference may contain forward-looking statements and involve a number of risk factors. These risk factors could cause the Company's actual results to be materially different from those projected in such statements. These forward-looking statements should be considered in conjunction with the discussion of risk factors included in the Company's SEC filings and today's press release. Investors are cautioned not to place undue reliance on these forward-looking statements which speak only as of today's dates.

The Company disclaims any obligation to update any of the risk factors or to publicly announce revisions of the forward-looking statements talked about during this conference call or contained in today's press release to reflect future events or developments. I will now turn the call over to your host, Mr. Mark Lemond, President and Chief Executive Officer of Shoe Carnival. Please go ahead, sir.

Thank you and welcome to Shoe Carnival's third quarter 2008 earnings conference call. Joining me on the call this afternoon is Kerry Jackson, our Chief Financial Officer, and Cliff Sifford, Executive Vice President and General Merchandise Manager.

On our last earnings call in the middle of August, we conveyed to you an improved comparable store sales trend for schools that had reconvened at that time. This trend continued until the Labor Day weekend. After the back-to-school season ended, we saw our slightly positive comps quickly taper off as our targeted moderate income consumer ceased being motivated by need and retail spending became more discretionary. This ongoing trend of changing consumer behavior has created an increasingly difficult retail climate. While we have not been immune to the negative impact of the economy, our third quarter financial performance reflects the same strong inventory management and effective expense control initiatives that we have demonstrated throughout the year.

During the third quarter, our merchants were able reduce year-over-year inventory on a per store basis by approximately 8%. And although we operated 17 more stores at the end of the third quarter compared to the same quarter last year, we were able to reduce Selling General & Administrative expenses by $1.2 million. And despite the 5% decrease in comparable store sales, we were able to leverage SG&A costs by 20 basis points. During this continuing economic malaise, we will remain focused on the initiatives we have discussed in prior quarters. These include increasing the net realized price of our footwear, putting downward pressure on inventory levels to improve turnover, controlling expenses, and maintaining a strong balance sheet with a healthy cash position.

Let me describe a few of these elements in more detail. With respect to the increasing prices, so far this year we've been successful in raising the overall net realized price of our footwear. We have been able to accomplish this while at the same time reducing per store inventory levels. However, increasing prices may prove to be more difficult in the fourth quarter, as we expect the retail environment to become increasingly promotional and price-sensitive as we move through the holiday season. Importantly, just as we have said in the past, we will react to the pricing and promotional cadence of our competitors in the footwear marketplace. We fully expect to continue to lower inventory levels especially with respect to seasonal product. Our current plan is for year-end per store inventories to be about 10% lower than the prior year.

On the expense control front, I'm encouraged that all Shoe Carnival associates are focused on cost control. Through the efforts of our associates, we are seeing significant savings, for example, in inbound and outbound freight costs, certain taxes, and lease costs. We are continuing to implement cost savings across the entire Company and will prioritize spending in those areas with the greatest return on investment, such as projects involving enhanced information technology.

We believe our targeted moderate income consumer has gone from a "want it, buy it" mentality to a "need it, buy it" mentality. And we have just adjusted our marketing strategies to this shifting consumer behavior. While we continue to invest heavily in advertising during peak sales periods, we do not believe the consumer is reacting to advertising in non-peak periods. Certainly not in a way that would yield a sufficient return on investment for that advertising dollar. Consequently, we reduced the ad spend in the third quarter by about 15 %, or $1.5 million. This was one of the primary drivers in reducing total SG&A expenses for the third quarter. We plan to continue this strategy in the fourth quarter concentrating our advertising efforts on weeks that we expect the consumer to "feel the need" to get out and shop.

Turning to store expansion. We have opened 22 new stores through the end of the third quarter, and our last two new stores will be open prior to Thanksgiving. As reported in the second quarter, 15 of these new stores are located in large and small markets and existing geographic regions. We have closed three stores so far this year, and we will close an additional nine locations prior to the end of the current fiscal year. One of the toughest discussions we are facing today is our rate of store expansion. At this time, we have decided to reduce our growth rate for 2009 and are targeting 15 to 20 new stores with all but one or two located in existing markets. While we recognize that the immediate profitability of newly opened stores will be impacted by the current difficult economic environment, we remain committed to taking advantage of long-term real estate opportunities during a down retail market. We believe this is a prudent long-term strategy, especially when those new store location will backfill our existing underpenetrated markets. We have five stores currently scheduled to close during fiscal 2009. We will continue to review underperforming store locations for potential closure, especially those with expiring leases or kick out opportunities.

So far this year, we have managed our business conservatively, focusing on reducing inventories, generating cash flow and maintaining a debt-free balance sheet. We think that this is the correct strategy during this recessionary period, and we will continue that strategy through the fourth quarter and into 2009. We have lowered our expectations for new store openings and are scrutinizing all capital expenditures, including the remodeling of stores prior to the expiration of leases. However, we will continue to invest in store remodeling where appropriate and necessary, and we will certainly continue to invest in technology for the long-term benefit of the chain. We believe that even with a protracted economic downturn, we have the management discipline, the correct operating strategies, and the financial strength to not only weather it nicely but to gain long-term market share in the process. And for a little more detailed explanation as to the merchandise, I'd like to turn the call over to Cliff at this time.

Thank you, Mark. As Mark mentioned, we continued to experience a decline in customer traffic during the third quarter. However, average unit retails, average transactions, and units per transactions were all up. Total comparable store sales for the quarter were down 5%. We experienced comparable store sales losses in all departments except children's department which was flat for the quarter. This quarter showed us that the customer will shop when motivated by need. We experienced this during August as we produced a 0.3% increase for the month, led by our children's and adult athletic departments which together produced a 3% increase for the month. However, once the back-to-school selling season ended, these positive trends did not continue. Sales gains in athletic back-to-school were driven by Chucks, Nike, and most of the traditional performance athletic brands such as Asics and [Sockanee]. In children's shoes, back-to-school sales were driven by athletics as the classifications of voice gate, girls low profile and running, all performed well.

As we mentioned on our last conference call, the back-to-school increases we experienced in adult athletics were driven primarily by higher average unit retails. These higher unit retails were basically a result of our strategy to buy more performance product and performance brands which command these higher retails. Our children's increase was a result of both increasing pair sales and higher average unit retails. In addition to back-to-school, we have also seen a nice response to our women's' and children's boot assortment. For the quarter, these two categories are up high single digits on a comparable store basis. I point to these two examples of back-to-school and boot sales to show that even though we are going through a tough economic downturn, our customer looks to us to offer a great selection of trimmed right product for the entire family at key time periods. Our strategy of buying depth in key items offer our customer a real value as a one-stop shopping experience. This strategy has allowed to us build loyalty over the years, and we are confident that as the economy improves, and she has even more disposable income, she will continue to come to us even more often for all of her footwear needs.

Merchandise margins for the quarter ended down 110 basis points as we continued to concentrate on inventory control. These lower margins were driven primarily due to slow sales in our women's non-athletic department, where it is vitally important to address slow selling merchandise quickly and aggressively. As a result, we ended the quarter with women's inventory down close to 9% on a per door basis. Overall inventories ended the quarter down 8% on a per door basis. Our plan over the next year continues to be based on stringent inventory control and higher unit retails. We will continue to better serve our customer by buying depth in the key items and trends of the season, while continuing to reduce our overall assortments. By executing this strategy, we will put ourselves in a position to achieve stronger conversion rates, higher unit retails, higher gross margins, and improved inventory turns.

In closing, I want to call out our merchants who have done an outstanding job of following our strategies by keeping inventory control as our number one priority. They have been diligent each and every week in identifying opportunities to maximize sales and also addressing product that has not performed to expectation. We will continue to plan our inventory aggressively down on a per door basis. However, one of the things that make this Company great is our ability to quickly react. As opportunities present themselves or we see a change in consumer attitude, our sound financial position and strong position in the marketplace will allow to us quickly react. Now I'd like to turn the call over to Kerry Jackson.

Thank you, Cliff. Let me begin by discussing the results for third quarter and first nine months followed by information on cash flows and ending with certain expected Q4 financial metrics. Our net sales for the third quarter decreased $3.8 million to $170.1 million compared to $173.9 million in the third quarter of 2007. Same store sales declined 5% for the third quarter as compared to the same period last year. Gross margins for the third quarter of 2008 decreased 1.9% to 27.2% compared with Q3 last year. As a percentage of sales, the merchandise margin decreased 1.1% while buying, distribution, and occupancy costs increased 0.8%. As Cliff said, the largest factor in the decline in the merchandise margins was the decline in our women's non-athletic margins due to heavy promotions to keep the inventory turning. The 0.8% increase in buying, distribution, and occupancy costs was all attributable to the deleveraging of our occupancy costs.

Despite operating an additional 17 stores at the end of the third quarter as compared to the prior year, and incurring store closing costs during Q3 of an additional $321,000, we were still able to decrease our SG&A expenses by $1.2 million, or 0.2% as a percentage of sales. The savings were primarily achieved through a reduction in costs in advertising and employee incentive programs. Store closing costs included in SG&A were $417,000 for the third quarter as compared to $96,000 for the third quarter last year. The amounts recorded in the third quarter this year include in closing costs or stores to be closed in future quarters. Preopening costs in the third quarter were $386,000 compared with $407,000 in third quarter last year. We opened eight stores in the third quarter, compared to opening 11 stores in third quarter of '07.

The effective income tax rate for the third quarter decreased to 34% from 39.5% last year. For the year, we expect our tax rate to be around 36%. Net income for the quarter fell to $2.6 million from $4.2 million in Q3 last year. Diluted EPS for the quarter was $0.21 versus $0.33 earned in the prior year third quarter.

Now, I will transition to year-to-date results. Net sales year-to-date through the third quarter decreased to $490.7 million compared to $494.3 million in the first nine months of 2007. Same store sales declined 3.7% for the first nine months of 2008. Gross margins for the first nine months of 2008 decreased 0.9% to 27.6% over the same period last year. As a percentage of sales, the merchandise margin decreased 0.4% and buying, distribution, and occupancy costs increased 0.5%.

Year-to-date, we have decreased our SG&A expenditures by $697,000, even though we are operating additional stores and have incurred an increase in store closing costs of $565,000 year-to-date. Store closing costs included in SG&A in the first nine months of 2008 were $1.1 million, or 0.2% of sales, compared with store closing costs of $525,000, or 0.1% of sales in the first nine months of 2007. Preopening expenses for the first nine months were $826,000, compared to $963,000, in the first nine months of last year. Year-to-date, we have opened 22 stores versus opening 24 stores in the first nine months of last year. Net income year-to-date fell to $8.4 million from $11.7 million last year. Diluted EPS was $0.67 versus $0.87 earned in the prior year.

Now, let me discuss information affecting our cash flows. Capital expenditures for the first nine months of 2008 were $12.6 million, detailed as follows. We spent $6.5 million on new stores, $3.8 million on remodeling and relocation of stores, $735,000 on software and information technology, and all other additions were $1.6 million. Additional capital expenditures of approximately $5 million will be incurred during the fourth quarter this year, primarily for new store, store remodels, and various other store improvements.

Depreciation expense for Q3 was $4.3 million and $12.6 million for the first nine months of 2008. For the year, we expect depreciation to be just under $17 million. No shares have been repurchased this year under the share repurchase program authorized by the Board of Directors in December, 2006. This program was originally set to expire in December, 2008. However, recently the Board extended this program by one year. It will now expire in December, 2009.

My final comments today are on certain Q4 expectations. Historically, Q4 has not been a big income generating quarter for us because the majority of the quarter is a liquidation period. However, it has traditionally been a significant cash generating quarter due to the sell down of our inventories. In Q4, we will continue to control the areas of the business we can, primarily expenses and inventory levels. With tight expense controls, particularly with respect to advertising and incurring fewer store closing costs in Q4, we currently expect our SG&A in total dollars to decrease approximately 2% in Q4, compared with Q4 last year. In the fourth quarter last year, we expensed in SG&A $1.4 million in store closing costs. In Q4 this year, we are planning our store closing costs to be about $500,000. However, we are still evaluating how this difficult environment may affect the performance of our stores, and we may choose to close additional stores in the future.

With our belief that consumers will continue to be cautious in Q4, it is shaping up to be a very promotional retail environment. Despite having controlled our inventories, because of the promotional environment, we expect our merchandise margins will decrease in Q4. In addition, primarily due to operating additional stores, we expect our buying, distribution, and occupancy costs will increase both in dollars and as a percentage of sales in Q4. If we hit our inventory reduction target and CapEx for the year, we once again will be able to fund our store growth, generate significant free cash flow, and end the year with over $25 million in cash and no long-term debt. This concludes our financial review for the third quarter. I would now like to open up the call for questions.

(OPERATOR INSTRUCTIONS) Thank you. We will take our first question from Jeff Stein with Soleil Securities.

Good afternoon, guys. A couple of questions. First, on planning for spring of 2009. Obviously, you have to be taking a look at that right now, making your inventory commitments and wondering, are you going to go into spring planning down? And then a follow-up question, wondering if you could talk a little bit about SG&A, and hypothetically, a negative comp environment. Where do you see SG&A in dollars kind of trending on a year-over-year basis as we move through 2009?

Jeff, this is Mark. We are planning our business in such a way that we do expect negative sales next year. Negative comp store sales, anyway. And when I say that, the reason why we are planning that way is obviously for the same reasons we've planned this year the way we did, in order to control the inventories and control SG&A costs. So, we are planning slightly negative comps for next year, and we are planning SG&A costs and inventory levels accordingly. In regards to dollars of SG&A, we are not going to plan lower numbers than we actually incurred this year, but I think our management group has done a pretty good job reducing overall SG&A costs, particularly with respect to advertising and particularly with respect to administrative costs. So I wouldn't expect a lowering of those numbers to any great degree. We are still opening more stores than we are closing. We are still growing the number of the store count, the absolute store count. So I would not expect a decrease in overall SG&A costs relative to this prior -- the year that we are in right now.

Okay. Then the question is, if you are planning that way, Mark, and again this is just, I understand for planning purposes. But if the scenario place out that way, you're basically saying, okay, we are willing to accept a down year in earnings per share. Unless I'm missing something.

That is a potential, Jeff, unless we see some driver of business which at this point in time, I don't really foresee any other than, again the thing we look forward to every year is a late Easter and a warm spring, a warm weather event. Then certainly, we are planning our business. We are planning our cash flow. That is one of the reasons why we decided not to open as many stores as we originally opened, and we curtailed the number of new stores that we are opening for 2009. So absolutely, we are planning this business for a cash flow strategy for the time being.

And final question, Mark, from a real estate standpoint, I'm wondering how many committed leases you have at this point, and have you gone down in these 15 to 20 stores that you're planning to open? Do you feel comfortable that given the current real estate environment, that you are getting the best deal? Or, are you able to go back and perhaps reopen discussions on rents given the current vacancy rates?

Jeff, as a matter of business principle, I do not like -- once I have a signed lease or an agreed upon deal -- I do not like to go back to the landlord and try to renegotiate the deal. Just because we are in a financial, just because the economy is in the financial condition that it's in. Once we reach a deal with the landlord, it's pretty much a solid deal unless there are mitigating circumstances. For example, if we agree to co-tenants in a particular center, and for that co-tenancy, we agree to a particular rent and that shopping center doesn't fill out with that co-tenancy. Then, certainly we are going back to the landlord and either --. We are doing a number of things. Either cancelling deals or putting deals off until future years when the co-tenancy may improve or negotiating a lower rent. But if all things remain equal, just because we are the market is in a, and the real estate market as you well know is in a state of flux as well. But just because of that, we are not going back and renegotiating deals just for the sake of renegotiating deals.

I understand.

Having said that, we have seen movement on the part of landlords and the part of, particularly the [REITS], to negotiate, to allow us to negotiate very nicely to get some concessions in terms of either up-front cash for TIA, tenant improvement allowances, or a slight reduction of rent, or caps on common area maintenance charges, or things of that nature. So we have seen a willingness on the behalf of the real estate industry to negotiate a little bit harder than -- put us in a better position to negotiate harder than we have in the past.

And how many committed leases have you signed, and how many of those projects are already in construction?

We have signed 15 leases and I will tell you that nearly all of them are in one state of construction or another. But having said that, there is a possibility still that a number of those deals may get pushed into 2010. We are seeing that, we are looking at that on a day-to-day basis, and it's no secret. There is a lot of big retailers, a lot of big box retailers and anchor retailers that are pushing deals each and every day. So we are cognizant that a few of these deals may get pushed into 2010 from 2009. I don't really have a problem with that. As I said before, what we are looking at and working through this economic malaise is concentrating on cash flow of the Company and remaining a debt-free Company.

Got it. Okay. Thanks a lot.

Our next question come from Sam Poser with Sterne Agee.

Good afternoon. A couple questions. Number one, Cliff, the average selling prices versus traffic? Can you give us a little more detail there for the quarter?

I'm not sure, the average selling --?

Traffic versus ticket. You started to talk about it in your prepared remarks.

Traffic was down right at 6% for the quarter. And the, I'm sorry, the second part of that?

Average selling prices?

Average selling price -- let me get that for you. Was up about -- I need to give you a percent so hold on a minute, Sam . About 2.5%,

Okay. And then are you finding that there are a lot of opportunity buys out there right now, Cliff?

There's been a, Sam, a couple of opportunity buys. In fact, about 14% of our athletic inventory right now is considered to be opportunistic buys. And coming from some of our better athletic brands. So, yes, we are seeing some. And we are reacting to them as we see good ones.

Cliff -- I'm sorry, Mark, when you were talking about next year planning it down. Are you looking at it on a full year basis or are you sort of looking like the front half could just be worse than the back? Or are you going to give it a negative sweep at the moment just based on what we know right now?

Well, Sam, I wish I had a crystal ball as to recognize when we are going to see an uptick in retail sales. But I don't. The reason why we plan sales down is to plan the inventories appropriately. One thing we don't want to do is get stuck with stale, dated inventories. So we are working on the turnover of those inventories. If business picks up, there is plenty of opportunity as you well know in the footwear industry to chase product. So we are capable of reacting to an uptick in sales as well. So, again, we are planning -- we have managed this business conservatively in the past. We have generated some pretty significant cash flow for the past few years. We are continuing to generate cash flow in this business. And, we will continue to manage it conservatively in the future. And that I think, includes a prudent strategy to plan negative comp store sales, at least for the first half. I'd like to see what happens through next year's back-to-school before I get very exuberant for September and October, because back to school for us was not too bad. It was a pretty decent period relative to the industry, and relative to the other months going into it and the other months coming out of it. I'd like to see what happens in the back-to-school period before, again, like I said we get too exuberant about the back half of next year given the current weakness of the back half of this year. When I talked about planning the business down, primarily, you are exactly right we are talking about the first half of the year. But, we will see. Again, this Company is small enough that we can react pretty quickly.

And then, one last question. On the inventories at the end of the year that you said you wanted to be down 10% on a comp basis. Just to help us out for planning purposes, can you give us an idea of how that equates on the total? How you would look at that on a year-over-year total?

That would equate to inventories about $188 million.

Thanks very much. Continued good luck.

Our next question comes from Jill Caruthers with Johnson, Rice, & Company.

Good afternoon, just a little more clarity on how back-to-school was? You said it was pretty decent, positive comp in August. Were your merchandise margins holding up or in line with plan during that month?

Merchandise margins were flat year-over-year during the month.

Okay. Just trying to figure out, the comps apparently declined pretty significantly in September and October. How did the two months compare to each other? Did you see a continuing deterioration of comps or -- ?

The comps were slightly positive in August. The comps were down about the same during the month of September and October.

Okay. And any insight into how -- ?

I'm sorry, I believe that's what you were asking, correct?

I was just wondering if comps got worse through each month throughout the quarter.

I can give them to you. I would be more than glad to give them to you. September was down 11.5%, and October was down 7%, just over 7%.

Any insight into how November comps are trending or -- ?

We don't normally give forward that kind of information.

Okay.

Let me clarify that, it's not that we are ducking November comps. But we typically don't do that except we did during the back-to-school period because it's such an important period. As Kerry mentioned in his remarks, the fourth quarter for us once you get past the Thanksgiving period becomes, it's more important to liquidate seasonal merchandise than anything else. The back-to-school period, however, we feel a little bit differently about, and that's why we tried to give as much current information then as we possibly could.

Much appreciated. And last question, just to clear a little more on what you said, Mark, about how the customers reacting to the marketing only when it's really the peak shopping time. If you could talk about the customers current shopping pattern? When they do shop the ad, are they just keying in on the items that are highly aggressively promoted in that ad? Or do you actually get them to shop the store once they come in?

No, they are shopping the store. But it's, as those sales have coagulated around certain key periods, and those key periods have become very short in nature, for example, the back-to-school season. It starts with a -- it seems like it used to be two or three weeks ahead of the back-to-school date, and it's shortened now to a week to ten days before the back-to-school date. So that's a little bit of different because kids are shopping after schools go back a little bit more than they used to. But we expect to see the same kind of pattern in holiday that we've seen in the past, where once you get past the day after Thanksgiving, and particularly that weekend, that sales are going to trend to the two weeks before Easter and maybe even more strongly in the, not Easter, but Christmas, and maybe even in that week before Christmas. And then immediately subsequent to the Christmas holiday more so than they have in the past. It is becoming a shorter window each year it seems like.

Okay. Thank you.

Our next question comes from Chris Svezia with Susquehanna Financial Group.

Good afternoon, gentlemen. Cliff, I guess a question for you, first. Just in the past you have given comps by gender, men's, women's, kids, kids and athletic. I wonder if you could just go through those? I think you mentioned the children's business was flat in the quarter, and all others are down. But maybe just add a little more color as to what's happening in the other categories?

What we normally give, Chris, and I am more than glad to do that is a percent to total of our business. Which is basically, our women's business was about 23.5% of our total. Our men's business was right at 13%. And kids was just over 20%, about 20.5%. And athletic ran -- adult athletic ran about 40 points. So total athletic was about 55.

I think in the past you have referenced how comps or sales had trended by each one of those categories in the quarter.

Well, men's and women's' area down high single digits. And that's, kids were flat, and athletic was down low to mid-single digits.

That's helpful. And then correct me if I'm wrong, you had mentioned on the boot side of the business, you mentioned up high single digits. Is that -- did I get that correctly?

It's just over mid-single, around 7%, a little over 7%.

That was for the quarter, Cliff?

Yes, that's correct.

And then as you think about product cost inflation, and I know in the fall you had potentially were looking for a 6% to 7% or somewhere in that range increase in pricing. I'm kind of wondering how effectively that's been passed through, number one, and number two, maybe can you talk about product costs as you look to spring. How much that may have accelerated at this point?

Well, product cost for spring accelerated exactly where would we thought it would depending upon departments between 5% and 8%. And we see that. We think that is probably going to moderate, stabilize as we go into back-to-school because of the oil prices coming down, and the economic conditions that we are in today and the fact that, well, we are just buying less. So, and it's just not us, it's everyone. So the factories are getting a little more aggressive. So we think that's going to stabilize as we move forward. As far as passing product the increases through, we weren't able to do that in the women's' area obviously due to poor sales of the product. We did have to get aggressive, and therefore, our average price was down there whereas our average cost was up. So it was not successful there. We have been more successful in the other departments passing costs through.

Right, and I guess that's on the athletic side it's been a little easier to pass those pricing increases through, correct?

It is easier to pass those through because we bought better product. We bought higher end product from, especially from our main athletic suppliers, and the customers reacted very, very positive to that. And that, so therefore we were able to pass that through.

Okay, that is helpful. Just if you can just address for one second, when you look at product and look at specific on the women's end of the business, the dress and casual ends of the business. Anything that you're looking at in terms of that can maybe, and I know in this environment it's tough, but as you look to spring and you are looking at your open to buy. You can maybe start to see some improvement in that business? I think you talked about the dress end of the business last quarter seeing some signs of life there?

It is the junior dress business, and we continue to see signs of life there. In fact for the quarter, our junior dress business is up. The junior business, in total, has actually been pretty good which goes along with what happens in a recession. The children's shoe business normally continues to perform during a downturn, and that would carry directly into the junior shoe business. So we see that continuing as we head into the quarter. Excuse me, into the first quarter of '09.

Okay. Alright. Thank you very much, gentlemen, and good luck.

(OPERATOR INSTRUCTIONS) Our next question comes from Sam Poser with Sterne Agee.

My question was answered. Thank you.

That concludes our question and answer session. I would now like to turn it back over to your host for closing remarks.

Thank you. Well, these are certainly interesting financial times we are living in today, and the retail industry has definitely been negatively impacted. However, just as I said in my prepared remarks, I believe we have the right management team, the correct strategies, and the financial strength to operate successfully in this turmoil. Thank you for joining on this call, and I look forward to speaking with you next quarter. Thank you.

That concludes today's conference. Thank you for joining us, and have a wonderful day