Oxford Industries Inc. F3Q 2008 (Qtr End 11/1/2008) Earnings Call Transcript

Oxford Industries Inc. (OXM)

F3Q 2008 Earnings Call

December 9, 2008 4:30 pm ET

Executives

Anne M. Shoemaker – Treasurer

J. Hicks Lanier – Chairman of the Board, Chief Executive Officer

Terry R. Pillow – CEO of Tommy Bahama Group

Doug Wood – COO of Tommy Bahama Group

Thomas C. Chubb, III – Executive Vice President

K. Scott Grassmyer – Chief Financial Officer

Analysts

Eric Tracy - BB&T Capital Markets

Jeff Blaeser - Morgan Joseph & Co. Inc.

Robin Murchison - Suntrust Robinson Humphrey

Presentation

Operator

Good afternoon ladies and gentlemen. Thank you for standing by. Welcome to today’s Oxford Industries third quarter 2008 earnings conference call. (Operator Instructions) As a reminder, today’s conference is being recorded and now I would like to turn the conference over to Anne Shoemaker, Treasurer. Please go ahead.

Anne M. Shoemaker

Thank you [Gwen] and good afternoon everyone. Before we begin, I would like to remind participants that certain statements made on today’s call and in the Q&A session may constitute forward-looking statements within the meaning of the Federal Securities laws. Forward-looking statements are not guarantees and actual results may differ materially from those expressed or implied in the forward-looking statements.

Important factors that could cause actual results of operations or the financial condition of the company to differ are discussed in the documents filed by the company with the SEC. The company undertakes no duty to update any forward-looking statements. For your reference, a reconciliation of the non-GAAP financial measures discussed during this Q&A to GAAP financial measures is set forth in our earnings release, which is posted under the Newsroom tab of our website at OxfordInc.com.

And now I’d like to introduce today’s call participants. With me today are Hicks Lanier, Chairman and CEO; Terry Pillow and Doug Wood from our Tommy Bahama group; Tom Chubb, Executive Vice President; and Scott Grassmyer, CFO. Thank you for your attention and now I’d like to turn the call over to Hicks Lanier.

J. Hicks Lanier

Good afternoon and thank you for joining us to discuss our third quarter results. Obviously we are disappointed with our absolute results for the third quarter. However, we believe we managed the business well despite what are indisputably the worst market conditions in decades.

While we’ve been hurt like everyone else, our wounds are not self-inflicted. We believe we are on the right path in this environment, and we remain focused on three key areas; protecting the integrity of our brands, controlling and reducing costs, and maintaining and protecting our strong balance sheet and liquidity.

For the third quarter it is worth noting that we were on plan in August and September but October was worse than expected, as consumers reacted negatively to the deluge of bad economic news. Consolidated net sales for the third quarter ended November 1, 2008 were

$244 million compared to $286 in the same time period of the prior year.

Earnings per diluted share during this period were $0.31 compared to $0.76 in the same period last year. These results include $0.07 per share of restructuring and other unusual items comprised of $0.04 per share of the write off of unamortized deferred financing costs and $0.03 per share of severance. In response to the extraordinary market conditions that exist, we have taken deliberate but significant steps to insure that our cost structure and balance sheet are appropriate for the current retail environment.

We have taken cost cutting actions across all parts of Oxford, primarily during the second half of the current fiscal year which will reduce our annualized employment costs on a going forward basis by over $18 million. Additionally, we have moderated store roll out plans pending an improvement in economic conditions.

Our capital expenditures for fiscal 2008 are expected to total approximately $22 million. We currently anticipate less than $10 million in capital spending for fiscal 2009. We have continued to manage inventories very tightly and year-over-year inventories are down by 30%, contributing to a very strong year with cash flow from operations of over $61 million.

Finally, in August we closed on a new $175 million asset based revolving credit facility, which provides us with ample liquidity. I’ll reserve some additional comments for closing. I would now like to turn the call over to Terry Pillow, the CEO of our Tommy Bahama Group. Terry.

Terry R. Pillow

Thank you Hicks. Tommy Bahama reported net sales of $84 million for the third quarter of fiscal 2008 compared to $103 million in the same period the prior year. Sales decrease was due to particularly difficult market conditions for both wholesale business and the company owned retail stores where like virtually all our peers we experienced a sales decline. This was partially offset by very strong performance in our e-commerce business, which celebrated its first birthday in October and since that anniversary has performed well above last year’s sales level.

We have reduced costs and our careful inventory management has left us in excellent inventory position despite the weak sales. Tommy Bahama’s operating income for the third quarter was

$700,000 compared to $11 million in the same period prior year. The decrease in operating income was primarily attributable to the decrease in income for our company owned retail stores where comparable store sales created a de-leveraging effect of our expenses.

This decrease was perhaps exacerbated because this third quarter period has historically been the weakest sales period for Tommy Bahama retail stores. This year the third quarter was particularly weak as a result of our significantly diminished traffic during September and October. This, coupled with the expenses of seven additional retail stores, resulted in significant lower operating profits in the third quarter of this year compared to the same period last year.

Because of this challenging economic environment, we are taking measures to address our holiday business. Over the last year we have been working diligently to develop our database of our customers. In November we mailed our Holiday brand book along with a Loyalty Card of $50 to 225,000 of our best customers. We believe promotions like this will bring our loyal customers into stores without resorting to indiscriminate discounting as most other retailers have done.

Also, starting December 1 we are beginning our On The Flip Side promotion, which enables customers to purchase who purchase $150 a $50 card to be redeemed in January, ’09. We feel that these measures will be effective to drive traffic and increase sales in a very brand appropriate manner.

The three months that makes Tommy Bahama’s fourth quarter has historically been its largest retail period, and accordingly the retail stores have achieved greater operating leverage in those months. While we do not expect Tommy Bahama fourth quarter operating income to reach last year’s level, we do expect to approach a low double-digit operating margin.

Now I’ll turn the call over to Tom Chubb for details of our other three operating groups and [consolidated] figures for the quarter.

Thomas C. Chubb, III

Thanks Terry. Good afternoon everyone and thank you for joining us. I’ll start with Ben Sherman. The economic crisis is truly global in nature. Conditions in the UK, Ben Sherman’s home market, are as bad or possibly worse than here in the U.S. Ben Sherman reported net sales of $38 million for the third quarter of fiscal 2008 compared to $47 million in the same period of the prior year due to lower sales in the United Kingdom.

UK sales, which account for over two-thirds of the Ben Sherman business, declined primarily due to the exit from certain lower tier customer accounts that were still active last year; the difficult current economic environment; and the impact of a 12% decrease in the value of the British pound versus the U.S. dollar compared to the year ago quarter. The decline was partially offset by increased sales in other markets, including the United States.

Ben Sherman had operating income of $3.2 million in the third quarter of fiscal 2008 compared to operating income of $5.6 million in last year’s comparable period. The decrease in operating income was primarily due to the lower sales and lower royalty income, partially offset by reductions in overhead costs.

Net sales for Lanier Clothes in the quarter were $44 million compared to $53 million in the same period of the prior year, due primarily to the winding down of the Oscar de la Renta and Nautica license businesses, the restructuring of the Arnold Brant business, and the impact of weak demand in the tailored clothing market. For the quarter, Lanier Clothes reported operating income of $4.5 million versus operating income of $2.6 million in the year ago period. The increase in operating income was the result of reductions in SG&A expenses.

Oxford Apparel reported net sales of $78 million for the third quarter, compared to $83 million in the same period of the prior year. This anticipated decrease in net sales resulted from our continued focus on key product categories and decisions to exit under-performing lines of business. Operating income for Oxford Apparel was flat with last year at $7 million for the third quarter of fiscal 2008.

The impact of the lower sales was offset by a significant reduction in SG&A expenses during the third quarter of fiscal 2008. The same period of the prior year included charges totaling $1 million associated with the sale of Oxford Apparel’s last owned manufacturing facility. The corporate and other operating loss decreased to $2.9 million for the third quarter of fiscal 2008 from $3.7 million in the same period of the prior year. The decrease in the operating loss was primarily due to lower corporate SG&A expenses.

I’ll now move on to the consolidated results for the income statement, balance sheet and cash flow statement. As Hicks mentioned earlier, for the third quarter ended November 1, 2008 consolidated net sales were $244 million compared to the $286 million in the same period of the prior year. Consolidated gross margins for the third quarter of fiscal 2008 were 38.3% compared to 39.2% in the same period of the prior year. The decrease in gross margins was primarily due to the decreased proportion of Tommy Bahama and Ben Sherman sales in the current year, which generally have higher gross margins than Lanier Clothes and Oxford Apparel.

Sound inventory management as well as the fundamentally full price retail strategy of Tommy Bahama contributed to third quarter gross margins for the branded businesses remaining flat compared to the same period of the prior year. SG&A expenses for the third quarter of fiscal 2008 were $84.6 million or 34.7% of net sales compared to $92.8 million or 32.4% of net sales in the same period of the prior year.

Reductions in employment and other costs in each operating group were partially offset by increased expenses associated with operating additional Tommy Bahama retail stores and severance expenses associated with staff reduction. The increase in SG&A expenses as a percentage of net sales was due to the reduction in net sales described earlier.

Amortization of intangible assets decreased to $700,000 for the third quarter of fiscal 2008 from $1.2 million from the same period of the prior year. Royalties and other operating income for the third quarter of fiscal 2008 decreased 8.3% to $4.6 million from $5.0 million in the same period for the prior year. The decrease was primarily due to decreased royalty income of Ben Sherman, partially due to the impact of the decline of the British pound in the third quarter of fiscal 2008.

Interest expense increased 16.6% to $6.4 million for the third quarter compared to $5.5 million in the same period of the prior year, primarily due to the write off of $900,000 of unamortized financing costs when we entered into our new credit facility. As a result of these factors, operating income for the quarter was $13 million versus $23 million in the same period of the prior year. Earnings per diluted share for the quarter were $0.31 compared to $0.76 in the same period last year.

Turning to the balance sheet, inventories at the end of the third quarter of fiscal 2008 were $108.6 million compared to $155.8 million a year ago, a net reduction of 30%. While business conditions remain challenging, our inventory position is well managed and at an appropriate level. Receivables at the end of the third quarter were $120 million versus $156.4 million at
November 2, 2007. The reduction in receivables was primarily due to lower wholesale sales in the last two months of the third quarter of fiscal 2008.

Total liquidity at the end of the third quarter of fiscal 2008 was $125 million, which included

$8 million in cash and $117 million of availability under our new $175 million revolving credit facility, which closed on August 15, 2008. Cash flow from operating activities for the first nine months of fiscal 2008 was $6.1 million compared to $9 million in the same period of the prior year. Significant working capital reductions associated with the rationalization of our legacy business has contributed to our strong operating cash flow.

For fiscal 2008, we expect to generate cash flow from operations in excess of $65 million; incurred capital expenditures of approximately $22 million; and due to the timing of dividend payments to align with our new fiscal year, we expect to make five dividend payments totaling approximately $14.5 million.

With our strong free cash flow and our new credit facility, our liquidity remains excellent. In the fourth quarter we expect to incur approximately $0.04 per share of additional restructuring charges. Including these charges, we expect diluted earnings per share to be approximately breakeven on sales of $195 to $205 million.

Because of the intensity of the economic downturn, we are moderating our previously issued guidance for the full fiscal year 2008. We now expect sales to be approximately $950 million and diluted earnings per share to be approximately $1.00, which includes approximately $0.45 per share of restructuring charges and other unusual items.

Thanks for your attention. And now I’ll turn the call back over to Hicks Lanier for some closing comments.

J. Hicks Lanier

Thank you Tom. We are prepared for a relatively lengthy and very difficult market environment. While this environment has proved disastrous to many businesses, we expect to remain profitable and to continue to pursue our core strategic plan. To be sure, we will be cutting back where appropriate and keeping our pencils very sharp. We have changed much over the last several years and I think that our company’s presence in the marketplace for over 65 years has given us an appreciation and a skill set managing a business conservatively and navigating through difficult times.

We are going to deploy capital very carefully and look to protect our brand and our business unit until conditions warrant and a re-acceleration of our growth. Thank you for your time this afternoon and for your continued support. Gwen, we are now ready for questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Your first question comes from Eric Tracy - BB&T Capital Markets.

Eric Tracy - BB&T Capital Markets

Maybe, Terry, if we could just focus on the Tommy Bahama segment for a bit and walk through what you’re seeing particularly on your retail stores. Obviously the comps meaningfully decelerating in October, what you’ve sort of seen since then in the holiday and obviously planning to slow the store growth there, but just a bigger picture. What are – any changes to the ultimate outlook for the growth in that business?

And then secondly, just are you seeing any stabilization in those regions? You know, wholesale or retail basis, where the housing was taking the biggest toll.

Terry R. Pillow

First of all I can tell you, Eric, I’ve been spending a lot of time at our stores over the last couple of weeks and they’ve never looked better. Our inventories, our product looks great. We continue to see the same trends or pretty much the same trends that we were seeing at the end of October into November and the fourth quarter. So we’re not – even though it’s very regional, we’ve got stores in regions that are doing quite well. We’ve talked often about where we have a lot of stores that have been particularly hit by the housing; that continues.

We have some regions around the country that are doing quite well and stores that are performing quite well. So it’s sort of a day by day, as we watch the sales. As we do, seeing where they are, it’s pretty much a mixed bag. We have not seen much of a change from what we were seeing in November.

Sorry, the second part of your question?

Eric Tracy - BB&T Capital Markets

Well, just again on the retail growth, obviously slowing given the market conditions. Is there anything that changes your view from a longer term perspective of where you’d like to take that store base?

Terry R. Pillow

No.

Eric Tracy - BB&T Capital Markets

And then maybe just thirdly on Tommy Bahama, Nordstrom’s I know they’ve taken a more contemporary approach in terms of their merchandising. Can you speak a little bit to that and if that’s affected your kind of square footage or anything?

Terry R. Pillow

Our business with Nordstrom they continue to be a very important customer for us. Their business as they reported, their comps are down. We continue to monitor that business. There’s been some decrease in that business with Nordstrom as they fine tune their strategy, but they’re still a very important customer for us, currently and going forward for spring. We continue to partner with them very closely and we’ll continue to.

Eric Tracy - BB&T Capital Markets

And then maybe either Hicks or Tom, turning to Ben Sherman, are you able to break down and quantify for us sort of the UK versus the U.S. and maybe markets outside of the UK or U.S. and sales trends for Q3 there?

J. Hicks Lanier

Well, the sales figures that Tom repeated in his comments include the negative currency exchange if you watch this, so that’s a significant part of the sales drop that we’re reporting, but as he also said things are tough in the UK and quite frankly we have not found a place on the globe where they’re particularly good. If you know of it, we’ll rush right over there.

But it’s always challenging and I think what we can say for Ben Sherman, Tommy Bahama and the legacy business is that we are very pleased with the inventory management that our guys have done to be $50 million approximately less than we were at this time a year ago. In this environment, when we have not met our sales goals, it’s a pretty extraordinary feat that we’re proud of and particularly as it relates to Tommy Bahama. It has allowed us to be a [full flush] retailer.

And yes, we’re at a disadvantage to a lot of our peers who are in terms of top lines that they’re promoting so heavily, but I daresay on the gross margin line, we’re going to look pretty good against almost anybody out there. And as I say, this inventory situation allows us to do that and we’re quite pleased with that. But I think I sound like a politician. I’m not going to specifically ask you a question, I’m going to tell you what I want to.

Eric Tracy - BB&T Capital Markets

As we look forward, do you think that is sustainable and does that imply that Q4, given sort of your earnings expectations, that we’re just going to see huge de-leverage on the SG&A or is there something else going on the SG&A that’s?

J. Hicks Lanier

Well, you know, equally strong is that work we’ve done on SG&A. And what we don’t have a great feel of still at least to go with this quarter, there’s no consistency in the sales pattern and I think not only for us but for anybody that we know about. And so we are a little cautious at this point. But other than the specifics that Terry mentioned on our holiday mailer and gift card and the other enticements, we’re not out there with dramatic sales, red signs and discounts and that type of thing.

And that’s in stark contrast to what else is going on out there. We know that that has moderated our top line, but we think it’s the right strategy for us at this time and what we feel very strongly about is that in conjunction with the inventory management and expense reductions, and the management of the brand, we will come out of this cycle whenever it returns in a very, very strong position with our brand.

Operator

Your next question comes from Jeff Blaeser - Morgan Joseph & Co. Inc.

Jeff Blaeser - Morgan Joseph & Co. Inc.

Could you give us a flavor for where you feel you are on the rationalization of the legacy brands in the economy, taking out how much more reductions you would expect?

J. Hicks Lanier

Not to blow our own horn, but we are quite pleased with what has transpired in those businesses. In the case of Oxford Apparel, we really started this restructuring rationalizing close to two years ago, and what we’ve got today, and you’ll see more of it in the fourth quarter because we’re going to be up against some programs from last year that we have stuck, subsequently exited so a big part of our decrease in sales in the fourth quarter – about half of it absolutely is going to come from the Oxford Apparel group.

What we’ve consistently done with that is shrunk the business but maintained the absolute profitability or close to it, therefore enhancing our return on sales, our return on assets and obviously our return on equity. So we’re pleased with the progress we’ve made. We think we’re getting close to the bottom of exiting businesses and once we’ve got our keepers for the future, and as I say I think we’re pleased with that progress.

And Lanier Clothes you might recall that in the second quarter we took some fairly significant restructuring charges and that’s showing in the third quarter here. In the smaller business better margins, much lower expenses and much better profitability with still operating profits approaching double digits there. So some fairly difficult and painful surgery there, but I think we are braced for the environment and the future in both of those businesses now. And we have not been able to say that up until now.

Jeff Blaeser - Morgan Joseph & Co. Inc.

And I’m sure you’re not going to give us guidance for next year, but can you give us a feel for where you think SG&A will be? I know you mentioned $18 million in additional costs –

J. Hicks Lanier

That was just on employment costs there. Other SG&A areas where we will have reductions, so you know until we see a turn in this thing, we are managing things that are controllable for us and not wringing our hands about things that are out of our control. So you can expect us to enter the next fiscal year very lean and mean in terms of expenses, very lean and mean in terms of inventory, very dedicated to the positioning of our brand in the marketplace and we firmly believe that we will be in a position to take market share over the next couple of years as a result of our position.

Jeff Blaeser - Morgan Joseph & Co. Inc.

How many in annualized sales does new store development account for? And what is a moderate level of growth going forward?

J. Hicks Lanier

Well, for next year, it’s going to be very moderate in terms of new stores. In Tommy Bahama, we plan one new store in Newport Beach, California and we’ve been working on that location for about three years. In Ben Sherman, we expect to open one store in the U.S. in Boston. We have just opened a store in Cologne, Germany and expect to open one in Berlin in the early spring of next year.

And other than one of the ways we furnished that Tommy Bahama inventory is we have opened more outlet stores than we have historically, but that’s a physical vehicle for making sure that our inventory is in the right position if we don’t have to go to the dramatic reductions within our own stores. So don’t look for much of a kicker next year from the stores, but I think at this juncture we’re not trying to force growth in an environment that’s not receptive to growth. But we are ready with all the resources including capital to turn that switch up when we see things improving.

Operator

Your next question comes from Robin Murchison - Suntrust Robinson Humphrey.

Robin Murchison - Suntrust Robinson Humphrey

I want to ask you about China. Last year you guys sourced I think about 45% of the product from China and just wondering with the deflation over there, does that help you any – how does that help you with your product, managing your product cost on a go forward basis?

J. Hicks Lanier

You want to take that, Tom?

Thomas C. Chubb, III

Yes. I think that deflation if you remember, Robin, just as recently as six months ago people were talking about inflation coming out of China. And now there’s clearly some deflationary forces that have started to come into play with China, but I think it’s a little bit early to see what if any impact that’s really going to have on our cost to goods.

Robin Murchison - Suntrust Robinson Humphrey

Okay. So you –

Thomas C. Chubb, III

The inflationary pressure’s gone away, though.

Robin Murchison - Suntrust Robinson Humphrey

Terry, you mentioned the $50 gift card for redemption in January. What is the threshold – there must be a threshold spend associated with that?

Terry R. Pillow

Robin, it used to be that we’ve done this program historically once a year. We added a program this year to deal with the economic conditions. Heretofore, the threshold was $250 to receive the $50. For this promotion that we’re offering now in December, we’ve lowered that to $150 the gap to spend to redeem that coupon which we think that lowering that will enable us to attract more customers to that with the lower threshold.

Robin Murchison - Suntrust Robinson Humphrey

Okay.

Terry R. Pillow

It’s been successfully a very successful promotion for us historically and we think it will be also for us in the fourth quarter.

J. Hicks Lanier

Yes. And as we’ve said repeatedly that when somebody walks into our stores, the conversions continue to be at historic levels and average dollar amount on the sale and these promotional activities are trying to drive traffic. That’s where the issue to spend not only for ourselves but everybody around us is the traffic has dropped dramatically. And with the holiday mailer that we had and the $50 gift cards, we’re expecting people to come in with that $50 card and walk out with you know $150, $200 worth of product. And that’s how we’re holding up and the same with the January promotion.

Robin Murchison - Suntrust Robinson Humphrey

Well given that you don’t discount in the stores, I mean you don’t typically walk into the store and see a lot of sale merchandise, I mean I would expect that your AUR or your average selling price is being maintained. It’s a matter of trust. Do you keep a separate measure for your outlet stores?

J. Hicks Lanier

Certainly.

Robin Murchison - Suntrust Robinson Humphrey

How is the AUR in your outlet stores?

Thomas C. Chubb, III

Our outlet store – you know the funny thing about outlets right now is that outlets are suffering the same type of traffic decline that we’re seeing in full price stores, that go from an average retail it’s staying about the same as we historically have shown. So a lot of this has to do with how much inventory we have in outlets, which the way we’ve been managing our inventories, we’ve actually been able to two things; we’ve actually kept our inventories in line and we’ve also added outlets this year, which has allowed us to keep our average resale’s up.

J. Hicks Lanier

But the outlet stores in general, not only for us but for everybody, are not the relative value that they were before this cycle because of the heavy promotions in the regular price stores, excluding us.

Robin Murchison - Suntrust Robinson Humphrey

If you separate your Tommy Bahama customer base from the larger department stores and look at the remainder, maybe the Green Grass Golf Shops or some of the specialty retailers out there, just wondering what your – you know, are you under any pressure because of bankruptcy for some of these guys going out of business? I mean, I’m sure their orders have to be down.

J. Hicks Lanier

Absolutely. They are down and like the Green Grass Golf business is really the weakest I’ve ever seen it. With golf clubs closing right, left and some center losing membership because of economics in the area. And Scott and Tom and their credit team are spending a huge amount of time evaluating the information we have that’s been death of our industry peers on the whole credit situation. That’s you know we expect it not only that some of our customers, some of them haven’t made it already. We expect there will be more that will go before the cycle is over, just as we expect some of our peers probably [won’t come back] through this time.

Robin Murchison - Suntrust Robinson Humphrey

The only distribution before markdown of Tommy Bahama product is through the outlet stores or if you choose to mark it down in the store? We shouldn’t see it anywhere in any other venue?

J. Hicks Lanier

Well, there are isolated incidents where some of our customers will divert it to acquire or it’s a discontinued product, we might put it through an off price channel, but no current merchandise that you know that’s the bulk of it goes through our outlet stores.

Robin Murchison - Suntrust Robinson Humphrey

We don’t know – I don’t think we have because of the restatement of the year’s what sales growth in fourth quarter was last year for the division? I think we do know the operating margin in the division was 15%, but is there any way we can get the sales gross for Tommy for last year? It sort of – and I’ll tell you where I’m going with this, you know it seems given the environment that if you’re expecting a low double-digit operating margin, I’m trying to figure out how you’re expecting a low double-digit operating margin in the fourth quarter of this year versus the 15% last year.

And wondering if it’s just tied to sales volume or if you can help us out there, how we should think.

J. Hicks Lanier

Okay. I will say that you’re looking at maybe a 10% reduction in top line this year with additional stores. And that de-leveraging asset is what’s going to take us from that 15 or so down to you know around the low double-digits, high single digits.

Robin Murchison - Suntrust Robinson Humphrey

And then lastly just generically sort of hearing chatter in the channels about the department store orders, preliminary orders sort of look like 2009 down 10 to 15% and wondering if you could comment on that?

J. Hicks Lanier

That’s [what is] with that wholesale business right now.

Operator

And there are no further questions at this time. I’d like to turn the conference back to our speakers for any closing remarks.

J. Hicks Lanier

Well thank you Gwen. I thank everyone for attending. These are tough times quarter end. I hope we’ve projected that we understand the environment we’re in and think we’re doing the right things. Maybe not on a quarter-to-quarter basis but certainly for the long term and we’re going to stay the course and look forward to future success. Thanks for your interest in us.

Operator

Thanks everyone. That does conclude today’s conference. You may now disconnect.

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