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Town Sports International Holdings Inc. (NASDAQ:CLUB)

Q4 2013 Results Earnings Conference Call

February 19, 2014 4:30 PM ET

Executives

Dan Gallagher - President, COO and CFO

Bob Giardina - Chief Executive Officer

Analysts

Sean Naughton - Piper Jaffray

George Kelly - Craig-Hallum

Kurt Frederick - Wedbush Securities

Operator

Greetings and welcome to the Town Sports International Fourth Quarter 2013 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Dan Gallagher, President, COO and Chief Financial Officer. Thank you, Mr. Gallagher. You may begin.

Dan Gallagher

Thank you for joining us today. This is the Town Sports International Holdings earnings call discussing results for the fourth quarter of 2013. I am Dan Gallagher, President, Chief Operating Officer and Chief Financial Officer of the company.

I caution listeners that any remarks we make in this conference call relating to matters that are not historical facts constitute forward-looking statements which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks and uncertainties, many of which are outside of our control, which may cause actual results to be materially different from any forecasts we have made. These risks and uncertainties are described in our reports filed with the SEC, including those discussed in the Risk Factors, MD&A, and other sections of our annual report on Form 10-K for the fiscal year ended December 31, 2012 filed with the SEC on February 25, 2013, and on forms 10-Q filed subsequently.

We have issued a press release discussing our results for the quarter, which has been filed with the SEC under Form 8-K. We disclaim any duty to update or revise such forward-looking statements whether as a result of future events or otherwise.

In addition, for those of you who do not have access to this release and filing, we’ve also made them available at our website www.mysportsclubs.com. This conference call is also being webcast and may be accessed via the Investor Relations section of our website. Also a replay and transcript of the call will be made available on our website following the call.

I’ll now turn this call over to Bob Giardina, the Chief Executive Officer of Town Sports International, for a discussion on the operations of the company. And then I will give further detailed financial discussion later on in the call. Bob?

Bob Giardina

Thanks Dan. Good afternoon and thanks for joining us for our fourth quarter and 2013 year end conference call. 2013 was a year marked by accomplishments in key areas, like personal training, pricing improvements which were accompanied by stable attrition rates, system investments, capital structure improvements and the announcement of an exciting new brand.

Well, I cannot say you are satisfied with how you are finishing 2013 from a financial results standpoint. We are making progress positioning ourselves to benefit from the changes that have taken place in the fitness industry which I will address in a minute.

First, some Q4 highlights. Total revenue was down, slightly driven by 1.6% drop in membership revenue and 2.5% year-over-year drop in total membership. However, our total personal training revenue which has been a major focus was up 7.8%. This is a perfect illustration of where our fitness stars are being spent today and where we will continue to invest.

We continue to see evidence of increased consumer willingness to pay-per-use or per session for the fitness regiment and in making sure to align our offerings accordingly. Our attrition continues to be steady and healthy and it continue to be successful with pricing, reflecting member satisfaction with their fitness experience at our clubs.

Low new enrollments was a primary reason for 1.3% comparable club revenue decline. The lower enrollments persisted into January and we’re exasperated by -- I'm sorry, exacerbated by the adverse weather which has also impacted PT revenues recorded today.

As we look ahead, we certainly see some headwinds in the short run but also tremendous opportunity to leverage our existing business and infrastructure as well as the experience in the fitness industry to expand one of our strongest trends in our society today, fitness and health. And there are no signs or reasons for this trend to slow down as more and more evidence continues to come out of the health benefits of exercise.

Let me start with some near-term industry challenges and then I will address what we’re doing to combat these and also where we are investing to position ourselves for long-term growth. We’re continuing to see increased competition within our markets while competition continues to be heavy in its urban markets due to cost and availability of real estate. There are some companies that are even pursuing more urban sites.

There are now number of low-cost clubs finding the real estate easier to open in tight urban markets. In addition, we continue to see a shift in the way consumers purchase their fitness services. Pay-per-use programs and boutique studios are on the rise, especially for new consumers entering the fitness market but not willing to commit to a membership.

We now compete with more than 300 studios in Manhattan alone, including yoga, cycling and CrossFit. The impact of these industry dynamics impounds folks over the past year has fewer new membership than expected and that was reflected in our fourth quarter and 2013 full year results.

Our attrition rate and our pricing on the other hand have remained at very healthy levels which is a sign that people are still interested in fitness and we have done a good job in our clubs keeping up with our vendor’s needs. While the industry is changing, the industry as a whole is growing and consumer seems willing to spend more to achieve their fitness goal.

We are aggressively pursuing growth in our business to correspond with these areas of industry changes. Now what do we do to compete and grow our business. First, we continue to support our personal training products with the completion of over 120 UXF zone installations.

This initiative almost overall focus on personal training is driving personal training memberships in overall PT revenue and also supports our stable attrition levels. We have had continued success with our personal training membership product, increasing our personal training membership revenue from 34% of total PT revenue in Q4 of 2012 to over 75% of total PT revenue in Q4 of 2013.

Next we have made significant improvements to our front-end systems with the implementation in rollout of the Motionsoft registration in booking software platform. This has supported our ability to expand our ancillary services including PT, small group training and signature classes in a number of friendly fashion.

We expect to see further benefits of MoSo in 2014. We also have new club leases in place for a minimal of five traditional fitness clubs opening in 2014 as we continue to find opportunities to fill in our core urban market.

We will continue beyond 2014 with the growth of our traditional clubs as well as we solidify our dominant positions in our core market especially New York and Boston. And as you saw last year in both New York and Boston, we were also willing to use acquisitions to build our core business. And finally, maybe our most exciting development, we are ready to launch the BFX Studio brand and have the infrastructure, capital, experience and team in place to support a rapid expansion of this concept.

Our first BFX Studio is opening in the first half of 2014. And we are currently in the process of building out this first location on 6th Avenue and 16th Street in Manhattan. At this point, we expect to open two to four BFX studios in units this year and most likely double that number in 2015.

What also makes this exciting is that we plan to have some of our future leaders outside of our core northeast market and we fully expect BFX to be a national brand. We have a unique concept, which is three offerings in one location versus the typical one product, yoga, spin or cross training studio.

We have the capital and experience to execute against any competition and the team to make it a success, including our world renowned spin instructor, Josh Taylor who brings instant credibility to the brand with potential instructors and members.

We have been successful in improving our capital structure while returning significant cash flow to our shareholders in the form of dividend in 2012 and our ongoing quarterly dividend in Q4 2013. In addition, we recently completed a total refinancing of our debt at a reduced borrowing rate, saving the company approximately $3 million in annual interest costs.

The new debt facility provides the company with much more flexibility in regards to our ability to pay a dividend with no financial covenants. This should set up our capital structure for years to come. In December, we signed an agreement to sell our East 86th Street, New York property for $82 million. We expect this deal to close on or around March 31st and upon the closing of the sale, we will execute the lease for future club, opening at the same address in the newly developed property.

I was also very pleased to announce the promotion of Dan Gallagher to President and Chief Operating Officer earlier this year. I have known Dan for the past 15 years and I have watched him grow with our company. He has been an invaluable member of the Executive Team, has strong leadership skills and has earned the respect of his peers and parents.

His deep knowledge of our industry and our business makes him an excellent choice to lead, and I look forward to working with him for many years to come. As Dan assumes the COO role, he will continue with his CFO responsibilities, while we conduct the search for the new CFO.

During his time, I will continue to work closely on the operational side of the business. We are excited about the opportunities we see for our core brands as well as our new brand in 2014 and beyond. The industry is changing and while that creates some shorter-term headwinds, the implications of a growing pie of fitness dollars being spent is without a doubt a positive dynamic, and one that we will benefit from overtime given our strong network of clubs and decades of fitness industry experience this management team has. We will continue to invest to position our company to take advantage of the very positive long-term underlying trends for our industry.

With that, I would like to turn it over to Dan.

Dan Gallagher

Thanks Bob. I will go through the income statement highlights for the quarter and our year-end balance sheet and then discuss our outlook for the first quarter of 2014. In the fourth quarter, our consolidated revenue was $113.9 million, a decrease of 0.3% from the third quarter of 2012.

Our total member count at the end of the quarter was 497,000, a decrease of 10,000 members from the end of Q3 and 13,000 from the end of 2012. The number of restricted memberships totaled 41,000 as of December 31, 2013.

Monthly attrition for the quarter averaged 3.4%, a slight improvement over the 3.5% level from Q4 last year. We expect monthly attrition in the first quarter of 2014 to approximate 3.6% as compared to 3.5% in the first quarter of 2013.

We continued to show a modest improvement on the average monthly dues with average monthly dues of members charged in Q4 2013 at $58.90 versus $58.20 in Q4 2012. Our average joining fee was $57.49 per member, roughly in line with the $57.81 in the same period a year ago.

Total ancillary club revenue was down 0.4% to $20.7 million from $20.8 million a year ago. The decrease was due in large part to a decline in other ancillary revenue. The decrease in other ancillary revenue was offset by a 7.8% increase in personal training revenue.

This improvement in personal training revenue was aided by a depressed comparison in Q4 2012 related to the disruption caused by Hurricane Sandy. But the increase was also driven by continued growth in our PT membership product as well as price increases put into effect during Q3 of 2013.

Revenue at clubs opened over 12 months decreased by 1.3% for the quarter. The components of comparable club revenue were as follows -- memberships decreased 2.6%, price increase 0.9% and ancillary club revenue and fees and other revenues increased 0.4%.

We had a total net member loss of 13,000 members for full year of 2013. We experienced disappointing new membership sales in Q4 2013. And so far in Q1 2014, our new membership sales volume continued to be soft and is being impacted further by severe weather experienced in the Northeast. We will continue to drive personal training and ancillary revenue streams to help counter this membership decline.

Turning to expenses, total operating expenses decreased 1.2% to $108.6 million for the fourth quarter of 2013. However, in Q4 2012, we experienced fixed asset impairment charges of $3.2 million related to damages incurred by Hurricane Sandy and in addition, payroll costs were elevated by the charge of approximately $2.5 million related to bonuses paid related to the special dividend.

Removing these expenses from last year, total operating expenses increased by $4.4 million or 4.2% in this year’s fourth quarter. Club operating expenses increased to $46.1 million in Q4 of 2013 from $42.9 million in Q4 2012. Increases in club operating expenses include a 1.5% increase in club operating months given our acquisitions in the first half of 2013.

We also experienced additional increases with repairs and maintenance and utility costs. We are experiencing increases in utility rates, and last year many clubs were without power because of Hurricane Sandy, that’s further depressed in prior year’s utility cost.

General and administrative expenses totaled $7.4 million in Q4 2013 versus $6.4 million in Q4 2012. As of this fourth quarter, our new registration and booking system is up and running throughout most of our club days and this new system is generating additional cost at the G&A line. We are also in the process of upgrading and converting our phone and data lines to provide more bandwidth and more efficient and advanced technology.

In Q4 2013, we experienced incremental cost of approximately $300,000 related to this conversion. Once this transition is complete, we expect to save approximately $500,000 on an annual basis. Also in Q4 2013, we incurred a little over $200,000 in legal cost related to our East 86th Street New York sales process.

Operating income for the fourth quarter was $5.3 million compared to $4.3 million in the fourth quarter of 2012. Net loss for the quarter was $695,000 or $0.03 per share compared to net loss of $453,000 or $0.02 per share in the fourth quarter of 2012. Please refer to our press release regarding items called out in each quarter amounting to approximately $0.03 per share and $0.14 per share net of taxes in Q4 2013 and Q4 2012 respectively.

Adjusted EBITDA decreased 20.6% to $18.4 million in Q4 2013 versus adjusted EBITDA of $23.2 million in Q4 2012. This decrease was driven by the decline in membership revenues which were our highest margin revenues, as well as increases in expenses which were in part driven by the increase in our club count Q4 2013 versus Q4 2012, including cost related to our new BFX brand. This puts adjusted EBITDA for the full year, $90 million versus $99.8 million for 2012.

Cash flow from operating activities for the full year 2013 totaled $67.4 million as compared to $60.1 million for the full year of 2012. During Q4 2013, we completed a total refinancing of the company’s debt. This new facility provides us with a low cost of borrowing and at the same time gives us more flexibility to return value to shareholders.

After issuing a one-time special dividend of $3 per share in Q4 2012, and after completing our debt refinancing, in Q4 2013 we announced a $0.16 per share quarterly dividend. On February 12, 2013 -- 2014 I should say, we announced the $0.16 quarterly dividend is payable on March 5, 2014, to shareholders of record at the close of business on February 24, 2014.

Total outstanding debt as of December 31, 2013, was $325 million and our cash position was at $73.6 million. As a result, net debt decreased 9.6% to $251.4 million from $278 million as of December 31, 2012.

For the year 2013, capital expenditures including the acquisition of businesses totaled $33.8 million. Late in Q4 2013, we announced we entered into an agreement with the developer to sell our East 86th Street New York property for $82 million subject to certain adjustments. We expect this transaction will close on or about March 31, 2014.

After the completion of this sale, TSI will no longer receive rental income revenue from this location which totals approximately $2 million in 2013 and we will begin to pay rent to the developer to continue to operate our existing club for a period of not less than 2 years from the closing date of the sale. Upon completion of the construction of the new property, the company will lease a portion of the newly constructed luxury high-rise for new New York Sports Clubs.

Turning to our outlook; based on the current business environment, recent performance and current trends in the marketplace and subject to risks and uncertainties inherent in forward-looking statements and excluding the impact of the possible sale of our 86th Street location, our outlook for the first quarter of 2014 includes the following. Revenue for Q1 2014 is expected to be between $116.5 million and $117.5 million versus $119.2 million in the first quarter of 2013. As percentages of revenue, we expect payroll-related expenses to approximate 38.3% and club operating expenses to approximate 41.4%. We expect general and administrative expenses to approximate $7.5 million. We expect depreciation and amortization expense to approximate $12 million and net interest expense to approximate $4.7 million.

We expect net income in Q1 2014 to be between zero and $250,000 and earnings per share to be in the range of zero and $0.01 per share, assuming a 39% effective tax rate and weighted average of 24.5 million fully diluted shares outstanding. We estimate that adjusted EBITDA will approximate $17 million in Q1 2014. This represents a decrease of approximately 30% from $24.2 million of adjusted EBITDA realized in Q1 2013.

For the remainder of 2014, although a lot of moving parts, we’re expecting decreases in EBITDA from the prior levels each quarter but to a slightly lesser degree on a percent basis for the next two quarters, with the fourth quarter year-on-year decline in the mid-single-digits as ancillary revenues, including personal training revenue and Sports Clubs for Kids revenue, are expected to increase over prior year and contribute more in future quarters.

Expected increases in personal training revenue were driven by both the price increase and continued success of our personal training membership product. In 2013, our Sports Clubs for Kids program results were disappointing and revenue was down versus 2012. We expect Sports Clubs for Kids to improve from these low 2013 levels. We expect adjusted EBITDA for the full year of 2014 to be 15% to 20% lower than the full year 2013.

For the year ended December 31, 2014, we currently plan to invest $45 million to $50 million in capital expenditures, including approximately $20 million to $22 million related to potential 2014 and 2015 openings, including those under our new Boutique Fitness Studio concept. We expect these capital expenditures to be funded by cash flow provided by operations and available cash on hand.

That concludes our prepared remarks. We would now like to turn the call over to any questions anyone may have.

Question-and-Answer Session

Operator

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions) Our first question is from Sean Naughton with Piper Jaffray. Please go ahead.

Sean Naughton - Piper Jaffray

Hi. Yeah. Just a question on the competition, Bob, I think you talked about a little bit and some of the things you're doing to address it. But is there anyway to talk about, is the competition more in the suburban club areas, or is it pretty equally balanced between your urban clubs, whether it's in Boston or New York. Just interested in what you are seeing there from a competitive dynamic standpoint?

Bob Giardina

Sure. Yeah, we’ve looked at it pretty closely over the last four years. And in terms of traditional clubs, full-service clubs, they can be rolled into the more luxury clubs. We’ve had about a 190 clubs opened up in our markets in the last four years. Those clubs have been split primarily more suburban than urban. I would say 75% of those clubs are low-cost clubs, $10 to $20 per month.

What we’ve seen more recently in the last two years is the growth of the studios and that’s been more of an urban phenomenon. We see some suburbs but more in the urban market. The thing that's interesting about the studios are, they are typically instructors or trainers that work in clubs, that go off and do their own business. We see more turnover in those studios. We see a lot of studios opening and closing and we’ll continue to see that. And we are also starting to see more clubs opening and closing. But there’s just a lot more options for consumer right now.

Sean Naughton - Piper Jaffray

Okay. And then just on the pricing in the clubs. I know you did a good job on that when you came back to Town Sports and kind of put a new focus on the join fee and making sure you’re selling the value of the membership. Can you just talk about the $10 increase I think you put through on the Passport Membership? How that was received and if you think that was potentially a hurdle to getting new members into the club, outside of the weather impacts that we had in Q1?

Bob Giardina

No, I think actually the price increases. We are going to continue to be surgical in the way we look at clubs and increase where we can. What really drives membership sales are your guess traffic. So if you have X amount of guest coming in for a day, you are going to close a certain percentage of them. And we just see a decline in number of guest traffic.

I would say more recently from January through I would say mid-February. Last year, we had about 14-inches of snow. This year, we had about 47-inches of snow. So when you have the weather dynamic on top of the competitive landscape, it’s a declining guest. And what we’re doing to address it, is we’re doing more things to work with existing members.

So as an example in February, we sent to approximately 250,000 members a free 30-day membership for a friend. So we’ll use net members to drive in guest traffic and if those members, those guest decide to take a membership, that member will get about $50 credit or free month, we’ll do something to work with the existing member. So we’re looking at different ways to really drive guest traffic to our members.

Sean Naughton - Piper Jaffray

Okay. And then maybe just a last question, maybe for Dan, I guess on the operating expenses for Q1, looks like some pretty significant de-leverage. Just curious if there's any cost in there that we should be thinking about year-over-year. You mentioned utility cost is that something we can quantify or just maybe talk to somebody operating expenses?

Dan Gallagher

Some of the operating expenses are going to be up because of our new clubs including a new BFX brand and start-up cost related to that. So we have started to take rent charges for some of the clubs that’s one that’s under construction or actually two under construction. I would say that coupled with BFX start-up cost together is about a million dollars of EBITDA, I’ll call EBITDA hit in Q1 versus not having those last year.

Utilities I’m expecting based on the rates to be up, probably every quarter this year unless something changes quickly, I guess, Natural gas prices are way up and that drives electric eventually but we’re seeing utility rates go up. And on top of that we have a little bit of extra snow removal going on in our market as well that we forecasted, hopefully not much more but we forecasted it now.

Sean Naughton - Piper Jaffray

Is that -- I mean, is that like a -- was that a material number for you guys on the utility that can second swing the needle 40-50 basis points, or is it going the wrong way?

Bob Giardina

Utilities can get around from 500,000 and 750,000 higher as what we’re forecasting. Whether it actually is that that’s what we’re forecasting.

Sean Naughton - Piper Jaffray

Okay, that’s helpful, thank you.

Bob Giardina

Okay. Thanks Sean.

Operator

Thank you. (Operator Instructions) Your next question is from George Kelly with Craig-Hallum. Please go ahead.

George Kelly - Craig-Hallum

Hi guys. First question on EBITDA guidance for the full year. I think you said it would be about $16 million down in 2014 versus 2013 and just wondering if you could break that out at all between the cost of the new studio gyms that you’re opening and the decline at your existing club base?

Bob Giardina

I can give you some high level stuff, George. I think if you look at our 2014 new clubs, coupled with BFX and if you add to that the expected rent that we are going to have pay to 86th Street location assuming we sell it, that would be about $5 million to $6 million drag on EBITDA for that group of clubs, the 2014 clubs, the BFX units, as well as rent on our 86th Street location. On top of that assuming we do close March 31st on the sale of our building, subsequent to that we would lose about a $1.5 million of rental income that we’ve had in prior years.

So those two things together are anywhere from $6.5 million to $7.5 million as far as new clubs and the impact of what happens to us if we sell the building as planned. So that's contemplated in the full year guidance but not the Q1 guidance as it's a March 31st contemplation. We do not affect for it in our Q1 guidance, because we just -- it would make numbers little noisy and it could easily be delayed by days and we didn't want to do that. I hope I answered your question a little bit.

George Kelly - Craig-Hallum

It does. Yes, it does absolutely.

Dan Gallagher

Okay.

George Kelly - Craig-Hallum

And then other ancillary revs has been weak and it was the Kids Club stuff I know over the summer, what was it in the fourth quarter?

Bob Giardina

The Sports Club for Kids was again slow and our Small Group Training was also slow in the fourth quarter.

George Kelly - Craig-Hallum

Okay.

Bob Giardina

The Sports Club is pretty similar trends as the third quarter, but just as they are lesser in dollars because we don't have the camps and stuff like that, but as a percentage a very similar. And we do expect -- I think I just mentioned that we do expect Sports Club for Kids to get back closer to 2012 levels if not slightly better as opposed to the drop we saw in 2013.

George Kelly - Craig-Hallum

Okay. And then last question for me, the BFX Studios. I think you have mentioned that this is something that you're planning and taking outside of Boston and New York. And I am wondering if you could give more detail, not about the cities but about timing and sort of as we look three years at, how many clubs would you realistically have?

Bob Giardina

I think when we look at three years George, we're going to look at, we understand the market that we're currently in. So we'll open some locations in those markets first and then we will be going to other markets and we see ourselves having 20 to 30 locations within the next three years.

George Kelly - Craig-Hallum

Okay, all right. Thank you.

Bob Giardina

Sure. Thanks.

Operator

Thank you. The next question is from Kurt Frederick of Wedbush. Please go ahead.

Kurt Frederick - Wedbush Securities

Hi, thanks. Bob in the comments that you had mentioned five clubs something in '14. Was there another lease signed during the quarter?

Bob Giardina

We just signed another lease about two days ago.

Kurt Frederick - Wedbush Securities

Okay.

Bob Giardina

In Canton, is it Canton?

Dan Gallagher

Yes.

Bob Giardina

Canton, Massachusetts.

Kurt Frederick - Wedbush Securities

Okay. And then the phone upgrade, date upgrade, when is that supposed to be completed?

Bob Giardina

That’s expected to be completed in this first quarter. So we did have charges in the fourth quarter, we’ll have a little bit incremental charges in this first quarter and then we expected to realizing some savings going forward from that.

Kurt Frederick - Wedbush Securities

Okay. And the rate lock, what was the cash take this year?

Bob Giardina

I don't have that available. I don't have that available, sorry.

Kurt Frederick - Wedbush Securities

Okay.

Bob Giardina

Give me a second, I can get it. No, I don’t have that, sorry.

Kurt Frederick - Wedbush Securities

Okay.

Bob Giardina

I don’t have at my finger tips.

Kurt Frederick - Wedbush Securities

All right. And the impact of weather, has that changed at all the timing of any of the planned club openings?

Bob Giardina

No, actually one of the clubs that landlords are having a hard time getting some things done on the roof. But the rate lock is between $8.5 million to $9 million January charge, rate lock charge this January.

Kurt Frederick - Wedbush Securities

Okay. So is it still then one in Q1 and then two in Q3, two in Q4 and that the…

Bob Giardina

In cadence of our clubs?

Kurt Frederick - Wedbush Securities

Yeah.

Bob Giardina

I think more towards the backend that we’re going to be, I think our first club that will be probably September, it’s probably going to be second half of the year, yeah. Our first club is going to be I think Greenpoint Brooklyn and that’s the one has no issue.

Dan Gallagher

Could be Q2.

Bob Giardina

It could be the end of Q2, beginning of Q3 and then all the rest would be second half of the year.

Kurt Frederick - Wedbush Securities

Okay. All right. That's all for me. Thanks.

Dan Gallagher

Thank you.

Operator

(Operator Instructions) And the next question is again from George Kelly of Craig-Hallum. Please go ahead.

George Kelly - Craig-Hallum

Hi guys, I just had one quick follow-up modeling question. So the revenue line fees in other was $2.2 million in the quarter which is higher than it has been. What’s a good way to model that going forward?

Bob Giardina

I would say much, much more similar to 2013.

George Kelly - Craig-Hallum

So just kind of, just over a $1 million kind of run rate?

Dan Gallagher

I have to double check if rental income is a rental income and that one 86th Street going away. So I don't want to step in my toes here. I think that's -- you've got a separate line, but let me update that. George I'll get back to you.

George Kelly - Craig-Hallum

Okay. Sure. Thanks.

Dan Gallagher

Okay.

Operator

Thank you. We have no further questions in the queue at this time. I'd like to turn the floor back over to management for any additional remarks.

Bob Giardina

Okay. Well, thank you for your time today and we look forward to reporting our Q1 earnings in the future. Thank you.

Operator

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time and thank you for your participation.

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