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Executives

Keith Stewart - CEO

Robert Ayd - President

William McGrath – EVP & CFO

Carol Steinberg - COO

Teresa Dery - SVP and General Counsel

Analysts

Neely Tamminga - Piper Jaffray

Alex Fuhrman - Craig-Hallum Capital Group

Mark Smith - Feltl and Company

Justin Ruiss - Sidoti & Company

ValueVision Media, Inc. (VVTV) Q4 2013 Results Earnings Conference Call March 5, 2014 4:30 PM ET

Operator

Good afternoon, and welcome to ValueVision Media's Fiscal 2013 Fourth Quarter Conference Call. [Operator Instructions] Today's call is being recorded for instant replay. I would now like to turn the call over to Teresa Dery, Senior Vice President and General Counsel at ValueVision. You may begin.

Teresa Dery

Thank you, operator, and good afternoon. I'm joined today by Keith Stewart, CEO; Bill McGrath, EVP and CFO; Bob Ayd, President; Carol Steinberg, COO; and other members of the senior management team.

Comments on today's conference call may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as anticipate, believe, estimate, expect, intend, predict, hope, should, plan or similar expressions. Listeners are cautioned that these forward-looking statements may involve risks and uncertainties that could significantly affect actual results from those expressed in any such statements. More detailed information about these risks and uncertainties and related cautionary statements is contained in ValueVision's SEC filings.

Comments on today's call may refer to adjusted EBITDA and adjusted net income or loss, which are both non-GAAP financial measures. For reconciliation of each of these measures to our GAAP results and for a description of why we use them, please refer to our fourth quarter 2013 news release, available on the Investor Relations section of our website.

Comparisons in today's call relate to pro forma comparisons. ValueVision follows a 4-5-4 retail calendar and as a result we had an extra week in our fiscal 2012 fourth quarter. We adjusted our 2012 fourth quarter and full year 2012 financial information to create pro forma 13 and 52-week period because we believe that these pro forma are a more appropriate basis for comparisons to current year results. Our subsequent commentary will reference to 2012 pro forma results. In the press release we issued today, there is a table showing ValueVision's summary results and key operating metrics for the fourth quarter and full year 2012 and 2013 on both a pro forma and reported basis.

As you may have seen in our recent press release, the special meeting of shareholders previously scheduled for March 14 has been cancelled in response to the activist shareholder abandoning its proposal and stating that it would not participate in the special meeting. However, the activist shareholder has indicated that it intends to pursue proposals and nominate directors at our regularly scheduled annual meeting. With that said, we are here today to talk about the business and ValueVision's fourth quarter and full year results. We do not intend to take any questions regarding the proposal by the activist shareholder. We thank you for your cooperation in that regard.

All information in this conference call is as of today and the company undertakes no obligation to update these statements. I will now turn the call over to Keith.

Keith Stewart

Thanks, Teresa, and thank you all for joining us on the call today. The team delivered strong operating results in Q4, a continuation of progress we made in the first three quarters of fiscal 2013. Bill will take you through the detail on our financial performance in the quarter and the full year. I do want to call out some of the pro forma financial highlights in the fourth quarter compared to the prior year periods.

Net sales were $193 million, an increase of 17%. Gross profit increased 14%. Net shipped units increased by 44% to a record 2.4 million. Adjusted EBITDA improved by 25% to $5 million from $4 million in Q4 of last year. And I would like to point out that on a full year basis, adjusted EBITDA increased to $18 million compared to $4 million in 2012. We feel good about the momentum we have built up and it's coming through on our financial performance.

From an operational perspective, we grew our total customer base by 30% in the fourth quarter over prior year. This helped us increase our 12-month rolling customer counts to a record 1.4 million, up 20% over last year. Our ability to successfully increase new customer counts by double-digits in each of the last three quarters has enabled us to achieve the largest customer base in our company's history. I am also pleased with the balanced customer growth within our customer base. Each product category's customer base grew steadily as we continued to implement our strategy of diversifying and broadening the product mix. Our focus on diversified growth has created a stronger, more resilient customer base, providing a better foundation to deliver financial results.

In Q4 we continued our consecutive quarterly improvement of lowering the average price point which is $74, a reduction of 20% versus the same period last year. Our team focused and delivered on offering a broad-base of gifts at appealing price points. This resulted in more new existing and reactivated customers purchasing gifts in all of our channels. We experienced the same progress on a yearly basis. The average price point was lowered to $81, a reduction of 16% compared to last year. This was accomplished across all categories which is broadening our appeal to greater audiences in our 87 million homes and digital storefront.

We also continued to make improvements across all areas of operations to provide better customer service, more accessible programming and faster order delivery all with a relentless focus on customer experience. In addition to record customer growth in Q4, our customers bought more product than ever before in the fourth quarter and in the full year. 2013 was a transformational year for our company. We took control of our brand and are now fully operational with ShopHQ. We further strengthened our merchandise team to support long-term growth. Our product categories are more diversified with a much broader assortment at lower average prices.

Our TV distribution footprint is gaining in size, quality and productivity, appealing to wider audiences. Our customer experience continues to improve as we invest across all of the business. Our online platforms continue to improve and adapt to embrace mobile shopping, and we achieved record customer growth and ended the year with 1.4 million total customers, a 20% increase over last year. Overall, these initiatives led to solid improvements in our top and bottom line performance as well adjusted EBITDA. Looking ahead, our team culture remains focused on improving the customer experience. We have a stronger base to scale our operating infrastructure for long-term sustained growth and profitability as we build and inspire communities through shopping.

With that, I will now turn the call over to Bill for a financial review.

William McGrath

Thanks, Keith. Fourth quarter sales of $193 million were up 17% over prior year while full year sales of $640 million were up 12% versus last year. Sales growth was driven by the categories of home and consumer electronics, fashion and accessories and beauty, health and fitness. Gross profit increased 14% in the fourth quarter and as a percent of sales was 32.1% compared to 33.2% in Q4 2012. The gross margin rate decrease was primarily due to an increased sales mix in home and consumer electronics, a category that typically carries lower margins.

Fourth quarter operating expense is $63 million compared to last year's 13-week pro forma operating expense of $65 million. Prior year operating expenses included an $11 million non-cash impairment charge related to the company's FCC license. The increase in operating expense was influenced by variable cost in Q4. Variable expenses increased as a percentage of sales to 8% in the quarter versus 7% in Q4 last year, reflecting the impact of a 44% increase in net shipped units.

Cable and TV distribution expense declined in Q4 versus last year's same quarter. Q4 operating expense growth versus prior year also reflects increased salary and recruiting expenses, employee benefit enhancements, as well as accruals for incentive compensation. Finally, during the fourth quarter the company incurred $1.8 million in advisory fees and other costs related to the ongoing activist shareholder matter. We expect to incur additional cost associated with this issue in subsequent quarters. ValueVision is working to manage these expenses prudently while ensuring that all shareholder interests are represented.

Adjusted EBITDA in Q4 improved to $5 million from $4 million in Q4 last year due to the sales and gross profit growth. On a full year basis, adjusted EBITDA increased to $18 million compared to $4 million in 2012. Our balance sheet remains strong. Cash including restricted cash totaled $31 million in line with the third quarter balance. For the full year of fiscal '13, we generated $3 million in positive cash flow. During the fourth quarter we also expanded the size of our total credit facility with PNC Bank from $50 million to $75 million. The additional liquidity better positions us to support future growth as we evaluate options to increase our warehouse distribution capacity in 2014.

I will now turn the call over to Bob.

Robert Ayd

Thank you, Bill. Q4 was a strong quarter for ShopHQ with revenues up double-digits. And I am pleased with how well our team continued to execute on the business. A much improved product assortment and having the right holiday gifts drove record new customers in the quarter. Our customers sought style and warmth this season in boots and faux fur from vendors such as Matisse, MIA, and EMU, making these categories holiday bestsellers. Android tablets as well as iPad Mini bundles were hit gifts. ShopHQ customers also demonstrated keen interest in a range of skincare products, color cosmetics and bath and body fragrances. Our assortment of attractive table top items including crystal was also quite popular.

Overall, we offered holiday shoppers a wide array of must have gift giving options with many never before seen on our multichannel platform. Customers responded well to our merchandising initiatives as we drove increased sales, gross profit dollars and customer counts. We also had improvement in gross margin rates in almost every major category.

In Q4 we achieved strong sales growth in the categories of home and consumer electronics; beauty, health and fitness; and fashion and accessories. Although sales in jewelry and watches declined, productivity was up approximately 20% as we are repositioning the category. In home and consumer electronics, we capitalized on seasonal trends in tablet, electronic accessories and mobile phones. We also invested in our home décor, cook and soft textile categories. Of note, we focused on capitalizing on changing market trends for fashion in the bedroom. Our growing proprietary brands of North Shore Linens and Cozelle sheets offered our customers more options to update the look of their bedroom that not only feels good but also makes a fashion statement.

Fashion and accessories in Q4 continued its strong momentum from Q3 as we continued to invest in our proprietary apparel brands. Kate & Mallory, which is our largest growing apparel brand, targets those who want to stay relevant and on trend with fashion. Our Oso Casuals denim friendly brand, which is a strong performer, is geared towards classic styling and of course casual fashion choices. Moreover, our footwear segment continued strong growth in Q4 and benefitted from the introduction of new brands that were launched in Q3, including Sanita footwear and Durango boots.

Within beauty, health and fitness, we continued to build out the category in Q4. We broadened our product assortment in part with introductions from Silk Oil of Morocco and DevaCurl hair products. We also successfully launched new and upcoming brands from Juice Beauty and Rodial Skincare. Overall, the beauty segment achieved strong quarterly growth. Sales increased in skincare and color cosmetics offset softness in the health segment.

As Keith mentioned earlier, our customers bought more product than ever before in Q4 and throughout the year. During the holiday season we were focused on delivering great gifts for the customer and our team introduced approximately 7,000 new styles and added over 60 new suppliers. Looking back, our efforts throughout 2013 to prepare for the all important holiday season paid off. On the TV distribution front, we continued to made progress in improving our channel position. ShopHQ's updated studios and sets allowed us to appropriately showcase our broader and more diverse assortment, especially with respect to our fashion, home, kitchen and consumer electronics segments.

Key initiatives to improve the customer experience during the year also played a role in our Q4 performance. Overall, these customer experience improvements were born and executed by actively listening to the customer. As a result, our customer satisfaction levels have markedly improved which is designed to build loyalty and purchase frequency.

With that, I will turn the call over to Carol.

Carol Steinberg

Thanks, Bob. Our fourth quarter included a number of key initiatives that improved our operating metrics and enhanced our digital storefront. Fourth quarter and rolling 12-month metrics surrounding new customer counts, customer purchase frequency and the total customer base, improved to record levels. We are making the customer experience simpler and more convenient across all of our relating platforms. We are also bringing our content to life with rich media, credibility and authority.

Operationally, despite a 44% increase in shipped units and our expanded use of our offsite storage for inventory, we successfully managed to increase demand on our distribution operations. Our transaction costs were up slightly to $2.46 per unit in Q4 versus the year ago. During the quarter, we continued to make progress in faster order receipt to delivery, getting packaged to our customers in a shorter timeframe and making the returns process easier.

In 2014, we plan to expand our distribution fulfillment capabilities likely with an expansion of our Bowling Green, Kentucky facility. This is to meet the needs of our growing customer base and higher shipped unit volumes. Benefits expected from this expansion include reduced expense from elimination of offsite storage, more streamlined shipping operations, and an improved customer experience. We expect construction to begin during the back half of Q1. The initial building expansion should be in place for the Q4 holiday season with the remainder of the infrastructure completed in Q1 2015.

Turning to our digital initiatives. The customer continued to engage across our online channels with a substantial shift to mobile shopping. Mobile net sales using Smartphone and tablet devices was up 77% in Q4 and increased to 29% of internet sales versus 20% during last year's same quarter. Internet sales as a percentage of total sales increased slightly to 47% in Q4 2013 versus last year's quarter. During Q4, we introduced several mobile enhancements for iOS and Android devices. Enhancements were made to the live viewing functionality of our ShopHQ programming that offers synchronized content to our live broadcast. Our tablet and Smartphone apps offer a dynamic and complementary experience to both the website and our broadcast. We are pleased with the steady progress in downloads, viewership and orders.

Finally, we successfully completed a smooth transition to the new ShopHQ brand by the end of fiscal 2013. Overall, we are very pleased with the results of our fourth quarter operating and digital performance, especially with customer growth and engagements being at record levels. Looking ahead at fiscal 2014, we are focused on a number of key initiatives to drive the business and continue building on the platforms we have created.

First, we are focused on implementing systems initiatives designed to drive increased purchase frequency and customer engagement. To meet growing customer demand, we are seeking to expand and upgrade our fulfillment capabilities, infrastructure and call center technologies. Our mobile focus will remain on simplicity, ease of use, relevant content, and a more personalized shop anytime, anywhere experience.

In conclusion, we have made much progress in laying the digital building blocks and creating a sound operational foundation for leveraging our multichannel-retailing platform. We remain confident in our ability to deliver on the fundamentals and we remain focused on delivering long-term sustainable growth. Operator, please open the line for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Neely Tamminga, Piper Jaffray. Please proceed.

Neely Tamminga - Piper Jaffray

Just want to offer some congratulations on the fantastic execution on this quarter. Particularly how difficult it is out in the retail environment. So congratulations all around. So a couple of questions, if I may. I would love to know, Keith, considering how tough the environment is out there, are there any comments you can make about kind of how things have trended so far this quarter and how we should be thinking about it? I think February has brought some mixed reads, broadly. And then if Bob could talk a little bit about the timeline of the jewelry conversion, it sounds like you guys are reworking that category. When should we start seeing some, I guess, regain momentum relative to what you guys are aligning it to be? That would be helpful. And then just lastly for Carol, if you wouldn't mind talking a little bit about mobile. It sounds like it grew a lot. Did we hear what the penetration of mobile is yet and what you think that can grow up to, based on what you're seeing from consumer demand as you make these enhancements? Thanks, guys.

Keith Stewart

Thanks, Neely. I will take that first question. As we look at Q1, despite the retail climate in retail marketplace, we do see headwinds with a pronounced lowering of the average selling price. Q1 of 2013 was roughly flat to the prior year, while if we go back to Q2, Q3 and Q4, we have made significant progress in reducing our average selling prices. They ranged 17% to 20% in reductions. We do expect the previous run rate from the three quarters to continue going into the first quarter. So more specifically our Q1 average selling price was $93, whereby Q2 and Q3 were closer to $80.

As disclosed a few minutes ago, our average selling price is somewhere around -- we are looking to continue that run rate of somewhere around $80. So the headwind to the reduction of the average selling price is really what we are looking at in Q1. Other than that I am very pleased with the broadening of the merchandise mix. Complete expansion throughout each and every product category. That expansion along with the other initiatives that the team mentioned are doing two significant things. It's growing our customer file in a very meaningful way, that not only pays dividends today but most certainly in the future. And secondly, because of the broader mix and some of the other initiatives, the purchase frequency from our customers continued to increase.

So as we grow our customer file, we engage the customer even more and they buy more from us. It will certainly pay dividends in the future. Thanks for the question, Neely. I will turn over to Bob.

Robert Ayd

Hey, Neely. Thank you for the question. I was very pleased with the jewelry performance in Q4. The productivity of jewelry or jewelry and watches, was up close to 20%. So we continue to reposition the brand. I expect that to stabilize this quarter, early next quarter, and I expect to see the productivity continue to increase.

Carol Steinberg

Okay, Neely, it's Carol. Thank you for the question. To give you a little color on our digital strategies. Basically, we now have iOS and Android apps on tablets and smartphones in addition to our html site, which renders really well on laptops and tablets. We launched on the tablet apps that live functionality that synchronizes and changes content on an hourly basis. So we are consistent with the live broadcast. The checkout processes have been simplified, the desired live experience is available on all the devices, on all channels. So our internet penetration is now at 47% for the full year with a considerable shift to tablet devices, as what we find is our customers are able to and enjoy taking us along for their shop anytime anywhere experience.

So in summary, the mobile sales accounted for 29% of our online sales in Q4, an increase of 77%, bringing up to full year 25% versus 16.9% last year. And our Internet sales were at 47% for Q4, up 70 basis points, 46.4% for the full year, again up 70 basis points.

Operator

Your next question comes from the line of Alex Fuhrman, Craig-Hallum Capital Group. Please proceed.

Alex Fuhrman - Craig-Hallum Capital Group

Congratulations on another good quarter. Really just a couple questions here. Firstly, for Carol, this distribution center that you guys are going to be building, I'm curious to how many units you think you'll be able to fulfill from that facility? And then imagining with kind of a resurgence of tablets and things like that in the merchandise mix, is there going to be a need for as much units shipped from your DCs or is some of that consumer electronics that have been growing drop ships from the manufacturers? And then more broadly, just thinking about some of the homes that you've added distribution to or added a second channel to over the past six months. Are you starting to see the early stages of what you would have expected to see with those channel position upgrades or is that something that more you would expect to see over the next couple of years?

Keith Stewart

I will pick up the first part for Carol as it relates to our distributions center. The expansion that she referenced earlier has some different levers to look at. We have a reduction of the average selling price and then a shift into product categories that are generally larger queue. So really processing within the warehouse is a little bit different. It's a sizable expansion for us. We believe it's going to continue to scale for quite some time. The benefits that we see from, as Carol mentioned, that we see from the expansion, most certainly have everything to do with improved shipping quality and shipping times. But other capital expenses in the form of IT systems to automate our shipping and collate a lot of packaging, is going to improve our efficiency throughout.

So it's going to do a lot for our operation. We are quite frankly, Alex, a lot of it's manual today in the leased operations that we have outside of Bowling Green. So it's a needed investment into the business and our customer will be rewarded with faster shipping and better quality.

William McGrath

Alex, this is Bill. I will address the question you had raised relative to the changes in channel position. We, over the course of the year we do look for opportunities. If there is an opportunity that we view as a cost effective movement of our channel positions, to either add a second channel or to lower it. And at the end of the third quarter, we had mentioned that in November, about $5 million homes where we were carried on a very high channel, we had the opportunity to maintain that channel and then to add a second channel position in standard def, below Channel 50. And then we added HD coverage in about 3.5 million of those 5 million homes.

And in that particular move, we liked the marketplace in which those homes were in and we did see a very quick response in terms of performance within those markets. We evaluate these channel changes really on the basis of expected contribution margin turning positive. You have an incremental investment in terms of the distribution costs. And then what you are looking at relative to that incremental investment is the improved contribution margin you get out of higher sales productivity. And generally it's a run rate. It can take us as long as nine months before we see those households turn positive. But in this particular move that we had in the fourth quarter, we were very encouraged. We saw a quick response in those homes. And so it was a little bit out of the norm for us in terms of that typical duration of about nine months.

Keith Stewart

And I will add, just as importantly, to improve contribution margin and revenues the access to customers that frequent in a different spot within the channel position to drive new customers is very very important. So it is about channel positioning for customer acquisition on top of the product diversity that Bob referenced before.

Alex Fuhrman - Craig-Hallum Capital Group

That's really interesting. When you say you're getting a better lift than you would have normally gotten, this 5 million homes with the increased channel position being a higher ROI, do you attribute that more to the type of upgrades you've had? Is it more because of the HD versus the non-HD? Is it more something special about those channels under 50, or is there something different about the type of channel upgrades you have within those 5 million homes that maybe represents a better, sort of what's more important to you as you think about those channel attributes? Or is that maybe something that you wouldn't expect to see with future channel upgrades?

Keith Stewart

Well I could start with, HD has nothing to do with it. Quite candidly, with HD homes that we have seen, we are not seeing an increase that’s meaningful in productivity. However, all metropolitan service areas, they are called MSAs in the industry, are not created equal. So we have some highly populated areas that generally are gravitating towards our medium. In the specific case that Bill had mentioned, they are very good areas. But again, not all MSAs, certainly as it relates to systems, are created equal. And certainly, cable, satellite and over the top providers are also different. So that’s why we are very cautious with our forecast as it relates to improved productivity because they all are very very different.

Operator

Your next question comes from the line of Mark Smith with Feltl and Company. Please proceed.

Mark Smith - Feltl and Company

I've got a handful of questions for you. First, Bill, was the activist shareholder response cost, was that all largely in G&A?

William McGrath

Yes, Mark. It's accounted for exclusively within G&A.

Mark Smith - Feltl and Company

Okay. And then, can you give us any insight into G&A as we look forward to this next year, excluding some of these onetime items?

William McGrath

Yes, Mark. I think as you look at the G&A roll into next year, it would be -- again, if you can exclude the onetime items that, particularly the shareholder activist cost, I think you look at a run rate increase somewhere in the range of about 4%. So you had a step function increase in G&A cost that occurred in the current year, largely related to investments that we had made on the peoples side, as I mentioned, additional salary and recruiting expenses, enhancements of our benefits program as well as incentive compensation accruals. But I think that -- so that was a step function increase that you saw in those level of costs that basically would be in line to a moderate increase as you roll forward into next year.

Mark Smith - Feltl and Company

And then I think Carol talked about transaction costs being up a little bit here. Any insight you can give us as what you're seeing today and kind of your outlook for the year?

William McGrath

Yes, Mark, it was up a little bit over last year. And that’s basically a variance from where we had been in prior years where we had been running favorably. And Carol had described the fact that we had a lot of activity that was taking place outside of the four walls of our main distribution center Bowling Green, Kentucky. So we are leasing [ph] some proximate space in order to handle the higher volume. We were basically beyond capacity in our facility. And when you expand outside of those four walls, your operating efficiency is not as strong as it is when you are operating within your -- the main facility of the operations. And that was really the primary driver in terms of the operating efficiency.

Carol Steinberg

Yes, Mark, it was 2%. So it was really a very small amount.

Mark Smith - Feltl and Company

Okay. And then maybe for Keith. Looking at the ASP now in the low mid-70s, let's call it. Is this the new normal or are we going to see some fluctuations?

Keith Stewart

Well, you do see fluctuations, Mark, going into Q4 with our gift giving season. So we expect that we are going to have reduction in ASP, a meaningful one, let's call it in the mid-teens area, in Q1. And it should moderate certainly within Q2 and Q3 because we have did a lot of that heavy lifting in Q2 and Q3 of last year. And as we look at Q4, it should level of into the low 70s. So as I characterize the headwinds, Q1 was a quarter where we did make as much progress as we had in the rest of the year. And we are going to continue to strive to make progress in broadening our mix and moderating our ASPs [indiscernible].

Mark Smith - Feltl and Company

Okay. And then looking at the gross profit margin, I think you guys talked about mix hurt a little bit as you had some more home and CE primarily. Was there anything else going on in gross profit margin as we saw that, that's the lowest we've seen in a little while?

William McGrath

No, Mark, it's almost completely driven by the change in mix so our other cost of goods influences year-on-year were comparable.

Mark Smith - Feltl and Company

Okay. And then, I think my last question, just looking at shipping. I guess shipping and kind of other revenue it looks like. How much of a lever did you use as to drive transactions during the quarter, as it looks like it's down a bit kind of on a units shipped basis?

William McGrath

Yes, we had a little bit more activity in terms of shipping promotions, free shipping, in Q4 than we had in our prior three quarters of 2013 in terms a mix of the total units. It was a more promotional for us. But I'll say it was in line with where we were a year ago. We weren't higher than the -- we didn’t have a higher level of shipping promotion than we did in Q4 of last year.

Keith Stewart

Okay. Operator, we can take one more call.

Operator

Your next question comes from the line of Justin Ruiss with Sidoti. Please proceed.

Justin Ruiss - Sidoti & Company

I just had a quick question on the inventory levels and just kind of the makeup of how that's going. I know it's kind of ticking up a lot. But could you just delve into where those dollar amounts coincide with what your stocking levels would be?

William McGrath

Sure. Justin, this is Bill. We ended the year at about $51 million in inventory. A year ago we were at about $37 million. And I will qualify one element of the growth year-on-year, was the fact that we actually ended Q4, I will say leaner certainly than we anticipated. And our weeks of supply going into the first quarter were lighter than we would have normally. One of the reasons for that was the, we wound up being, I will say more aggressive in Q4 of last year because of the impact on Sandy in the early part of the quarter. And so were more responsive of, say in terms of concerns about an early fourth quarter inventory buildup and responding to that in terms of order flow and other activity. We are comfortable with the turns. I think if you I think if you extrapolate out, our turns were at about six times, and that’s a pretty good position for us. As Bob had described, one element of growth that’s important to our business is growing the apparels side. And as that becomes a larger segment of our total mix, turns in that category are slower than what you would see in the home of the watch or jewelry area. So you have a little bit of a mix influence but we are still very very comfortable with the quality of the inventory and the appropriateness of the investment relative to our sales expectations.

Keith Stewart

Thank you, everybody, for your time and interest today and we look forward to speaking with you next quarter.

Operator

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.

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