Call Start: 08:30
Call End: 09:12
G-III Apparel Group, LTD. (NASDAQ:GIII)
Q1 2015 Earnings Conference Call
June 3, 2014 08:30 AM ET
Neal Nackman - CFO & Treasurer
Morris Goldfarb - Chairman, President and CEO
Edward Yruma - KeyBanc
Erinn Murphy - Piper Jaffray
Rick Patel - Stephens
Joan Payson - Barclays Capital
John Kernan - Cowen & Co.
Eric Beder - Brean Capital
Welcome to the first quarter fiscal 2015, G-III Apparel Group earnings conference call. My name is Loraine and I will be your operator for today's call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Please note that this conference is being recorded.
I will now turn the call over to Mr. Neal Nackman. Mr. Nackman, you may begin.
Thank you. 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 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.
In addition, during the call we will refer to adjusted EBITDA, which is a non-GAAP number. We have provided a reconciliation of adjusted EBITDA to our net income according to GAAP in our press release and on our website.
I will now turn the call over to our Chairman, and Chief Executive Officer, Morris Goldfarb.
Good morning and thank you for joining us. With me today are Wayne Miller, our Chief Operating Officer; Neal Nackman, our Chief Financial Officer; and Jeff Goldfarb, our Director of Strategic Planning.
We had an excellent first quarter. Our revenues were strong across a number of important categories and our margins were good. After a slow start to the quarter, April was the strongest month of the quarter and April’s momentum is carried into the second quarter. This combination of a solid first quarter and the continuation of healthy trends across our business gives us increased confidence in our revised full-year guidance. I will start with a few highlights from the quarter.
Our total revenues were up 34% at $366 million. This was above our plan and a record for the quarter. Our outperformance was primarily driven by our wholesale business. $44 million of the sales increase was the result of the G.H. Bass business we acquired in November 2013. We reported net income per diluted share of $0.06 compared to $0.05 in last year’s first quarter. We were pleased with these results which include the transitional loss that we're incurring as we integrate and reposition G.H. Bass.
We performed well in generally tough weather affected environment in the first quarter, both in our wholesale business and in our retail stores, we're seeing momentum in the wholesale business both for us and our retail partners. Combined with our specialty retail business we have compelling mix of growth opportunities that will drive our business over the remainder of the year. Our wholesale business, which was about two thirds of our net sales in the quarter, outperformed plan. This is driven primarily by variety of strong businesses under the Calvin Klein umbrella. We also had a good performance from Vilebrequin in both its wholesale and retail stores. We also saw strong results from several of our dress businesses.
Calvin Klein led the way for us. Compelling products and the underlying strength of the Calvin Klein brand assisted us in transcending the pressures of the environment and enabled us to deliver good results again this quarter. Calvin Klein Better Sportswear, dresses and handbags were the most significant sources of strength in the quarter. We believe we can build upon this success for the summer and fall seasons. Calvin Klein Better Sportswear had strong growth in the quarter with wholesale shipments up significantly. There is still some softness in the market, but we believe we factored that into our plans. Calvin Klein dresses were up modestly, retail selling was strong, and our gross margins were solid.
Our Calvin Klein handbags wholesale shipments were also strong as we continue to expand doors and our footprint within existing doors. Our Calvin Klein performance and suit businesses even with tough comparisons from last year, each had another solid quarter. More broadly in our wholesale assortment the dress category was a standout for us this quarter. Our Eliza J brand continues to be strong, our Jessica Simpson business has improved with good margins, and we saw a very positive response to our dress lines from Vince Camuto.
Our moderate Jessica Howard dress business performed better in net sales and gross margins. Our overall dress business is approaching $350 million at wholesale and we continue to have growth opportunities. We’re just getting started with Ivanka Trump. Ivanka’s overall rollout went smoothly and we’re focused on building a presence for this brand in a number of categories including dresses, sportswear separates, swimwear and outerwear. We continue to think that the Ivanka Trump brand can occupy distinct and differentiated lifestyle position and can become increasingly important over time.
Our Team Sports business had a good first quarter and is set up to have another strong fall and holiday season. As you know, the first quarter is something of a cleanup quarter for our outerwear business. I’m pleased to report that inventory at the end of the season was in good shape in all channels across our assortment of brands. This bodes well for the upcoming fall season and while it remains somewhat early, our outerwear lines have received good feedback from our customers and we're pleased with our bookings thus far.
Turning to our retail businesses; we performed relatively well. Wilsons had a positive comp of 1.2% for the quarter, but finished with very strong April. This strength has continued into second quarter. We're still in test mode with our full price concept and it should be at about 20 full price stores, up from 15, this start of the holiday season. We want consistent sales productivity before we commit to a larger rollout of full price Wilsons stores. Our G.H. Bass merchandise clearance is on plan and the transition of operating systems from PVH to our platform is almost complete. In addition we've just completed a new showroom and moved the New York G.H. Bass staff into our new corporate headquarters. This cements the cultural integration of our businesses.
We're looking forward to fall, when our updated assortments begin to flow into the Bass stores. We are confident that we can reinvigorate the brand and grow the business, just as we did with Wilsons. Vilebrequin retail store comps were up low single digit for the quarter with positive contributions from both the U.S. and European stores. Here too, we think there is momentum in the numbers as we go forward. Our company owned store count is now at 75 with a plan to be over 80 by year-end. I would note that when we acquired the brand there were 13 U.S. stores out of a total of 60 company-owned stores. We now have 21 in the U.S. and we continue to see good results from all of our new locations.
I’ll reserve a few comments for closing, but I’ll now turn the call over to Neal Nachman, our Chief Financial Officer for a closer look at the numbers for the quarter.
Thank you, Morris. Our net income was $1.3 billion, or $0.06 per diluted share compared to a net income of $1.1 million or $0.05 per diluted share in last year’s first quarter. Net sales for the quarter ended April 30, 2014 increased 34% to $366 million from $272 million in the same period last year. Net sales of licensed products increased to $217 million from $180 million driven by increased sales of Calvin Klein licensed products primarily in our women’s sportswear and handbag lines, as well as sales from our new Calvin Klein swimsuit and Ivanka Trump product lines.
Net sales of non-licensed products increased to $68 million this quarter from 61 million in the comparable quarter last year. This increase is driven by increases in net sales from our Vilebrequin business and our dress divisions. Net sales of our retail operations increased $50 million to $95.6 million in the first quarter primarily due to net sales of $44.2 million from our G.H. Bass business that was acquired in November 2013. In addition, Wilsons had increased sales as a result of new stores and a comp sales increase of 1.2%.
Our gross margin percentage was 35.5% in the three-months period ended April 30, 2014 as compared to 33.9% in the prior year's period. Gross margin percentage in our licensed product segment was 28.1% this quarter compared to 27.8% in the prior year. The gross margin percentage in our non-licensed product segment was 35.8% compared to 31.6% in the prior year, which is attributable to improved margins in our Vilebrequin business, as well as our Eliza J and Jessica Howard dress divisions. The gross margin percentage in our retail operation segment was 47% compared to 50.9% in the prior year, primarily due to our new G.H. Bass business operating at a lower gross profit percentage in our overall retail business and a higher markdown granted by Wilsons.
Total SG&A expenses increased $122 million in the quarter ended April 30, 2014 from $85.8 million in the same period last year. This increase is primarily attributable to increased personnel costs, facility costs and advertising costs, which are primarily associated with our new G.H. Bass business, Wilsons’ sales and our increased retail store count.
Regarding our balance sheet, accounts receivable decreased to $145 million from $152 million at the end of the prior year’s first quarter. Inventory increased approximately 33% to $323 million compared to $242 million at the end of the first quarter of last year. Inventory increases are consistent with our forecasted sales growth. We are pleased that despite of cash expenditure of approximately $50 million in November 2013, in connection with the acquisition of G.H. Bass, our bank debt less cash on hand balance decreased $16 million and stands at approximately $39 million as of the end of the quarter. We spent approximately $10 million on capital expenditures thus far, primarily due to the expansion of our retail distribution center, we sold improvements for the new Wilsons and Vilebrequin stores as well as fixed in cost at department stores.
Lastly I would like to discuss our guidance for the full fiscal year and the second quarter. For the fiscal year ending January 31, 2015, we are now forecasting net sales of approximately $2.06 billion, up from our previous forecast of 2.05 billion. This would result in an increase of approximately 20% from the $1.7 billion in net sales in fiscal 2014. We are increasing our forecasted net income to between $88 and $91 million compared to our previous forecast of $85 to $88.5 million.
This results in an increase of between 14 and 18% compared to net income of 77.4 million in fiscal 2014. We are now forecasting net income per share of between $4.05 and $4.20 per diluted share, up from our previously forecasted range of $3.95 to $4.10 per share.
Our revised guidance compares to net income per share of $3.71 in fiscal 2014. We are forecasting adjusted EBITDA to grow between 16% and 19% to between $170 and $175.5 million, compared to $147 million in fiscal 2014. With respect to our second quarter guidance we are forecasting net sales to increase to approximately $392 million in this year’s second quarter, an increase of 29% from the $304 million of net sales for the comparable quarter in the prior year.
We are forecasting net income between $2.8 and $3.7 million or between $0.13 and $0.17 per diluted share with a second quarter. This compares to net income of $3.6 million or $0.17 per diluted share in the previous year’s second quarter.
That concludes my comments and I will now turn the call back to Morris for closing remarks.
Thank you, Neal. This has been an excellent start to our year and while the first quarter is historically our smallest from a revenue perspective, we are pleased to have reported a profit compared to assigned loss even while integrating the G.H. Bass business. The majority of our businesses are quite healthy, particularly relative to the market which has been challenging for many. This strength is not lost on our retail customers who come to count on us to anchor their assortments in a number of key categories. This certainly bodes well for our ability to continue to capture market share, attract strong brand partners and diversify our business into new categories. Additionally due to our success we’re able to attract and hire some of the best talent in the industry. We continue to execute our strategy to growth both organically and through acquisition.
We’ve been fortunate to find good additions to our business, whether through acquisitions or new licensing arrangements and more importantly we worked very hard to integrate them into our operations and to improve upon the financial performance of these businesses. This combination of thoughtful capital deployment, an incremental improvement to our acquired businesses has served us well and created excellent value for our shareholders. Our most recent strategic acquisition of G.H. Bass is a good example. This transaction which came at a very reasonable valuation, provides us with a significant degree of scale in our retail infrastructure. G-III will also benefit by building the wholesale and licensing business of G.H. Bass.
I would like to thank our shareholders and analysts on the call today for your continued interest and support, or customers and partners for their contribution to our success and our employees and management team for their continued hard work and dedication. This current fiscal year has the potential to be another excellent record breaking year and we’re excited to be off to a great start.
Thank you, operator we’re ready to take some questions.
Thank you, we will begin the question and answer session. (Operator Instructions). And our first question comes from Edward Yruma from KeyBanc, please go ahead.
Edward Yruma – KeyBanc
In terms of the performance in the quarter, how much of it would you ascribe to kind of strong sell through outerwear and reduced marked on money at the close of the outerwear selling season?
Not a lot, it was quite honestly, it was a normal year. Our outerwear business was good, we had issues that we fought through to attain that status, we had many-many days of store closings that you can’t, you just don’t do any volume when your stores are closed. We calculated hundreds of individual day closings at Wilsons and Bass, and our retailers also had significant days that they were closed so you know coat business was not exactly what you might think. Our dress business was strong, our handbag business was strong we had a well-rounded business I couldn’t say one individual issue that brought us to where we are.
Edward Yruma – KeyBanc
Got it. And one final question, in terms of the G.H. Bass business I know you have the revenue component there but if you could talk about how you think about the impact of the P&L that plays out for the rest of the year and if you’re holding by your previous guidance for impact on an annual basis. Thank you.
Yes Ed for the full year we’re still thinking that it’s probably it could be a slightly accretive event but nothing of significance. We certainly had -- while the business are integrating totally with the Wilsons’ business it becomes harder to get to a specific P&L figures for it but we certainly incurred a significant loss in the first quarter from the business we’re probably looking at a loss event in the second quarter and then we’re hoping to get the business right and the back half for the year should be stronger for us and positive.
Thank you. And our next question comes from Erinn Murphy from Piper Jaffray. Please go ahead.
Erinn Murphy - Piper Jaffray
Great. Good morning and great job executing the quarter. A couple of questions for me, first, if we look back over this last quarter Morris you talked about the retail business starting soft and ended much stronger in April as you kind of referenced Wilsons. Did you see a similar shopping patter or selling trends at wholesale? And then if you think about the second quarter what are you seeing in terms of the kind of delta between how the consumer is shopping retail versus wholesale?
The similarity is -- thank you Erinn, thanks for your question. The similarity is very strong with our own retail and the retail customers that we have. Clearly, our traffic count was down it was down low double digits and we saw the same or we heard the same numbers in our department store and more traffic. And we believe that this trend is actually continuing. We see traffic down in the month of May both that again our own retail as well as our customers. So, we do have a battle to fight. We need to get our customers in, we need to close the sale and let the customer -- remind the customer that there is value to be had by shopping brick and mortar.
Erinn Murphy - Piper Jaffray
So, I guess that traffic continuing to be a headwind for the entire space, can you just talk about what you’re seeing the consumer respond well to whether it’s categories or average transaction side, I mean how are you making that up with the continued momentum in your business?
They are responding to fashion, they’re responding to price when they do see a promotion they respond to it. When they do see new fashion hit the stores there is an immediate response. The core basic business is strong it’s consistent but it doesn’t give us the bump up that’s needed to offset some of the traffic miss. And if we go to the luxury sector we see a little bit of a difference in traffic count. We don’t seem to be incurring the same depletion of traffic in luxury as we are in the mid-tier.
Erinn Murphy - Piper Jaffray
Thank you. That’s helpful. And then I guess just following back on the outerwear bookings for fall. Any other hint if you can give I mean is the order book now complete is there any context you can give in terms of how retailers are thinking about that and just kind of underlying momentum you have as you think about this being a potential other record breaking year for you guys?
The order book is far from complete. We are on trend to comp to last year comp to history there is a long way to go we’re somewhere around 70% booked between 70% to 72% which is consistent with last year’s number. And the early bookings were -- there was kind of a strange mix there were retailers that felt they were highly under inventory for their winter season they came out fairly aggressively and there were others that looked at it -- looked at the business as if it was an anomaly and not a trend then modified their buy and are running a flat business. So, there is nothing that we can really get out of the years that supports tremendous growth. There is normal growth that we’re expecting and we’re planning our inventory to support that.
Erinn Murphy - Piper Jaffray
Great, that’s helpful. And then just one last question and then I’ll let someone else get in. Just bigger picture Morris as you think about the acquisition landscape I mean can you help us think about the filters the parameters that are compelling for you as you are considering potential new brands to add to your portfolio overtime? Thank you.
Clearly, we’re looking at acquisitions that can provide some scale to our business that are in the sense somewhat game changers, we’re no longer in the motive finding situations that add $20 million or $30 million of business, they become a little bit of a drain on our management team. The integration of acquiring a $30 million or $40 million company is not too far different than acquiring a $500 million company. So with that balance sheet we can be a little bit more cavalier than the past and say that the $0.5 billion acquisition is manageable from a financial point of view. And we are out there looking at appropriate acquisitions and not limited to any one sector, we’ve kind of proved out that we can operate businesses that are outside of coats outside of dresses that we seem to be getting our arms wrapped around significant footwear business at Bass. So the fear factor is gone, we’re looking for a solid acquisition with a solid management team that’s positioned for growth and prosperity and still predominantly in the United States.
Thank you. And our next question comes from Rick Patel from Stephens. Please go ahead.
Rick Patel – Stephens
Congrats on a strong quarter. Can you talk about inventories in the channel in general? I know you’re happy with your level of inventories but just curious what you make of levels at your department store customers? Do you think they’re healthy levels and if not how should we be thinking about the potential for markdown support in the coming quarters?
It’s something that we’re watching overall, certainly our wholesale levels are in great shape. We think that retail levels are also in good shape with so many concerns that the retail performance in the major department stores was not very strong in the first quarter, so we’ve definitely seen some inventory growth probably more in the general sportswear category. So we’re assuming a little bit concern about pressure that could come from moving that inventory in the second quarter. But overall we’re comfortable with where we’re positioned.
We’re controlling our inventory positions with our retail customers in a sense we have added planners and merchandisers in all of our businesses, we closely watch it, we accelerate the markdowns to make sure that inventory is perpetually clean. So there is no residual inventory that looks aged when you walk into a store and they’re at very manageable levels. So there is a conscious effort to control it where we can and where we’re given an opportunity to have a voice. So we’re pleased probably more pleased than we have ever been with our inventory management skills and the impact that we’ve had in our customer base.
Rick Patel - Stephens
That’s great to hear. And then can you talk about the Ivanka Trump brand a little bit more, you have been out with the product now for a few months. Perhaps can you give us a read on what’s performing well? Where the areas of improvement are and I know you've highlighted the potential for Ivanka to be a mega brand down the road. But how much do you think it can contribute to the top line this year?
I’ll start with the pieces that we do know, we shipped sportswear, we shipped dresses, we shipped swimwear. Swimwear was the later entry and swimwear is doing very well on a department store level. So we’re pleased with that launch. The dress side of our business is also very good and the piece that maybe lagging relative to what we would like to see is the sportswear piece, but that’s typical of how we launch a business. We take the business, we design it appropriately, we believe appropriately. Each delivery tends to build a library of products for us. And by the time we get to shipping out our third season were 80% to 90% appropriate and correct for the consumer.
Our outerwear is posed very well, we’re in 75 Macy’s stores for fall, Bon-Ton has supported it, Lord & Taylor the Bay. We have all of our customers that have been loyal to our organization are here to support new initiatives that we have. And we believe that the way we’ve created the Ivanka outerwear business, is a little bit unique. It has style, it has fashion that is not typical of the rest of our company. There is a space for it at retail and we’re certain that it will be a large business.
In response to your question about scale, we believe that this business by calendar 2015 should be between $50 million and $75 million business without much difficulty, a profitable $50 million to $75 million business.
Thank you. And our next question comes from Joan Payson from Barclays. Please go ahead.
Joan Payson - Barclays Capital
Congratulations on a strong start to the year. Could you talk a little bit about your margin out performance this quarter, because I think we saw much stronger than what we were originally expecting and where that came from if its related to Vilebrequin or Bass or just the overall cadence of the business changing at this point.
Still the biggest piece of our business is our wholesale piece of the business, it probably represents about 70% of the quarter. And we saw nice improvement in the gross margin in the wholesale side, we commented that the license part of the business was up slightly, the non-license business had a stronger increase. It was Vilebrequin on moderate dress business or Eliza J dress businesses both performed very well.
So wholesale was a good driver for us in total, the Calvin business did fine as far as gross margin comparisons. So overall the only place that we really struggled was really in our own retail business. As I mentioned we incorporated the G.H. Bass which operates slightly lower than the Wilsons business at least initially. And Wilsons also did have competed with the lower traffic by being more promotional and that did reduce their gross margins in the quarter.
Joan Payson - Barclays Capital
And on the Wilsons full price side you mentioned the store test still being under way. Could you talk about how the merchandising differs from the off price stores in terms of the categories and brands and what the big differences are there?
The category is the same, it’s predominantly three classifications of product. It’s accessories, small leather goods, hand bags and accessories as one silo and the other two were men’s and women’s outerwear. So the classifications are the same, store design is somewhat different or our goal is to be different we’re improving on it as we speak. Pricing is higher by about 20% and the product mix is, the product mix on the outerwear and the accessories are a little bit more upscale than they have been.
And there is a greater focus on leather in our mall locations and there are in the outlets and we believe that there is an opportunity to grow it. We’ve still not proved it out, we’re still in test mode. We’ve not reached the scale of 20 stores yet and we’ve not reached a level where we believe we’re geared to go and build a 100 store opportunity in this. And our leases are assigned such that if we decide that this is not a direction we take, the exit is fairly simple. So we see there as an opportunity with minimal risk.
Joan Payson - Barclays Capital
And just finally you mentioned the May traffic trends but are there any data points that you’re seeing so far this quarter that make you incrementally more confident for the second quarter and the rest of the year in general?
No, there is a concern. I don’t have any data points quite honestly other than when you get fashion right the product sells. We still see a lack of traffic and there is nothing out there that supports the fact that traffic is going to get back to what we perceive as a normal count. So there is a concern for the traffic coming back.
Thank you. (Operator Instructions). And our next question comes from John Kernan from Cowen. Please go ahead.
John Kernan - Cowen & Co.
Congrats on an excellent quarter. Just you talked Morris I think you talked about momentum actually building in the wholesale channel after very strong first quarter. Is there any reason for us to believe your wholesale licenses, wholesale non-license business wouldn’t see some type of acceleration or continue this very strong trend as the year goes on.
I believe that the momentum continues because of who we are and the brands that we hold and the fact that there are situations in most department stores where there is a consolidation of resources. The strong survive and in our case not only survive we flourished, we’re gaining market share pretty much in every sector, brands are dominant. We’re doing store build outs that if you see our G&A has increased somewhat and that’s a product of doing the appropriate build outs for our department stores.
We’re training our people better, so we’re taking advantage of situations that afforded to us by the wholesale channel and its proving out. And I don’t believe if you pulled the competition you get the same response. I’d say that most people are losing space. We’re gaining space in every classification that we participate in. So that’s the traction that I refer to it’s not the traction that really has begun to accelerate at the retail level it’s specific to Q3 as far as I am concerned.
John Kernan - Cowen & Co.
Thank you. And that’s helpful. And then you gave a lot of commentary across the portfolio but just in terms of just Vilebrequin I think you said you’re up to 75 stores now you’ll be at 80 by year end with 21 of the stores being in the U.S. So what do you think is long term potential for Vilebrequin both in the wholesale channel and the retail channel both in terms of the growth indoors of distribution along with category expansion? Thanks.
Look, the number that we gave John was company owned stores we just had a franchise open in South Korea we had another franchise here in the West Coast. So our franchise units pretty much match our company owned units there, it's close. We have about 72 I believe of locations and franchise. And our wholesale business is growing specifically in the swim area what we’re doing right now is we’re building adjacent type product we’re still trying to perfect the women swim business. We’re in the middle of signing a footwear license for casual footwear that should be distributed not only in our own stores but globally in wholesale multi-branded stores that crater a luxury. And we’re building a ready to wear collection that should have an impact in the luxury sector. So this will be a brand that we’ll put a lot of work and effort into and it’s again it’s a valid approach, it’s a brand that does have great consumer recognition at luxury and we believe it’s got a fan base that will support a lifestyle initiative.
Thank you. And our next question comes from Eric Beder from Brean Capital. Please go ahead.
Eric Beder - Brean Capital
Could you talk a little bit about Calvin Klein handbags where are you seeing the gains there is it -- and I am sure it’s both indoors and space. Where do you think that business can go? And could you talk a little bit about Calvin Klein’s sportswear the performance wear how is that doing in China and how are the stores doing in the U.S. and you plan to expand them anytime soon?
Okay. The handbag business that I think two years ago I said that this opportunity can be a $200 million business I think I repeated that maybe six months ago. And I am kind of comfortable repeating it again we’re more than halfway there. It is challenging this space is crowded we are doing well. We’re gaining again we’re gaining market share we’re gaining space and we’re doing the appropriate build out to get us to a scale that I am describing. So we’re very happy with it. We have a great team. We have a great team that understands that business we’re sourcing more efficiently and we get better every single day in the handbag sector.
On the performance piece of our business we’re opening two more stores as we speak one of them will be in the mall of America and another one in New Jersey. So, that will bring us to five in the United States. Those stores are doing well. The trophy is our store in Scottsdale it’s grown the comp sales there are about 26% comp to last year. So we’re very pleased with it that store is designed well, they display the product well and there is demand for the product.
On the China initiative we described the joint venture that we had put together several years ago with a Chinese local company called China Ting publicly traded company on the Hong Kong Exchange. That initiative isn’t going as well as the United States initiative. We haven’t appropriately found the consumer to support the creativity that we’ve provided and operationally we have some misses there as well. So that one is still a work in process and we’ll decide how to handle that one. Again as always we try to minimize the risk that we take in going to a new initiative so whether we continue with it or we dispose of it, it will be de minimis to the company. And on the wholesale side the performance of our businesses has grown significantly, that today is north of $100 million business and it got there quite rapidly.
And I will now turn the call over to management for closing remarks.
I thank you today, and thank you for being a part of our company. Have a good day.
Thank you and thank you ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.
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