Overstock.com's CEO Discusses Q1 2011 Results - Earnings Call Transcript

| About: Overstock.com, Inc. (OSTK)

Overstock.com, Inc. (NASDAQ:OSTK)

Q1 2011 Earnings Call

April 28, 2011 4:00 PM ET

Executives

Jonathan Johnson – President

Steve Chesnut – SVP, Finance and Risk Management

Patrick Byrne – Chairman and CEO

Analysts

Dan Chornous – The Benchmark Company

Nat Schindler – Bank of America-Merrill Lynch

Brent Rystrom – Feltl Co

Glenn Rowland – Private Investor

Operator

Good afternoon. I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2011 Overstock.com Incorporated Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. (Operator Instructions).

Mr. Johnson, you may begin your conference.

Jonathan Johnson

Thank you, Kina. Good afternoon. And welcome to our Q1 2011 earnings conference call. Joining me today are Dr. Patrick Byrne, Chairman and CEO of Overstock; and Steve Chesnut, Senior Vice President of Finance and Risk Management of Overstock. We do not predict the future and we want to stay out of trouble. So, let me first read the legal forward-looking statement language.

The following discussions and our responses to your questions reflect management’s views as of today, April 28, 2011, and may include forward-looking statements. Actual results may differ materially. Additional information about factors that could potentially impact our financial results is included in the press release and Form 10-Q that were issued and filed this morning. And our Form 10-K filed earlier this year.

During the call, we will discuss certain non-GAAP financial measures. The slides accompanying this webcast and our filings with the SEC each posted on our Investor Relations website contain additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to our most comparable GAAP measures.

With that out of the way, let me turn the call over to Steve to highlight some of our financial results.

Steve Chesnut

Thank you, Jonathan. Let me give you a brief review of our financial results for the first quarter 2011. Unless otherwise stated, all the comparisons we made during our call today will be against our results from Q1, 2010.

Q1 revenues were flat compared to last year’s revenue in our direct business acclaimed by 5% of revenue from our fulfillment partner business grew by 2%. Gross profit grew by 6% in the quarter to just over 50 million and gross margin increased by a 100 basis points to 18.9%.

Contribution margin increased by 60 basis points to 13.1%, despite the 40 basis point increase in sales and marketing expense. Combined technology and G&A expense increased by 20% largely due to increase in staffing with compared to last year.

During the quarter we retired 10.1 million of our long-term debt, which has 24.4 balance outstanding as we finish the quarter. Working capital increased slightly from Q4 2010 to 15.1 million. So, I would encourage you to review our Form 10-Q that was filed today for more details and thorough analysis of our results.

So with that, let me turn the call over to you Patrick.

Patrick Byrne

Thank you. Referring to the slide deck, going to start on slide 3, actually into these numbers, Steve has already walked through slide 4. Q1 is of course everyone knows about the Google’s natural search penalty, we disclosed that we’ve put on, when we came out, it cost us about 4% or 5% of sales while it was on, and about 7% or 8% in contribution dollars. That was on for what, six weeks or so.

Jonathan Johnson

For 2 months.

Patrick Byrne

We have introduced O.co as our shortcut to Overstock, it’s getting nice pick up, nice traction, and you may have seen something yesterday about the Oakland Coliseum, where rank number 4 top and by NRF AMX this year we received two Stevie Awards for the best customer service in department and sales department.

Slide 5, growth has come down. Of course we are up against – we had enough 42% growth in this quarter last year. So, we had a tough comp, but we feel okay if it’s stabilized. It has stabilized – we are not, as I have been saying for a couple of years, we are really not chasing the top line growth, it’s nice when it comes. We care a lot about contribution dollar growth.

So let’s go to slide 6, see there’s still site growth in quarterly gross profit. Contribution dollars, contribution percent as on slide 7 is gone up to 13 one, I think that is probably the highest we are going to see it. And do you guys want to add anything to that.

Jonathan Johnson

I would agree with that.

Patrick Byrne

Yeah, we don’t want this taking up to 14 for example. So, we are – slide 8 contribution dollars, 5% growth. Again, we were hit somewhat by the Google penalty, but still it is positive and we think that we have good growth lined up for this year in this number.

Slide 9, cash flow from operations. Trailing 12 months for spinning off $35 million in operating cash flow.

On GAAP, annualized at slide 10, our inventory turns on a GAAP basis are 40 now, and even on a core basis they are 8.3. which is healthy, loved to see at even get up to 10 or so, but we’ve really leaned out our capital, we spent a lot of the last couple of years developing all the pricing in forecasting, and we think it’s paying in different way, and one is we’ve just stripped lot of inventory out of our supply chain.

Jonathan Johnson

Yeah, when you see at the last 9 quarters, this is the highest span, I think there is very low efficiency still be achieved there, but we’re reaching at least for the result. Right.

Patrick Byrne

Slide 11 on a giveaway, retailers love to lookout on a GAAP basis 854%, which is of course and certainly high, on the core inventory only it’s 92 and that is disappointing, we want to be able to, I think we’ll see a significant increase in this soon would you Steve?

Steve Chesnut

I would, because part of this is influenced by our core margin, somebody headed to core where we are, some promotional activities to lean down inventories

Jonathan Johnson

We would like to see this get at least to a 120, even just a first step.

Patrick Byrne

Slide 12 our NBS score, for those who contact customer service again just continues to go up and up, and up, we can’t believe it, but they just keep on finding new ways to do more with less, and customer care and satisfy people so right at 58% for people this is actually an apples to oranges comparison, because the 58% is people who had a problem with customer service, where the overall score of 8% for the average American company is your overall score.

Jonathan Johnson

Meaning people who do, and do not contact customer service.

Patrick Byrne

Right, and those who contact customer service tend to be a little bit less happy, then those who don’t. So, unique customer down slide 13 unique customers were without almost 25 million people do business with us collectively, but our number of unique customers is down and on slide 14 new customers is down, and slide 15 PDC voters is down, the big difference is our average order size is on slide 16 has gone up quite a bit. And this is both function of our buying decisions, and just mix shift going on within, mix shift going on within our products do you want to comment on that, Steve.

Steve Chesnut

I would comment, Jonathan is that, part of a customer’s going down we attribute to the Google penalty box, a lot of people shop now by going to Google and typing in the search part what they are looking for and when we were in the penalty box for the last six weeks of the quarter, it meant that, for many items, we weren’t appearing on a page that was meaningful.

Jonathan Johnson

And I think the average order size was influenced, like you said Patrick by mix where we are not chasing the BMMG customer as much and we’re getting a great customer around home garden.

Patrick Byrne

Slide 17, gross profit for transaction up nicely. And there are some of our costs here really tied to, our per transaction basis costs. So, it’s nice one when we can generate some more gross profit out of each one. Marketing CPA and marketing efficiency. CPA has ticked up, marketing efficiency at 5.8 on the GAAP basis is right, maybe still a point higher than I would like to see the cost for acquisition has gone up for us again that’s partially reflection of Google when you lose those customers who are the cheapest to get.

Jonathan Johnson

There achieve is to get into counter balance the effectively penalty we did some more on page search with Google during the period in the box.

Patrick Byrne

Corporate employees are 19% growth, 850 corporate employees now that’s, I like this, I feel like we’re managing, we’re deliberately growing our corporate layer. But, we are, it’s the majority of it is in technology and we are watching it carefully and trying to keep it, will keep it growing and consistent with our overall contribution dollar growth. I don’t see this is a problem, this 19% growth is we’re adding good technologist and getting back, our innovation cycle has spun up or creating lots of new things. And so, I think this is reasonable.

Steve Chesnut

Can I comment? So, one of the things that I notice on this chart is that this is the first, this has the Q1 number going down from Q4. And, I think that is a result of some of these technology hires they were able to be more efficient in different parts of the business. So, all the number grow 19% year-over-year, quarter-to-quarter, it’s come down a little bit.

Jonathan Johnson

Okay, let’s go to questions. Are there any questions?

Question-and-Answer Session

Operator

(Operation Instructions) We’ll pause for a moment to compile the Q&A roster. Your first question comes from Dan Chornous of The Benchmark Company

Patrick Byrne

Hello, Dan. Dan?

Operator

Dan, please un-mute your line.

Dan Chornous – The Benchmark Company

Hi, can you guys hear me now.

Patrick Byrne

Yeah, I can hear you now.

Dan Chornous – The Benchmark

Hey sorry about that guys. Good afternoon. I just had a few questions for you, two on the top line and two on the expense side. I know that you guys had stated previously that you expected you could grow in line with overall e-commerce growth, at least pace with general e-commerce growth. Given the Google impact in the first quarter and now on the second quarter, do you think that is still a reachable goal?

Patrick Byrne

Yes, although, well, first, we’re out of it, we’re out of the Google penalty box now. I guess, I have stated that goal, but I have tried to be pretty careful to say, we are talking on an annual basis. Quarters-to-quarter are going to fluctuate where, in my view of business that in its fourth quarter was making 0001 then 0002 then 0004 that did great business its annual earnings would be doubling each by, what it’s doing in the first three quarters, what we were doing in our first three quarters as long as we come out somewhere around breakeven in the first three quarter is less relevant to me and on the top line, yes, I still do think that we should be able to grow at least at the industry rate, looking at over a year at time, I’m sorry go ahead.

Dan Chornous – The Benchmark Company

I was just curious if you guys had seen, now that you’re out of the penalty box, obviously you had to undertake some actions to alleviate that situation. Has there been sort of, has your natural search ranking returned close to where it was before or can you sort of quantify that?

Patrick Byrne

Yeah Dan it has and in fact we can tell we were out of the penalty box before we were even notified because we saw the search ranking improve and a tick up in sales.

Jonathan Johnson

Yeah it jumped back right away, it may not what you think – maybe a fraction below where it was before, but it jumped back since Friday.

Dan Chornous – The Benchmark Company

You posted a 5% decline in direct. Was there a conscious shift away from the direct or was it just a function of the Google penalty or just a function of the quarter itself?

Patrick Byrne

It’s really just a function of the quarter. We are pretty agnostic. We don’t have an overarching theory as to how much we should be growing one versus the other or shifting revenue back and forth direct partner. We are just making the decisions on direct on a standalone basis on sort of a case by case, product by product basis, Products get offered at – is it worth us sinking our capital into it? So, there is really not an overarching theory as to where we should drive that. So, it just sort of comes and go with the product offerings are.

Dan Chornous – The Benchmark Company

Okay. And two – just two quick questions on expenses if I might. On the gross margin side, you guys obviously showed a nice improvement there, up 1% year-over-year. You clearly had the balance in 3Q ‘10. It is elevated now. You have been as highest 20. Could you at least give me some sort of sense directionally of where you would like to see that? Will it go higher from here? Or is it more just a function of product mix or revenue mix?

Patrick Byrne

I don’t think you see our gross margin – we said three years ago or so. I think we said we had 400 or 500 basis points we can pull out. I think we actually pulled out more than that, more like, 700 or 800 but we keep giving a lot of it back to the consumer. So, you see our margins go up a certain amount, but we actually – and similarly I don’t think we want to see them go up. We still see 100s of basis points more that we can strip out of our supply chain. But, I think you see the bulk of that just keep getting passed on to consumers. Steve?

Steve Chesnut

Yes, and that is part of the story. I think we have got supply chain efficiencies that played out in the quarter are constantly looking for pricing opportunities to give back those dollars to the consumer.

Patrick Byrne

That’s right. And we still see, I actually thought three years ago we would be able to pull out about 500 or 600 basis points, I think we’ve pulled out about 800 basis points out of our supply chain. And I would have thought we would be running out of ideas by now, but we have Mr. Chesnut here and they have a lot of more opportunities coming.

Jonathan Johnson

We still have fertile minds.

Patrick Byrne

But again, you won’t see our margins go up to 25% and I am sure you know as Dan, as an analyst, that we calculate our margins a little bit differently than other people. Our margins include our logistic costs, but so I don’t think that you see them go up significantly from here. If anything, we just want to keep the same…

Dan Chornous – The Benchmark Company

Keep them at this level?

Patrick Byrne

Yeah, keep it this level that sounds about right.

Dan Chornous – The Benchmark Company

Okay. Just one more thing. Your legal expenses jumped up about $2 million in the quarter and I guess I hadn’t quite anticipated that much of an increase and if there’s just sort of any color you could provide on how that is going to you – I know that you won’t give exact expense guidance, but where that might trend for the rest of year, that would be very helpful. Thanks very much.

Patrick Byrne

Thanks, Dan. It is an expensive that year, from the legal point of view.

Jonathan Johnson

Yes, we have got some battles we are fighting. And so I think – I think we are going to continue to have legal expenses like we did in the first quarter.

Dan Chornous – The Benchmark Company

All right, great. Thanks a lot, guys.

Jonathan Johnson

Thank you.

Operator

Your next question comes from Nat Schindler of Bank of America-Merrill Lynch.

Patrick Byrne

Hello Nat Schindler.

Nat Schindler – Bank of America-Merrill Lynch

Hello Patrick, Jonathan. Just a couple of questions. One, just to go back, and I am remembering actually a different number than in line with the e-commerce idea. I think, Patrick, you said, I think it was two quarters ago, that you expected to grow about 1000 basis points faster than e-commerce long term. Is that –?

Patrick Byrne

I don’t know, I actually do think that we should be able to grow, it doesn’t sound too hard to me, I think e-commerce grows 10% and we should be able to grow 15% to 20%.

Nat Schindler – Bank of America-Merrill Lynch

Okay. I am just – I am trying to figure out because, obviously, you had – so you had a very tough comp this quarter, but going back to 2009, you actually had a very easy comp in 2009. So it is really – it is getting you kind of this oscillation. So, if I look back three years to 1Q ‘08 pre-recession or pre the big part of the recession, I guess it could’ve started in the fourth quarter of ‘07, but really back before everybody was talking about recession, so looking at a normalized number, you grew – you were up 31%, which is basically exactly the same as what e-commerce is up, which is fine because e-commerce is growing well. The challenge I have is how you reconcile that with how much you are spending in tuck-in G&A and how you are making those decisions because – and that line is up 44% since that time. And is there a way – are we going to see this real increase that you have had in employees taper off to something that matches or actually where you could actually get leverage on that line?

Patrick Byrne

I think so, I think that our long term growth in corporate G&A including technology should be somewhat below our top line growth, but I think that where we came through in 2008 was, we were tightening our belt in an effort to get profitability, but once having got there, we are having the luxury of profitability we are taking dollars and investing it in technology expense. So, you are sort of comparing where we were when we are tightening our belts as tight as we could to where we are now when, we losing to some, there is always I think that there is, I can’t be more precise than I am being, we should able to grow at least as fast as the industry and I think that our contribution dollars should be able to grow another 5% or 10% faster than that, if only because then model out what our bottom line looks like given that sort of assumptions it generates very nice growth in the bottom line.

Nat Schindler – Bank of America-Merrill Lynch

I understand. Another thing, could you help me out a little bit on the exact dates of the Google penalty?

Jonathan Johnson

Yes, I think we went into the penalty box February 22nd, and we came out of it April 21st.

Nat Schindler – Bank of America-Merrill Lynch

So just about half the quarter?

Jonathan Johnson

Yes, it was just shy of half the quarter and it was the first three weeks of the second quarter.

Nat Schindler – Bank of America-Merrill Lynch

Okay, great. And then – now, you answered in the last question that, as you came back out of the penalty box, you are – come back up in your search rankings well. Now, I would assume that there was an advantage to doing the SEO work that you were doing that caused Google to get upset. So should your cost of customer acquisition be reset at a marginally higher rate from now on or how marginal is that?

Patrick Byrne

It’s pretty marginal.

Jonathan Johnson

The things that we were doing that Google took issue with were such inconsequential thing piece of what put us high in the rankings that we don’t think that not doing them anymore it’s going to hurt us.

Patrick Byrne

Yeah, I mean, there is a measurable difference, but probably measurable to us on the inside and not even maybe it shows up in a matter of few dollars or dollars something in CBA, I’m not even sure if it’s that much.

Steve Chesnut

Yeah, I mean, as we have seen it bounce back, I mean I think we are going to return back to more of the normal pattern that we saw early in 2011.

Patrick Byrne

Well, it’s had a great relationship with the Google, I would be surprised about this, we’re actually developing some good stuff with them. So, I was surprised about the whole Google penalty, but there it is.

Nat Schindler – Bank of America-Merrill Lynch

Patrick, going back quite a few years probably, four or five years ago, your big marketing put at that time was SEO or you going to, is SEO still going to be a major part of marketing in or is that just because of what Google did that’s kind of a turned off avenue, and you’re going to focus on brand and SEO?

Patrick Byrne

No, we are no it’s we’re not going to turn off it’s back, it’s still good part of the market progress, and nice healthy chunk of our business, but it’s, no we’re pushing a little bit harder on branding that we’ve done before, but we really actually always readjusting analyzing the ROI for dollars spent in every different marketing chimney and trying to optimize for that. No, I don’t see this is all as coming into our SEO efforts, in fact I feel like we’re getting better and better, in fact I think that just, I heard some somewhere along the way, some I think Wall Street Journal reported that this, I don’t know where they got the information. But that this was all figured by some competitor who had seen how much we had improved in rankings and hence, made a case to Google. So I don’t know if the Wall Street Journal was right about that, but so anyway it’s happen because I think we’re a lot better SEO then we were four years ago. And I don’t see cutting into that at all.

Jonathan Johnson

Yeah, I agree , and I think we SEO is still a vibrant part of our marketing.

Patrick Byrne

It’s taken quite a change by the way , I mean SEO, the SEO world is taking lot of the principles are changing in what, , for example SEO, a lot of it has been about as you know, I’m sure lengths and what size lengths to your and very length count is a vote. Well the lot of that voting is starting to shift into voting as measured in social media rather than in sites linking to you. So, the whole the principles of SEO seem to be shifting and the industry is well aware of that shift and we’re trying to stay at least current with it, and maybe ahead of it.

Nat Schindler – Bank of America-Merrill Lynch

Yeah, that sounds good and just a couple of quick questions on a different avenue one the Coliseum deal, wondering if you can give us some indication of how much of you paid, and also what’s the affinity with Oakland?

Patrick Byrne

Well, we announced yesterday, that the deal was a million two a year or six years as rule escalator and it comes out off, some point $2 million for the six year deal. We also announced that should either of the as or the raiders leave, we have the option to reduce it to a predetermined price or to terminate the deal. So, we feel like we got some comfort there. What is the affinity with Oakland? Well, it was great deal that was offered to us. We have a lot of sales in the bay area. It is a vibrant community and –

Patrick Byrne

And they are the underdog.

Jonathan Johnson

Yes, it is just win baby and frankly Coliseum has a superb location for branding between the Nimitz Highway 880 and the BART that goes by. There are a lot of people who will see Overstock.com Coliseum every day.

Nat Schindler – Bank of America-Merrill Lynch

Trust me. I live out of here. I know that the backup on the Nimitz is pretty much constant. So, you’ll get a lot of good long branding hours in front of people’s eyes. And just on a final question on the legal expense, the uptick in legal expense, I would – it seems like you have two big legal cases going right now. Obviously, the case against the prime brokers and then also the case against – there are the California District Attorneys case. Is there a particular change in one of those or was, particular change in the ongoing prime broker case that upped the cost or is this the introduction of the new case?

Jonathan Johnson

Really neither. The prime broker case is in full discovery stage and we are very busy in incurring expenses there. So that, I think that’s part of it and the California DA case is ongoing and it’s – we are incurring expenses there. But we have some patent trolls where the discovery where the discovery part of this stage has gotten a little more busy. So, while the two cases you mentioned are factors in the ongoing legal costs we have got a lot of litigation in it, it seems like the tide is just rising in the number of them.

Nat Schindler – Bank of America-Merrill Lynch

Well, okay, thank you very much for taking my questions.

Jonathan Johnson

Thanks Nat.

Operator

Your next question comes from the line of Brent Rystrom with Feltl Company.

Brent Rystrom – Feltl Co

Yes, just have two quick questions. Do you see or do you anticipate a benefit from higher gasoline prices?

Patrick Byrne

Well, great question. I read in the New York Times once a couple of years ago that the logistics costs are that the energy used in e-commerce is 90% less than in delivering products to malls having people. I’m not sure I believed that, but there is a significant fraction, non-negligible percentage, a single digit percentage of our product cost, but probably a high single digit percentage, are ultimately an expression of energy costs. And but I think that that is a higher number for brick-and-mortar and so any inflation in energy costs ends up hurting them more than us –

Brent Rystrom – Feltl Co

Actually, what I am wondering, Patrick, is more on the other side. Your consumers are going to be more apt to order from you because they are thinking about do I want to spend the money to drive someplace?

Patrick Byrne

I have thought that for years but it doesn’t, it’s really, if you are really, I’ve thought that for years if people really understood how much it costs to drive to the neighborhood mall and shop and they tack that on, then online shopping is even more attractive. However, I think, I’m not completely convinced that consumers price it out as accurately as they should.

Jonathan Johnson

I would say, I think though at some point that becomes a factor and I’m not sure if it is $4 a gallon or $8 a gallon, I don’t know where it is, but at some point people – the trip to the mall is going to be factored into the cost.

Brent Rystrom – Feltl Co

If you do a Google search on it, you basically will notice just the last couple of weeks hundreds of articles popping up in newspapers about people saying that they are not going to go to malls much to shop online more.

Jonathan Johnson

Really –

Brent Rystrom – Feltl Co

That was the reason it popped up. And the second question I have just a real simple one, can you give us a sense of what your best categories are right now?

Patrick Byrne

We probably don’t – yeah, we have some categories that are doing better than others we have some that are very good, but we really don’t want to disclose that, do we Steve?

Steve Chesnut

No, no. In the Q or in the K, we do give some breakout and that is probably the best spot to look.

Brent Rystrom – Feltl Co

All right.

Steve Chesnut

But it is the broader categories.

Brent Rystrom – Feltl Co

So has it changed much since the K?

Steve Chesnut

No, we are pretty consistent with the K.

Brent Rystrom – Feltl Co

All right. Well, thank you, guys.

Patrick Byrne

Thank you Brent. You are welcome, nice to hear from you.

Operator

(Operator instructions) Your next question comes from Glenn Rowland, a private investor.

Steve Chesnut

Hello, Glenn Rowland.

Glenn Rowland

Hey, guys. How are you?

Steve Chesnut

We are good, how are you doing?

Glenn Rowland

Good. I have two questions. The first one is about cash and allocation of cash. It looks to me you have got cash to pay down the remaining debt, rainy day cash. You are investing in technology and stadiums. When might you look at buying back shares? It looks to me like you have ample cash to do that. Second question is can you tell us how things are going at Eziba and the potential you see there?

Patrick Byrne

Great. It will be as far as the buyback, I want to make sure that we are comfortable in getting our current – having enough, current note comes due December 1.

Glenn Rowland

Yeah.

Patrick Byrne

So, what’s that six to seven months. We don’t want to put that in any danger. Jonathan or Steve, do you want to expand on this if we –

Steve Chesnut

No, I think I think we are taking a very conservative position on cash and making sure that we ensure we can retire that 24 million.

Patrick Byrne

Yeah, I think it is a great price now and I think that we would be buying stock were it not for that we want to conserve cash and pay off the last of our debt.

Jonathan Johnson

Yeah, I think our view is conserving it the debt is prudent and conserving it for – we are fairly bearish on the economy, I think it is fair to say and having cash if things turn precipitously south, we think is a safe and prudent bet, wouldn’t you say bet.

Patrick Byrne

Yes.

Jonathan Johnson

Okay, so Eziba.

Patrick Byrne

Eziba is going you know, it’s ticking along, it’s like a lot of these smaller businesses we start. We have a discrete team that is managing it with their own bottom line. It will be a double digit million dollar business this year on the track to be. But we haven’t really figured out how – it has been spinning up just organically. There is a little bit of promotion on Overstock and mostly it’s just been spinning up organically. We are thinking about ways that we might use more of our Overstock asset of traffic into developing a bigger customer base for Eziba.

Jonathan Johnson

Yeah, the deals on Eziba are great. They are just fantastic and the quality of products is very high. Glenn, if you have got friends that you haven’t referred to Eziba to be members, you need to it.

Glenn Rowland

Yes.

Jonathan Johnson

Hey, I will say that the sales, the products that are selling on Eziba are different than what we had expected over the game, I don’t want to say what categories we expected and what it turned out to be, but it turns out that the categories that are showing on Eziba are quite different than what had originally expected.

Glenn Rowland

Okay, thank you.

Jonathan Johnson

Thank you very much.

Operator

And there are no further questions.

Jonathan Johnson

Well, Kina thank you for moderating for us. Owners and interested parties thank you for joining us. We will get back to the salt mine and work hard for the rest of Q2. Thanks.

Patrick Byrne

Thank you. We will be seeing some, hopefully we will be seeing some people here in next week.

Jonathan Johnson

At the shareholder meeting on the fourth. Thanks.

Patrick Byrne

Thank you.

Operator

That concludes today’s conference. You may now disconnect.

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