Jamba's (JMBA) CEO Dave Pace on Q2 2016 Results - Earnings Call Transcript

| About: Jamba, Inc. (JMBA)

Jamba, Inc. (NASDAQ:JMBA)

Q2 2016 Earnings Conference Call

August 04, 2016, 17:00 ET

Executives

Karen Luey - EVP, Chief Financial & Administrative Officer

Dave Pace - CEO

Marie Perry - Incoming CFO

Analysts

Mark Rosenkranz - Craig-Hallum Capital Group

Phil Terpolilli - Wedbush Securities

Tony Brenner - ROTH Capital Partners

Operator

Welcome to the Jamba, Inc. Second Quarter 2016 Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn the conference over to Karen Luey, Chief Financial Officer. Please go ahead, Karen.

Karen Luey

Thank you, operator and good afternoon. With me on today's call is Dave Pace, our Chief Executive Officer; and our incoming Chief Financial Officer, Marie Perry. During today's call, Dave will provide a business update. I will review our second-quarter financial results and then Marie will review her initial observations and outlook going forward. We will then open up the call for questions. I would like to remind all listeners that the call is being broadcast and recorded live over the Internet at jambajuice.com. The webcast is available on our website and a replay will be available via telephone until August 25, 2016.

This conference call will include forward-looking statements within the meanings of the securities laws. These forward-looking statements will include things about the Company's strategic priorities and certain statements of our expectation and plans. Forward-looking statements are subject to risks and uncertainties that could cause our results to differ materially from the forward-looking statements that are contained in our Company's filings with the SEC, including the Risk Factors section in our Form 10-K.

The company does not assume any obligation to publicly release any revision to the forward-looking statement discussed during the call. In addition, on the call, we will refer to certain non-GAAP financial measures to help understand the Company's financial performance and to supplement the financial results that we provide in accordance with GAAP. The Company has provided a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP counterparts in our earnings release filed with the SEC earlier today and available on our website at www.jambajuice.com in our Investor Relations area.

With that said, I would like to turn the call over to Dave. Dave?

Dave Pace

Thanks, Karen and good afternoon, everyone. I've now been the CEO of Jamba for a little over four months and I continue to be excited about the future for Jamba and our mission to inspire and simplify healthy living. During the quarter, we continued on our journey to transform the Company to align with our asset-light strategy of being primarily a franchise organization. In May, during the first-quarter call, I laid out five core strategies that we as an organization will be focused on. These include build an iconic brand; establish a customer-and-store-centric operating environment; drive sales and transactions through innovation; improve store profitability through simplification; and expand our global footprint.

Our second-quarter activities saw us advance these strategies with several key initiatives which included amplifying our local marketing efforts; focusing on both established and emerging markets through activation with local schools, businesses and community groups through our Make It Real campaign, that reminds and educates guests that our products are handcrafted and made from real fruits and vegetables. At the end of the second quarter, we introduced an update to the Jamba Juice mobile app which now allows Jamba guests to customize their Order Ahead transactions. We're continuing to see growth in the number of transactions coming through our Order Ahead app as awareness builds in the marketplace.

Also, at the end of the quarter, we opened a new innovation bar in Pasadena California. This new company-owned location is a learning lab where we will test various menu options and design elements that may have the potential to be rolled out to the broader system. Some of the new items being tested currently include cold-pressed juice flights, cold-pressed juice smoothies and innovative quinoa bowls. An initial customer reaction to the innovation bar has been strong. On the product front, we introduced our new, refreshing, Island Getaway Smoothies -- Gotta Guava and Tropical Sunburst. Also, during the second quarter, we expanded our line of made-to-order bowls to include a Pattaya energy offering which are now available in stores nationwide.

Finally, following a successful test earlier this year in our Central California stores, we launched our line of protein smoothies which satisfy our consumer needs for after-work-out replenishment and meal replacement in our California markets in June. These products are launching across the rest of our system this week. As we move to become more customer-and-store-centric, we've increased our focus on improving the customer experience. During the second quarter of 2016, we continue to operationalize our made-to-order juice and bowl platforms that launched in 2014 and 2015. This effort simplifies execution, allowing consistent delivery of a great product, enhancing speed of service, improving cost of goods sold and helping to mitigate the impact of minimum wage increases.

We continue the rollout of our new Blendtec blenders. This new blender technology improves the quality of our finished products and reduces the noise levels within our stores. This rollout will continue across the system for the balance of 2016. On the development front, we opened 10 U.S. locations, including our third co-branded pilot location with Bruegger's Bagels. We also opened two new Jamba locations in the UAE and South Korea. Although our new store openings in the first half of 2016 were slower than we expected, we remain confident that we will deliver our commitment of opening at least 100 new stores in 2016.

More recently, in July, we entered into a development agreement with industry franchise leaders Kevin Denha and Omar Ammori to develop 20 locations in the Greater Detroit market. The agreement includes an accelerated growth plan over the first three years of the eight-year agreement. And finally, we're scheduled to open our first stores in Indonesia and Thailand in Q3 and Q4, respectively. So you can see that there's been progress in a number of areas and we're really just getting started.

As I announced in our last call, we're in the process of relocating our Support Center from Emeryville, California to Frisco, Texas and I would also like to update you on the status of that move. We expect to complete this transition by the end of 2016 and believe it will position us to better serve our franchisees and customers while positioning the Company for sustainable, long-term profitable growth. We're now occupying our temporary office space in Frisco and are building the new team in Texas. Along with the move, we've announced several changes in management. First, as I announced on last quarter's call, Karen Luey, our CFO, will be stepping down from her role after today and Marie Perry will formally assume the role as our new Chief Financial Officer and chief Administrative Officer, effective tomorrow.

The overlap with Karen and Marie during the second quarter allowed us to have a controlled and structured transition that gave Marie the chance to get oriented to the Jamba systems and processes, as well as the time to make several key management hires within the Finance team. These included the hiring of our new VP of Finance, Todd Wilson; our new Controller, Mike Barhydt; and our new Director of Tax, Todd Palmer, as well as several other key roles within the Finance team. I'm excited about the team that Marie is assembling and I want to thank Karen for her support during this process and her willingness to remain as an advisor through March of 2017.

Secondly, we recently announced the appointment of Rachel Phillips-Luther as our Chief Marketing Officer. Rachel will formally begin on August 9 and will be based in the Frisco office. She brings a deep understanding of the restaurant industry and a history of energizing brands. She comes to us after a successful tenure as CMO at Dallas-based Zoes Kitchen and also held senior roles at several other restaurant groups. I'm delighted to have Rachel join the new Jamba team.

Along with these two key leaders and their teams, we've also added organizational depth in Frisco with new members of the Supply Chain, IT, Development and HR teams. Our ability to attract high-quality, experienced restaurant and retail talent is validation of the access to talent in Texas -- one of the key reasons for our move. While it's still early days for me, we're redirecting the focus of our team to the activities that will support our strategies and drive our future growth. We continue to rigorously analyze and assess current activities with a more disciplined commercial eye and we'll update you as we make decisions about how we will attack the opportunities in front of us.

We have an exceptional franchisee community and a terrific brand to build upon. 2016 is obviously a year of significant transition for us, but, as I hope you can see, we're executing the strategy and developing the organization we need to successfully deliver value for our shareholders over the short, medium and long-term.

With that, I'd like to turn it over to Karen to talk about second-quarter results.

Karen Luey

Thank you, Dave. To help you better understand the core business on a go-forward basis, we have included non-GAAP financial statements in our press release that excludes the impact of nonrecurring and relocation-related expenses and the gains on refranchising activities. I will report both on GAAP and non-GAAP adjusted results in my comments. As we compare results to the prior-year, they will be skewed as a result of the refranchise initiative undertaken by the Company during 2015 which decreased the number of company-owned stores at the end of the second quarter of 2016 compared to the same period in 2015. Total revenue for the quarter was $21.5 million compared to $54.1 million in the prior-year.

The components of total revenue are company store sales and franchise revenue. Company store sales decreased by $34.5 million over the prior-year which was mainly due to 138 less company stores in the second quarter of 2016 compared to 2015. Franchise and Other Revenue increased 33% to $7.7 million as a result of the shift in company stores to franchise; the opening of 30 net new global franchise locations since the second quarter of 2015; and the increase of 4% in franchise same-store sales.

On a systemwide basis, same-store sales increased 4.2%, led by our franchise and company locations in California and the Midwest. Our results outpaced the Knapp-Track fast casual results by 550 basis points. Company-owned comparable store sales increased 5.7% which is made up of an increase in both average check of 430 basis points and transaction of 140 basis points. Across the system, we saw an uptick in the discounts as a percent of sales compared to the prior-year which was designed to strategically offset a portion of the aggressive retail price increases taken [indiscernible] strategies. Discounts taken increased to 5.7% of company store sales compared to 5.1% in the prior-year's second-quarter.

Company store margin was 12.4% as compared to the prior-year of 16.2%. As with the other comparisons, this margin level is not comparable year-to-year and is not representative of the go-forward margins in our stores. The margin pressure was primarily due to several factors. The first is the mix of stores currently in our base which results in a deleverage of fixed expenses due to the composition of the company store portfolio. At the end of the second quarter of 2016, our portfolio consisted of 75% higher AUV California locations compared to 84% in the prior-year same-quarter. This will primarily impact the fixed cost components in our labor and occupancy lines.

The other factors include the increase in the California minimum wage that occurred in the third quarter of 2015 and in early 2016; the unexpected downtime of the Company's labor management system which limited the visibility of our operators to manage store hours; store incentive, based on performance that did not occur in the prior-year same-quarter; and the transition of our field leadership team as a result of the re-franchise initiative and the Support Center relocation.

We're actively addressing these in order to bring labor in line with our expectations through a series of initiatives that include, repositioning our field leadership in our California and Midwest regions; a tightened focus on our labor management systems to provide the visibility needed to more effectively manage hours; working on technology solutions that will improve labor efficiencies; and, of course, driving topline revenue.

We opened 12 stores during the quarter on a global basis. Eight were domestic franchise locations, one domestic company store, one express unit and two stores located internationally. As Dave mentioned, we continue to feel confident to hit our guidance of 100 global stores for fiscal 2016. We closed one company store in New York City during the second quarter. And during the quarter, domestic franchisees closed nine locations, primarily in smaller kiosk format venues at an average AUV of $300,000. International franchisees closed one low-volume unit in South Korea.

In terms of costs for the quarter on a GAAP basis, General and Administrative costs were $9.4 million. On a non-GAAP basis, after adjusting for nonrecurring items and relocation costs in both years, G&A was $5.6 million for the quarter of 2016 compared to $7.8 million in the prior-year. We fully expect to meet our goal of exiting 2016 at a $21.7 million run rate. GAAP net loss attributable to Jamba, Inc. for the second quarter was $2.5 million or $0.16 loss per share compared to net income of $6.3 million or $0.38 per diluted share for the second quarter of 2015. On an as-adjusted basis, net income was $1.3 million or $0.09 per share compared to $3.1 million or $0.19 per diluted share for the prior-year period.

An approximation of our free cash flow for the year, based upon using adjusted EBITDA as a proxy for cash from operations and adjusting for all relocation costs, is a use of cash of approximately $3 million. One element that we would like to highlight is on our Jamba card liability. We're expecting the end-of-year balance to increase over the 2015 year-end level, as we begin to increase the points of distribution into third-party retail and strategically focus all systemwide stores on Jamba card sales during the fourth quarter of 2016 which will result in an increase in working capital for the year. We have $15.8 million of cash as of the end of the second quarter.

As noted in the earnings release, the Board of Directors approved a share repurchase authorization of 20 million over a two-year period. This aligns with our asset-light strategy. And as cash becomes available, after prudent investment in the business, it can be utilized to repurchase shares at management's discretion.

Our effective tax rate for the quarter was 2.1% and primarily relates to foreign withholding taxes and state alternative minimum tax. We continue to have a full valuation allowance against our deferred tax assets. And based on our pretax income recognized in the recent years, we will begin to evaluate the need for a valuation allowance in the future. Our cumulative federal net operating loss at the end of fiscal 2015 was approximately $119 million.

With that said, I'd like to now turn the call over to Marie.

Marie Perry

Thank you, Karen and good afternoon, everyone. Let me start by saying that I am very excited to join the Jamba team and have already experienced, in my two short months, the power of this iconic brand. I look forward to working closely with Dave and Karen and the team as we continue to build toward the future success of the Company. Allow me now to briefly introduce myself and a bit -- a little bit more about my background. I was most recently at Brinker International, where I served as Senior Vice President, Controller and Treasurer. I also held roles -- leading roles -- within the Brinker Finance team, including serving as the interim CFO during a 12-month period.

Prior to my time at Brinker, I held Senior Finance roles at American Airlines and started my career over two decades ago in Public Accounting at KPMG. Having been fully immersed in the Jamba business since early May of this year, I want to take this opportunity to provide my perspective on the impact that change has had on the finance organization over the past few years and share our plans to stabilize the financial governance and build a solid team at Frisco. While the business model has simplified, complexity and workload have significantly increased with this team. This has been driven by several compounding initiatives, including the outsourcing of several finance and accounting functions in 2014; the refranchising strategy that was completed in 2015; and the work currently underway to relocate the Support Center to Frisco by the end of the year.

Despite this ongoing state of transition, the Finance team has delivered on all fronts, but this has not been without some challenges. However, by leveraging the experienced insights of the existing team, we've identified a number of opportunities to streamline processes, improve analytical insights and drive efficiencies internally within the Finance organization. I would also like to comment on our pending move to Frisco. In addition to being a catalyst for cost reductions, the relocation to the Support Center will enable us to revise and simplify processes, enhance systems and build and train the new Jamba Finance team. And please be assured that, as we progress through this transition, I am committed to providing you with greater insight into the business on an ongoing basis, while ensuring accurate in financials, timely.

As we look ahead to guidance, we're reaffirming our outlook for 2015. Total revenues of $80 million to $82 million; annual comp sales growth of 1% to 3%; 100 new stores opening, 75 of which will be domestic and 25 will be international -- we will begin operations in two new international markets; adjusted G&A of $24.3 million, exiting 2016 with a run rate of approximately $21.7 million and adjusted EBITDA of $12 million to $13 million.

With that, I'll now turn the call back to Dave.

Dave Pace

Thank you, Marie. Before I turn the call over to the operator for questions, I'd just like to say thank you to Karen, since this is her last earnings call. I speak for everyone at Jamba by saying that we appreciate your commitment to the Company over the past 10 years and especially over the past few months with your assistance in our transition. I would also like to say thank you to the entire Jamba team for their continuing commitment to building our great brand and Company throughout this transition period.

With that, we'd like to open the call for questions. So, operator, if you can take it from here.

Question-and-Answer Session

Operator

[Operator Instructions]. The first question is from Mark Rosenkranz, Craig-Hallum Capital Group. Please go ahead, sir.

Mark Rosenkranz

First question from me. I was wondering if you could talk about, you know, you read the 100 new stores you expected to open in 2016. Could you talk about maybe the timing of those stores with the remainder of the year? Are we seeing that more 3Q weighted or is that kind of balanced throughout the remainder of the year?

Dave Pace

Yes, I mean, it's obviously back-half-loaded. It probably will be weighted toward Q4, given what we see right now. We still feel comfortable with the progress, but it should be a Q4-weighted opening schedule. The other thing I would say, Mark, while we're talking about it is, we're not -- this is not a cadence that we want to have in terms of the back-loading of the opening schedule. So we've been working pretty hard to get our pipeline built in Q1 and Q2. So, a lot of our focus right now is kind of solving that issue for going forward. But for this year, yes, we'll see Q3 and then I think there will still be too many or heavyweight in Q4.

Mark Rosenkranz

Yes, that makes a lot of sense. You know, kind of similarly, how are you seeing the revenue kind of shake out for the remainder of the year sequentially-wise? We were a little high on our second-quarter results. Wondering if you could talk about how you kind of see the steps going from 3Q to 4Q for the remainder of the year to reiterate the guidance?

Karen Luey

Typically Q2 and Q3 are our higher-volume revenue quarters. So I think what you should see is a step-up in Q3 over Q2 levels, especially as you factor in the estimate that you might have on new store openings for the third quarter.

Mark Rosenkranz

Kind of shifting gears to Marie, if I could -- I asked Dave this the last quarter and I was wondering -- between your appointments and the two months you've kind of spent working with the Company, I was wondering if you have any kind of observations? Maybe things you've learned over the last two months you've been a little bit surprised on. Just kind of anything you've observed as you've gone under the hood a little bit on the last two months.

Marie Perry

Really, from my comments in the prepared remarks, first, I'd just had to say, in terms of just the overall brand and just the excitement that I have, it truly is an amazing organization. And I've just told everybody you just see the opportunity really to grow this brand. But from just more of a -- within my particular role, it really is what I said in terms of just looking at the organization and looking for opportunities to streamline. I will tell you that the first order of business is really the transition.

So when you think about the effort that it's going to take to move the entire organization, much less the accounting organization, to Frisco and just making sure that things are working as designed, is the number one priority. We will have an opportunity to find some areas to streamline and to create some efficiencies and then just look for opportunities going forward.

Mark Rosenkranz

You know, last question from me related to that -- on the transitions in the Q last quarter, you mentioned that you expect about $6 million in additional expense related to the move. Is that unchanged at all?

Dave Pace

I think that number is going to be higher, Mark, through the end of the year. I think it's going to be closer to -- I think we called out $7.8 million this time around. And that's really related to a couple of things. We had some outside service that we brought in with a firm to help us document and capture financial processes. We've got some recruiting fees. We had some redundancy in terms of brokerage fees for the offices here, so -- but we see that number going up to about $7.8 million.

Operator

We have a question from Phil Terpolilli, Wedbush. Please go ahead, sir.

Phil Terpolilli

Just a few things. To kind of go back to guidance and sort of take it piecemeal, I'm looking at the 1% to 3% comp growth and it seems to apply, at least in my model, a pretty sharp step-up even at the low-end on a two-year stack. So I guess kind of starting with that and what gives you confidence that things can get better in the second-half of the year?

Dave Pace

Well, after a relatively weak first-quarter, we had a much stronger second-quarter. We're in our summer period now and we feel good about the product pipeline. We feel very good that if you looked at -- we see the results that we've had -- particularly protein smoothies -- as we now roll those into the rest of the system, we're optimistic that those are going to contribute.

So I think we have work to do, but I think we feel like the second-half of the year is achievable. We have -- if you look at the company store progress, we had positive comp -- positive check-in, positive transaction in Q2. And it is a tougher step in the second-half, but we think we can get there.

Phil Terpolilli

Okay. And you mentioned the protein smoothies. Do you have any sense? It sounds like you were maybe just running that in California before, but how much of a lift that is generally when you add it to stores?

Dave Pace

I might have to rely on the others for an incrementality standpoint, but the story on the protein smoothies was we put it in test in Central California earlier in the year, back in February/March, I think. And we had such a strong response that we decided to accelerate it. And we accelerated it into California largely because of supply chain availability.

And we couldn't broadly go to the entire system at the time and so we went with California first. And now we're going to the rest of the system. And we've seen results in California that were comparable to the success we saw with the launch in the test markets. So, I mean, that's one of the reasons why we moved that up and moved it more quickly, because we felt good about the results. I don't know whether, Karen or Marie, you have incrementality that you want to refer to?

Karen Luey

I think, Dave, it's been out there so early in the California company stores that we don't have good views on incrementality yet.

Dave Pace

Okay. So, in terms of UPDs, in terms of sales levels, they are running where we thought they would be.

Karen Luey

With our expectations.

Phil Terpolilli

And then on the EBITDA side, at least by my math, you hit about $7 million in EBITDA to hit the low-end of guidance for the second half of the year. And I assume at least kind of looking at the model that I would think a lot of that step-down in G&A that you're expecting.

But is there anything else on any of the other line items? I know you called out sort of why you think there's some pieces that could help on the labor side for the company-owned stores, but anything else there that you want to call out that sort of gives you confidence you can get to that range?

Dave Pace

Yes, I think a large part of it is, as you mentioned, Phil, is the G&A step-down. And so just getting better control on our costs which is a hedge in some ways against any softness on the revenue line. But I think we're -- as I said in the last call, I think the G&A number is a number that we can get our arms around and we can get after. And so that gives me confidence for the second half right now.

Karen Luey

Especially as we saw the results for G&A -- adjusted G&A in Q2.

Dave Pace

Right.

Phil Terpolilli

And then just on the store growth too -- I know you called out a little bit before. Can you just tell us kind of quarter-by-quarter how much you are expecting maybe for 3Q right now? Maybe what's already been opened and what you've signed?

Dave Pace

In terms of the forecast number for Q3 openings -- I'm trying to see if I have that in front of me, to tell you the truth.

Phil Terpolilli

That's okay. We can take it off-line.

Dave Pace

Sure. I can get back to you on that, Phil. I mean, I have -- sorry about that. We should have that number right here but we don't.

Phil Terpolilli

No, no, that's completely fine. And then just one more thing from me. You gave some numbers earlier on discounting and I thought I heard that discounting was sort of flattish, but then there was two numbers that were a little bit different year-over-year as a percentage of sales. So I'm just trying to make sure I understood that correctly. Can you walk through that one more time? I think it was 5.7% and 5.1%.

Karen Luey

Yes, Phil. This is Karen. So company store discounts this quarter -- 5.7% compared to last year, 5.1%. And that 5.1% was about the same rate of discounts that we incurred in the first quarter. And as you know, there were several price increases that were taken throughout 2015 that we're using discounts to mitigate a little bit of that impact.

Phil Terpolilli

So it was 5.1% in 1Q and now 5.7%, is that correct -- his quarter?

Karen Luey

Yes.

Phil Terpolilli

Okay. And then how do we think about that kind of going forward? Will that still be the case, sort of the step-up that you had this quarter?

Karen Luey

Yes, I think when you think about it, Phil, for discounts, we should look at it to stay flat with what we're seeing for Q1 and Q2 of 2016. So, on the 5.5% to 5.7% line.

Dave Pace

By the way, Phil, just a quick update on the openings for Q3 and Q4. I think we'll see roughly around 25%, 26% in Q3; Q4 is scheduled to be around 46%, I think -- or Q4 around 46%. So, you can see we're back-loaded on that.

Phil Terpolilli

Yes. But you are still comfortable with that number, based on what you're seeing?

Dave Pace

Based on what we see right now, we're.

Operator

We have a question from Tony Brenner, ROTH Capital Partners. Please go ahead. sir.

Tony Brenner

Just looking at the same-store sales company numbers here, that 5.7% increase is against the decline a little larger than that of almost 6% last year. And as you go forward, the comparisons are a heck of a lot tougher. So I'm wondering why the second-quarter gain against -- which really isn't a gain on a two-year basis, makes you confident that the second-half will be positive?

Dave Pace

Well, I think -- you're exactly right, Tony. The two-year stack was relatively flat for those stores. I think the product pipeline that we see in some of the transaction traffic trends that we see, we feel can get us there. So there's no question, the second-half of our year is a tougher step-up than the first-half of the year. But we feel good about in the pipeline.

Tony Brenner

Okay. Can you break down that price increase between mix and -- or the average ticket increase, rather, between what was mix and what was actually a higher price?

Dave Pace

I would say -- I don't have that right in front of me. Go ahead, Karen.

Karen Luey

Yes, Tony, I would say, looking at it today, it's about a half/half. Half of it relates to the price increase and about half of it relates to the mix shift from smoothies to our bowl platform.

Dave Pace

I was going to say mix of juice.

Karen Luey

Yes, juice and the bowl platform.

Tony Brenner

Okay. And one question regarding new products, most of which appear to be beverages. My impression was that one of the objectives of your pilot store was to try to develop non-beverage products. Over the years, Jamba has been pretty unsuccessful in increasing the attachment rate of anything other than the beverage. And I thought that was the idea of these stores, rather than coming up with new types of smoothies. Is that incorrect or --?

Dave Pace

No, I mean I think that's certainly a part of it, Tony. You're -- I think you are in Southern California, if I remember -- I don't know if you've been up to Pasadena to the store, but you'll see in there, quinoa bowls and new bowl products, new food products that we're trying and that have actually been received very well so far.

So it's certainly part of it. I think the innovation store for us is the chance to try a lot of things. We're trying grab-and-go. We're trying cold-pressed juice flights; we're trying cold-pressed juice bottle, cold-pressed juices bottled fresh in the store. We've got bakery items. There's a lot of different things that are being tried. I mentioned a couple of them, but there's quite a bit that's new in that renovation store.

Operator

Ladies and gentlemen, we've reached the end of the question-and-answer session. I would like to turn the call back over to Dave Pace for closing remarks. Please go ahead, Mr. Pace.

Dave Pace

Okay, thanks, Jerry. I just want to say thank you to everybody for dialing in for the call. I look forward to getting back on the call in the third quarter and thanking Karen again and welcoming Marie. And we'll talk again in a couple of months. So, thank you. That's all.

Operator

This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time.

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