I would like to welcome everyone to the LeapFrog thirdquarter earnings conference call. (Operator Instructions) Ms. VanEss, you maybegin your conference.
Thanks, Robert. Good afternoon and welcome to LeapFrogEnterprises' conference call to review the results of our third quarter ended September 30, 2007. I'm EileenVanEss, Vice President of Investor Relations and Treasurer.
Before we begin, we wish to remind you that certainstatements made today will include forward-looking statements aboutmanagement's expectations, including expectations regarding the financialresults for 2007 and beyond; forecasted achievement of business metrics;anticipated impact of future initiatives and objectives; planned launches ofproducts, services, and features; and, other similar matters.
In addition, we expect that questions posed in the Q&Aportion of this call may prompt answers that contain additional forward-lookingstatements not contained in our prepared remarks. This cautionary languageconcerning forward-looking statements applies to both our prepared remarks andour impromptu answers to questions posed during the course of this conferencecall.
A variety of factors -- many of which are beyond our control-- affect our operations, performance, business strategy and results and couldcause actual results to materially differ from those projected in suchforward-looking statements. Some of these factors are described in our 2006annual report on Form 10-K filed with the Securities and Exchange Commission onMarch 8th of this year, as well as in LeapFrog's other publicstatements and SEC filings. LeapFrog does not update forward-looking statementsand we expressly disclaim any obligation to do so.
With that, I would now like to turn the call over to JeffKatz, President and CEO of LeapFrog.
Thank you very much, Eileen. I'd like to welcome everybody.It's been one year since we presented our strategic plan to return the companyto growth and we thought that in today's call it would be appropriate toprovide you with a quick update of how we're doing on executing against theplan. I'm going to start the call with a brief overview of our third quarterresults and then I'll talk about the plan.
As we previously announced, third quarter revenue fell shortof our expectations. Product sales for the first half pretty much tracked toplan, but third quarter sales were weaker than expected, primarily due tolegacy products that are being replaced or phased out later next year.
In particular, we saw even weaker performance than weanticipated in our LeapPad family, Little Leaps, Leapster Television orLeapster TV, as we call it and L-Max products. As those of you who followLeapFrog know, our 2007 new product offering was limited to begin with, andsales from these new products were not enough to offset the decline from legacyproducts.
Due to the weak sales trends in the third quarter, werecently revised downward our 2007 full-year guidance. The good news is thatsales of some new products are very strong, particularly ClickStart, which youmay have noticed prominently this morning in the Wall Street Journal; and, ourLeapster handheld business continues to do quite well. Total Leapster handheldsales increased and our sellthrough tie ratio increased from 5.3 to 5.6 fromlast year, through the third quarter of this year.
It's too early to comment on 2007 FLY Fusion sales. Our goalfor FLY Fusion seems achievable based on early data, but we plan most of oursales to occur in the fourth quarter, and we know that FLY Fusion is heavilydriven by advertising which began in October. The early response to advertisinghas been good, however.
While recent sales trends overall have been what I can onlycall awful, other fundamentals are working better than last year. For example,our overall retailer scorecard is better. Our software tie ratios are improved.We continue to make improvements in gross margin.
With respect to our retailer scorecard, it shows majorimprovements over 2006. Net margin is up a full point at our top account; inventoryhas been reduced versus last year and remains at what we see as low levels; inventoryturns are up quite a bit and markdowns are down 40%. We've seen strong salesper square foot indications, obviously adjusted for shelf space reductions, andwe're in good shape in terms of retail productivity and profitability indicesas we look to reload the shelves with our new product line in 2008.
Work continues on the launch of our entire 2008 productline. A large crew of about 40 from LeapFrog attended the Dallas Toy Fair inOctober and as you would know, it was an important show for us. We had anopportunity to visit with all of our big U.S.retailers and some from Australiaand Canada as well.I was pleased with the tangible progress we demonstrated to customers, and mysense is that they were pleased -- even impressed -- with what is coming tomarket and the large scope of new product in a fairly short development cyclethat has occurred.
As I am sure you have all heard, retailers have not beenvery enthused about holiday trends so far this year. We observe retailers to betaking what I would characterize as a smart -- perhaps cautious -- approach tothe holiday season with a purchasing strategy that is aggressively managing forSKU productivity, reduced inventory levels, and also planning most of theirpurchases, or a lot of their purchases, as close to the peak part of theholiday season orders as is possible in anticipation of a late season start.
We're seeing a fair amount of discounting and promotions onthe part of retailers that has begun as part of a quite well-publicized effortto drive traffic. We hope this helps get the season fired up. But, where we'reparticipating in it is part of our plan and won't have any impact on ourmargins for the year. We will still see margin improvement over last yearthat's pretty significant.
In contrast to the brick-and-mortar retailers, the onlineretailers are pretty optimistic about the outlook for holiday spending andcontinued growth of the online retail sector. In a recent earnings call, forexample, Amazon's Chief Financial Officer, and I'm quoting from publications: "Weexpect to see a great record holiday season helped by toy sales." At LeapFrog,we continue to see very sharp increases in sales from LeapFrog.com as well asfrom online retailers. So this trend bodes well for us.
In mid-October, we launched an improved version of LeapFrog.comthat's working particularly well at driving average order size up. It's anotable improvement for us in that it makes the site easier to shop, easier tosearch, easier to understand what software goes with what hardware and ingeneral allows us to more flexibly change our marketing emphasis than we wereable to do before this launch. It alsoreflects, and this is not yet visible to shoppers, some of the new technologythat's fundamental to our web-connected product strategy that we've beendiscussing. So overall, I'm real positive about web trends at LeapFrog and theprogress we've made in a short time. Check out the site if you've not done sorecently and look for continuing improvements there and on those sites thatsell LeapFrog products.
I'm sure you've all read -- almost ad nauseam -- about thequality control issues some of our competitors have been dealing with. I'm gladto say that we have not had any of these issues and beyond the incredibleoutflow of bad PR that impacted the category overall, this was not a principaldriver of our soft sales during the quarter.
Did it have an impact? Undoubtedly yes. But we know that ourproduct lineup was our principal driver, we knew this would be the case, wejust didn't think it would be as soft as we experienced it.
Back to the numbers. Gross margin came in at 42.2%, which ismuch better than last year and earlier quarters, reflecting the impact of newproducts which had to meet tougher profitability hurdles, our continued work onreducing product costs, the benefits of tuning our SKU mix, and the absence, ofcourse, of the huge inventory writedowns we took last year.
I want to call out particular kudos to our supply chain andinformation technology teams who have really operated superbly and we shouldwait until you see what they are accomplishing with respect to our new productsas well.
Operating expenses were $63.8 million in the third quarter;about flat with last year, primarily due to a decline in advertising expenses.Our operating loss for the quarter was $2.8 million, still lousy; it's supposedto be a profitable quarter, after all. While much better than last year, it'slower than we expected due to weaker sales. Cash at quarter end was about $100million, and inventory remains in quite good shape.
Now, I'd like to turn to an update on the strategic plan. Asyou may recall, the plan we laid out last year has three distinct phases :
(1) Fixingthe basics to set the platform to build LeapFrog upon;
(2) Reloadour product portfolio to leverage for the future;
(3) Growthfrom a largely new product line, from strength in our brand and with strongfundamentals in retail gross margins and reasonable cost structure.
We concluded the fix phase of the plan at the end of 2006.During the fix phase, we significantly reduced inventory and we built cash.This enabled us to enter the reload phase with a healthy balance sheet andsignificantly improve distribution pipelines for new products.
The reload phase, which has been our focus this year, is allabout developing new products, the sales and marketing strategies needed tosupport them in the grow phase, and improving our product blended grossmargins.
The reload phase will continue into next year and we expectto enter the growth phase by mid-2008, concurrent with the launch of our newproducts.
When we introduced the plan, we outlined a handful ofimperatives and since we're going to be covering a lot of this in quite somedetail at our upcoming analyst day, I'm going to provide only a brief update onthem now.
Retake the reading market; that was priority or imperative #1.We're on track here and we recently introduced our next-generation readingproducts to retailers at Dallas Toy Fair. I think they were impressed and wehope you will be able to join us November 8 to see these products foryourselves.
Another imperative, building the business around platformarchitecture. We are making very good progress on this. We have still more workto do. Our goal is to reduce the number of chipsets and software developmentenvironments or tools upon which most of our products are built, from four downto two. This will enable us to develop products more quickly and costeffectively than in the past.
Strengthening the portfolio; very, very important. There isno doubt that our product portfolio next year will be stronger than it has everbeen. Our 2008 product launches will be our largest and most global launchesever.
First and foremost is our reading line which we will launchbig and in more countries than we've ever launched a product. Next, we'lllaunch new gaming platforms and new software libraries with better licenses,and there will be new grade school products that put us back into a largesegment we did well in back in the year 2002, but that we had nearly abandonedby the time we got to 2006.
We will also launch new products in our learning toy line,expanding existing ranges that work well such as our Fridge Phonics Series, butalso wholly new products.
Refresh the brand is also an important imperative. In 2008at retail, you'll notice a new LeapFrog that we think gets us out of theclutter in the everybody does learning aisles of retail and a new, strongermarketing plan that ties the strength of all of our new product together withthe brand we know works very well for moms and kids. A brand that research showsfar outscores all others when it comes to education that's also fun for kids.We're excited about that.
Web-connect all of our products, also very important. By theend of 2008, all of our key products will be web-connected. This will improvethe play experience and make it easier to access and purchase LeapFrog softwareanywhere. We've also developed a new web-based CRM technology that will help ushelp kids learn that will drive software sales, that will build the LeapFrogbrand and build a longer LeapFrog consumer relationship than we've seen in thepast. More on this very important initiative at investor and analyst day.
Driving more content is also important due to the highmargins in our content. I referred to this before but looking ahead, you'll seean excellent portfolio of content; better software libraries and absolutelybetter quality of license titles, including some name brand content that isexclusive to LeapFrog. As I also just mentioned, a LeapFrog management systemdesigned to market content, not just hardware.
Finally, we've spoken about creating a metrics-drivenculture. Very important, because I think this is part of how we got to where wegot to. I think we're making very good progress here and it will play into ourresults. Our team has a solid understanding of what we are trying to do. Theirrole in making it happen and how we and they are doing is also highly tied tometrics. Employee and management incentives are clearly aligned with the trendsand the metrics that will drive our performance.
Before I turn the call over to Bill Chiasson for a review ofthe numbers in detail, I'd like to say that international and SchoolHouse aretwo areas where we have more work to do. We're still working through how tobest deliver growth and importantly profitability, abroad. SchoolHouse isperforming a bit better than our plans, and unlike 2006, is contributingpositively to earnings. We'll have more to say about our specific plans forboth international and SchoolHouse in the coming months.
Overall, I feel we are doing a good job executing on ourplan and managing the business fundamentals that matter most in this reloadphase: gross margins, inventory and cash. Looking ahead, we'll be focused onmaking sure the improvements we've made translate into profitable growth fromour new products.
We'll be doing that by getting our new products to market; weexpect that next year 60% of our sales will come from products launched eitherlate in 2007 or 2008. Further, reducing overhead costs, further improving grossmargins, increasing software sales and meeting all of our milestones on timeand on our budget.
With that, I'd like to turn the call over to Bill Chiassonfor a deeper look into the financials.
Thanks, Jeff. I'dlike to give a few highlights before plunging into the details. While sales forthe quarter were down 22% from last year, the decline is traced to productsthat are being phased out over the next year or so, and excluding the impact ofthe retiring products, sales were essentially equal to last year.
Results were also impacted by the focused, more profitablepositioning of the SchoolHouse segment.
Gross margins have improved significantly, the direct resultof the actions we've taken to achieve supply chain efficiencies
. Operating expenses were essentially equal to 2006 levels,as the timing of advertising spending offsets higher SG&A.
Driven by the strong improvement in gross profit, theoperating loss was improved by over $11 million in the quarter from last year,despite the sales decline. And also, our balance sheet remains very strong,with inventories down 29% from the end of the third quarter last year. We havealmost $100 million of cash and investments and of course, we remain debt free.
Now, I'd like to go through the details of our results,starting with net sales. Our consolidated net sales for the third quarter was$144 million, a decrease of $40.7 million, or 22%, compared to the same periodin 2006 and that's on both a reported and constant currency basis with salesdeclines in all segments.
In terms of results by segment, the U.S.consumer business decreased 21% to $109.5 million for the third quarter of2007, compared to $138.3 million in the same quarter last year. Net salesdeclines in the U.S.consumer segment were due primarily to the lower sales of products that arebeing phased out or replaced, particularly the LeapPad family, Leapster TV,Little Leaps and L-Max. Increased sales of Leapster hardware and softwareproducts and new products, such as ClickStart, partially offset these declines.
The mix of net sales of platform, software and standaloneproducts as a percent of the U.S.consumer segment net sales were as follows:
- Platforms were about 35% of net sales in the third quarter this year, compared to 37% in the third quarter last year.
- Software was about 30% of net sales in the third quarter this year, compared to 24% last year.
- That leaves net sales of our standalone products at 35% of net sales in the third quarter this year, down 4 points from the 39% of net sales recorded last year.
The shift to a greater percentage of sales from softwarereflects the higher Leapster software sales, demonstrating the progress we'vemade against our strategy to increase constant sales and tie ratios.
Net sales in our international segment declined to $30.2million in the third quarter 2007 from $39.6 million last year, a decrease of24% on a reported basis. Foreign currency exchange rates favorably impacted ourinternational segment's results for the quarter, and excluding the impact offoreign currency, our international net sales would have declined by 27% forthe quarter.
Our international segment net sales decline was primarilydue to sales declines in our distributor markets as our distributors workedthrough excess inventories from prior years. As with the U.S.consumer business, our international business is also impacted by weakperformance of products which are being phased out in the near future.
Our SchoolHouse segment's net sales decreased to $4.3million in the third quarter of 2007 from $6.8 million last year, or a 37%decline. As we've noted before, we've made the decision to focus our salesefforts on profitable products and districts, sacrificing the top line in favorof profitability.
Onto gross profit and gross margin. Despite the lower sales,our gross profit improved to $60.8 million for the third quarter of 2007compared to $49.2 million for the same quarter in 2006. Our gross marginimproved by 15.6 percentage points to 42.2% in 2007, compared to 26.6% in 2006.
The largest portion of the improvement was driven by supplychain improvements, specifically maintaining leaner inventory levels and as aresult, we've incurred lower charges for excess and obsolete inventory andfewer purchase order cancellations.
Margins were also aided by product mix. For example duringthe quarter, software sales represented a greater portion of our U.S.consumer sales mix than last year.
Also, we executed a reduction of about 18% of our low marginSKU's this year which also contributed to the margin improvement.
By segment, gross margin was as follows:
For the U.S.consumer segment, gross margin for the third quarter of 2007 was 46%, comparedto 26.4% for the third quarter last year. Again, the leaner inventoriesespecially contributed to the U.S.consumer segment margins, as the majority of the improvement came from reducedcharges for inventory writedowns and reductions in purchase ordercancellations. We also saw improved margins from a higher portion of highermargin software sales.
In the international segment, gross margins for the thirdquarter of 2007 fell to 26.8% from 28.3%, reflecting the impact of closeoutsales in the United Kingdomof products to be discontinued. For the first nine months, gross margins are upover 5 percentage points to 31.7% in the international segment.
In the SchoolHouse segment, gross margins improved to 53.5%in the third quarter 2007 from 22% in the third quarter 2006. As you mayrecall, the third quarter 2006 gross margins were depressed by higher than averageinventory writedowns.
On to operating expenses. Our selling, general and administrativeexpense for the three months ended September 30, 2007 was $34.4 million, an increase of $4.2 million for thesame period in 2006. The increase in our selling, general and administrativeexpense was driven by increased patent defense costs and higher stock-basedcompensation expense. These increases were partially offset by lower costs inour SchoolHouse segment as a result of our workforce reduction in that segment.
Our research and development expense for the third quarter2007 was $14.2 million, a decrease of $300,000 from last year and is dueentirely to the timing of expenses.
Our advertising expense for the quarter was $12.8 million,down from $17 million in the third quarter 2006. We are focusing ouradvertising activity towards the last quarter of the year in support of thehigher seasonal sales. However, for all of 2006, we expect advertising expense todecline from the 2006 levels.
The loss from operations improved to a loss of $3.1 millionfor the third quarter of 2007, compared to a loss from operations of $14.7million for the third quarter last year. Higher gross profit and relativelystable operating expenses accounted for the improvement in the third quarter of2007.
Income or loss from operations was the following for eachsegment: the U.S.consumer segment had an operating loss of $3.1 million for the third quarter of2007, compared to a loss of $12.1 million for the same quarter last year. The internationalsegment recorded operating income for the third quarter 2007 of $500,000compared to income of $2.2 million for the third quarter of 2006. TheSchoolHouse segment had a $500,000 loss in operations for the third quarter of2007, compared to a loss of $4.8 million in the third quarter of last year.
Our income tax expense for the three months ended September 30, 2007 was $637,000compared to a provision of $37.5 million for the same period last year. Thethird quarter 2006 expense reflects the cumulative impact of valuationallowances against our domestic deferred tax assets. The valuation allowancewas first recorded in the third quarter of 2006 and continues currently,preventing us from recording any current year tax benefit for current U.S.losses, while still incurring tax expense for our non-U.S. operations. The fullyear effective income tax expense rate for 2007 is expected to be a negative 6.2%compared to a negative 22.5% in 2006.
Our net loss for the third quarter of 2007 was $2.8 million,compared with our net loss of $49.7 million last year. The higher gross profitand lower tax expense contributed to the improved comparison to last year.
On to the balance sheet. Accounts receivable was $127million at the end of the third quarter 2007, compared to approximately $153million at the same time last year and $142 million at year end. Our day salesoutstanding at September 30, 2007was 79 days compared to 75 days at September 30, 2006 and 71 days at December 31, 2006. The slight increase in day sales outstanding in thequarter reflects a shift of sales to the latter part of the quarter, consistentwith our retailers pushing out their orders to later in the quarter.
Net inventories remain in good shape, despite the lower thanexpected sales. Net inventory was $110 million at September 30, 2007 down $45 million from the end ofSeptember of last year, a reflection of the improved supply chain performance.As compared to the end of 2006, inventories are up $37 million due to thenormal seasonal increases.
Before turning it back to Jeff to wrap up, I'd like to recapour results for the quarter. The sales decline is a direct result of theweakness of our legacy products which are obviously impacting ouryear-over-year comparisons.
Importantly though, we're encouraged by the strength of thecore Leapster business, both hardware and software. Also importantly, we'reseeing improvements in many of the fundamentals of the business. Product mix isimproving with software sales making up a greater portion of our revenues. TheSKU reduction is starting to reflect in our performance. Tighter inventorymanagement has been a key driver of improved margins with fewer inventorywritedowns and other supply chain benefits. Gross margins for the first ninemonths are up nicely from last year. The cash position is excellent at $97million and of course, we have no debt.
Now I'd like to turn things over to Jeff to wrap up.
Thank you, Bill. Nowfor the outlook. It's tough to say at the moment what holiday consumer spendingwill look like this year. However, fourth quarter is typically our seasonallystrongest quarter, and we expect to see shipments improve from third quarterlevels.
For the full year 2007, we're expecting a revenue decreaseof approximately 10% to 15% compared with 2006; an improvement in gross margincompared to 2006; a reduction in overall operating expenses from the $271.7million level in 2006; and improvement in the net loss over '06; and cash andinvestments of approximately $100 million at year end 2007.
I'd like to note that what's ahead is a lot more importantthan our third quarter results or our fourth quarter outlook. What matters mostright now is how we're positioned for next year and we feel very good aboutthat.
In closing, I'd like to say that we're confident that theinvestments we've made in our people and our products and the steps we've takento turn the company around are the right ones to build great value over thelonger term. We're excited to begin seeing the payback. At least hereinternally, we're already seeing it from the work we have done in the fix andreload phases, and we appreciate your continued support and interest inLeapFrog along the way.
We are hosting our first ever investor and analyst day herein Emeryville next week. We're planning on a fun and interactive session whereyou'll have a chance to meet our team and see our products firsthand. If you'dlike to come and you haven't yet sent a RSVP, please do give Eileen VanEss acall.
With that, I'll turn it over to Eileen for Q&A.
Robert, could you run the Q&A please?
Your first question comes from Sarah Gubins – Merrill Lynch.
Sarah Gubins - Merrill Lynch
Could you talk a bit about what you're expecting for the newproducts for 2007? One way to look at it would be within the 10% to 15% declinein sales that you have for '07, what are you generally assuming for the newproducts?
Sarah, this is Bill.The biggest new products we have for 2007 are ClickStart and the FLY Fusion. Wealso have new titles for Leapster software and some newinfant/toddler/preschool products. Those are nowhere near as big of acontribution to our business as we expect the new products in 2008 will have.We've seen this as a rebuilding year, and we don't see those dramaticallychanging the needle for this year.
At this stage, I think as Jeff said in his comments, we feelokay about the performance of the new products; but again, they're not reallythe driving force of our performance for this year.
Sarah Gubins - Merrill Lynch
I'm just trying to get some sort of a baseline for productslike ClickStart which are one of your larger launches for the year in terms ofwhat a new product can do -- or at least what you'd expect it to be able to do-- since ClickStart hasn't really been impacted by the problems of the legacyproducts, just any range of what you're expecting for sales there would be particularlyhelpful.
Okay. I'm looking atthe numbers here, Sarah. If we may, let us think about the right way to giveyou some feedback on that. It is an important launch from a dollar volume andquantity perspective, but I want to give some thought to how to put it in theright context.
Sarah Gubins - Merrill Lynch
Switching to costs, you mentioned ad spend, which was downin the quarter, was more of a timing issue than anything else. Can you give usa sense of what you're thinking of in terms of your ad spend for the fourthquarter?
We're expecting ad spend for the year to be down overall.
In the quarter, I think we're up versus the third quarterand down year over year in the quarter, I want to say about 20%.
Sarah Gubins - Merrill Lynch
In the fourth quarter?
Sarah Gubins - Merrill Lynch
From the about $44 million you spent last year?
Sarah Gubins - Merrill Lynch
In terms of the rest of the operating costs, andparticularly in SG&A, when you think out to '08, are there areas where youwould expect to be able to get some cost savings or even are there any coststhat can be cut there?
We'll get into a bit of this at our investor day, but we'vealready begun the process. In particular, there's two areas, both R&D andSG&A will be impacted. But in particular, we would expect to see reductionsin SG&A that are pretty tangible next year. Part of that will come fromjust pure efficiency of the way we manage the company and to some degree,manage our marketing and product marketing processes here.
Sarah Gubins - Merrill Lynch
As you think about what you're expecting from the newproducts in '08 and your cost structure, is there a chance that you could havepositive operating income in 2008, or are you expecting it?
Let me say this. We're looking at that in a lot of detailnow. We're structuring our costs so that subject to sales volumes, we'll havethat opportunity next year and I think one of the things we're discussing as amanagement team in effect is do you position the company to take a risk so thatin effect, you drive harder towards earnings momentum in '08, '09, 2010?
So in other words, we've got a lot of products to launch. Ifyou launch them really hard in '08, chances are you'll get very good earningsmomentum into '09 and even 2010. If you're overly conservative, you might getbetter '08 earnings, but you might not be as happy with your earnings momentumin '09, for example.
Sarah, just to add to that. Remember that most of ourlaunches will be happening in the back half of the year, so we're not going tohave a full-year reflection of those and as we launch a product, typically thehardware precedes the software sales, and so it takes a while for that momentumto build up in the products. So exiting the year with a strong momentum is animportant priority for us.
Sarah Gubins - Merrill Lynch
Actually, along those lines then is there a chance we could seegross margins down in '08 because it would be more heavily weighted towardshardware which tends to have lower gross margins than software?
At this time, we feelvery good about the actions we've taken this year to improve gross margins andour hope is that we'll at least be building a stronger momentum of strongermargins next year as well.
We don't think so, in other words.
Sarah Gubins - Merrill Lynch
It may be too early to know about this, but I'm wonderingabout how consumers are using the web in terms of FLY Fusion? Are you findingthat they're actually downloading content from the web?
We are. The Download Store,as it's called, is actually working better than I thought it would; but interms of pure volume, it's early. This is a product that we expected to ramp upalmost exponentially in terms of sales into the fourth quarter. That's what wesaw with the launch of original FLY, heavily stimulated by TV in particular.We're seeing a similar trend right now. So it's a bit early to call it, butwe've seen the Download Store so far pretty heavily utilized.
Robert, do we haveanyone else?
There are no furtherquestions at this time.
Very good. let me just wrap up, if I may, by saying I wantto thank everybody for listening in to our call. Again, I hope that those whoare on the call have an opportunity to join us on investor and analyst day. Ithink you'll find it very valuable and we look forward to seeing you then. Ifyou have any further questions later on, please feel free to contact EileenVanEss, and we look forward to those future opportunities. Thank you.
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