Rocky Mountain Chocolate Factory F1Q09 (Qtr End 5/31/08) Earnings Call Transcript

Jul. 8.08 | About: Rocky Mountain (RMCF)

Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF)

F1Q09 Earnings Call

July 8, 2008 4:15 pm ET

Executives

Franklin E. Crail - Chairman of the Board, President, Chief Executive Officer

Bryan J. Merryman - Chief Financial Officer, Chief Operating Officer, Treasurer, Director

Analysts

Jerry Faulkner - RJ Faulkner and Company

Bill Sumner

Michael Michaelson - Renwater Associates

John Powers - F.R. Law

Operator

Hello and welcome to the Rocky Mountain Chocolate Factory first quarter fiscal year 2009 conference call. (Operator Instructions) Some of the statements made during this call may be considered forward-looking statements that involve a number of risks and uncertainties. There are several factors that could cause actual results of Rocky Mountain Chocolate Factory to differ materially from these forward-looking statements. These factors include, but are not limited to, the potential need for additional financing, the availability of suitable locations for new stores, and the availability of qualified franchisees to support new stores, customer acceptance of new products, dependence upon major customers, economic and consumer spending trends, and such other factors listed from time to time in public announcements and in Rocky Mountain Chocolate Factory’s SEC reports.

In addition, please be advised that the financial results for the fiscal periods presented in this call do not necessarily indicate the results that may be expected for any future quarters or the upcoming fiscal year. To Rocky Mountain Chocolate Factory’s knowledge, the information relayed in this conference call is correct as of the date of its transmission and the company does not undertake any obligation to update this information in the future.

(Operator Instructions) Now I would like to turn the conference over to Franklin Crail, President and CEO. Mr. Crail, the floor is yours, sir.

Franklin E. Crail

Thank you. Good afternoon, everyone and welcome to Rocky Mountain Chocolate Factory’s first quarter conference call. I’m Frank Crail, President of Rocky Mountain Chocolate Factory and with me today is Mr. Bryan Merryman, the company’s Chief Operating Officer. We’re going to start the call this afternoon by having Bryan give you a summary of our first quarter operating results and at the conclusion of his presentation, we will be happy to answer any questions you might have. So at this time, I’ll turn the call over to Bryan.

Bryan J. Merryman

Thanks, Frank. I would also like to welcome everyone to the call today. On the first quarter, really the story of the first quarter is that we had mixed revenue results first quarter versus the first quarter of last year. We had factory revenues down, our company-owned store revenues were also down. We saw increases in royalty and marketing fees and we also saw increases in franchise fees.

We had a continued lack of revenue growth combined with some commodity pressure that we’ve been seeing for some time. Despite that, profitability held up fairly well. To get into a little bit more detail, total revenues decreased in the first quarter versus last year 3%. Our factory revenues were down 7.9%. They decreased due to a specialty market sale that was made in the first quarter of fiscal ’08 that was not repeated in the first quarter of fiscal ’09. As a result, specialty market sales were down 26% in the first quarter of ’09 versus the same period last year.

We also saw a continued decrease in same-store pounds purchased by the franchise system in the first quarter. It was down 14% and this is due to a continued product mix shift from factory made products to store-made products. These two negative trends were partially offset by an increase of 3.5% in the average number of franchise stores in operation. Our company-owned stores revenues were down 6.3%. This was due to a 5.1% decrease in same-store sales and we closed one company store in Winter Park, Colorado. The lease terminated and we did not renew it.

Our royalty and marketing fees were up 11%. What drove that increase was an increase of 3.2% in the average number of domestic franchise units in operation, an increase in the effective royalty rate. That was slightly offset by a 2.5% decrease in same-store sales in our franchise system.

Franchise fees increased 137% in the first quarter. This is due to opening eight stores in the first quarter of this year versus four in the prior year. We recognize franchise fee revenue only when a store opens.

Factory margins decreased 420 basis points from 34% last year to 30% this year. The majority of that is due to manufacturing inefficiencies associated with about 20% lower production volume and higher commodity costs.

Operating expenses decreased 6.3%. This was due to reduced professional fees.

Net income for the quarter was $1,004,000 versus $1,032,000 last year. Basic earnings per share were up $0.17 versus $0.16 in the prior year. Our fully diluted earnings per share were flat, $0.16 in both this year and last year. We opened eight stores during the quarter. We opened an additional two more stores in June, so we’ve opened 10 so far this year. The company in the first quarter continued to generate excess cash flow. We finished the quarter with approximately $924,000 in cash. Our current ratio was 2.8 to 1. We have not purchased any shares in the first quarter. We have $3 million to purchase shares that has been previously authorized by the board of directors.

On June 13th, the company paid its 20th consecutive quarterly cash dividend at $0.10 per share and in the first quarter, the company remained debt free.

While we are not giving guidance on fiscal ’09, we are on track to open 35 to 40 new stores. In light of macroeconomic conditions, same-store sales trends, and same-store pounds purchased trends, we are not going to provide guidance this quarter. If current trends do not deteriorate, we -- further from where they are now, we would expect a modest decline in earnings for the year. We’ll resume guidance if macroeconomic conditions stabilize and we see consistent trends.

With that, I will turn the floor back over to Frank.

Franklin E. Crail

Thanks, Bryan. Operator, at this time we’d be glad to take any questions anyone has.

Question-and-Answer Session

Operator

(Operator Instructions) The first question we have comes from Jerry Faulkner with RJ Faulkner and Company.

Jerry Faulkner - RJ Faulkner and Company

A question for you as far as, you know, obviously your earnings were down slightly but compared with what’s going on with most retailers, it looks pretty darn impressive to me. How has the impact of the slowing economy and all the various things we read about every day, how has that impacted your demand for franchisees or franchise units from either new or existing franchisees?

Franklin E. Crail

Jerry, I think the demand we are seeing at this point in time is pretty similar to the last couple of years. The area that we’ve been affected most by what’s going on in the economy is our traffic counts are down in virtually all of our retail environments, and so -- I mean, that obviously is putting a lot of pressure on gross sales and we are having to try to make it up through increasing average transaction. But from the standpoint of new franchisees or new franchises sold to existing franchisees, I would say that has probably slowed somewhat, as there’s more financial pressure on the current franchise system.

Jerry Faulkner - RJ Faulkner and Company

Okay, okay. And then the second question would be as far as the same-store pounds purchased, this figure has really been under pressure for quite some time and I think you’ve kind of described it as a lot of the franchisee store operators switching to the store made product because in their own mind, they feel like it’s less expensive for them to make that product than to buy a product from your stores, even though I guess if they add all their labor costs in there, that may or may not be the case. But it would seem like at some point that the product that they buy from the stores, the inventories that they have within the stores are going to have to get down to a point where they almost have to start reordering at a greater rate. Are you seeing any improvement in those trends in the last couple of months or so?

Bryan J. Merryman

Well, Jerry, we’ve started to see an improvement at the beginning of June and really thought that we would have a good month in June in terms of system purchases. However, that really didn’t materialize. At the end of June, sales fell off and so did same-store pounds purchase. Same-store sales in June were off 5%. In May, they were up 1%, and so May was the first positive month we’ve had in a while and June started out pretty well and then didn’t finish very well.

Our Fourth of July holiday, interestingly enough, was over last year and so I think people are still going on vacation and traveling but they are going to purchase and going to the malls and shopping centers less outside of the holiday periods.

So I’d like to say that that trend is improving. It’s improved very slightly. The first two months of the first quarter, we were off 17%. For the quarter, we were off 14%, and so it improved a little bit in May but not much.

Jerry Faulkner - RJ Faulkner and Company

Okay, but you’re saying in May, it was up 1% -- is that correct?

Bryan J. Merryman

Same-store sales were up.

Jerry Faulkner - RJ Faulkner and Company

Oh, same-store sales, not same-store pounds purchased.

Bryan J. Merryman

Same-store pounds purchased.

Jerry Faulkner - RJ Faulkner and Company

Okay, and then obviously probably on every conference call that anybody has nowadays, probably someone asks about the impact of fuel costs and I know you have your own trucking operations. Are you -- I know your general policy has been not to pass along your commodity price increases directly to your stores. Are you passing on any kind of surcharge for fuel costs for delivery of the product?

Bryan J. Merryman

We increased our fuel prices on January 1st, along with our chocolate prices at really an inflationary -- a modest rate, way less than the rate of inflation as it relates to our manufacturing operation. Fuel wise, in the first quarter sequentially fuel prices were up 14% from the fourth quarter of last year. Compared to the first quarter of ’08, ’09 fuel prices were 33% higher. If you look at chocolate on the same basis, sequentially it was up 9% in the first quarter. Corn syrup was up 14%. If you compare to the prior quarter last year, chocolate was up 19% and corn syrup was up 14%. So we have absorbed a tremendous amount of commodity price increase, energy price increase, and that contributed to the 420 basis point decline in margins in the first quarter.

Jerry Faulkner - RJ Faulkner and Company

Okay, well, in light of the challenges that you are facing, I’d say your first quarter performance was pretty impressive, so I will turn it over to the next questioner.

Bryan J. Merryman

Thanks, Jerry. I think the business’ profitability is holding up well as well.

Operator

The next question we have comes from Bill [Sumner] with [inaudible] Capital.

Bill Sumner

Let me make sure I’m getting the math correct here -- so we opened eight franchise stores but we ended the quarter with the same number of franchise stores. That implies that eight stores closed?

Bryan J. Merryman

We had seven franchise stores close and one company-owned store close.

Bill Sumner

So it is unusual historically looking back to, in this particular quarter, to have no net new store openings? And what I’m really trying to get at here is as Frank, you said new franchisee interest has slowed, as you would predict. It’s probably not the best time to be starting a small business for a lot of people but how about the existing franchisees, some of the weaker stores -- are you starting to see more pressure on them that might end up being fatal?

Bryan J. Merryman

Well, if you look at the first quarter of last year, we were minus two stores in the first quarter of last year. And if you look at how the net store growth happened last year, in the first quarter we were minus 2, in the second quarter were plus 1. In the third quarter we were plus 9, and in the fourth quarter we were flat stores. Don’t see any real changes this year versus last year in net store growth, so we haven’t seen an acceleration in closings. However, there is still fatalities out there and I’ll also let Frank add to that question.

Franklin E. Crail

We have really refocused our franchise support effort, especially during the last three months but it’s been in transition here for probably four or five months, to getting the franchisees more -- you know, we have a lot that are very involved in their business and they are in it all the time. We have others that are somewhat absentee owners and we are trying to impress on everyone how important it is during these challenging economic times for them to be able to keep their expenses to a minimum, work on average transaction and become the best business people they can. And so with our franchise support effort, it’s being geared much more to a financial orientation now in helping the franchisees that don’t have the business acumen that they might want to understand more of the importance of matrix like same-store sales, average transaction, customer counts, and ways to increase all those. So we are hopeful that over a period of the next six months, a year and especially long-term that this is going to cut down the fatalities in the system, because that has always been a concern to us and we are putting a lot of effort into that right now to keep that from happening.

Bill Sumner

Okay, good, so it sounds like the answer is that we’re kind of in the middle of the bell curve as far as existing stores losing one here or there. How about -- is appropriate real estate still the limiting factor in store growth, or has that switched to franchisee ability to open stores?

Franklin E. Crail

Well, it’s probably -- real estate is always a big factor. Real estate might be getting a little bit better right now because a lot of landlords are finding that they are having more fatalities in the spaces that they are leasing due to other companies closing their stores also, so we are trying to be as aggressive as we can, not only on rent structures but trying to get the landlords to participate in build-out. But locations are always a challenge because every chain out there is looking for top notch locations and we are obviously competing with them, and so what we are trying to do is figure out ways that we can find locations where our concept will work where we have average lower rent structures and we have cheaper build-out costs, because when you start getting into regional malls, build-out costs are very, very expensive also. And so that’s why part of our strategy in going forward is to try to find or locate stores in retail environments where we can get in cheaper and with lesser rent.

Bill Sumner

Okay, and to finish this thought process off, Bryan, you and I had talked at one point about kind of a critical mass phenomena in franchise operations where you hit a certain number of stores and you can actually accelerate growth. Leaving aside the fact that we are in an odd economic time right now, if you can kind of normalize it -- where are we in that trend? Is our hyper growth period over or is there still a lot of locations out there and franchisees? If you could just put some color on that for me.

Bryan J. Merryman

Well you know, I don’t think I have a definitive answer for you right now, Bill. I mean, it is a challenging macroeconomic environment and it’s hard to answer that question minus that environment. We are still opening a fair number of stores and we have a number of anomaly stores, stores that have opened in small markets that have performed way beyond our expectations. They’ve had lower build-outs, lower rents.

We haven’t had a lot of these but we’ve have enough for it to really have gotten our attention and so we are in the process of really studying those stores and all of our other stores, we’ve actually hired somebody outside of the company to try to look at every database that is available and figure out what the success factors are in those small markets. And if we can build a model that is predictive of performance in those kind of markets, then we could see another phase of high growth.

There’s lots and lots and lots of small markets out there. We have performed well in some and done okay in others and in a few have just done phenomenally, and we are in the process of really studying that and trying to find an answer and maybe if we do, that could lead to some acceleration in growth. Minus that, we still work in lots of different environments and there’s still a lot of opportunity out there right now.

So I don’t think I have a definitive answer for you, but we’re still hopeful that our highest growth in terms of units is not behind us.

Bill Sumner

Great. Thanks, I’ll get back in queue.

Operator

The next question we have comes from Michael Michaelson with [Renwater] Associates.

Michael Michaelson - Renwater Associates

It seems appropriate I follow Gary Faulkner with a question -- it was he who got me into Rocky Mountain in the first instance. I have two questions; with fuel prices moving up and the price of raw materials, cocoa, moving up, I wonder as you raise your prices, if you are forced to raise the price of your chocolate, what kind of price sensitivity do you see on the part of the buying public? How aware are they of higher prices and to what extent does it affect you?

Bryan J. Merryman

Well, I think that the buying public [is aware] of rising prices. You know, it’s our philosophy that, especially in these economic times, it’s our philosophy to absorb absolutely as much of the commodity price increases as we can, pass on only a marginal increase to our franchise system, try to help them retain their store level profitability, have them raise prices also in a small, incremental way over time as opposed to all at once.

I know that if you’ve watched other companies like Hershey’s, they go for a period of time without raising prices and then you’ll see double-digit price increases from the. That is absolutely not our policy. We have never done that since I’ve been with the company, anyway, and so we think there’s -- especially right now there’s price sensitivity out there and more than usual, I think the consumer is highly price sensitive. There’s just a ton of information at their fingertips through the Internet and I think it makes a difference to not increase prices a large amount at once and do it incrementally over time, and that’s what we are doing. We are willing to see our margins, our factory margins back up temporarily, so that in the long-term we are pricing our product at retail appropriately.

Michael Michaelson - Renwater Associates

Okay. The second question, with the price of the stock hitting $9 some time during the day today, which is at its low for the year, you have authorization to buy back shares of some $3 million I gather, but you have not been exercising that right and you have not been buying any during the last quarter. Why is that?

Bryan J. Merryman

Well, let me start with that we made a large buy-back in the fourth quarter fiscal ’08, and with that we used most of the company’s cash reserves. The company has been debt free both short- and long-term debt free for some time. We’re quite happy to be in that position in this environment and don’t feel it’s appropriate to leverage the company up to buy back stock until what we see the macroeconomic trends and maybe more specifically, same-store sales trend firm up a little bit.

If you look at what has happened in same-store sales over the last five quarters, you know, you could think that maybe there’s a little bit of a positive trend happening. However, then June looks to be our worst month since Christmas, or since December. And so with the volatility in same-store sales, we’re just going to be very, very conservative as it relates to our balance sheet. If same-store sales improve and we see that we think that that’s a trend that’s just going to sustain itself, then we will become aggressive about buying back the stock, but we would really like to keep the company debt-free in this --

Michael Michaelson - Renwater Associates

Well, no one can argue with that. Okay, good answer. Thank you very much.

Operator

The next question we have comes from John Powers with F.R. Law.

John Powers - F.R. Law

Good afternoon. I just was curious as to internally when you are looking at the franchisees and were talking about the number of closures, there was a mention about weak stores. How do you internally classify the strength of the different franchisees as weak or in trouble, well-performing, marginal? How is that accomplished? And then within that scale, how do you take the stores you have open and kind of fit them into the various categories, as far as the numbers would go?

Franklin E. Crail

Well, we have the gross sales of all of our stores in the system through royalty reports an we know what an average cost of goods should be. We know what the individual franchisee at any specific location is paying from the standpoint of rent. The one thing that we don’t have at our fingertips but we can do it through phone calls is figuring out what the payroll costs are, which is the next largest cost. And so we can sort of put together a financial picture of what some of our stores are doing and we know by doing a back-of-the-envelope type of calculation, when we see a store that is probably, or has the potential of being running a negative cash flow.

And so we take a look at especially those stores and see what we can do from the standpoint of cutting expenses. In some cases, we’ll go back to the landlord, try to get a rent reduction either on a temporary or permanent basis and do whatever we can through guidance with the franchisee or something that we can do internally to try to get that particular franchise store to cash flow. If they aren’t cash flowing, then it’s really just a matter of trying to cut back the payroll to the point where the franchisee is in the store the majority of the time and being able to make sure that they can survive until the economic conditions turn around. There really isn’t any magic to that other than just sort of take a look at the stores on an individual basis.

John Powers - F.R. Law

Okay, so but currently, how many -- I’m just looking to try to get an idea -- how many are you classifying as say weak, trouble, marginal, in that spectrum with regard to the number you have currently open?

Franklin E. Crail

Well, I don’t have a specific number. We sort of take a look at our stores in the top 25% category, the middle 50, and the bottom 25, and the bottom 25% of our stores -- and I don’t know, I don’t have it in front of me what the exact cut-off number would be, but the bottom 25% of the stores are the ones that are most likely the most impacted by a softening in their sales, and so those are the ones that we try to get to on an immediate basis. That isn’t always the case because if somebody in the bottom 25 has the lower rent structure, then they might be cash flowing and be in good shape, just like somebody in the middle 50% might have a very high rent structure and because of that, it could put them in a position where they are breaking even or has the potential of a negative cash flow.

John Powers - F.R. Law

Okay, and the reason I’m asking is that looking at the financials for the quarter, it would appear that in large part the companies -- really the only increase is on the franchisee fee side, where you’ve seen a significant increase in your franchise fees and the royalty marketing fees that you are taking in from franchisees, I assume, and that at the same time then saved about $100,000 on the cost and expenses associated with the franchise costs. And I just was curious -- is that a correct interpretation, that in large part, you know, the numbers -- there’s about $200,000, or 200 -- what would it be? 200 between those two categories that would be directly attributable to the franchisees?

Bryan J. Merryman

Yeah, I think that that’s fair to say, that royalty and marketing fees were up, mostly due to an increase in the effective royalty rate as a result of purchasing much less product from the factory. Also, there was a 3.2% increase in the average number of units in operation as well. So yes, that’s really what happened with the quarter as the royalty and marketing fees somewhat made up for the decrease in factory revenues.

John Powers - F.R. Law

And then what constitutes the franchise cost category?

Bryan J. Merryman

The decrease in that category came from professional fees.

John Powers - F.R. Law

Okay. Thank you.

Operator

The next question we have comes from Bill [Sumner] with [inaudible] Capital.

Bill Sumner

Bryan, can you give an update on your view of factory capacity? This is something I’ve tried to revisit every six months or so. Do we still have excess capacity, land, building, equipment, transportation? And tied to that, what kind of CapEx plans are you looking at?

Bryan J. Merryman

We’re looking at very, very minimal CapEx. We had actually a fairly detailed capacity study done last year and the factory, it’s still the -- the theoretical capacity still meets reality and labor force, given where we are located. And so the capacity was well above what we thought it was and really is limited by the labor force and whether you could really run three shifts in this town or not.

If capacity was perfect, which it would never be, you know, the number would be kind of really sort of an unbelievable number approaching 4 million pounds, you know?

Bill Sumner

So since labor -- because of your location there in beautiful Durango, Colorado, I’m assuming labor will probably not ease up. Is it possible that we get into a point where even though we have excess capacity there that -- this may be looking too far out, and tell me if it is, but that you might have to actually build a facility somewhere else where you have a better labor force?

Bryan J. Merryman

Well that would certainly -- I mean, that would certainly make a lot of sense if we had the demand for the product, for sure, if we couldn’t staff the capacity in this facility.

Bill Sumner

And what I’m trying to figure out here is the risk, the business risk -- if you had the labor force there, then it’s easy to see how we could incrementally grow sales as the demand was there. If you actually had to build a new facility, you’d get to that kind of jump up point on the graph where you have to kind of put the money out there without the demand all in place yet. And I’m just wondering if that’s something we might face. And tell me if this is too far in the future for me to be thinking about right now, you can tell me and I’ll move on to other stuff.

Bryan J. Merryman

Well, it certainly is a great thought but I think it’s too far in the future to --

Bill Sumner

Okay.

Bryan J. Merryman

-- about right now. We certainly have, especially in this environment, this economic environment, we certainly have a lot of capacity that we can staff to right now. And the theoretical capacity of the system is much higher than that $4 million pounds. That’s more considering the labor force that we have when we say that, but the theoretical capacity of the facility is much higher than that.

Bill Sumner

So approximately 4 million, given the labor force you have now but it’d be higher than that if you had more labor to draw from.

Bryan J. Merryman

The number that we agreed upon and put in our 10-K was 3.6 million pounds.

Bill Sumner

Okay, great. And what are your debt levels right now?

Bryan J. Merryman

No debt right now.

Bill Sumner

No long-term, no short-term?

Bryan J. Merryman

We are into our working capital line of credit slightly at the end of June, but that’s just an inventory build for August shipments.

Bill Sumner

Sometimes I talk to managers where I might try to convince them that they could repurchase shares or do this or do that as far as allocating capital back to the stockholders; however, with your, Bryan and Frank, I have the utmost confidence that you will make intelligent decisions there. However, having said that, I do note that what you are paying out, about $2.5 million in dividends? And theoretically, the same argument for not repurchasing stock would apply to not paying a dividend, and I just say that to point out the -- that the -- you know, at some point the stock price is such that maybe you take on $1 million in debt here and $1 million in debt there and repurchase some shares. But I just wanted to throw my thoughts into the mix. I’m sure you’ll make the best decision.

Bryan J. Merryman

Well Bill, I certainly agree with that comment and we continue to monitor what we think are the most important issues in making that decision, so I don’t disagree with your comment at all.

Bill Sumner

All right. Because you know, I disappeared for a while because the stock price wasn’t too exciting to me anymore, but now it’s starting to get there. Thanks, guys.

Operator

The next question we have comes from John Powers with F.R. Law.

John Powers - F.R. Law

Thank you. Just a couple of quick questions -- curious how many current litigation there might be pending between the company and your franchisees, and is that number up or down since the same quarter last year?

Bryan J. Merryman

We have some litigation that is incidental to our business and we’ve disclosed that in our filings and that’s as much as we’ll comment on that topic.

John Powers - F.R. Law

Okay, and then the second question is I’ve had product that has come from Rocky Mountain from Costco and I’m curious what your current plans are to continue marketing company product through big box stores, either their brick and mortar or their e-commerce sites.

Bryan J. Merryman

That’s an interesting question, that you said you had product that came from Costco. I’d be very curious to when that happened.

John Powers - F.R. Law

I think it was about -- they were some kind of a cluster, about two months ago maybe.

Bryan J. Merryman

Well that certainly doesn’t jive with the shipments that we’ve made to them. We had no orders or shipments from Costco in our first quarter, so that’s very curious that you would have a cluster from our company from Costco in the last two months. That doesn’t make any sense at all.

John Powers - F.R. Law

Yeah, I think it was about two months ago that I had them. I’m trying to think whether I would have the receipt. Would -- I mean, they certainly could have had the stock around for a while, I assume? But anyway, in answer to my question, what as far as the company in addressing its sales concerns, is it intending to pursue big box or what’s the plan?

Bryan J. Merryman

We do not anticipate any change in our specialty market strategy and that is to selectively consider opportunities where we think the price that the specialty market will pay for the product and retail the product is in accordance with our strategy. And so we have no strategy change as it relates to specialty market.

John Powers - F.R. Law

Okay. Thank you.

Operator

We show no further questions at this time. I would like to turn the conference back over to management for any closing remarks.

Franklin E. Crail

Thank you, Operator. I’d like to thank you all again for dialing in to our conference call today and we look forward to talking with you at the end of our second quarter, so thank you again and have a good day.

Operator

To access the digital replay of this conference, you may dial 1-877-344-7529 or 1-412-317-0088 beginning at 5:45 p.m. Eastern Time today. You will be prompted to enter a conference number, which will be 421182. You will be prompted to record your name and company when joining. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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