PriceSmart - Q3 2023

Transcript

Operator (participant)

Good afternoon, everyone, and welcome to PriceSmart, Inc.'s Earnings Release conference call for the Q3 of fiscal year 2023, which ended on May 31st, 2023. After remarks from our company's representatives, Robert Price, Interim Chief Executive Officer, and by Michael McCleary, Chief Financial Officer, you will be given an opportunity to ask questions as time permits. As a reminder, this conference call is limited to one hour and is being recorded today, Tuesday, July 11th, 2023. A digital replay will be available following the conclusion of today's conference call through July 18th, 2023, by dialing 1-877-674-7070 for domestic callers or 1-416-764-8692 for international callers, and by entering the replay access code 780477 pound.

For opening remarks, I would like to turn the call over to PriceSmart's Chief Financial Officer, Michael McCleary. Please go ahead, sir.

Michael McCleary (CFO)

Thank you, operator. Welcome to PriceSmart, Inc.'s earnings call for the Q3 of fiscal year 2023, which ended on May 31st, 2023. We will be discussing the information that we provided in our earnings press release and our 10-Q, which were both released yesterday afternoon, July 10th, 2023. In these remarks, we refer to non-GAAP financial measures. You can find a reconciliation of our non-GAAP measurement of adjusted earnings in our earnings press release and our 10-Q. These documents are available on our investor relations website at investors.pricesmart.com, where you can also sign up for email alerts. As a reminder, all statements made on this conference call, other than statements of historical fact, are forward-looking statements concerning the company's anticipated plans, revenues, and related matters.

Forward-looking statements include, but are not limited to, statements containing the words expect, believe, plan, will, may, should, estimate, and some other expressions. All forward-looking statements are based on current expectations and assumptions as of today, July 11, 2023. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks detailed in the company's most recent annual report on Form 10-K, the quarterly report on Form 10-Q filed yesterday, and other filings with the SEC, which are accessible on the SEC's website at www.sec.gov. These risks may be updated from time to time. The company undertakes no obligation to update forward-looking statements made during this call. Now, I will turn the call over to Robert Price, PriceSmart's Interim Chief Executive Officer.

Robert Price (Interim CEO)

My sincere thanks and appreciation to our employees here in the U.S. and in our 12 countries and one U.S. territory for their amazing dedication and hard work. Congratulations for a job well done during the Q3. Our Chief Financial Officer, Michael McCleary, will soon provide a detailed narrative for our Q3 results. In advance of his remarks, I would like to offer some comments. Our year-over-year increased sales performance was supported by significant strengthening of the Costa Rica currency, the Colón, along with the strong opening of our new location in San Miguel, El Salvador, by improvements in buying and operations, and by growth in online sales. The Q3 results are definitely encouraging. However, I want to remind our investors that PriceSmart markets, the countries in which we operate, are impacted by challenging economic and political events outside of our control.

After operating in the region for 26 years, we have the experience and skills required to successfully operate the club business in the region to U.S. standards, but we are often faced with country-specific events that result in risks to our financial results. We continue to address these risk factors with improved risk prevention systems, along with meeting with government officials as needed. One final comment relates to the announcement of the company's plan to repurchase stock. We believe that the decision to repurchase stock is in the best interest of our shareholders. We also want to assure our investors that our company's balance sheet and cash flow support both the stock repurchase and our plans to continue to grow PriceSmart. Michael will continue with his presentation.

Michael McCleary (CFO)

Thank you, Robert. We had a strong Q3 with both revenues and net merchandise sales exceeding $1 billion. Net merchandise sales increased by 7.1% or 5.6% in constant currency. Comparable net merchandise sales increased by 5.8% or 4.3% in constant currency. For the nine months ended May 31st, 2023, total net merchandise sales exceeded $3.2 billion, and revenues reached almost $3.3 billion. Net merchandise sales increased by 8.7% or 9% in constant currency, and comparable net merchandise sales increased by 6.5% or 6.7% in constant currency for the nine-month period.

By segment in Central America, where we had 28 clubs a quarter in, net merchandise sales increased 11.8% or 6.1% in constant currency, with an 11% increase in comparable net merchandise sales or 5.3% in constant currency. All of our markets in Central America had positive comparable net merchandise sales growth. Our Central American segment contributed approximately 650 basis points of positive impact to our total consolidated comparable net merchandise sales for the quarter. The Costa Rica Colón appreciated significantly against the U.S. dollar compared to the same three-month period a year ago and was the primary contributor to the favorable currency fluctuations in this segment.

In the Caribbean, where we had 14 clubs at quarter end, net merchandise sales increased 7.3% or 6.9% in constant currency, and comparable net merchandise sales increased 4.2% or 3.8% in constant currency. All of our markets in this segment had positive comparable net merchandise sales growth. Our Caribbean region contributed approximately 120 basis points of positive impact to total consolidated comparable net merchandise sales for the quarter. In Colombia, where we had nine clubs open at quarter end, net merchandise sales decreased 15.7% or increased 0.6% in constant currency, and comparable net merchandise sales decreased 15.2% or increased 0.7% in constant currency.

The comparable net merchandise sales decrease in Colombia, driven by the significant devaluation of the Colombian peso, contributed approximately 190 basis points of negative impact to total consolidated comparable net merchandise sales for the quarter. In terms of merchandise categories, when comparing our Q3 sales to the same period in the prior year, our foods category grew approximately 9%, our non-foods category decreased approximately 5%, and our other business category grew 7%, primarily from our food service and bakery departments. The decrease in our non-foods category was primarily because in the Q3 of fiscal year 2022, we had higher sales as we marked down certain categories of inventory, combined with a deliberately more conservative position in similar categories of products this year and a smoother flow of merchandise through our supply chain.

Membership accounts grew 2.2% versus the prior year to 1.79 million accounts. Platinum Membership accounts are 8.6% of our total membership base as of May 31st, 2023, an increase from 7.1% as of May 31st, 2022. We continued with a strong 12-month renewal rate of 87.1%. Our membership income was $16.7 million, an increase of 8.4% over the same period last year. Total gross margin for the Q3 of fiscal year 2023, as a percentage of net merchandise sales, increased 110 basis points to 15.3% versus 14.2% in the Q3 of fiscal year 2022.

In total dollars, total gross margin increased $21.5 million, or approximately 15.1% versus the same quarter of the prior fiscal year. A 110 basis point increase was primarily due to significant markdowns we took in the Q3 of fiscal year 2022. Total revenue margins increased 120 basis points to 16.8% of total revenue when compared to the same period last year, primarily due to the increase in total gross margin. The total gross margin rate of 15.3% in the Q3 of fiscal year 2023 decreased compared to the 16.1% rate in the H1 of fiscal 2023.

This decrease is due to a variety of factors, including the elimination of our COVID premium, reduction in our Trinidad foreign currency exchange premium, and a margin decrease in Colombia, where we strategically decreased sales prices on select items across all of our imported merchandise categories in an effort to reduce the cost burden to our members during this period of exceptionally high inflation and significant devaluation of the Colombian peso. Beyond Colombia, we also took actions that resulted in a general blended margin decrease in response to increasingly challenging economic conditions to help alleviate the burden on our members. The average price per item increased approximately 7.7% year-over-year, down from a high of approximately 10% in Q1 of this fiscal year.

We still continue to see the price and FX pressures impact aggregate demand, as the average items per basket decreased approximately 3.2% compared to the same period of the prior year. During the quarter, our average sales ticket increased 4.2%, and transactions grew 2.8% versus the same prior year period. Freight rates continued to come down, and we adjust our merchandise pricing as dynamically as possible to ensure those cost reductions are passed on to our members. Freight rates decreased from approximately $3,900 per container last quarter to $2,900 during Q3 due to slowing transpacific demand from U.S. imports.

SG&A expenses increased to 12.9% of total revenues for the Q3 of fiscal year 2023, compared to 12.4% for the Q3 of fiscal year 2022. Warehouse club and other operations expenses made up about 40 basis points of this increase. The net effects of the appreciation of the Colón in Costa Rica and devaluation of the peso in Colombia on expenses contributed approximately 20 basis points of this increase. A tax receivable write-off impacted this line by approximately 20 basis points, or $0.08 per share. General and administrative expenses increased to 3.1% of total revenues for the Q3 of fiscal year 2023, compared to 3.0% for the Q3 of fiscal year 2022.

The 10 basis point increase is primarily due to increased compensation costs and travel, along with certain non-recurring expenses related to severance and professional fees. Operating income for the quarter increased 27.5% from the same period last year to $43.1 million. Operating income for the first nine months of fiscal year 2023 increased 19% from the same period last year to $152.4 million. In the Q3 of fiscal year 2023, we recorded a $1.5 million net loss in total other expense net, which includes the net impact of interest expense, interest income, and other expenses, which primarily consist of our foreign currency exchange losses. This compares to a $4.7 million net loss in total other expense net in the same period last year.

The primary contributor to this $3.2 million decrease in other expense net is an increase in interest income of $2.7 million comparatively because of significantly more investments of surplus cash at higher yields, while interest expense and foreign exchange losses were relatively stable when comparing the two periods. Our effective tax rate for the Q3 of fiscal 2023 came in lower than last year at 28.9% versus 33.7% a year ago, primarily related to expected cost savings for CEO compensation. For the nine months ended May 31st, 2023, the effective tax rate was 32.2%, compared to 32.8% for the prior year period. On a go-forward basis, we estimate an annualized effective tax rate of about 32%-33%.

Net income for the Q3 of fiscal 2023 was $29.6 million, or $0.94 per diluted share, compared to $19.3 million, or $0.62 per diluted share in the comparable prior year period. Net income for the first nine months of fiscal 2023 was $93.8 million, or $3.01 per diluted share, compared to $81.2 million, or $2.63 per diluted share in the comparable prior year period. Adjusted net income for the Q3 of fiscal 2023 was $31.9 million on an adjusted $1.02 per diluted share. Adjusted EBITDA for the Q3 of fiscal year 2023 was $63.2 million.

Adjusted net income for the first nine months of fiscal year 2023 was $103.3 million, or an adjusted $3.32 per diluted share, compared to adjusted net income of $79.8 million, or an adjusted $2.58 per diluted share in the comparable prior year period. Adjusted EBITDA for the first nine months of fiscal 2023 was $215.6 million, compared to $138.3 million in the same period last year. Moving on to our strong balance sheet. We ended the quarter with cash equivalents, and restricted cash totaling $236.4 million.

From a cash flow perspective, net cash provided by operating activities totaled $184.7 million for the nine months ended May 31st, 2023, compared to net cash provided by operating activities of $64.3 million for the same prior year period. This, in working capital, generated from changes in our merchandise inventory and accounts payable positions for the nine months ended May 31st, 2023, contributed $91.1 million of cash flow compared to the same prior year period. Average inventory per club decreased by approximately $0.5 million, or 6%, and inventory days on hand decreased by approximately four days, or 9%, for the Q3 of fiscal year 2023 versus the same period in 2022.

The primary driver of the decrease of inventory year-over-year is selling through much of our overstocked merchandise in our hard line segment that we took significant markdowns on in the prior year period. Net cash used in investing activities increased by $136.4 million for the nine months ended May 31st, 2023, compared to the prior year, primarily as a result of the net increase in purchases of short-term investments, primarily in the U.S., compared to the same nine-month period a year ago. Net cash used by financing activities during the nine months ended May 31st, 2023, increased by $24.4 million, primarily the result of a net decrease of proceeds from short-term borrowings compared to the same nine-month period a year ago.

During the Q3 of fiscal year 2023, the Honduran Central Bank began limiting the availability and controlling the allocation U.S. dollars for conversion from Honduran lempiras U.S. dollars. as of May 31st, 2023, our Honduran subsidiary had approximately $15.9 million worth of cash and cash equivalents denominated in lempiras, which cannot be readily converted U.S. dollars for general use within the company. We are actively working with our banking partners and government authorities to address this situation. Lastly, before turning to our growth drivers, our board of directors has authorized a share repurchase program of up to $75 million of the company's common stock. This program underscores our confidence in the business and our expectations for growth, while together with our dividend, also delivering returns for our shareholders.

Subject to market conditions, we expect this program to begin toward the end of our fiscal Q4. On to our growth drivers. Starting with real estate, we are truly excited to have opened our new San Miguel club in May, which is our third club in El Salvador. This club includes our new sales floor design, which we expect will allow for better space utilization through more efficient pal and positioning on the sales floor. We are very pleased with the initial membership sign-ups and sales. We also currently have three warehouse clubs under construction. We have now completed exterior construction of a warehouse club in the affluent El Poblado area of Medellín, Colombia. We are working hard to complete the interior to be ready for our expected opening of the warehouse club at the end of August.

This club will be our second in Medellín and tenth in Colombia. In addition, we plan to open a warehouse club in Escuintla, Guatemala, in the fall of 2023, and a warehouse club in Santa Ana, El Salvador, in early 2024. Once these three new clubs are open, we'll be operating 54 warehouse clubs, and we are actively exploring additional locations as well. Finally, we are currently remodeling and expanding four of our high-volume clubs. These clubs are located in San Salvador, El Salvador, San Pedro Sula, Honduras, Santiago, Dominican Republic, and Port of Spain, Trinidad and Tobago. We also remain focused on the important role of our distribution facilities for optimizing efficiencies and reducing supply chain risk, and continue to actively seek new distribution center locations as part of our real estate strategy.

An example of this is that we recently signed a new lease to move and expand our domestic distribution center in Panama. Turning now to membership value. As we've highlighted in previous calls, our private label Member's Selection brand continues to be a high quality, good value alternative in these times of high inflation and foreign currency fluctuations. During the first nine months of fiscal 2023, our private label sales represented 26% of our total merchandise sales. That's up 180 basis points from 24.2% in the comparable period of fiscal year 2022. We expect to expand our suite of wellness services, and we currently have 48 locations with optical centers and expect to have 50 open by the end of the fiscal year.

Our optical program provides 4 free eye exams with every membership. We performed over 35,000 eye exams during the quarter. Optical is also an important social responsibility contributor to our local communities. In partnership with Price Philanthropies' Aprender y Crecer vision program, eye exams are performed by PriceSmart optometrists. Price Philanthropies purchases the glasses from our optical centers. Both the exam and glasses are given to children and their families free of charge. We have provided 40,000 screenings, 8,000 exams, and 7,000 eyeglasses to date through this program. We currently have pharmacy centers in all eight of our warehouse clubs in Costa Rica and two warehouse clubs in Panama. Expect to open pharmacies in the remaining five clubs in Panama during fiscal year 2024.

With respect to audiology centers, during the quarter, we opened 10 new audiology centers, with 24 centers open at the end of May 2023. We expect to open an additional eight centers in fiscal 2024. Our third growth driver is our omni-channel shopping options for our members, which reflects all sales in our digital channels, both in our app and on our desktop website. We currently utilize pricesmart.com and our app and third-party last mile delivery services to drive online sales. During the Q3, total omni-channel sales increased 18% as a percentage of net merchandise sales versus the same period in the prior year, and represented 4.9% of total net merchandise sales, a record for the company. Total orders increased 29.4%, and the average transaction value increased 11.1% versus the prior year period.

In May, PriceSmart was recognized by Uber Eats as the business of the year and best supermarket for the 2023 edition of the Delivering Excellence award in Costa Rica. These two awards recognize our efforts and commitment to provide the best shopping experience and demonstrate our commitment of providing value to our members. As of May 31st, 2023, approximately 58.6% of our members had created an online profile with pricesmart.com, and 15% of our total membership base has made a purchase on pricesmart.com. We believe that there are significant growth opportunities in our digital channel, and we will continue to invest in this part of the business to provide an enhanced omni-channel experience and additional value to our members.

It is also encouraging that 9.5% of our membership accounts are enrolled in our auto renewal option, which is up 150 basis points from 8% in the comparable prior year period, as this brings added predictability to our membership income. During the Q3, we released our comprehensive environmental and social responsibility report for fiscal year 2022. This ESR report provides an overview of PriceSmart's commitment to employees, members, communities, and the planet. The report also describes our approach to integrating sustainability and social responsibility into our decision making and operations. The full ESR report is available on our investor relations website at investors.pricesmart.com under the ESG tab.

Environmental and social responsibility continues to be an important component of how we approach our business, and an important component of those efforts is our actions and practices that aim to responsibly use natural resources. For instance, we are currently operating five recycling centers, three in Honduras and two in Guatemala. On average, around 12,000 lbs of recycled material is being collected monthly in each location. You can find more information about PriceSmart's philanthropic and corporate social responsibility efforts on pricesmart.org. In regards to social well-being, we are proud to announce that PriceSmart has been included in Newsweek's list of top 100 most loved workplaces for 2023. This list recognizes companies that put respect, caring, and appreciation for their employees at the center of their business model, and in doing so, have earned the loyalty and respect of the people who work for them.

We have continued to strengthen our commitment to people first. This achievement results from a joint effort of our leadership team together with every one of our employees. Looking forward a little into Q4, our comparable net merchandise sales for the four weeks ended July 2nd, 2023, were up 7.9% or 4.8% in constant currency. The tailwind from the strength of the Costa Rica Colón continues to offset the drag from the weakness in the Colombian peso. We've also seen significant improvement in the Colombian peso exchange rate with the U.S. dollar the past couple of months, especially in June, which has meant that Colombia FX has had less of a negative impact on U.S. dollar sales during the month. In closing, our people-first culture is what drives our efforts to succeed.

We are continuously working on enhancing employee engagement and building a positive work environment and culture across all countries we operate in. This culture, combined with our commitment to the foundational six rights of merchandising, arms us with the tools and can-do attitude to deliver on the value we promise to our members and has resulted in another successful quarter. Thank you for joining our call today. I will now turn the call over to the operator to take your questions. Operator?

Operator (participant)

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a three-tone prompt acknowledging your request. If you are using a speakerphone, please lift the handset before pressing any keys. First question comes from Jon Braatz at Kansas City Capital. Please go ahead.

John Braatz (Partner and Senior Equity Analyst)

Morning, Robert, Michael.

Michael McCleary (CFO)

Morning, Jon.

John Braatz (Partner and Senior Equity Analyst)

Michael, on the gross margins, obviously, I knew about the pricing actions that you were taking in Colombia, but you seem to have extended that throughout all your markets. A couple questions. Number one, were those pricing actions in place for the full quarter? I guess secondly, how long do you see these pricing actions actually remaining in place?

Michael McCleary (CFO)

Well, we kind of started that towards probably end of, end of Q2, early Q3, just a variety of actions, kind of sharpening our pencils a little bit on price points. At this point, those, that fine-tuning is continuing. I don't know, Robert, if you want to add anything on that.

Robert Price (Interim CEO)

Not too much. I think the results in the Q3 indicate that, I mean, gross mark pricing is somewhat of an art, and we're in so many different markets that we have to be very nimble in how we think about the pricing to maintain the membership value, weigh in, factor in risk, and constantly try to improve our expense structure so that our bottom line is gonna remain strong as we continue to offer better values to our members. It's a bit of a dance, and particularly operating in small markets, this many small markets.

I wouldn't wanna leave the impression that we're locked in to any particular number. We are. This is just a constant effort to make sure that we're delivering value, that we're doing it in a way that's gonna increase volume, and that we do it in a way that also brings the right profit to the bottom line.

John Braatz (Partner and Senior Equity Analyst)

Sure.

Robert Price (Interim CEO)

It's not quite as formulistic as you might think.

John Braatz (Partner and Senior Equity Analyst)

Okay. Yeah, With the Colombian currency showing relative strength here, would that at all influence any new pricing actions in Colombia, given the strength in the peso?

Robert Price (Interim CEO)

Well, you know, Colombia is by far the largest market we operate in.

John Braatz (Partner and Senior Equity Analyst)

Mm-hmm.

Robert Price (Interim CEO)

I mean, Colombia, as a GDP, is probably close to the same as all our other markets combined. For us, to be able to continue to gain market share in Colombia is extremely important, looking to the longer run. One thing I would say is that I think, and the competition level, by the way, is much, much more intense in Colombia than any place else we operate, because we are operating against major chains in South America that are very, very strong competitors. The other thing, I don't know whether you're aware of this or not, but the largest retailer in Colombia, Éxito, has made an announcement recently that they're for sale.

Not that we're not interested, obviously, in that, but what I, the reason that's relevant is because we think, given the strengthening of the peso and some disruption in terms of Éxito's situation, this is the time to really... Also with the opening of El Poblado, that this is the time to really be aggressive...

John Braatz (Partner and Senior Equity Analyst)

Mm-hmm.

Robert Price (Interim CEO)

about solidifying and growing our position in Colombia, because honestly, for our future, at this time, the market that offers us the most expansion opportunity in terms of sales is Colombia. I think we, our mentality is that we wanna be strong in Colombia, and also the imports that we bring in from around the world distinguish us from other competitors in the market. I think now that the peso is stronger, we have an opportunity to even become a bigger factor with our imported merchandise.

John Braatz (Partner and Senior Equity Analyst)

Okay, that's good. Michael, on the Honduras situation, do you see that potentially morphing into something like we saw in Trinidad, where you begin to restrict the imports there and raise prices to offset the currency issue?

Michael McCleary (CFO)

This is kind of new to this quarter, we're monitoring it actively. Obviously, you can see by the numbers that we disclosed about the cash on hand is not near as extreme as it got to at one point in Trinidad, we did think it was important to call it out, I think it was somewhere around $15 million versus-

John Braatz (Partner and Senior Equity Analyst)

Yep.

Michael McCleary (CFO)

A peak of about $100 million in Trinidad. At this point, we're monitoring it. We haven't taken any actions to restrict flow of merchandise at this point. We're just working with the banks and the local officials to continue to monitor this, and we'll see as we go forward.

John Braatz (Partner and Senior Equity Analyst)

Okay. One last question on the repurchase program, $75 million. I think domestically, you hold $42 million in cash. I think that was in the 10-Q. Let this, for the sake of convenience, let's say you were looking to complete this repurchase over the next year. Would that mean you would most likely have to repatriate some money from your markets down south, or would you borrow money? Or would there be enough domestic cash flow to, you know, let's say, pay the dividend and make any CapEx spending and do the complete repurchase?

Michael McCleary (CFO)

Let me put it this way, we're not expecting to enter into any debt or to fund the buyback and/or any tax leakage from.

John Braatz (Partner and Senior Equity Analyst)

Okay

Michael McCleary (CFO)

Moving the funds around between the countries, anything significant.

John Braatz (Partner and Senior Equity Analyst)

All right.

Michael McCleary (CFO)

I think we can fund it with existing cash flows.

John Braatz (Partner and Senior Equity Analyst)

All right. Thanks, Michael.

Michael McCleary (CFO)

Mm-hmm. Thank you, Jon.

Operator (participant)

Thank you. Next question comes from Víctor Cárdenas at Scotiabank. Please go ahead.

Victor Cárdenas (Equity Research Associate)

Congratulations on the results, Robert and Michael. Thank you for taking my question. I only have a question in regards to the which we purchased program, and in particular, just to understand a little bit about the rationale as opposed to using other alternative, like a special dividend? Any other soft guidance regarding the timing and the sizing of the repurchase? I think that you mentioned that in Q4, the program may be starting to make the first repurchases, but looking into understanding the rationale as to other alternatives and also some soft guidance on the sizes of the repurchases, if I may.

Robert Price (Interim CEO)

As I think I mentioned, we've never in the history of PriceSmart, entered into a repurchase program. This is the first time. I think partly it's gonna be a learning experience for us because what we're hoping to accomplish by this is to provide some opportunity for certain stockholders who might want to go beyond the dividend in terms of cash benefits and sell some of their stock. The other thing in my mind is, it is certainly a learning experience because we really don't know how this is gonna work until it's out there.

The other thing is, you know, we're a very thinly traded stock, and what's been the pattern is that we release earnings, and then when it's good, the stock jumps up for a few days, and then it goes back down, and then we're back in this kind of pattern where there isn't much going on. I think that, by having this stock repurchase program in place, I think we can provide a little more stability and put some kind of a little more. Well, I guess it would be stability into the pricing of the stock because we are an unusual company. I mean, we don't trade very much, and we're not a U.S. company in terms of nobody can go in and actually see what we're doing unless you live in one of our countries.

I think we're gonna learn. I mean, we don't know what's gonna happen. I think the most important thing, though, we have the cash to do this, number one, and number two is that looking beyond the repurchase, the real focus has to be on running this company well. If we run the company well, we will have good results for the shareholders in terms of the stock price. I think that's where we're that's our bottom line, but we're in a learning phase really here, and I don't know how to predict exactly how this all plays out, but we will see.

Michael McCleary (CFO)

Thank you, Michael. Thank you, Robert.

Robert Price (Interim CEO)

Is that it?

Operator (participant)

Thank you. There are no further questions at this time. I will now turn the call back over for closing comments.

Michael McCleary (CFO)

Okay, thank you, everybody. We hope you all have a good day. Thank you for joining us today. Bye-bye.

Operator (participant)

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, we ask that you please disconnect your lines.