Hello, welcome to WildBrain's fiscal 2023 earnings call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the previous remarks, there will be a question-and-answer session. To ask a question during that time, please press star one on your phone keypad. If you would like to withdraw your question from the queues, press star two. I'd now like to turn the call over to Kathleen Persaud, Vice President in Investor Relations at WildBrain. You may begin the conference.
Thank you everyone for joining us today for WildBrain's third quarter 2023 earnings call. Joining me today are Josh Scherba, our President and CEO, and Aaron Ames, our CFO. Also with us and available during the question and answer session is Danielle Neath, our EVP of Finance and Chief Accounting Officer. Before we begin, please note the matters discussed on this call include forward-looking statements under applicable security laws with respect to WildBrain, including but not limited to statements regarding investments and acquisitions by the company, commercial ratings of the company, the business strategies and operational activities of the company, the markets, industries in which the company operates, and the future growth, objectives, and financial and operating performance of the company and the value of its assets.
All statements are based on facts and assumptions that management believes are reasonable at the time they were made and information is currently available. Forward-looking statements are subject to a number of risks and uncertainties. Actual results or events in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including the risk factors set out in the company's most recent MD&A and annual information form, which are available on the investor relations section of our website at wildbrain.com. Please note that all currency numbers are in Canadian dollars unless otherwise stated. After remarks, we will open the call to questions. I'll now turn the call over to President and CEO, Josh Scherba.
Thanks, Kathleen, and thanks to everyone for joining us today. I want to start by saying how thrilled and honored I am to have been appointed WildBrain's President and CEO. I've been with the company since its founding in 2006, I've held many roles over that time, spanning all aspects of the global organization. WildBrain is a truly special company within the entertainment industry, with a deep vault of beloved IP and a totally unique and powerful commercial offering to monetize our own and partner brands. At WildBrain, our mission is quite simple. We create exceptional entertainment experiences that captivate and delight fans new and old. In doing so, we cultivate and grow love for our own and partner brands with kids and families around the world. We do this through the wonder of storytelling.
As President and CEO, I'm excited to continue this work and further advance WildBrain's position as a leader in content creation, audience engagement, and global licensing. Before I touch on what my vision of our future looks like, I'd like to take a moment to thank Eric Ellenbogen for his important leadership over the past several years. Eric helped transform WildBrain, working with the management team and our board to set the company on a renewed path of sustainable growth and positioning it for a successful future. During this time, he and I worked closely together, elevating the company's commitment to creative excellence and expanding its global reach by implementing a unified 360° strategy across the organization, rebranding the company, and assembling its top management team.
I look forward to building further on this foundation as we move to the next phase of growth for the company. On behalf of the entire company and the board, I'd like to thank Eric for his vision and valuable contributions. Last quarter, we talked about the inflection of our growth in 2 phases. Phase one was all about content activation, production, and rollout, and that laid the foundation of the transformation we've undertaken over the past three years. We've invested in our creative, building out our team and processes, and we're seeing returns of those investments both in quality of our output, as underscored by a significant increase in award nominations for our shows since 2019, and also evidenced by the partners we're now attracting.
Phase two is about accelerating the monetization of our key franchises across the full 360° spectrum of our business, using our capabilities in content creation, audience engagement, and global licensing. We do this all with IP at the center. For our own IP such as Peppa, Teletubbies, and Strawberry Shortcake, but also for our partner IP such as Sonic Prime, our hit Netflix series co-produced with SEGA. We've always taken a content-led approach to igniting or monetizing brands. While it all starts in our business with strong IP, getting the content right creatively is vital. Great characters and story lay the runway for successful audience engagement, which in turn drives global licensing. In our industry, to have success in toys and other consumer products, you need audiences to love your characters and stories.
To grow that love, you need to engage audiences wherever, whenever, and however they want. It's a virtuous cycle, and when it's done right, it generates more and more demand for our content, which in turn generates additional opportunities for audience engagement and licensing. As we've said previously, no other independent company in the entertainment industry offers this full suite of capabilities under one roof to ignite IP. The 360 flywheel is a comprehensive infrastructure that provides capabilities to monetize IP through every stage of the cycle. At our studios, we develop and produce exceptional content. Through our global distribution capabilities, including our world-leading YouTube network, WildBrain Spark, and our traditional distribution business, we deliver the content to screen to engage audiences worldwide. We further amplify that engagement using social media, promotional activations, and live appearances to help fans celebrate to grow their love for our brands.
Finally, through our global licensing agency, WildBrain CPLG, we leverage opportunities for consumer products, live experiences, retail activations and more in over 90 countries, providing fans with avenues to embrace our brands off-screen in their own lives. With the investments in our infrastructure now behind us, we will apply a highly focused and disciplined approach to leveraging that infrastructure to accelerate our growth over the long term and monetize key franchises. In the coming months, I will be working closely with our senior management team as well as with the board and Jim Fielding, who has been appointed strategic advisor to aid us as we dive into the next stage of growth. For those of you who don't know Jim, he's been a familiar face here at WildBrain for years.
He first came on board as a consultant working with our Peanuts brand, where he developed the current growth strategy. Jim's experience with top-tier companies like Disney, DreamWorks and Twentieth Century Fox, and his expertise in detail and licensing field made him an ideal fit. Since he's come in-house, Jim formed our strategic marketing group to set franchise strategy and social engagement. On the back of those efforts, we're seeing traction on our own brands in just a short period of time. With Strawberry Shortcake, for example, in less than three months, our social media engagement has grown double digits. This growing popularity for both Strawberry Shortcake and Teletubbies is leading to new licensing opportunities, and we'll be announcing some of those partnerships in the coming weeks.
Jim has quickly made an impact, and we will continue to leverage his deep brand experience to elevate our owned and partner brands. We look forward to providing updates on those developments and more over the coming quarters. One recent development that I do, however, want to touch on now is our agreement to acquire House of Cool, announced in March. House of Cool is a leader in pre-production capabilities for premium animated content, including series, specials, and feature films. Pre-production is a critical first stage of any project, setting the look and tone of a production. Adding House of Cool's talent and capabilities further sets us apart as a premier animation partner and allows us to accelerate our growth in content creation. The House of Cool team has worked on over 20 theatrical films, including Despicable Me, A Peanuts Movie, and franchises like Angry Birds and Ice Age.
They have also worked on numerous high-profile series, including What If...? from Marvel Studios, Gravity Falls for Disney, Trollhunters for DreamWorks and Netflix, and Pretzel and the Puppies for Apple TV+. I've known the co-founders, Wes Lui and Ricardo Curtis, for years, the fit for House of Cool and WildBrain is ideal. As Ricardo said in our announcement, House of Cool has been a fiercely independent operator for the last two decades, it would require something special for them to join another studio. Thankfully, WildBrain is that special. With Ricardo and Wes and their creative team now combined with our in-house talent, WildBrain has greatly enhanced our capabilities for premium content. The animation industry has been shifting to meet streamers' move towards storytelling for the whole family.
Sonic Prime is a great example of that, a serialized complex story that appeals across multiple age demographics. The House of Cool acquisition helps us to take our storytelling to the next level while also adding the capability to do features, setting us up as the top provider for premium animated content. In the last year, we've seen some notable shifts in our industry across both content and consumer products. We believe WildBrain is uniquely positioned to adapt to those shifts over the long term. We are diversified in our revenue base, with approximately 40% of our revenue from content and approximately 40% from consumer products. We are not singularly tied to sector-specific impacts. We are also diversified across our portfolio of brands. With both owned and third-party brands, with properties like Peanuts, Teletubbies, Strawberry Shortcake and Sonic Prime, we have plenty of opportunities to grow.
Within our services, we strive to be a premier partner to brands. With our global infrastructure and expertise in global licensing combined with data and insights, we can harness audience engagement. We are a unique partner for companies. Companies like SEGA and Tangoäle come to us for our ability to extend and amplify their brands because we can provide turnkey solutions. Unique is a word that may be overused, but I cannot think of a more fitting adjective for how I see WildBrain in today's media and entertainment landscape. With our capabilities and our assets, the future is bright for WildBrain. Our strategy is in place, the foundation is built, and I'm excited to lead WildBrain on the next phase of growth to unlock its value and drive even greater value for our shareholders.
With that, I'll turn it over to Aaron to review the results in the quarter and our outlook.
Thanks, Josh. Third quarter consolidated revenue was CAD 141 million, reflecting an increase of 9% year-over-year. Content production and distribution revenue was up 24%. That is fitting from live action production. Consumer products revenue of CAD 51 million was consistent with the prior year. While the overall macro retail environment is still facing some of the inventory reduction headwinds we discussed last quarter, we nonetheless saw strength in both our owned and third-party brands. With our expansion into APAC, we expect to see accelerated growth in fiscal year 2024 and beyond. Spark revenue was down 15% due to the soft advertising market. I reiterate the real value of Spark is in the engagement it brings to our owned and partner brands, which propels consumer products as well as the insights it provides to all aspects of our business.
Television revenue was CAD 9 million in the quarter. Gross margin dollars were up 6% year-over-year with strong revenue. Gross margins were down about 100 basis points from more live action production in the quarter. We recorded net income of CAD 19 million compared to net income of CAD 21 million in the year-ago period, primarily driven by higher finance costs and a write-down of our home library, offset by higher gross margin dollars and an income tax recovery. As we discussed in the past few quarters, we have been moderating our SG&A spend and are beginning to realize the returns on those investments. Free cash flow in the quarter was negative CAD 4.6 million compared with positive free cash flow, CAD 8.1 million in the prior-year quarter. Free cash flow for Q3 reflects the timing of working capital settlements.
Year to date, free cash flow is positive CAD 13 million. Our leverage at the end of the quarter was 4.59 times. Leverage may fluctuate from quarter-to-quarter, but overall, we expect it to continue to trend down gradually over time through EBITDA growth and free cash flow generation. Adjusted EBITDA increased 9% year-over-year. Turning to guidance, we continue to expect revenue of approximately CAD 525 million-CAD 525 million and Adjusted EBITDA of approximately CAD 95 million-CAD 105 million. We expect to end the year with positive free cash flow. With the continuation of top line growth and efficiently managing our expenses, we remain confident in our outlook for the year. I'll turn it back to Josh now.
Thanks, Aaron. We're in an advantageous position in the industry with our capabilities across content creation, audience engagement, and global licensing. Our portfolio of owned and third-party partner IP allows us to truly ignite brands through the power of storytelling. We have an exceptional leadership team aligned to meet our goals. As I look over the next 12- 18 months, I see several opportunities for growth. With Peanuts, we will continue to grow, and we have a long runway in Asia Pacific with our recent expansion in that territory. In Sonic Prime, the velocity of deals in our licensing pipeline has continued to increase as we see traction with licensees. Lastly, we will grow our partnerships with powerful global brands like SEGA and Playmobil, who are attracted to the ecosystem we've built.
Lastly, I'd like to thank our entire team for their continued hard work and commitment to the future. By focusing on creativity, entrepreneurship, accountability, inclusivity, and collaboration, we will continue to build on our strong foundation for long-term sustained growth. With that, I'll open the call to questions.
Thank you. At this time, if you would like to ask a question, please press star then 1 on your telephone keypad. If you would like to withdraw or mute, press star two. Please stand by while we compile the Q&A roster. First question we have Aravinda Galappatthige with Canaccord Genuity. Please go ahead.
Josh, on your promotion to CEO, I wanted to touch on the consumer products side, obviously. I think understandably it's flattened a little bit because of sort of the macro picture, and as you referred to with what's going on with retailers. I know that, you know, you've been pushing it and you made comments around gaining more traction from the non-Peanuts brands, specifically Strawberry Shortcake and Care Bears. Can you maybe just talk to the path forward in that direction? How material can sort of the merchandising revenues on those brands grow? Can it sort of, you know, perhaps take concentration away from Peanuts? Is that something that can be achieved over the next year or two? Maybe I'll stop there.
Yeah. Thanks, Aravinda. The cycle that ultimately leads to revenue for consumer products, it starts with audience engagement. We've been, you know, we've been focused on creating different forms of content around Strawberry and Shortcake over these past couple of years. We're seeing really positive signs in the engagement of that content. We've also been increasing our activity around social media, and we've seen some really encouraging signs in that area as well. These things take time and we're gonna make sure that we do it in a way that's sustainable and give us long-term growth on both of those brands.
As we look out, you know, as we talk about future quarters, there will be deals announced, but it's going to take time to get to a place where we have that significant revenue from those brands. It really is a tremendous opportunity when we look at upside. We have this platform that we've built that supports a global top 10 brand with Peanuts. To be able to leverage that on other on other brands is truly a luxury, and we're gonna take advantage of it.
Okay, thank you. I was wondering if you know, now that you're in your role as CEO, would you kind of maybe consider, you know, have more activity on the M&A side? I mean, you obviously saw the House of Cool acquisition. I know that balance sheet, you know, there's obviously there are some limitations there, but when you look at the space, there's obviously, you know, companies in the space that are cash-rich, some of them cashed up. I'm not sure about the full universe of private companies. What's your view on possibly more transactional going forward? Or is your focus predominantly organic at this point?
We will continue to look for strategic opportunities out there. I think that House of Cool fits that perfectly. They're exactly in where we're going with premium content. you know, world-class pre-production capabilities that they're not easy to replicate or find out there in the world. and to bring in the talent like Ricardo and the creative organization that he has built, it's a really unique opportunity that came along and really builds out our overall strategy in the area of content creation, and again, adds to really how unique we are, you know, on the global landscape. look, if House of Cools kind of grew on trees, we'd be out there actively looking for them every day, but they don't.
It doesn't mean that we're not gonna continue to search for things that could be really, really strategic for us in where we're going visually for the company.
Great. Just one last question for Aaron or Danielle. The adjusted EBITDA attributable to non-controlling interest was sort of unusually small. You obviously kind of viewed that as a gauge to get a sense of how sort of Peanuts did. Were there any kind of one-time items or anything extraordinary that kind of drove you to create that?
Yes. Excuse me. On, on the income statement, there was lower non-controlling interest expense, as there were non-EBITDA items in there, such as interest accretion and foreign exchange evaluation. If you refer to page 25 of the MD&A, you can see the Adjusted EBITDA portion, which is up about CAD 600,000 over the same quarter last year. CAD 6.4 million for the quarter.
Okay. Thank you. I'll take a closer look at that. I'll pass it on.
Thank you. Next question we have Drew McReynolds with RBC. Go ahead.
Yeah, thanks so much. Good morning and congratulations, Josh. Two for me. First, maybe for you, Josh, just in your opening remarks, excuse me, you talked about evolving content type over the last 12- 18 months, and I think we're kind of well aware of shifting out there, but just more specifically to WildBrain and kids and animation side, wondering if you could just kind of dive deeper into some of those shifts. Secondly, a while ago, the company did put out fiscal 2024 targets, and I think since then, certainly a lot has evolved. Just wondering whether those are still more or less in, intact and, you know, if it is all gonna be updated, just kind of what timeframe did you look about to get some updates there?
Thanks, Drew. let me start with the content landscape. Yeah, you know, really looking back, it was, I guess, in April of 2022 that the quote unquote Netflix correction happened. we've been, you know, we've been living through this kind of new rationalized cost world for the streamers since then. it's certainly had, I would say, a delay in some of the green light decisions that they've been making. you know, I think we really view that as more of a timing issue than anything else. At the same time, there's been some trends that actually go in WildBrain's favor.
The first is this kind of slight quality and known IP that's a benefit to us. Also, I'd say this trend that Netflix has been going for, which is shared viewing, family viewing, looking to create experiences that have kids put their personal iPad viewing down and actually watch things together as a family. This is something that is really considered a hit for Netflix with what we've done on Sonic Prime. It's that multi-level storytelling that works not only for kids, but for parents. On Sonic, I know we've got a real even split of adult accounts as we do for kid accounts. That was also part of the reason for building out more of that expertise in the House of Cool acquisition.
Their background in feature film and as well as working on Trollhunters, which was really the first series for Netflix to do this, it has been extremely well received in the industry. You combine all of those things and while there's been some pressure on timing, we feel like we're really well positioned for this next phase with the streamers. On your second question, it is my first day in the role. So it's gonna take us a few minutes to get back to you on how we're landing for fiscal 24. We're of course going to do a bottoms up budget, and we'll be working through that process in the coming weeks.
You know, long term, I'm extremely bullish on the growth of this company.
Understood. Thank you very much.
Thank you. Our next question comes from Tim Casey with BMO. Please go ahead.
Thanks. Can we get some more perspective and insight as to why the board has elected to change CEOs without really any, you know, communication to the street or, you know, perspective on targets? Why the change so abruptly and suddenly? Thanks.
Yeah. Thanks, Tim. Over the last few years, Eric's done a great job leading us through this transformation. We've kind of seen this transformation in phases. That first phase was about building out our creative capabilities, extending our global licensing reach into key territories. Really it's a foundation. That was phase one. The board made the decision that for this next phase, which is really going to be about execution and focus, that this structure would be better suited for this next phase. really think it's a signal for where we are in terms of phasing and growth of the company.
Thank you.
Thank you. Next question we have Stevie from Manager.
Oh, yeah. Hi. I noticed that you guys took a write-down on some of the programming in the quarter. I was wondering if you could tell us which shows that was attributed to and also seems to be an ongoing thing. Have you thought about an ongoing tuning to cost of doing business? Have you thought about actually taking that off your discuss when you report your results rather than these discounts that seem like they're on the front of the quarter?
Yeah. We do have a quarterly, a regular quarterly accounting process to check for impairments. We did highlight a few select titles where the revenue consumption has come in a bit lower than expected. It was the CAD 6 million of non-cash impairment charge for the quarter. That was again, that's been accountable as a portion against acquired library. You know, we've disclosed that bit in the financials for users to adjust in their models accordingly and we don't disclose the titles because they're still available for sale, and they're still, we're still expecting some revenue on those titles. It's just adjusting downwards on the net book value.
Okay. Thanks.
Thank you. Our next question we have Adam Klein with National Bank Financial. Please go ahead.
Yeah. Thanks a lot. Maybe just going back, Josh, to Tim's question. I appreciate, you know, the comment in terms of feeling that new team to drive things forward. I think it was last August that Eric signed a new three-year contract. Maybe you could just talk a little bit about, you know, what has transpired in less than the past 12 months and then maybe a couple of follow-ups, please.
Thanks, Adam. You know, when Eric re-upped, one of his key, one of his KPIs was succession. We've, this is part of a succession plan. The timing from a board perspective, it was appropriate to do now as we move through this next phase. I guess, you know, again, I wanna reiterate how excited I am about this opportunity. My experience kind of spans all aspects of the company from an operational standpoint. As we move into this next phase of execution, I'm really confident in the ability for our team to be able to get us there.
Okay. I should congratulate you also. I apologize for not doing so. If I go back to David's question, Danielle, it's actually been a while, I think, since you last did an impairment. Like, I don't think we've seen anything in the last several quarters. Am I wrong? It's been a while.
Yeah. No, no, that's correct. I think Q2 last year, we had one, but again, we follow our quarterly process and they do come up from time to time.
Okay. Maybe for Josh or Aaron, you know, we're looking at consumer products that are relatively flatish for the year, maybe even down 1% year-to-date. You know, the retailer inventory destocking dynamic does continue, likely through, you know, these coming months. You know, there's a lot of, we've seen and heard in recent weeks from quarterly reporting from others that, you know, a lot of this destocking should run its course by the end of June. Can you help us at all in terms of, you know, whether you think there's a resuscitation that you could see in your Q4? It does seem to face off against a relatively easy comp.
Yeah. For Q4, you know, this inventory restocking will continue on for a little bit longer, a couple of quarters. We do expect that to occur. However, you know, on the other side, if consumer products and, you know, CPLG's performance, we're seeing good performance there. There are some opportunities there. Again, those occur in a gradual way. I don't see a massive change in the next couple of quarters. In 2024, we're very bullish on 2024 and beyond because, you know, as these new properties come online and the opportunities presented by APAC, definitely in the long term, you're gonna see nice uplift.
Okay. We'll leave it there. Thanks. Ladies and gentlemen, if you wish to ask a question, please call star four then one on your touchtone phone. Next question we have Daniel Kurnos with Benchmark. Please go ahead.
Hey, thanks. Good morning. Josh, first, congratulations. I think maybe let me try to ask some of the prior questions in maybe a different way. I think you've kind of outlined the reasoning why a change here. I think maybe, you know, since you've obviously been, you know, with the company forever, and have sort of been on the calls prior with Eric, is there any philosophical difference between sort of what you bring to the table? As in, you know, you mentioned IP was at the heart. Elizabeth's at the heart. Eric was obviously incredible at generating incremental brand growth, partnerships, et cetera, and I know he worked on a lot of that stuff too. Now it's about, you know, focusing on profitability, improving the monetization of that portfolio, seeking alternative ways to use what you've got.
Is that kind of the way that you're trying to frame the difference? Do you view this more as just sort of a continuation of the processes that were put in place over the last three years?
Thanks, Dan. I would say that, you know, Eric and I were very much aligned on strategy. This is a continuation, and it's the next stage of what we've been building on. You know, again, I bring it back to these core capabilities that we have. You know, our ability in content creation to make content that can work for premium streamers, that can attract families to watch together, and then what we do on YouTube with digital-first content that is native to that platform and engages kids, through to what we do in all forms of audience engagement around social activations and our YouTube network. Along with this global licensing footprint we've built, it's a totally unique combination of capabilities that we have. We're seeing this...
We're leveraging this to grow PN, but we've got this amazing opportunity to do that with other brands. The pieces are all in place. This next level is really about execution. I would also say that, you know, having been with the company, as you say, forever, your words, not mine, but it has been a while. I really value the culture here and we have a culture of entrepreneurialism, of creativity and inclusivity that I'm gonna continue to foster and encourage.
I believe that we've got a moment to really focus together and be all about execution and really bringing to fruition what's been built over many, many years, and realize the potential for it.
Okay. That's, that's helpful. On House of Cool, you know, we have the purchase price, which is mostly stock, two-thirds stock, one-third cash, with I think an incremental earn-out. How do we just think about either the contribution or the economics or payback period around that deal? Rather, you know, is it more just a capability for long-term scale play, or do you expect some kind of, you know, more immediate payoff from the deal?
It's highly strategic, and it definitely builds out our capabilities in the space, which is really important. It goes beyond just the financial contribution that House of Cool would directly make to the company. I'll highlight a couple of other areas. Certainly they work, they work on projects from, you know, top studios in the world, which can also actually offer an opportunity because they don't do production services, to be partnering where they can do pre-production and then Vancouver could be doing production. That's another interesting alignment. Then I would also point to their expertise in features, which is not a space we're currently in, as an opportunity for us to grow in as well.
In terms of structure of the deal, I mean, this really made sense for them because they believe in what we're building at WildBrain. To take a deal that was heavy in equity made a lot of sense for them, and it made a lot of sense for us, and it's all part of what is gonna be a long-term, a long-term arrangement with them.
Got it. No, that makes sense. Do you have any view on kind of how the Hollywood writers' strike will have an impact either in your favor if you have production capabilities that these others can't fulfill, or alternatively on sort of demand for other episodes? You know, just to help us think through kind of that dynamic understanding. I think the last one lasted 100 days, but you know, we're still a ways away from full season.
There isn't much in terms of a direct impact on us. You know, animation is largely excluded from it and certainly the majority of our productions are Canadian-based, it doesn't have an impact on our existing slate. There were a couple live action projects in development that will be pushed out a bit, but nothing that was in our plan. In terms of opportunities, we'll have to see how this plays out. You know, historically, when these strikes have gone on for an extended period of time, it has offered up opportunities for global distribution. You know, as the supply dwindles and Service providers are looking for content that's fresh.
It has benefited companies like ours in the past, but it's too early to say because it really depends on how long it goes.
Okay. Last one. Sorry to ask at once, but, you know, I know Paramount just launched its PPC store, which I think is hot in the game, although I'm not sure that they should be doing anything right now with their cash burns. You know, are you the piece of the streamer expand more into kind of those avenues because they recognize the value in sort of PPC or CPG in doing that? Help us think through other additional ways or growth areas that are developing from some of those avenues that you're exploring.
You know, direct to consumer obviously continues to grow, and it's something that we think a lot about at CPLG and what we're doing with Peanuts as well. You know, being the owner of IP and brands, that certainly presents itself as a go forward opportunity. I think, again, what's unique about us is that the layering on of our audience engagement. Our YouTube network and our social activations that really fire this engagement and then the opportunity for only these direct to consumer, there is a real link there between that engagement and then actually it leads into purchase. Certainly an opportunity there that we're monitoring closely.
Thanks for sticking with me on your first one, Josh. I appreciate it, and congrats again.
Thank you very much.
Thank you. This concludes today's conference call. Thank you all for participating in Analysis Connect.