Earnings Call: Q1 2015

Jun 10, 2014

Earnings release

Good day, ladies and gentlemen. Welcome to the Oxford Industries, Inc. First Quarter 2014 earnings conference call. Today's call is being recorded. At this time, I'd like to turn the conference over to Ms. Anne Shoemaker, treasurer. Please go ahead, ma'am. Thank you, Catherine, good afternoon, everyone. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not guarantees, and actual results may differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results of operations or our financial condition to differ are discussed in our press release issued earlier today and in documents filed by us with the SEC, including the risk factors contained in our fiscal 2013 Form 10-K. We undertake no duty to update any forward-looking statements. During this call, we will be discussing certain non-GAAP financial measures. You can find a reconciliation of GAAP financial measures to non-GAAP financial measures in our press release issued earlier today, which is posted under the Investor Relations tab of our website at oxfordinc.com. Now I'd like to introduce today's call participants. With me today are Tom Chubb, CEO and President, Scott Grassmyer, CFO, Terry Pillow, CEO of Tommy Bahama, and Doug Wood, President of Tommy Bahama. Thank you for your attention. Now I'd like to turn the call over to Tom Chubb. Thank you for joining us this afternoon. We had a very good first quarter at Oxford, with a solid 10% increase in net sales and adjusted earnings increasing 15% to $0.94 per share from $0.82 per share in the prior year period. Once again, our business was fueled by the strength of our brands, with Tommy Bahama delivering a solid performance and a truly exceptional performance by Lilly Pulitzer. As you are well aware, the first quarter was a difficult one for many retailers. With its 121-store national retail footprint, Tommy Bahama was not exempt from the reduced traffic issues that plagued the country during February, March, and early April. Low traffic during the first part of the quarter undoubtedly held Tommy Bahama's sales in check, but in a testament to the strength of the brand and the team, we rallied and delivered a solid first quarter. We saw sales in the quarter increase by 5% and comps returning to positive in April. With the strong finish, Tommy was able to deliver a 12.8% adjusted operating margin for the quarter. Comps were slightly negative for the quarter against a tough comparison in 2013, when Tommy Bahama posted a strong 10% comp store sales increase. I am pleased to report that the momentum Tommy Bahama experienced in April continued into May and the early part of June. Market conditions are clearly not as robust as we would like them to be, but we are proud of the results that Tommy Bahama is able to generate. Terry Pillow will provide more color on Tommy Bahama after I give you an update on our other operating groups. Lilly Pulitzer's performance in the first quarter was positively stellar. The top line increased 28%, and comps rose an amazing 34%. Our product assortment was very strong, with more emphasis on print, a beautiful color palette, and more options in casual dresses. Sportswear also performed extremely well and actually grew at a faster rate than even dresses. These beautiful products were supported by a well-thought-out and well-executed marketing campaign. Lilly Pulitzer continues to open new stores with three in the first quarter. Fantastic locations in Tampa, Key Largo, and Bethesda, bringing our store count to 26. The good news continues as the positive momentum at Lilly Pulitzer has continued as we move into summer. The team at Lilly Pulitzer is stronger and deeper than it has ever been and is clearly executing at a very high level. Our Lanier Clothes group reported a 6% increase in net sales and an 11% increase in operating income. Needless to say, we are pleased with the way this team continues to deliver a good return on investment, particularly in light of the competitive pressures in their business. Moving to Ben Sherman. Although the first quarter is a relatively small quarter for the Ben Sherman business, the team delivered improvements on the top and bottom lines. While most of the top-line increase was attributed to the liquidation of certain aged inventory and the impact of currency translation, we were very encouraged by the improved performances of our retail stores and concessions in the U.K. and Europe. We also saw a reduction in the Ben Sherman operating loss in spite of the unfavorable impact of foreign currency translation. With improvements in our own brick-and-mortar stores and a strong autumn-winter wholesale order book, we appear on the right trajectory to post additional improvements in the remainder of fiscal 2014. We are under no illusions about how tough the consumer marketplace is but remain confident in the strength of our brands and the opportunities we see for each of our businesses in 2014. Scott will review our consolidated results and outlook in more detail, but we are very pleased to reaffirm our guidance for the year. I'd like to now turn the call over to Terry Pillow to give more insights on Tommy Bahama. Terry? Thanks, Tom. No doubt the consumer marketplace has been somewhat unpredictable early this year, with traffic in most malls and other retail venues down compared to last year. While we have seen recent improvement, it remains choppy. In this environment, the strong brands like Tommy Bahama will find ways to inspire consumers. Our marketing around Father's Day, which is a very important holiday for us, includes fantastic brand building mailers, loyalty gift cards, and compelling emails. We've also incorporated a significant public relations push with great editorial coverage in major magazines and local TV spots. These are each important and highly effective marketing tools that drive traffic to Tommy Bahama. With five days left, we are looking forward to Saturday, which is historically one of our highest sales day of the year. Another type of marketing we do is more local in nature and gives back to the communities where we operate. For example, this summer in Chicago, where we have four stores, we have partnered with the Chicago Park District to support their beaches and lifeguards. In addition to the number of special events, we have supplied over 400 lifeguards with their official uniforms. Partnerships like this generate an amazing amount of press coverage and expand awareness of the Tommy Bahama brand. In this rapidly evolving omni-channel world, it is getting increasingly difficult to get consumers to show up at brick-and-mortar stores. To be successful, the retailer must offer an experience that the guests cannot replicate sitting on their couch. We believe that the presentation of our product and the high level of customer service give the guests an excellent experience at all of our stores. The experience is particularly strong in 14 locations that feature both a store and a restaurant. In those locations, the guests can shop for our wonderful products and also have a meal and perhaps a beverage or two, all of which are Tommy Bahama. This ability to provide this unique experience is a point of differentiation at Tommy Bahama. Now I'll turn the call over to Scott Grassmyer to discuss our consolidated highlights. Scott? Thanks, Terry. I'd like to walk you through a selection of highlights from our consolidated results for the first quarter of fiscal 2014. For the first quarter of fiscal 2014, we had increases in the top line in all of our operating groups, with consolidated net sales increasing 10% to $258 million. Gross margin was comparable with last year at 57.2%, and we saw slight leveraging of SG&A in the quarter at 47.8% of net sales. Operating income increased 9% to $28.5 million. As a reminder, we acquired the Tommy Bahama Canadian business from our licensee in the second quarter of last year and no longer have the associated royalty income. In the first quarter of fiscal 2014, our royalty and other income was approximately $600,000 lower than the prior year period, most of which was due to the acquisition. For the first quarter of fiscal 2014, interest expense was $1.1 million, compared to $900,000 in the first quarter of fiscal 2013. Our effective tax rate for the first quarter was 45.4%, compared to 45.8% in the first quarter of fiscal 2013. The rate in both periods was unfavorably impacted by our inability to recognize a tax benefit for losses in foreign jurisdictions. Now on to the balance sheet. Total inventories on a LIFO basis at the close of the first quarter of fiscal 2014 were $128 million, compared to $96 million at the close of the first quarter of fiscal 2013. As you will recall, we carry a significant LIFO reserve for tax purposes. For reference, on a FIFO basis, after adding back the LIFO reserve, total inventories increased by 22% to $185 million from $152 million. The increase in our inventory levels was due to anticipated sales growth, particularly within our direct-to-consumer business, the earlier receipt of shipments from suppliers, the addition of the Tommy Bahama Canadian business, and the impact of currency exchange rates. Our liquidity remained strong. At the end of the quarter, we had $142 million of borrowings outstanding and $95 million of unused availability under our revolving credit facilities. Our capital expenditures were $7 million in the first quarter, and we expect to spend approximately $55 million in CapEx for the year. These expenditures are expected to consist primarily of costs associated with both new and remodeled retail stores and restaurants. We will also continue to invest in information technology and e-commerce capabilities and make certain enhancements to our facilities. I now like to walk you through our outlook for the second quarter and full year. We provided our initial guidance for the second quarter in this afternoon's press release. For the second quarter, which ends on August 2nd, 2014, we anticipate net sales in the range of from $245 million-$255 million, compared to net sales of $235 million in the second quarter of fiscal 2013. Adjusted earnings per share are expected to be in a range of $0.85-$0.95, and GAAP earnings per share are expected to be in a range of $0.82-$0.92. This compares with second quarter fiscal 2013 adjusted earnings per share of $1.01 and GAAP earnings per share of $0.96. The expected year-over-year decrease in earnings in the second quarter is primarily due to anticipated lower levels of wholesale replenishment and reorders due to the market softness in the spring selling season, higher promotional activity in the Tommy Bahama outlet business, and higher compensation expense. The effective tax rate for the second quarter of fiscal 2014 is expected to be approximately 43%, compared to 40.7% in the prior year. In the second quarter of fiscal 2013, our tax rate reflected a $600,000 favorable impact of a reduction in the enacted tax rate in the U.K. For fiscal 2014, we reaffirmed our guidance of net sales in the $980 million-$1 billion range and adjusted earnings per share in a range of $3-$3.15. On a GAAP basis, we expect earnings per share in a range of $2.88-$3.03. This compares with fiscal 2013 earnings per share of $2.81 on an adjusted basis and $2.75 on a GAAP basis. The effective tax rate for fiscal 2014 is expected to be approximately 42.5%, compared to 43.7% in fiscal 2013. With that, Catherine, we're now ready for questions. Thank you. Ladies and gentlemen, to queue up for a question or comment, please press * then one on your touchtone telephone. If you're on the speakerphone, please pick up the handset and make sure your mute function is turned off to allow your signal to reach our equipment. Once again, ladies and gentlemen, * one. We'll hear from Edward Yruma with KeyBanc first. Hi, this is Jessica Schmidt on for Ed. Just first question, can you talk about the timing of earnings? I guess specifically how we should be thinking about the cadence of earnings for the remainder of the year, especially given the retail overhead impact to your third quarter? Absolutely, Jessica. I think we've given you some indication on the second quarter, I'll let Scott sort of walk you through the way you need to think about quarters 3 and 4. Okay. Yeah, quarter three is our tough quarter. We don't have a back-to-school business, and the more stores we have, the more downward pressure it puts on quarter three. Quarter three will be by far our lowest quarter and maybe a little bit lower than last year. Quarter four will get the benefit of not only the stores we opened last year, but also we have a pretty high store opening pace in quarter three, which quarter four will get the benefit of. We would expect some growth in earnings year-over-year in quarter four. Okay, thank you. Just as a follow-up, can you talk about the recent weakness in the replenishment business? I guess what's driving this and how should we think about this going forward? Do you think that it's something temporary and it should recover for the remainder of the year? Yeah, Jessica, I'll be happy to talk about that. It's pretty straightforward, really. I think if you look at what's happened out across the retail landscape, most retailers have not had a great spring. There's been low traffic, and most of them have really not had a terrific spring. That means as they move into quarter two, they've still got inventory from quarter one that they need to sell through. For us, as we look at quarter two in our wholesale business, no impact on our direct-to-consumer businesses, but in our wholesale business, that means there's gonna be less replenishing for us. As you know, Lanier Clothes has a big replenishment business. Our golf business, which is actually a fairly small business, but they have a significant part of their business that they do on an at-once sort of reorder basis. It also impacts Tommy Bahama, and I'll let Terry elaborate a little bit more on how that works at Tommy Bahama. Jessica, as Tom said, some of our partners had a tough first quarter and therefore the reorders aren't as robust in second quarter. It's our strategy with our wholesale partners to partner with them. It's not our intention to force goods on them that they don't need, which only increases markdown cadence. We're trying to run a full-price business in our own stores and on our website. That doesn't serve our needs or their needs either. In these kind of situations, we're working with our partners to make sure that their stock-to-sales ratios are healthy going into second quarter. We're seeing this correct itself as we move through second quarter, especially in men's, which is, as I mentioned, we're right in the middle of Our Father's Day selling season, so are they. Hopefully we can get some of the miss in first quarter back. We're going to work with them on a weekly basis to make sure we maintain and not build them full of excess inventory that they don't need. Okay. Thank you. I'll pass it on. Thank you, Jessica. Thank you. I will now take our next question from Rick Patel with Stephens. Good afternoon, everyone, and congrats on a strong first quarter. Thanks, Rick. Hey, can you talk to us about how Tommy performed in the e-commerce channel? Just wondering if you're seeing outperformance there. Secondly, talk about the performance of the brand in international markets, whether you're seeing the new assortments there gain traction, and what gives you the confidence that market's heading in the right direction? Let me take a preliminary crack at that, I'll ask maybe Doug to elaborate a bit more, particularly on the international question. In e-commerce, yes. E-commerce in both Tommy Bahama and Lilly, still is growing at a faster rate than retail stores. Like retail and Tommy Bahama, e-commerce during the first quarter was not as robust as it's been at some times in the past, but it accelerated through the quarter and I think as we've moved into the second quarter has been performing quite nicely. In Lilly Pulitzer, it was extremely strong. It drove more than its share of the 34% comp that we reported for the quarter. Moving to the international question, the way we really look at international and Tommy Bahama is there are really two markets that are of consequence to us and that we're focused on. The way we think about it is Australia and Japan. Australia is a market that we bought back from a licensee about two years ago. They'd run the business for four or five years prior to that. That business is performing well. We're happy with it. It's comping nicely. It's growing. We're actually gonna add a store there in Australia later in the year. So with respect to Australia, the strategy at this point is just to grow. It's a good market for us. We're performing well. We wanna grow. In Japan, which we view as a huge opportunity for us, it's still a bit of work in progress. It's not performing yet at the levels that we would like it to. We've done some things and are working on some things that we are very optimistic are gonna get us on the path to having a successful formula there, and one that we can expand over time into a meaningful and profitable business. I'd like Doug maybe to elaborate a little further on that. He's spent a good bit of time over there in recent months. Yeah. Rick, I was just there last month, we just got a country manager in place back in February. We got now a new merchandising manager. The first thing we did is we changed out our marketing, our PR teams, and you're gonna see that take hold, especially as we move into summer. You can't be there and not feel that the brand is gonna work, and just the positive energy we have. It's just that we haven't started yet to see the results in executing sales. That's something that with the team on the ground and this refocus, we're pretty excited about what we've got coming up in the future. All right. A question on Ben Sherman. It looks like the losses there narrowed in the first quarter. Scott, any thoughts on what the guidance is like for that concept as we think about the back half of the year and what's embedded in guidance? Yeah. You mentioned when we gave original guidance that we expected between the $4 million-$6 million reduction in the loss, that's still the way we feel. The back half we think will be stronger. The first quarter's the smallest quarter. We think especially when we get in the second half of the year, it's really their stronger time. We've got healthy order books for autumn, winter, and our comp stores, especially in Europe, are comping nicely. We still think we're on track. Great. Thank you very much. Thank you. Our next question will come from Eric Retter with Green Capital. Good morning. Congratulations on a good start to the year. Thank you, Eric. Tom, could you talk a little bit about the women's part of Ben Sherman, excuse me, of Tommy Bahama? I know that you started rolling that out on a wholesale basis. I'm curious how well that did. Lilly Pulitzer had a great quarter. How did dresses look in that mix? Well, I'll start first with Lilly Pulitzer and just say that dresses were terrific in the first quarter, but everything was terrific. As we slice and dice the business in Lilly Pulitzer for the first quarter, it's been very difficult for us to find a number that wasn't headed in the right direction. It's just one of those quarters where everything really seemed to work and be on the upside. I think you have to really tie that back to the team at Lilly Pulitzer and all the great work that they did last year to set up for spring. Moving to Tommy Bahama, we have gotten, I guess, more serious about the wholesale business and women's there. We've always done wholesale there, but I think for a long time, our proposition in women's wasn't quite as strong. We have started to get some traction in the wholesale, and it is growing nicely from a very small base. We are seeing good growth there, and I'll let Terry maybe elaborate on that a little bit. Yeah, Eric, we always said that we were going to gauge our women's business by the success we had in our direct-to-consumer business, and it keeps growing nicely. Our Mother's Day business, we had healthy increases in categories, and women's accessories were very good. As Tom said, it's our philosophy to crawl, walk, run, and we are starting some healthy wholesale businesses that we've got. We're doing it in a measured way to make sure we do it in the right way. We think the success we've seen in the sell-throughs on our website and in our stores, it gives us the confidence that. We've got wholesale partners that are reaching out to us and wanting to be involved with the brand. We just need to make sure that we have the correct strategy, we roll it out with the right retail partners, and we do it in the right way. We'll be talking more about that in the following quarters. Great. Since I have you there, Terry, could you talk about how the New York City store is doing and how the flagship is going? It's still, Eric, every time that-- I'm so glad you asked those questions because I'm so happy to talk about the New York store. I'm getting accolades from friends that are visiting there. The business is actually comping very nicely in both the retail store and the restaurant. We're seeing it just continue to build week after week after week. The areas where we needed to start, we needed to move out the dinners to later. We were always busy at happy hour and early dinner, but we're seeing it slowly get more busy in the evenings, which is what we need to do. Not only the retail store is increasing with local, not so much being dependent on tourists as we were, but we're seeing the local community sort of find out that we're there. As that part of town sort of wakes up and the retail presence down there, as you can still see, is growing nicely down there. We couldn't be happier about not only the presence that that store brings to our brand, but also its performance. Thanks very much, and keep eating with us in the restaurant there. Thank you. Ladies and gentlemen, as a reminder, that is star one for questions. Pamela Quintiliano with SunTrust, please go ahead. Great. Thanks so much, and congratulations, guys, on executing in a really challenging environment. I have a quick one. Just a quick one on Lilly before delving into Tommy. Lilly, was the performance consistent throughout the quarter? Is there any type of weather impact, or does she just see the product and know she needs to get it right away and that's it? Well, when you have a quarter like Lilly Pulitzer had, it's hard to say that they were hurt by the low traffic during the quarter. In fact, I think they were. I think it would've been even better had there been just in general more traffic. What happened was that both the traffic we saw in our stores as well as the comp performance actually ramped up through the quarter. It got stronger. February was a positive comp, but March was stronger, and April was stronger still. It definitely accelerated through the quarter. She definitely likes what she sees and is willing to fight through whatever kind of conditions she has to to get it one way or the other. If all else fails, just order it online. Yes. No, it's phenomenal in this environment to see that full price sell-through. When I think about Tommy and mall versus off-mall performance, island versus non-island performance, the same thing just regionally, if you could touch on all that. Yeah. I will flip that directly to Terry and let him walk you through the way we segment the business and how things kind of performed there. Pam, as you know, we have a pretty diverse group of stores as far as malls, street locations, islands. I can tell you that it's harder to track the traffic in our own islands just because of the walking back and forth between the restaurant. We know from looking at our comps in our islands versus our comps in our non-island stores, that the islands are outpacing. In my prepared remarks, I talked about the entertainment value of those islands. Clearly, in an environment like this, we take advantage of having better business even in the stores where we have A restaurant. The malls have been the most difficult. The traffic in the malls has been the one that has been consistently down through the first quarter. We're seeing it come back a bit. We're taking advantage of every customer and our conversion rates are up in our stores. Our sales associates are doing a terrific job of converting the traffic that we do get. We're very happy with what we're seeing in May, as we move into Father's Day. Can you just remind me what % of the store base is in malls? I think it's about 40%, Pam. Okay. It's 40%, obviously from a square footage perspective- Yeah it's a lot smaller. We've got mall locations, we've got islands, we've got street locations. I think it's about 40% of mall. Okay. - We'll double-check that for you. Thank you. I appreciate that. Just a quick follow-up on wholesale, given you said some of your partners have been suffering a little bit, how do you ensure that they maintain that full price cadence that they typically do, just given that there's been a little bit more challenges from them out there in the marketplace? How often are you communicating with them? Just any insights there? Well, obviously, this is a generalized statement. Across Oxford Industries and all our businesses, this comes from me, in my role to all the heads of the operating groups. Our goal with the wholesale is to build mutually successful and mutually profitable businesses that can work for us and work for the retailer. Because we're very much trying to run full price brands, that means when we sell on a wholesale basis, that we need to work with retailers to drive through full price selling, not just have them make their numbers by discounting. There's a lot of work that goes into that. There are hundreds of different conversations that happen. We, together with our wholesale partners, monitor selling on a weekly basis. Depending on the situation, there are all types of different conversations that occur. It's hard to summarize that in a short format. I think the key is, as Terry mentioned earlier, that when we work with these guys, we're trying to help them find ways that they can sell through product at full price, so that what they're doing is consistent with our own brands. Part of that is when their business is soft, we don't push goods in that we know they're not going to be able to sell through if they're already backed up on inventory. Okay, the very last question, thank you for letting me ask so many. Just the comment on being more promotional on the outlets. Tommy, can you just elaborate on that? Yeah, I'll let Terry and Doug comment on that a bit. We definitely have seen some softness in the outlet store world, we have discounted more in order to move inventory, we've sort of factored that into our forecast for the balance of the year. We're not sure we see any immediate reversal in that. We don't think it's anything to do with us as much as it is just what's happening in the whole outlet world. Doug, do you want to elaborate on that? Yeah. I think the only thing I'd want to add is that because of our full price strategy in our own retail stores, we use our outlets to clean our excess. It's important that we keep our outlets current, too. When you have a Q1 that doesn't meet expectations, you're going to have a little bit of extra product that's going to be flowing through the outlets, we're going to clear through that's going to come in Q2. That's going to have some downward pressure on margins. We've been doing this for a long time about keeping those outlets in a good position because they're an important part of our strategy. Fair enough. Thank you very much. Best of luck. Thanks, Pam. Thank you, Pam. Thank you. We'll go to Michael Richardson with Sidoti. Hi, Mike. Good afternoon. Just a couple of questions with you, Tom. First one is regarding inventory. I was wondering if you can give us an idea by brand how much inventory is up, and sort of how you're feeling about the levels right now, and then whether or not you've cleared through the older Ben Sherman inventory. Thanks. I would say overall, I think we're up a bit in Lilly Pulitzer, but I think we're very comfortable with where their levels are. It's just what they need to support growth. In Lanier Clothes, they're up a bit also, but frankly, it's because last year we were too low and weren't able to service business as well as they needed to. In Ben Sherman, we're up year-over-year a bit. They did clear some during first quarter. Scott and I have spent a good bit of time with them, making sure that they've got a good plan to get their inventories in line, which I think we feel very good about. I think Doug just addressed the Tommy Bahama situation, where we've got a lot more stores this year than we did last year, and those stores all require inventory, and that's creating some significant uplift in inventory level there. You do have a bit of just first quarter missing our expectation for the quarter, our original expectation for the quarter. Because of that, he's got a little bit of inventory that he'll be working on mopping up in Q2. Okay, thanks. Also, regarding Lilly Pulitzer second quarter, it seems like once you get some momentum early in that brand, it tends to sort of continue throughout the year. I guess the product is right. I'm just wondering sort of how you're feeling about Lilly going into the second quarter. I would say we feel very good about the balance of the year, but I would give the caveat that the first quarter is the big quarter. That's the biggest quarter for Lilly Pulitzer by a pretty large margin. Even if we comp up at a similar rate for other quarters, which would be pretty audacious, the impact is not quite as great on the overall numbers. We're very happy with things. We feel good about the future. I certainly wouldn't plan that level of comp for the rest of the year, but I think we'll continue to perform nicely. Again, the only caveat being that first quarter really is the big quarter, and we need to do well in first quarter in order to have an overall successful year in Lilly. They certainly got the job done. Yeah, obviously, a very strong quarter. Any plans to expand Lilly into any new markets this year? They've added three stores already, and they're adding a couple more in the balance of the year. e-com is growing very rapidly. Even though a year ago, we wouldn't have projected a whole lot of growth in the wholesale, they are getting some growth in the wholesale as well. Just last question. Can you give us an update on the Fort Lauderdale Restaurant Island? Is that on track? Just overall, what percentage of your business is wholesale versus direct consumer? You mean the Jupiter, Florida store? Yeah. I'm sorry, Jupiter. Yes. Yeah. Okay. I'll let Terry maybe update you on that. Yeah, Mike, we are. We're very excited about that location, where it is, and we're currently on track of opening that this side of the year. I'm just trying to find It's basically in November. We're opening it in November. It's a great location. It's going to be a beautiful store. We've been working on the design of it for a long time. We like the flow of the store, the bar, the restaurant. We try to get better at every one of these we do, and so I'm hoping this is going to be the best one yet. We're happy about that, the grand opening and taking advantage of November and December. Okay. Mike, I think on the wholesale piece of the business, I think last year, wholesale was about 41% of the total business. In the first quarter, it was actually slightly higher than that. At Tommy, it was just 26% last year of the total. It'll probably be less this year. Does that get you what you need? Yep, no, that's perfect. Thank you guys very much. Best of luck for the rest of the year. Thank you. Thanks. Thanks, Mike. Thank you. With no additional questions, I would like to go ahead and turn the conference back over to Mr. Tom Chubb for any additional or closing remarks. Thank you for your time and attention again this afternoon. We're realistic about the market conditions out there, but we feel very good about our performance in the first quarter and our prospects for the balance of the year. We appreciate your interest, and we look forward to talking to you again in early September. Thank you. Again, ladies and gentlemen, that does conclude today's call. Thank you all again for your participation.