Good morning ladies and gentlemen. Thank you for standing by. Welcome to the Vera Bradley third quarter conference call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions.

As a reminder, today’s conference call is being recorded. I would now like to turn the call over to Mark Dely, Vera Bradley’s Chief Administrative Officer..

Good morning and welcome everyone. I’d like to thank you for joining us for today’s call.

Some of the statements made during our prepared remarks and in response to your questions may constitute forward-looking statements made pursuant to and within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended.

Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from those that we expect. Please refer to today’s press release and the company’s most recent Form 10-K with the SEC for a discussion of known risks and uncertainties.

Investors should not assume that the statements made during the call will remain operative at a later time. We undertake no obligation to update any information discussed on today’s call. I will now turn the call over to Vera Bradley’s outgoing CEO, Rob Wallstrom.

Rob?.

Thank you Mark. Good morning and thank you for joining us on today’s call. Our new CEO, Jacquie Ardrey, and John Enwright, our CFO both join me today. Jacquie joined the company in November after most recently serving as President of Grandin Road with previous experience at Harry and David and Hanna Andersson.

She has jumped right in and we are excited to have her leading the company into the future. First, let me make a few comments on the quarter. We delivered a year-over-year improvement in non-GAAP EPS largely driven by implementation of our targeted expense reductions.

Total revenues of $124 million were modestly above overall expectations and we began to experience some stabilization in our gross margin rate as supply chain challenges moderated and strategic price increases help offset increased raw material and freight costs.

As in past quarters, we are continuing to experience bifurcation in the spending of our customer base.

Vera Bradley’s direct full price channel customers with higher household incomes remain more engaged and continue to spend more than customers with lower household incomes, especially in our Vera Bradley factory channel where inflationary pressures impacted traffic and discretionary spending.

However, our Vera Bradley indirect channel experienced its third consecutive quarter of year-over-year growth. At our Vera Bradley brand, we are continuing to fuel our innovation pipeline and build on our lifestyle merchandising focus in the core areas of travel, back-to-campus, everyday, and collaborations.

In the third quarter, we continued our powerful product collaborations with Disney and Harry Potter, launched a new rain gear collaboration with Totes, introduced our VB Cloud casual footwear collection, expanded our family sleep and loungewear collection, and made our debut in the metaverse with our NFTs to celebrate our 40th anniversary.

While stores will continue to play an important part of our Vera Bradley distribution strategy going forward, we continue to rationalize our store base, closing underperforming stores as leases expire. We have closed 10 full line Vera Bradley locations this year.

Pura Vida’s ecommerce revenues continue to be affected by social and digital media effectiveness and higher costs. This year, we have lowered Pura Vida’s year-over-year marketing spend until we can determine the best ways to maximize the marketing effectiveness, which has had a negative impact on sales.

In the third quarter, we did begin to reinvest more marketing dollars than we spent in the first and second quarters, and we saw a positive impact on ecommerce sales trends, although still negative compared to the prior year; however, at the same time we experienced a negative trend in Pura Vida’s wholesale revenues.

Our number one priority is to build a more diverse, innovative, effective and performance-based marketing program to drive Pura Vida ecommerce sales.

We are in the process of implementing a comprehensive customer data platform for Pura Vida to build a single coherent, complete view of each customer so that we can better target and personalize marketing and become less reliant on third party marketing. This should be complete by early next year.

In the meantime, we are continuing to work with our micro influencers, expanding our TikTok presence, launching impactful ads on connected TV, optimizing SMS, and aggressively exploring other methods to effectively reach our customers.

We opened our new Pura Vida full price stores at Broadway at the Beach in Myrtle Beach, South Carolina in August and at the SanTan Village in metro Phoenix in September.

Stores can play a key role in driving new customer acquisition as we continue to diversify our marketing platforms, and they demonstrate the power a retail presence has in driving digital sales, omnichannel loyalty and spending. So far, all of our Pura Vida full price retail stores are trending to exceed their first year sales projections.

On the Pura Vida product front, we continue to build customer excitement and engagement through collaborations like Disney, Harry Potter and Hello Kitty, partnering with key influencers and continuing innovation like the expansion of our demi fine and stone jewelry collections and extension of our apparel offerings.

Now let me officially introduce our new CEO, Jacquie Ardrey.

Jacquie?.

Thanks Rob. Although I’ve been with the company just a few short weeks, I’m convinced that both our Vera Bradley and Pura Vida brands have untapped potential in the marketplace. While I expect the macro environment to remain unpredictable, our teams are focused and our cash position and balance sheet remain solid.

I look forward to working closely with our leadership teams to develop and execute solid growth plans, leverage our many opportunities especially in the areas of merchandising and marketing, and deliver consistent, sustainable growth and value to our shareholders over the long term.

I look forward to talking to you more about our go-forward plans during our year-end earnings call in March. Now let me turn the call over to John to review the financial results.

John?.

Thanks Jacquie, and good morning. Let me go over a few highlights for the third quarter. The numbers I will discuss today are all non-GAAP and exclude the charges outlined in today’s release. For a complete detail of items excluded from the non-GAAP numbers as well as a reconciliation of GAAP to non-GAAP numbers, please reference today’s press release.

Consolidated net revenues totaled $124 million compared to $134.7 million in the prior year third quarter. Consolidated net income totaled $6.3 million or $0.20 per diluted share compared to $6.2 million or $0.18 per diluted share last year.

As Rob noted, the increase in EPS was primarily attributable to expense leverage due to the cost reduction initiatives. Vera Bradley direct segment revenues totaled $80.1 million, a 7.6% decrease from $86.6 million last year. Comparable sales decreased 9.6% in the third quarter.

Vera Bradley indirect segment revenues totaled $22.3 million, a 6.7% increase from $20.9 million in the prior year third quarter, reflecting an increase in certain key account orders partially offset by a decline in specialty account orders. Pura Vida segment revenues totaled $21.7 million, a 20.3% decrease from $27.2 million last year.

Third quarter gross margin totaled $65.6 million of 52.9% of net revenues compared to $72.3 million or 53.6% of net revenues last year. The current year gross profit rate was negatively affected by higher inbound and outbound freight expense, deleverage of overhead costs and channel mix changes, partially offset by price increases.

Third consolidated SG&A expense totaled $57.6 million or 46.4% of net revenues for the current year third quarter compared to $63.7 million or 47.3% of net revenues in the prior year.

As expected, current year expenses were lower than prior year primarily due to cost reduction initiatives and a reduction in variable related expenses due to lower sales volume. The company’s third quarter consolidated operating income totaled $8.2 million or 6.6% of net revenues compared to $8.7 million or 6.5% of net revenues in the prior year.

Now let’s turn to the balance sheet. Total quarter end inventory was $178.3 million compared to $148.3 million at the end of third quarter last year.

Total current year inventory was higher than prior year primarily due to approximately $17 million in incremental logistics costs burdening overall inventory, as well as incremental Vera Bradley factory inventory related to lower than expected revenues.

Cash, cash equivalents and investments as of quarter end totaled $25.2 million compared to $75.3 million at the end of last year’s third quarter. The company had no borrowings on its $75 million ABL credit facility at quarter end. A key reason for our lower cash position is due to the inventory build of $30 million over last year.

We will continue to take a conservative approach to cash, particularly in this volatile and challenging environment. Now let’s shift to our fiscal 2023 outlook. We expect the fourth quarter macroeconomic environment to continue to be unpredictable.

The Pura Vida business will continue to be challenging, inflationary pressures will continue to impact Vera Bradley’s customers with lower household incomes, particularly in the factory channel, and there will be continued pressure on gross margin. All forward-looking guidance numbers that I will discuss are non-GAAP.

For the fourth quarter, we expect consolidated net revenues of $136 million to $141 million compared to $149.6 million last year, and a consolidated gross margin rate of 49.5% to 50.5% compared to 50.9% last year.

The expected decrease is primarily associated with incremental targeted promotional activity and deleverage on overhead costs, partially offset by price increases and lower year-over-year freight expense. Consolidated SG&A expense of $61 million to $63 million compared to $67.1 million in the prior year.

The reduction is primarily driven by cost reduction initiatives and lower variable related expenses due to expected sales decline. Consolidated EPS of $0.16 to $0.20 compared to $0.17 last year.

For the full-year, our updated expectations are consolidated net revenues of $489 million to $494 million compared to $540.5 million in fiscal 2022, a consolidated gross margin rate of 51.9% to 52.1%, compared to 53.3% in last year.

The expected year-over-year decrease is primarily related to incremental inbound and outbound freight expense, incremental targeted promotional activity, and deleverage on overhead costs partially offset by price increases. Consolidated SG&A expense of $242 million to $244 million compared to $258.8 million in fiscal 2022.

The reduction in SG&A expense is being driven by cost reduction initiatives and variable expenses. Consolidated diluted EPS of $0.22 to $0.26, compared to $0.57 last year. Net capital spending of approximately $10 million compared to $5.5 million in the prior year. Operator, we will now open up the call to questions..

[Operator instructions] Our first question today will come from Oliver Chen with Cowen & Company..

Hi, good morning. Hi Jacquie, Rob, David.

Rob, as you think about channels, could you tell us a little bit about the right-sizing of full price? Also, as we look ahead to factory, you’ve been experiencing that pressure with that customer - what are your thoughts on the evolution of that, and indirect had a nice number as well, would love thoughts if that momentum can continue.

Jacquie, I was curious about what attracted you most to Vera Bradley, and also as you embark on your initial weeks and months there, what are some of your key priorities? Finally Rob, on the inventory number, you gave a lot of great detail. Maybe you can help us understand how to model going forward inventory growth relative to sales.

That would be great. Thanks everybody..

Thanks Oliver. I guess a couple things. Let me hit some of the channel conversation questions that you asked. Full price, we’ve been talking about that we see the full price store count consolidating this year, which we’ve been doing, making sure that we’re really right-sizing it.

We do believe that continuing to leverage the ecommerce business, our indirect business, and really looking at our full price business as a way to get to the customer in the most efficient way and in the place where she shops, so I think that you’re going to see that rationalization kind of continue through this year.

The factory channel right now, we do believe that the big factor for us has really been what’s been going on in the general economy and this inflationary pressure, and the tightness that we’ve seen kind of across retail in more -- what I’ll call more the semi-opening price areas, right, the non-luxury areas that we’re seeing just some reduction in that customer.

We’re just going to kind of fight through these near term economic pressure points, but we still believe that long term, factory is a really important part of our business.

The indirect channel has been very encouraging to see, and really the power of expanding our ecommerce businesses within our indirect channel, that they’re really where we’re seeing the strength, so again we just think that continuing to leverage that ecommerce space will be important.

I think maybe I’ll turn it over to Jacquie a little bit to talk about what attracted her, and then we’ll hit the inventory comment at the end..

Yes, thanks Rob. I was certainly drawn to the opportunity here. I love the fact that both the iconic Vera Bradley and Pura Vida brands were built from an entrepreneurial spirit.

We have devoted, emotionally connected and multi-generational customer bases, high brand recognition, socially conscious, purpose driven, and have enormous untapped potential in the marketplace.

I’m really working now with the leadership team and the board to build upon the company’s heritage and leverage our opportunities, particularly in merchandising and marketing, which is where I’m spending a lot of my time right now to really drive the long term profitable growth for both brands.

Since joining over just about a month ago, besides relocating here to Fort Wayne, I’ve been really immersing myself in the business, working with Rob, spending time meeting with the corporate Vera Bradley and Pura Vida teams, visiting stores, meeting with our board of directors.

It’s been a really busy but great, exciting month, and really my key priority right now is just evaluating our go-forward strategy so that we can have some really exciting things to talk about in March. .

Oliver, I’ll hit on the inventory question. As we kind of work through inventories a little bit higher than we would want it to be, we expected this also would be a little bit different when we started this year, so inventory built.

As we detailed, a lot of the build is associated with just the cost to get inventory from Southeast Asia to Indiana, so as we think about next year, we anticipate -- and obviously we’ll come out with our guidance for next year at the next earnings release, but we anticipate by the end of next year getting inventory back in line to where we would normally be, and so ultimately we would expect to see some free cash flow benefit next year associated with that and a reduction in inventory..

Okay, thank you. Rob, as we think about the consumer, in the industry we saw a pretty volatile October with a weaker October and then shoppers shopping later. Are you seeing that as well, if you could help characterize some dynamics there. Second question to this is on the gross margin line.

You called promos in the prepared remarks, but you also are undertaking strategic price increases. What should we take away between those two dynamics in how we’ll model or consider gross margins? Thank you..

Yes, so I think from a consumer standpoint, you’re right, Oliver, that we saw weakness in October, and as we got towards Black Friday, we saw the consumer begin to pick up during Black Friday and that momentum has continued past Black Friday.

What we have definitely seen, though, is the importance of promotional activity as part of that stimulation, that the consumer definitely is looking for the deal, is kind of returning to that historical Black Friday mentality.

We’ve been -- you know, we’ve added some promotional deals into the brand and the consumer has responded, so we expect that as we move through fourth quarter that it will continue to be promotionally driven, targeted promotions but promotionally driven nonetheless, and so I think that’s part of the balance as we kind of move in the year ahead, is just how to balance that promotional environment for the consumer and finding opportunities to offset that expense through other ways, whether that’s through product cost or whether that’s through general SG&A.

I think that probably talks a little bit about that gross margin number because we do think there will be some promotional pressure on that gross margin number.

The international logistics long term will really help us as that has come dramatically down, but the domestic logistics costs are remaining, I would say high, and we’re not seeing the reduction on that side, but the international logistics costs will be a tailwind as we move forward..

Yes, I’d just add to that, I think obviously we’re not giving out guidance for next year, but as a tailwind into next year will be international logistics getting back to more normal pre-pandemic levels, which will obviously benefit our P&L. .

Okay, thank you. The last question, at Cowen we’ve done a lot of work on fungible tokens and NFTs, and also the metaverse and what’s happening with decentralization and Web3. Why did NFTs make sense for Vera Bradley, and are you seeing any interesting trends with the customer profile there and any thoughts on plans ahead? Thank you..

I think one thing that’s been so important for us of getting in the NFT world is, one, we’ve always been a company that’s been innovation-driven and we wanted to get into that space, learn from that space, begin to experiment in that space and stay relevant with the younger customer especially, so we thought it was a great opportunity.

We thought we could use it as a leverage for our foundation and a leverage for just the collectability of our patterns, and so it’s something that we’ll continue to experiment around.

It’s not a huge commercial opportunity yet, but it’s one of those areas we want to make sure that we’re exploring and learning and kind of growing as that space grows in the years ahead..

Thank you. Best regards. Happy holidays..

Thanks Oliver..

Thank you..

Thank you. Our next question will come from Joe Gomes with Noble Capital. .

Good morning..

Hi Joe..

I wanted to start off on Pura Vida -- you know, we’ve talked probably for a year now about the digital trends, and I know you’re looking at putting together the database.

What really needs to happen here before we can start to see some improvement in that business? It just seems to be taking a long time to, I guess, figure out where to go next on that side, outside of opening the retail stores..

I think that’s a great question, Joe. A few different things, right? One thing that is underway is the customer data platform, the technology. There’s a lot of technology pieces the team’s been working very hard on over the last quarter.

We’ve had success with all of these platforms at Vera Bradley, so we’re working through and getting that learning, so we do think the first party data will be part of that. But the other piece of it is just a real diversification in the marketing platform.

One thing that I think is exciting with Jacquie coming in and her leadership with her merchandising and marketing background is getting a fresh set of eyes to look at it, because we do need to find a new way of acquiring customers that is not as dependent upon our old channels, and that obviously has not been an easy transition but it’s one that we think we can get through.

Stores have shown that the consumer still remains engaged. It’s improved our ecommerce business, so when we get in front of the consumer, we’re seeing a positive uptick. I think it’s going to be really mixing.

As we’ve seen a lot of these direct-to-consumer businesses have started to become more omnichannel, opening up stores, diversifying their marketing, and I think that we need to be doing the same.

We’ve had a -- it has not been an easy transition at Pura Vida to kind of re-platform the business, but I think we’re making some progress and I think with Jacquie coming on board, we can accelerate that progress in the months ahead..

Okay, and speaking on the retail stores, I know we’ve talked about in the past you have the San Diego store, I think it’s now anniversarying. How is that performing, how are those comps looking year-over-year for the San Diego store? It’s great news on the new ones, that they all seem to be performing above expectations..

What I would say about the stores at Pura Vida is it’s still early innings, right, so the good news is with all of our four full price stores that have opened up, they’re all tracking to exceed first year expectations, that’s really encouraging.

The second part of it that’s very encouraging is we’re seeing a significant uptick in the ecommerce business in those metro areas, and again just showing the power that stores have not only as a four-wall revenue and profit center, but also just for the franchise overall.

I know it’s one of these areas that Jacquie’s looking at as she plans the go-forward strategy, is just how to diversify the Pura Vida platform so that we can get that business growing again.

I know I’m speaking a little bit for her, but we’ve had so many conversations over the last 30 days that she really sees some excitement and potential around that brand, and so I think we’ll see improvements as we move through next year..

Okay. One more, if I may. Just on the guidance, I was wondering if you could give us a little more color. Last quarter, the gross margin guidance was 53.7% to 54.1%, and you’ve increased the range for revenues for the full year guide but significantly reduced gross margins down to 51.9% to 52.1%.

Even with freight expense declining and some of the other things that you’ve discussed, just maybe give us a little more color into how that gross margin estimate declined so dramatically..

Yes, so Joe, we talked a little bit about some more tactical discounting that we had probably initially built into our forecast at the beginning of quarter three, so really that is the more significant driver. Obviously that helped us drive a little bit more revenue, we’re expecting to drive more revenue based on that but at a rate difference.

From a profit perspective, we’re neutral to positive on that, so we think it’s the right thing to do. It helps us be competitive in the marketplace - you know, she’s out there, she’s looking for more of a discount than I think we initially anticipated when we put together our guidance at the beginning of the third quarter..

Okay, great. Thanks..

Thank you. [Operator Instructions] Our next question will come from Eric Beder with SCC Research..

Good morning. .

Good morning Eric..

Good morning. Could you talk a little bit about product categories you’ve expanded? In the Vera Bradley chain, you’ve expanded the product categories significantly now in the outlets with your shoes to both the outlets and the full price stores, outerwear the last years before.

As part of the overall looking at this, how do you feel about the categories you’re in and are there categories that should be de-emphasized or emphasized for you going forward?.

I think a couple things, Eric. First of all, I think the product innovation expansion in the categories just again shows the power of the Vera Bradley brand and our heritage in prints and color and fun and casual, so I think that that’s an underlying piece that stitches it all together.

I do think that part of what Jacquie’s evaluating is just overall the merchandising strategy and how to balance that strategy, both in terms of what is the overall offering as well as what is the offering by channel. I know that that’s one area that she’s really digging into and we’ll be looking at that over the months ahead..

Yes, and I would add that although it’s really too early to make a judgment about any product categories that we might exit, I’d say the team was already going through a SKU count reduction exercise which I completely support, and I obviously believe that travel, back to campus, everyday are kind of the key franchises for the Vera Bradley brand and we’ll continue to collaborate with strategic partners going forward.

But again, we’re looking at all that right now, and I’ll have more to share in March..

Great, and if you look at -- just thinking about expansion in terms of Pura Vida stores, you’re at four now.

Do you look upon next year as another year to continue to expand the brand, or do you want to sit here and wait and get a little bit better data from those stores as they start to anniversary - as you mentioned previously, San Diego just anniversaried.

How should we be thinking about expansion for Pura Vida stores next year?.

It’s a great question, Eric. I think first of all, there definitely is a learning and gathering the learnings from the stores, so I know that the team is actively doing that right now and so we are learning a lot, and that will make us better as we move forward.

I think that’s another key area that Jacquie is really looking at as she’s thinking about the next go-forward strategy is kind of what is the role that stores play in Pura Vida, what are the first things she really wants to attack to get that business back on track. Again, I think she’ll have more information on that in March..

Okay, and last question here, so in terms of collaborations, you’ve gone through the full cycle with Harry Potter. The collaboration, I would assume are more solid margin player because they’re not discounted, even on the sales here.

How do you look at the need and desire to have more or less collaborations in both Vera Bradley and in Pura Vida going forward, and how do they fit into this overall world here?.

Yes, I think that our collaborations have been really powerful in attracting new customers to the business, and that’s really been one of the key points, and I think that you will continue to see opportunities around collaborations. At the same time, it is really important that we keep it fresh, we keep it measured.

I don’t think that you would see us overall expanding big in terms of having more collaborations than we’re having today. I think it’s really about dialing them in.

We’ve learned a lot as we’ve worked through the franchises at -- Disney is a great one, right, when we talk about our Disney collaborations, there’s a lot of different franchises within Disney that we’ve worked with, and some of them have really worked well, particularly the ones that kind of fit with the Vera Bradley DNA, and so I think we get smarter and smarter over time, but I think it will continue to play a role but it will be a measured role as we move forward..

Yes, that’s definitely a focus for me in terms of how much of core and how much is partnerships for both of these brands, so that’s definitely something that’s on my mind..

Okay, well happy -- hopefully we’ll have some happy holidays, and good luck for the rest of the year..

Thanks Eric..

Thank you..

Our next question will come from Steve Marotta with CL King & Associates. .

Good morning everybody.

I know that you are not providing any sort of guidance for next year, but maybe at the highest level, can you talk a little bit about your planning? Do you think it will be a tale of two halves, or maybe just even at the very littlest can you talk a little bit about the cost initiative programs, just remind us what the size was originally, what was captured this year and what is expected to be captured next year? Thank you..

Thanks, Steve. Yes, we do think next year is going to be a tough year, so I think a lot of people are thinking about a recession next year and as we’re finalizing our plans, we’re taking that into consideration while we finalize our plans.

In regards to expense reduction target, it was $25 million, was kind of what we committed to, and a lot of that commitment is going -- we’re going to achieve a lot of that commitment in this year, so ultimately we’ll have gotten a lot of that through the P&L this year and ultimately then we’ll lap it next year.

We won’t continue to grow from kind of -- we’ll have that in our base next year, the $25 million compared to where we expected to be this year, so. I think we’re not finalized with the plans.

We have to get through holiday as we think about next year, so that’s why we can’t be really committal on what we expect for next year, but we’ll be able to give a much more detailed, thorough answer in a couple months..

I think the only thing I would add, Steve, just from kind of a big picture market standpoint, the way we’re looking at it is we think the positive for next year, which John spoke about earlier, is the reduction of international logistics expenses, right? That’s going to be a positive on the P&L next year and a tailwind, which is good news.

On the flipside, we do expect the macro environment to continue to be challenging, and as long as there’s this recessionary pressure, that that will be pressure that we’re facing next year, and then the company will just continue to be very disciplined on the SG&A line as we move through, making sure that we’re controlling SG&A well to manage through the recessionary environment.

To me, those are kind of the three big levers that we’re looking at next year, but we’re obviously still finalizing our plans..

That’s really helpful, Rob, and you actually just touched on something I wanted to follow up on from a logistics standpoint.

Can you remind, if the numbers are handy, what that incremental was in ’21, what the incremental incremental was in ’22, and those two numbers would be helpful because I know that that is not going to 100% roll-off because inventory needs to work its way through the system, but at the very least knowing those two numbers would give a benchmark for what could be in the ultimately earnings power standpoint.

Thanks..

Yes, I can handle that question. In ’21, it was about a $6 million increase, roughly about that number, and in ’22 it’s about $7 million, so if you go back to logistics expense from pre-pandemic level over ’21, it’s about $12 million to $13 million..

Really helpful, thank you..

That does conclude the question and answer session. I’ll now turn the conference back over to Rob Wallstrom for any additional or closing remarks..

Great, thank you. I’ve enjoyed being with this amazing organization for the last nine years. I could not have been surrounded by a more dedicated, collaborative and committed team, and I have enjoyed being part of the company’s special and powerful culture.

I’m especially proud of the innovation, tenacity and resilience that our teams have demonstrated to overcome challenges as we stayed focus as a customer-centric and purpose-driven organization. Forbes names us as America’s number one best midsized employer for a reason.

It’s an exciting time as Jacquie leads the company into the next phase of the future. We have a portfolio of two iconic lifestyle brands, multi-generational customers with amazing loyalty and devotion, remarkable brand recognition, a solid balance sheet, and incredible team.

With Jacquie’s leadership and strategic direction, I believe the company will deliver meaningful growth and value to our shareholders over the long term. I look forward to following the company’s continued progress and wish everyone much success.

Thank you for joining us today, and I know Jacquie and John look forward to speaking with you in March on the year-end earnings call. .

Thank you, and that does conclude today’s conference. We do thank you for your participation. Have an excellent day..