Q3 2023 Container Store Group Inc Earnings Call
Participants
Caitlin Churchill; IR; ICR, Inc.
Satish Malhotra; President, Chief Executive Officer, Director; Container Store Group Inc
Jeff Miller; CFO; Container Store Group Inc
Steven Forbes; Analyst; Guggenheim Securities, LLC
Kate McShane; Analyst; The Goldman Sachs Group, Inc.
Christopher Horvers; Analyst; JPMorgan Chase & Co.
Presentation
Operator
Greetings, and welcome to The Container Store third quarter 2023 earnings call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Caitlin Churchill, Investor Relations. Thank you, Caitlin, you may begin.
Caitlin Churchill
Good afternoon, everyone, and thanks for joining us today for The Container Store's third quarter fiscal year 2023 earnings results conference call. Speaking today are Satish Malhotra, Chief Executive Officer; and Jeff Miller, Chief Financial Officer. After Satish and Jeff have made their formal remarks, we will open the call to questions.
Before we begin, I would like to remind everyone that certain matters discussed in today's conference call are forward-looking statements relating to future events, management's plans and objectives for the business, and the future financial performance of the company that are subject to risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements.
The risk factors that may affect results are referred to in The Container Store's press release issued today and in our annual report on Form 10-K filed with the SEC on May 26, 2023, as updated by our quarterly reports on Form 10-Q and other public filings with the US Securities and Exchange Commission.
The forward-looking statements made today are as of the date of this call, and The Container Store does not undertake any obligation to update the forward-looking statements. Finally, the speakers may refer to certain adjusted or non-GAAP financial measures on this call.
A reconciliation schedule of the non-GAAP financial measures to the most directly comparable GAAP measures is also available in The Container Store's press release issued today. A copy of today's press release and investor deck may be obtained by visiting the Investor Relations page of the website at www.containerstore.com. I will now turn the call over to Satish. Satish?
Satish Malhotra
Thank you, Caitlin, and thank you all for joining our call today. I'll begin today's discussion by reviewing highlights from our third quarter performance, followed by a review of our key areas of growth. Jeff will then share the details of our third quarter financial results, followed by our outlook, and then open up the call to questions.
As we discussed in our announcement last month, our third quarter sales results fell short of our original expectation. We delivered a year-over-year consolidated sales decline of 14.8%, largely driven by ongoing challenges in our core general merchandise categories.
Despite these dynamics, we maintained a strong discipline with respect to our promotional strategy and expense management to deliver adjusted loss per share of $0.08, which was within our original range of expectation.
Furthermore, we were encouraged by the sequential improvement in year over year comparable sales decline of custom spaces over the second quarter. While the current macro economic environment still remains challenging, our team has focused on executing against our strategic initiatives, leading into the areas of the business that are delivering well and positioning ourselves to maximize the potential for longer-term growth, particularly with custom spaces.
For the third quarter, despite experiencing declines in our core general merchandise category, we did see a positive reception to the introduction of new products to our assortment, with sales more than doubling against our expectations for these new products.
In particular, our new premium products continue to do very well. Our analysis has shown that customers purchasing new premium products are retaining more frequently and have a higher average ticket compared to customers who do not purchase [premium] products.
Additionally, our discovery categories are also performing strongly with on-the-go travel solutions and home fragrances, achieving double digit growth and comparable sales relative to the third quarter of last year. Likewise, our premium customer spaces have also maintained robust performance with sales experiencing only a slight decline compared to last year. That's outpacing the overall performance of custom spaces.
Instead of that, we were pleased with the performance of our value oriented Elfa, which celebrated its 75th anniversary with special events that ended in the third quarter. The events sale performance met our expectations with notable sales being achieved towards the end of the event as customers responded to the sense of urgency messaging that was conveyed in our marketing communication.
Looking ahead to Q4 in addition to January's abnormal weather impact, we anticipate continued challenges to our core general merchandise category similar to what we experienced in the prior quarters. As a reminder, custom spaces is expected to have a tougher sequential comparison, as mentioned on our prior call, due to the additional promotional events this year to celebrate Elfa's 75th anniversary. We also expect to suffer softer Elfa product related sales during the plan non-promotional timeframe in the fourth quarter.
In response to our top-line performance, we remain committed to exercising strong discipline with both our promotional strategy and expense management. Furthermore, we look to action additional areas of optimization and includes participation.
As we look forward to fiscal 2024, we believe the need for The Container Store has never been greater. Over half of Americans are overweight by the amount of study they have and the vast majority have no idea what to do about it. Many resort to me like renting outside storage of finding themselves unable to use the garages for parking due to the full utilization of space in their home. They need our help to reclaim not only their space, but their time, their money, and their lives.
That's the journey we've been on these past few years and the purpose we have been living out to help our customers transform their lives through a powerful organization. While we are uniquely positioned with our comprehensive solution and services, we recognize the need to increase awareness about what we offer. This includes leveraging accolades such as the recent recognition by Time, which named Elfa and Preston as top picks within several of their best closet system categories.
Turning to the key growth areas of custom spaces and general merchandise we'll be focused on in fiscal 2024. While custom spaces has traditionally accounted for approximately 40% of our sales, given current sales trend and identified opportunities, we believe we can grow this penetration to approximately 60% of sales over time.
We aim to fuel custom spaces growth in three distinct ways. First, through our expanded assortment. As we have discussed before, we are continuing to drive innovation and newness within our custom spaces line. We have recently expanded our garage offering with Garage+ by Elfa, which just launched in late November.
We are seeing the new features and functionality like enclosed wall and leaning cabinet, lighting, full extension roles, and heavy duty workbench already resonates incredibly well with our customers and look forward to officially launching it this spring. Later this calendar year, we also plan to launch a significant overhaul of our Elfa décor line that will elevate its positioning in the marketplace.
Our Preston line is also expected to grow in its offering just as we have done earlier this fiscal year, with more premium options like leather draw, matte finishing, and enhanced lighting. We're excited to be working on adding a fully concealed hardware option for Preston, which we expect to be a material differentiator in the marketplace.
Secondly, we plan to grow our custom space business to our specialists, whether it be in-store designers, supporting Elfa or in-home designer supporting our more premium line. Today, we have almost 140 highly trained in-home designers focused on selling premium spaces, and they continue to perfect their selling strategy, speed of design, and their design capability.
In the third quarter 90% of premium space sales were driven by our in-home designers. We plan to increase our number of in-home designers and are working diligently to significantly improve our Preston design to solid conversion rate, which is currently about two thirds of what we experience with our premium Avera line. When combined with the total addressable market opportunity, this provides us a long runway of growth and potential share gains within custom spaces.
Finally, we anticipate custom spaces growth to come from increased awareness. Many customers today are either not aware that we also have custom spaces for object to engage in this category. We aim to change that by being far more intentional in leveraging data to drive our marketing strategy.
For example, through recent analysis, we reaffirm that the majority of customers who have purchased Preston and Elfa spaces have re-shopped our kitchen and closet general merchandise categories first. Leveraging insights like these will help us make more impactful decisions as we attract new customers launch them on their custom space journeys.
Furthermore, our marketing efforts were aimed to take a more integrated approach, demonstrating our ability to facilitate life-changing transformations for our customers from space optimization, curated finishing product, and vital organizational value.
This approach aims to not only allow customers to achieve their transformational aspirations, but also ensures that they knew the sound achievements are maintained over time. As we intensify our focus on custom spaces, our merchandising team is hyper-focused in refining and rebuilding our general merchandise assortment to complement our customer spaces offering for a complete solution.
With respect to general merchandise growth, we also have plans for it to come from three distinct areas, first through our expanded premium assortment. As we shared, we are pleased with the reception of our new premium general merchandise and see an opportunity to grow this offering with an improved margin profile.
This includes high quality of auditing and baskets to complement Preston. climate and costs. Crystal glass and BioWare team complete a trustee pension asset premium general merchandise to complete our premium coffee spaces and essential to serve the needs of our customers and also Danish phone solution under one roof.
Next, we plan to go live with the private label business through our new sourcing capability that we brought in-house last year, controlling everything organized collection is a great example of an explicit value oriented offering and to work in any space and complements our other solutions.
The healthy margins, private label products provide the opportunity to develop products that seamlessly integrates with our trucking space and make this area crucial to our general merchandise growth. Apparently, 40% of our general merchandise assortment is private label, and we see an opportunity to increase it further over time.
Lastly, we believe we can achieve growth in general merchandise to upscale the categories that complement our core offering. Discovery categories like home fragrances and on-the-go travel solutions continue to trend positively. It's something that's with significant opportunities either.
Before I close, I want to touch on our updated outlook for the remainder of the year and our disciplined focus on capital allocation. With respect to store openings, we are on track to end fiscal 2023 with five new locations and recently celebrated our 100th store opening in Princeton, New Jersey.
We continue to see high penetration in custom spaces and customer satisfaction in our small-format stores with an average Net Promoter Score of 81 in Q3. In the balance of fiscal 2024, we plan to open four new build-to-suit locations, which, as a reminder, require far less capital out. We also plan to relocate our San Francisco store in late June and have made the strategic decision to close our store in Los Angeles at Santa Monica.
We closely monitor the profitability of our stores and decided it was not in the company's best interest to renew the lease when it ends in August of 2024 due to a significant rent increase. Furthermore, given the current environment, we are not committing to the timing of future store growth beyond 2024.
While we continue to see significant opportunities to expand our national presence, it will be done in conjunction with our goal of sustained positive free cash flow. Despite the current macro economic difficulties and the obstacles encountered within our core general merchandise category, w e remain optimistic about the growth opportunities we have identified.
I believe in the transformative power of organization, coupled with the demand for it and our unique solution oriented offerings fuels our confidence. Now in this focus with the passion and the strength of our team lays a solid foundation for enduring success. And now I'll turn the call over to Jeff. Jeff?
Jeff Miller
Thank you, Satish, and good afternoon, everyone. As Satish reviewed, while we continue to face similar challenges to our top line that we experienced in the second quarter, particularly within our core general merchandise categories, we were able to deliver earnings results in line with our original guidance range through disciplined promotional activity and tight expense management.
For the third quarter, consolidated net sales decreased 14.8% year over year to $214.9 million. By segment, net sales for The Container Store retail business were $202.5 million, a [15.4%] decrease compared to $239.3 million last year. The decrease is inclusive of a comp store sales decrease of 16.8%, driven primarily by the 20.4% decline in our general merchandise categories, which negatively impacted comp store sales by 1,380 basis points.
Custom space comp store sales declined 9.2% compared to last year and negatively impacted comp store sales by 300 basis points. Sales from new stores benefited total TCS net sales by 130 basis points. For the third quarter of fiscal 2023, our online channel decreased 26.3% year over year. And our website generated sales, which includes curbside pickup, decreased 15.6% compared to last year.
Website generated sales represented a total of 21.8% of TCS net sales in Q3, which is consistent with Q3 last year. Unearned revenue decreased to $17.5 million in Q3 this year versus $18.8 million last year, which is reflective of the decline and overall sales.
Elfa third party net sales of $12.4 million decreased 4.2% compared to the third quarter of fiscal 2022. Excluding the impact of foreign currency translation, Elfa third-party net sales decreased 4.9% year over year, primarily due to a decline in sales in Nordic markets.
From a profitability standpoint, our consolidated gross margin for Q3 increased 140 basis points to 58.3% compared to 56.9% last year. The 140 basis point increase in gross margin was primarily driven a higher mix of custom space sales this year.
By segment, TCF's gross margin increased 40 basis points compared to last year, primarily due to freight tailwinds, which were partially offset by product and service mix headwinds driven by general merchandise as well as the expected impact from the incremental promotional activity in Q3 of this year.
Elfa gross margin decreased 170 basis points compared to last year, primarily due to unfavorable mix, partially offset by price increases to customers. Consolidated SG&A dollars decreased $9.7 million or 8% to $111.8 million compared to $121.5 million in Q3 last year, which reflects the impact of cost management actions taken in the first quarter.
As a percentage of net sales, SG&A increased 380 basis points year over year to 52%. The increase is primarily due to deleverage of fixed costs associated with lower sales in the third quarter of fiscal 2023. Our net interest expense in the third quarter of fiscal 2023 increased to $5.2 million compared to $4.4 million last year. The year-over-year increase is primarily due to higher year-over-year interest rates on our term loan and to a lesser extent, higher average borrowings on our revolver during Q3.
The effective tax rate for the quarter was negative 34.5% compared to positive 33.8% in the third quarter last year. The decrease in the effective tax rate was primarily related to the impact of discrete items related to share-based compensation on a pre-tax loss in the third quarter of fiscal 2023 as compared to pre-tax income in the third quarter of fiscal 2022.
Net loss for the quarter on a GAAP basis was $6.4 million, or $0.13 per share as compared to a GAAP net income of $4.2 million, or $0.08 per diluted share in the third quarter of last year. Adjusted net loss was $4.1 million, or $0.08 per share as compared to last year's adjusted net income of $4.1 million, or $0.08 per diluted share. Our adjusted EBITDA decreased to $12.8 million in the third quarter of this year compared to $22.2 million in Q3 last year.
Turning to our balance sheet, we ended the quarter with $16 million in cash, $184.7 million in total debt and total liquidity, including availability on our revolving credit facilities of [$99.6 million]. Our current leverage ratio is 2.8 times. We ended the quarter with consolidated inventory down 14.3% compared to the third quarter last year.
The decline reflects a concerted effort to tightly manage inventory in the current environment and is primarily the result of lower freight costs and fewer inventory units year over year. At TCS on a unit basis, on-hand inventory was down approximately 15% year over year, driven by general merchandise.
Capital expenditures were $33.4 million in the first nine months of fiscal 2023 versus $46.6 million in the first nine months of fiscal 2022, which reflects the planned pullback in capital spending in fiscal 2023. We are continuing to prioritize investments in our stores and technology. Free cash flow in the first nine months of this year was a use of [$6.7 million versus a use of $27.7 million] in the first nine months of last year.
Now for our outlook, as noted in our press release, we have updated our full-year outlook to reflect our year-to-date results and updated outlook for the fourth quarter. For the fourth quarter of fiscal 2023, we expect consolidated net sales to be approximately $200 million to $205 million, driven primarily by a comparable store sales decline in the mid-20s.
The expected decline in comparable-store sales is reflective of weather challenges we have experienced in January as well as continued pullback in our core and value-oriented general merchandise categories. As it relates to custom spaces, in addition to the already anticipated pull forward headwind related to the third quarter 75th Elfa anniversary sale, we are expecting additional pressure from the Elfa product line, primarily during a planned non-promotional time period in the fourth quarter.
We expect the consolidated revenue declines are also inclusive of continued Elfa third party headwinds, which we expect to be more than offset by new store sales. We expect adjusted net loss per share in the fourth quarter to be in the range of [$0.12 to $0.09].
The implied year-over-year operating margin decline for the fourth quarter is expected to be driven by SG&A, depreciation, and other fixed cost deleverage on lower sales. In addition, we expect gross margin to be relatively flat in comparison to the prior year as a result of the net impact of continued rate tailwinds and an unfavorable product mix from general merchandise.
Interest expense for the fourth quarter is expected to be approximately $5 million, driven primarily by higher interest rates. The effective income tax rate for the fourth quarter is expected to be approximately 21%. Capital expenditures for the full fiscal 2023 are now expected to be in the range of approximately $40 million to $45 million. Based on our performance to date and our fourth quarter outlook, we are expecting free cash flow to be slightly negative in fiscal 2023. This concludes our prepared remarks. I'll now turn it over to the operator to begin the Q&A session.
Question and Answer Session
Operator
(Operator Instructions) Steven Forbes, Guggenheim Securities.
Steven Forbes
Good afternoon, Satish, Jeff. Satish, given the focus on conversion rate and awareness improvements here as we look out, can you maybe give us some preliminary thoughts on how you're thinking about the event calendar for next year? Have you guys sort of identified why the conversion the design to conversion rates differ between the product lines? Like is there any any sort of targeted efforts right that you've sort of identified that you can incorporate into the event calendar?
Satish Malhotra
Yeah, this is Satish. Thanks for the question, Steve. So firstly, when it comes to the event calendar and the thinking that we have for fiscal '24, it is to separate some of the lines that we have traditionally showcase for our customers.
So rather than having a combined customer base event with all of our lines, we look to kind of separate them so they can each have their moments in particular, as we see really strong progression of in-store sales with Elfa and then utilizing our in-home specialists, driving our Preston and Avera sales and with results.
And quite frankly, I would tell you the conversion rate for Elfa is extremely high, as you can imagine, because not only is it available for customers for a do-it-yourself option, but it also allows us to design for our customers and for them to really benefit from the modularity of the offer offering.
When we think about the lines, in particular, our more premium lines, as you can imagine, and this is the efforts that we've been on in particular with Avera is that it takes our specialist some time to get comfortable with the lines and with their selling approach. And we've definitely seen great improvements with our Avera conversion lines. And similarly, we expect that to happen with our Preston line.
As I mentioned, we have about 140 in-home designers and they've gone through rigorous design trainings to enhance the design and selling skills. Our more tenured designers are already performing quite well in annualizing sales from anywhere between $700,000 to $800,000 and are making great progress on their design to sales conversion rates.
And obviously, that's slightly pulled down with new individuals that we're training and bring it into into our company. And so again, what I will tell you is that we've seen great success in conversion with Elfa. We've seen great success with Avera and we believe as our more as our more tenured designers get comfortable.
We're selling our Preston. We should expect in fiscal '24 to get the benefits of them now being a customer with all the new features and functionalities that we bought with Preston, including their abilities to utilize the design tools that are in their hands to start to benefit quite well with that conversion rate.
Steven Forbes
And thank you for the color and maybe just a quick follow-up for Jeff. You comment out, is this year sort of looking at slightly negative on free cash flow? Any sort of preliminary thoughts as we think about the rebalancing of growth versus profit into next year. And so what levers that the business can pull to maybe keep the business in sort of a free cash flow neutral too to positive state?
Jeff Miller
Sure, Steve. We're in the early stages of planning our fiscal 2024, so I can't necessarily comment too much in detail but as I as we think about the business moving forward and maintaining sustaining free cash flow has earned this growth mode focused on the growth mode. There are a number of levers that we have.
And right now we factored in and the call earlier Satish spoke to the fact that we have four stores open planned to be opened in 2024, and we have no plans for store expansion outside of 2024. So we're pulling back from a capital expenditure perspective that certainly will help on a free cash flow perspective in fiscal 2024.
I would expect that as it relates to expense management and working capital, we see line of sight of working capital opportunities, specifically inventory, one of our largest areas of working capital, and we'll be working towards that as we get into 2024 plans have actions around that. And of course, we're always looking for efficiencies on the expense side, and we'll continue to focus in on that. We are as we work to our line of sight for fiscal 2024 with the aim in sight of positive to neutral free cash flow.
Steven Forbes
Thank you.
Operator
Kate McShane, Goldman Sachs.
Kate McShane
Thanks for taking our question. I wanted to ask about marketing, obviously with Steve's question and just walk through the messaging and the event calendar, but is there any change happening with the percentage spent on percentage of sales on marketing? Are you shifting dollars in any way to improve this messaging?
Satish Malhotra
Yeah, I'll take the first part of that question, and then I'll let Jeff talk about the percentage to sales outlook. The change that we're making in our marketing is really to be more mindful of understanding that customers are still not really aware that we are after of our customer spaces and the approach that we're taking is a far more integrated approach.
And what I mean by that is our ability to whether it's through e-mails or our site or even embedded within our general merchandise is really allowing customers to understand the importance of making sure they have the right space and how that space can be optimized for them. And then how our general merchandise truly is acting as a finishing product for that more optimized space.
I've finished off with really some vital organizational tips to ensure that they're able to maintain their transformation achievements once they've been able to fully embrace what we have to offer. So that's what you should expect to see now and into fiscal '24 is us taking more of this integrated approach rather than it being siloed out between a custom space messaging, that then differs from a general merchandise to a messaging, that then differs from a services offering.
Jeff Miller
And just to add to that, Kate, you know, in terms of dollars spent in marketing as a percent of sales, we've had remained relatively consistent throughout fiscal '23. And I know as I said earlier, we're still early in the plans for 2024, but I think the focus will be more around making those dollars work harder for us, as Satish was outlining and the approaches of how we're doing it.
And the team that we have here at The Container Store has been working very diligently and finding ways to be much more efficient with the marketing dollars that we have to have the biggest impact. And I think Satish outlined some of those ways that we feel like we have the biggest impact there.
We've been focused on making sure we're operationally efficient from an SG&A perspective and implied in the Q4 guide is SG&A savings of $15 million -- up to $15 million, which we started the fiscal year taking actions and we had a range and you know, we've saved $30 million through Q3 with additional [$15 million] through Q4 for a total potential savings of $45 million on a year-over-year basis. With that in mind, we'll continue to focus on marketing is a key aspect of engaging with our customer and maintaining those messages and making sure they're much more efficient.
Kate McShane
Okay. Thank you. And then our second question was just on the guide for comp in the fourth quarter. Is that primarily a function of the adverse weather trends that you mentioned in your prepared comments and the lapping of some of the tougher comparators. Is there anything else within the mid-20s decline that we should be -- that's driving that.
Jeff Miller
Embedded in our guidance for that for Q4. If I were to speak to the high and low end. It's really based on the January trends we saw at the time we're putting together that the high high end of the guide assumes some normalization from what we were seeing in January and from a from a weather perspective, it did impact us quite a bit.
We had six times more store impacts in January than we did in the previous year. When I look at the entire quarter, February last year did have more weather impacting, but we're still early in February, and we don't know, so when we developed the guidance we assume some normalization from the January trends at the high end of the guide.
The low end of the guide assumes the January trends continued through the remainder of the quarter. And as I said in my prepared remarks, the you know, it's reflective of the continued pullback in the core and value-oriented general merchandise. And we also are seeing more pressure in the non-promotional time periods for the Elfa product line based on what we learned during Q3.
Kate McShane
Okay. Thank you.
Operator
Christopher Horvers, JPMorgan.
Christopher Horvers
Thanks, guys. So my first question is just give a sense of how much in the Elfa anniversary sale pulled forward demand from into the third quarter from the fourth quarter. It's always been a big event here in the spring, and I know you moved it forward and it drives a lot of seasonality in that business. So I was curious if you put some thoughts and numbers around that?
Jeff Miller
Chris, I don't have a number to speak to from a pull-forward standpoint, but certainly we are seeing that just just on the normalization of the quarters from a revenue top line perspective, and that's what was anticipated in our Q4 guide.
Christopher Horvers
Got it. And then I guess, as you think about, what is left for that? You mentioned, like, you know, outside of the promotional periods, there's not as much responsiveness on the Elfa side. So I guess what is what is what is sort of exist now in the fourth quarter to drive that business? And as we think about the upcoming year, should we assume that the upsell goes back to its normal timing.
Satish Malhotra
Well, just to clarify, Chris, this is Satish. We do -- we are in Q4, we do have Elfa events. And so the event that we were talking about earlier was our 75th anniversary event, and that was an added event from what we normally do. And and so that is something for you to pay attention to. And as we think about fiscal 24 come out expectation is to still have four alpha events throughout throughout the year.
And so where's the event that we have currently doesn't end until mid-February, and we still have a month and a half left to close out that quarters from that event. And we definitely will continue to go after customers that have experienced a purchase with Elfa and see what we can do to make sure that they're able to take full recognition of those installations, see what other potential Elfa opportunities exist as well as completing those alpha purchases with completion products. And so we still have a lot of exciting things to engage our customers with as we finish out Q4.
Christopher Horvers
Got it. And then I guess my last question is, as you think about like the current freight environment, your more general merchandise is, I think, more from Asia. And then obviously, there's some stuff going on in the Middle East. So how are you thinking about the duration of this freight tailwind that you've seen in the in the gross margin line? And you know what are your thoughts on could that could that turn to a headwind? Are you contracted out or or how are you managing that?
Jeff Miller
Chris, in terms of freight, certainly we've experienced the benefit of tailwinds through fiscal 2023. Based on the lower freight costs that we've been seeing throughout the fiscal year. We would expect that to continue a little bit, not as much in fiscal 2024 in the first half of the year. But when we look at the Red Sea situation and some of the disruption that's going on there, we have limited routings through the Suez Canal, about less than 1% of our freight goes through there.
The impact on global rates on the spot rates hasn't impacted us yet. We have about 85% of our shipments are under contract. And certainly we're watching it as we move forward. It could be a potential risk depending on how prolonged the situation is. But from a volume standpoint, we don't have a whole lot of volume going through that part of the world.
Christopher Horvers
Got it. Thanks very much.
Satish Malhotra
Thanks, Chris.
Operator
Thank you. There are no further questions at this time. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
