National Vision Holdings, Inc. (EYE) Earnings Call Transcript & Summary

Hi. I'm Robby Ohmes from BofA Global Research. And we are very pleased to have Reade Fahs, CEO of National Vision, here with us today; as well as Patrick Moore, the Chief Financial Officer. David Mann from IR is on the line as well. I want to thank both Reade and Patrick for joining us today following their report of another strong quarter of execution in a very tough environment. Let me turn it over to Reade for some comments, and then we're going to jump into fireside chat Q&A.

Great. Robby, thanks so much. And thanks for having us here. Yes, just for those of you who aren't familiar with us, National Vision is the third largest optical retailer in the U.S., over 1,200 locations. Optics is -- it's just a great category. As we get older, our eyes go bad. It just happens, so there's the aging of the population. And then of course, all of us are straining our eyes more than we ever did with all this darn screen usage. And then coupled with it all, in the last several years, like eyeglasses have become cool. They're fashion statements. Did you all see Oprah's glasses the other night? I mean weren't they spectacular? And so eyeglasses have become a fun fashion accessory. So all these things have dovetailed together to really help the marketplace. The value segment, where we're the largest player, has been growing very nicely. People have realized that they shouldn't have to pay hundreds of dollars for 5 pieces of plastic put together with 2 screws. And so they're coming to the value segment. And we think of ourselves as the low-cost provider of a medical necessity. You need to be able to see to get by in life. Glasses and contact lenses are by far the primary way people solve their vision correction issues. You need an eye exam to get glasses and contacts. We only sell 3 products: eye exams, eyeglasses and contact lenses. So -- and we -- and it's -- the cost of ownership when you're with us is less than other places. So the low-cost provider of a medical necessity, which means, in sort of good times and bad, people's eyes go bad, and they need to get them fixed. Going into the pandemic, we had 72 consecutive quarters of positive comparable store sales trends. So never in the past 18 years did we have a negative comp. And we averaged 5% quarterly comps for that 18 years that took a global pandemic to -- and the shutdown of our stores for 10 weeks to end this streak, which we we've heard is the best and longest consistent streak in U.S. retail. And then of course, we reopened last June, and we've had the 7 best months of my career with a comp from June to December of 12.6%. Things were strong in the fourth quarter, again, a sort of 10.6% comp in the fourth quarter, record quarterly profits since we've become a public company. And of course, that's -- generally, the fourth quarter is the slowest, lowest seasonality quarter in -- for optical. We're confident that we've been growing market share and that the trends that have been helping us for such a long time, the decline of the independent sector, the decline of malls, the decline of a lot of traditional big boxes that sold optical goods like Sears, JCPenney, et cetera, that all those trends have just been hastened by COVID that in -- during -- or soon after our shutdown, we did a convertible bond offering. And so we have a really strong financial position, strong liquidity, $668 million to be able to navigate through whatever is thrown at us this year. The other thing we announced last week was increased white-space opportunity. We added another 300 America's Best stores to our belief as to how many we can expand to, so that's 1,300 America's Best stores. So we think that our white-space opportunity is about 2,150 stores, and we have 1,200 now. So at the rate that we've been opening stores for the past several years, 75 stores a year, I think, that's 16 or 17 more years of opening at 75 stores a year. So we emerged from this god-awful year last year, feeling very strong and confident and feeling that we're going to be one of the sort of post-COVID winners because the trends that were in our favor before, only more so in our favor now. I'd also add, we think that culture is the key competitive advantage left in this world since so many things can be copied. And our culture remained -- came through this all, the adversity that was thrown at us stronger than ever. I guess the final thing is we do see ourselves as very much an ESG player. We've been committed to low-cost health care in America as a business and providing eyeglasses to the world for both in America and abroad for decades. Now we are more formalizing our ESG journey and laying all the groundwork to be able to sort of report on and improve on all the metrics that are of primary importance to ESG investors. So Robby, I think that's sort of a quick overview of who we are. Tell me, did I miss anything important to you there?

You didn't. That was a great overview. And my first question is, did Oprah get the glasses at America's Best?

She did not, I'm sorry to say that, but nor did she spend a small amount of money on those glasses. Those are very expensive glasses. I will say, although I would be flattered where she'd ever buy from us, none of our target consumers are billionaires, okay? Like -- and I actually think pretty much 0 of our consumers are billionaires, so I wasn't even thinking that. So -- but they were nice. I kind of admire the high end of the market as well.

I didn't think so.

But on a more serious note, Reade, maybe I think what a lot of us would like to know is, is there anything that you learned from COVID or anything that you think is structurally changed for National Vision? Anything that you learned that you're doing different either in America's Best or Eyeglass World?

Yes. So I'm not sure this is exactly what you mean, but let me give you my gut meter reaction to that. We benefited from a huge sort of peace dividend because when we reopened our stores, business came back far beyond our expectations and stayed strong for a long period of time. Traditionally, the world of a retailer like us is sort of nose to the grindstone, making sure you're overdelivering on your budgets every day, and just you're -- there's a short-term nature. And I'm talking about, again, for the 18 years prior to that, but you're just watching closely. And frankly, from June on, we didn't have to do that because the business was just coming through the door. I didn't mention it in my opening, but we in essence told our marketing department, "Hey, why don't you sit on your hands for a while because the business is coming in, the customers are coming in without you spending money to bring them in. Why don't you just focus on more long-term pieces?" So what we did during that peace dividend of the last 7 months of last year was we doubled down on trying to understand the consumer of today, the post-COVID consumer and trying to understand better how those trends, how their buying journeys might be different in a post-COVID environment. I really think that since reopening, we've spent more on consumer research and understanding than, frankly, the past several years combined prior to that. We looked deeply at -- and again, this is the part that I don't think you're asking about, but we looked deeply at our ways of working. So spent a lot of time on what are our key metrics that are really the fulcrum point metrics and dug down deep into those so that our -- so that we could watch the nuances. There have been -- there are sort of little chapter changes that have been occurring over time that you watch for. And we focused on team effectiveness. We had a few retirees at the end of '19, early 2020. And so we had some new members of our team. And so we did some team effectiveness work also. And all of these was -- and I would also add some sort of more long-term strategic planning, more balancing of paving the way for 2, 3, 4, 5 years from now sort of planning out technology options and thinking that through. So I just think we got this peace dividend that allowed us to be far more intentional, methodical and informed in how we approached the marketplace, understanding our customer journeys so much more, more focused, more strategic, yes.

That's really helpful. And maybe one area I was curious about, within that kind of strength that you've seen over the last 6 months, before COVID, I know doing more penetration with managed care patients was part of the strategy. What did you see in the last 6 months? And where is your strategy now on penetrating managed care customers?

Yes. So just again, for the newer folks, so whereas most of the chains, the majority of their business comes from insured customers and, frankly, for most of the independents as well, historically, we have been underdeveloped relative to managed care insurance customers. That's been for 2 reasons. One, when we -- when National Vision bought America's Best, they didn't even take insurance, so we were starting from 0 at that point in time. But also, it's because we're overdeveloped in the noninsured customer. If it's your money and your buying decisions aren't phased by insurance and networks and all that, if it's your money, you'll seek out true value. So you'll find us. So I think we're going to always be overdeveloped in free-to-choose, cash-paying customers. Having said that, for the past several years, insurance has been a nice driver for us. And so it's been growing nicely. And I think sort of when we went public, we were just over a 1/4 insurance business. Now we're more like about 1/3 comes from insured customers, and it is growing. But my suspicion is, and time will tell on this, that whereas the insurance side was growing more rapidly than the noninsurance, I wouldn't be surprised if it shifts with tightened unemployment, with less people having vision insurance. It's predicted a little -- that there will be a little less having that with more sort of people finding the value category and finding us because it's their money. So I wouldn't be surprised if there's a shift. I'm not actually worried about a shift. We're pretty agnostic from a margin perspective as to whether it's an insured customer or noninsured customer. But I could see a little rebalancing.

And how about on the digital side of your business? What changed if anything there because of COVID? And what are kind of the most important e-commerce initiatives at National Vision?

Yes. So -- and maybe to your earlier question, that would have been another piece. Of course, both -- when our stores were closed, then of course, people wanted to access contact lenses and glasses, and e-commerce grew. But interestingly, when we shut our stores, we did not actually close them. We shut them to the public because within days, we realized we needed to staff our stores because our customers were calling their stores. And now again, they could have just as easily gone on to our websites and ordered their contact lenses and ordered glasses from -- just as easily. But our customer base has a stores orientation. Our category still has a stores orientation. So we kept our stores staffed. The doors were locked. Unless it was a medical emergency, the patients couldn't come in. And if it was a medical emergency, then we had to call our optometrist to come in and deal with that because our optometrists were at home. But in essence, our stores were taking orders over the phone. But of course, this consumer research and anyone who's paying at all attention is saying, there are going to be -- our customers want heightened omnichannel offerings from us, and we started to report our numbers in terms of omnichannel. And let me give you an example on omnichannel. You come to the store. You get an eye exam. Your contact lens prescription is changed. You order the contact lenses, but then we ship them to your home, so you don't have to come back in. That is as omnichannel, it's consumer convenience. And so much of the research is just showing us all the different points in the customer journey where adding omnichannel offerings would be less -- diminish the friction for consumers and make them happier. And we are methodically going about sort of enhancing our customer journeys for the e-commerce offerings we've been having for a long time and then adding ever more so sort of user experience benefits that will keep our customers with us over the long term.

That's helpful. And Reade, you mentioned the strength of the business, but I think you said beginning in June -- around June last year, and this is maybe where Patrick can chime in as well, I mean the question for all the retailers that saw pockets of strength during COVID is, how should we think about you anniversarying those comparisons?

Yes. Robby, I think as we were laying out guidance this year, we tried to take great care and explain how that would feel on a grow-over basis. We're obviously going to have much easier comps in the first half of the year, going to get a little tougher in the second half of the year. We felt like 2021 to 2020 was one comparison. We've also looked back at 2019. We have -- we're expecting to see most of the profit growth in the year follow the sales growth in the year. We are expecting to see operating margin expansion of about 20 bps if we go back and kind of think about '19 the last kind of normal year. And so -- but we are expecting to see really strong sales first half, a little tougher second half and profits to fall in the first half. The bulk of the growth...

That's helpful.

And we did cite in our call last week that 2021 started out with similar trends to what we were seeing in Q4 for sales trends.

I'm just going to pause for a second to remind everybody watching that feel free to click the button and ask a question, and I will ask the question on your behalf. My next question is maybe a discussion a little bit more about sort of the difference in the comp strength in America's Best and Eyeglass World, and sort of Eyeglass World is doing so well, which wasn't always the case historically. Sometimes America's Best is doing better. What happened there? And do you think that kind of trend could continue? Is Eyeglass World on a kind of new momentum path?

Yes. No, that's a great question. We always liked to say prior to COVID that if America's Best wasn't around, you'd look at the Eyeglass World comps, and you'd say, "Hey, that's pretty darn good. I'm pretty happy with Eyeglass World comps. It's only by comparison to America's Best that they were always sort of the younger sibling trying to live up to the standards of the older sibling." And then post-COVID, immediately there was a reversal. And Eyeglass World just started hitting it out of the park. And now the older sibling is trying to catch up with the younger sibling. And let me tell you, the younger sibling is enjoying that immensely. And so I think there were a few reasons. I mean both brands are value. So they were both in the right segment. And I'll add just because we haven't mentioned it, we spent a lot of time on safety protocols because we got very early on that this is the trust economy, and we all -- anyone listening here could say, "Well, around me, this restaurant, this hardware store, this retail outlet is not taking it seriously." We all know which ones they are. We might -- we probably gave them 2 strikes. We probably -- but they were out after 2 strikes if they weren't taking it seriously because hey, we all have to be careful. We're all scared, right? So we realized early on that people needed to come into our stores and feel our safety-first mindset. At every turn, masks always required. We disinfected every frame after it was touched. Social distancing, we sort of taped off chairs in our waiting room, so you couldn't sit with -- anywhere near one another. So both of them had the same rigor associated with safety, which I think is a factor in all this. There's a big trust factor. Key difference in the brand is because of the lab in Eyeglass World, you can get your glasses same day, often one visit. And that mattered to people in this environment. It's also a bigger store. So just if your headset relative to COVID is looking around at how large a space you're in when you're inside, it's a just bigger, more spacious store. There's more room to spread out there. And I'll also say sort of we've been tweaking, tweaking, tweaking the nuts and bolts of our Eyeglass World operation for a while. And I think sort of the customers started coming in, in large numbers as we were really, really ready for them. And so to your question, do we think this is a trend or sort of a short-term sprint thing? We think it's more of a trend now. We think -- and I'll just add one other piece. There is a virtuous cycle aspect of this: good leads to good leads to good. We are in a very fair category. Those who take the best care of the patients and customers tend to win because there's a huge word-of-mouth component to this category. So sort of as you're serving ever more customers, as they're happy with their service, happy with their selection, Eyeglass World has about twice the selection of of an America's Best store, happy with the same-day service, they tell their friends, and it spirals up. So yes, 17.6% comp in Q4, and very, very encouraged, very happy. But the America's Best 12% comp is nothing to sneer at either. It's just a reversal of fortunes there. I like having the horserace going on.

That's great, Reade. That's really helpful. And maybe somewhat related to that, I think you mentioned on the call that 2% to 3% of the competition, the industry may be going away. I mean it sounds like you guys really out-executed the competition, but I would imagine some of them are coming back online. And like how are you thinking the competitive environment is going to play out over the next 6 months?

Yes. And to be specific there, we sort of -- we think that -- and this is from industry data sort of confirmed by some softer sources as well, that probably 2% to 3% of the industry doors -- that there are probably 2% to 3% less doors today than there were this time last year in the category. And that's some independent doctors just deciding to retire. That is the closure of Sears Optical. That is the decline of -- sort of probably less JCPenneys out there. And so that is that. But also, there are a lot of doors that just aren't as productive as they were. So that would be -- I don't think people are going to mall opticians in the same level and degree that they were before. I think many doctors out there are working less hours and doing less exams per hour, which means there's again less capacity out there to be had. So people need eye exams, need to find places where they can find eye exams. And I do think our operations are very crisp. I mean at its core, we're just being good at execution as we don't tend to win through brilliant strategies or massive advances in technology like Apple's always coming out with. We win through good nuts and bolts, experiences in our store, service in our store, interactions between doctors and patients, associates and customers day in, day out, one at a time, that's -- and it's a lot of basic execution and a tremendous amount of culture.

That's great. I actually did get a question that just came through, I think, related to what we were talking about before. The question is about clarifying whether the expectation is that profits will fall in the first half.

Yes. We expect to see strong sales growth and strong profit growth in the first half. Yes.

And then I guess they probably -- they continue on the second half is probably what was meant.

Yes. So look, it's all a function of the lumpiness of 2020 where we had a trough of store closure period from mid-March to early June, coupled with then a period of outsized demand, a period of heightened ticket likely related to government stimulus. We had margins that were benefiting from everything on the P&L leveraging. When your comps are above 10 or 15, you get a lot of leverage. And we had lower, much lower-than-normal advertising. And so as a result, we experienced, as you all saw, just simply exceptional margins in third and fourth quarter that as we think about 2020, we think advertising normalizes a bit. We think that mix between eyeglasses and contacts eventually comes back to a norm that was another gross margin benefit from last year. And so as we have laid out guidance this year, we were delighted to provide a nice full slate. We did so knowing that we're still operating in a pandemic. We're still operating in an economy that is where there may be some latent disturbances around longer-term impacts of unemployment. And so we laid out a nice full slate. We took a little caution with that. We'd love to beat it. But that's kind of how we were thinking about the first and second half. It's going to be a more normal year growing over a rather abnormal year.

That's really helpful, Patrick. And maybe along the lines of the back half, what are -- how are you guys thinking about wages for the people working in the stores or the hourly wage workers? And then for the doctors, what are the trends there? What do you see as you look out in the back half or even just 2022?

Yes. I'll start with the front of the store and work back, how about that? On the front of the store, hey, look, we've been seeing wage inflation for a few years with our associates. You've not heard us talk about with any consistency we delever due to associate wage growth. We have tended to be able to offset the kind of per capita lifts in wages with better productivity in the stores. Our stores, there's a lot of process, there's a lot of flow management. There has to be with the volumes that we take on. So each year, we're looking to figure out, are there ways where we can either get more productivity out of our team members or do similar things with a little less hours here and there? And we focus a lot of time on that. So we have been able to offset those wage increases. Now Robby, if we get across the board, national minimum wage hike that in one fell swoop, that's going to be kind of tougher to do, but we expect to see continued associate wage inflation. We know that there are some states that will make moves this year. We've built that into guidance. So we treat this as more of this is part of our role to find ways to offset the associate inflation and keep associates and customers happy. On the optometrist side, it's a little different. We're not ever looking to trim the hours of an optometrist. We like to have as many of those folks on board as possible. They do great work. We pay them what we think is a very competitive wage for their work. We have seen a few years of supply-demand, wage inflation tick up. And that's usually market-based more than across the board. Q3 and Q4, we saw that moderate. We're hoping to continue to see that. But the supply-demand equation will really balance that. Oftentimes, if we get optometrist wage pressure, we can offset that to a degree with our lab productivity. Each year, those labs get a little more productive. And so those have tended to get close to offset each year. So I think we're going to still see wage inflation. Management team is prepared to deal with it to a pretty high degree. Reade, anything to add?

Yes. I just wanted to add one piece that relative to our front-of-store folks, our people are optical professionals. And they take great pride in that, and they define themselves as I'm an optician. I work in health care. I am helping people to see. And so in thinking about sort of their other career opportunities, they're not thinking, "Oh, I wonder if I could go down the street and work in that Amazon distribution center and make a little bit more money." That's not part of their self-definition. We are -- we're a health care company. We are operating in health care. And so when we are comparing our compensation, we're comparing it within the optical industry primarily.

That's really helpful. And then anything changing on store growth? Is it still 75 a year for the foreseeable future? And -- or any shifts between the number of America's Best or National -- sorry, or Eyeglass World stores? And then, Reade, how do you think about acquisitions? You did acquire Eyeglass World. Does the environment we're heading into from here maybe make it -- make more sense for you to make some more acquisitions?

Hey, also just let me work backwards on that. I'll start with the acquisition and then work backwards on the white-space piece. So I'm proud to say we have successfully acquired, integrated and grown 3 companies in my time here. We bought America's Best, we bought Eyeglass World, and we bought AC Lens, our e-commerce company. At the time, we -- they were the third largest online contact lens -- e-commerce distributor. And so given the -- given in general the odds of M&A working out well, just there's a lot of track records of nonsuccess out there, we're pretty pleased that we have in our wheelhouse and our competency the ability to acquire and integrate companies well. Having said that, we think we've got the 2 best concepts in optics here certainly with America's Best and Eyeglass World. And whenever we look at anything, and we do look at everything, we have to evaluate it and turn it around in your mind, how would this create value for our shareholders? When we do that, we have to compare it to sort of the ROIC of an America's Best and Eyeglass World. And we feel great confidence in our game plan to continue to grow market share through the growth of these 2 brands. And you've got to look at the distraction of how much does that blow you off course. And so right now, we -- I think we should be perceived as an organic growth story. But we do look at things. And if something comes along and we say, "Oh, this could turbocharge us nicely," then we would seriously evaluate that. On the white space, we've been opening 75 stores a year. I think we started that around 2015 around -- roundabout there, so 5 or 6 years of that. And that's the number we've put out there this year. And although we're not making announcements for future years, sort of looking at past history, you might choose that number to model into the future. And we have yet to make a big balance change in terms of America's Best and Eyeglass World, but we're looking at it historically because of the cost of the lab, the -- our return on invested capital for America's Best has been better than Eyeglass World but with these sorts of comps. And I got to tell you, as I said, the little sibling is sitting there saying, "It would be really nice to get it to be a dead heat so that we could say, 'No, no, no, throw the capital our way.'" So I wouldn't be surprised if we lean in more to Eyeglass World in the future, but we do not have a big change plan for this year. And there's about 9 or 10 months of lead time from the time you decide to reallocate to the time you start to actually build those stores.

And I would just add, Robby, on the M&A front, we're looking at all M&A opportunities through a capital allocation lens. We know that we're going to invest for growth organically. I mean just the rule of thumb that I use, a lot of the deals that I've seen get done for businesses with stores, folks have paid $5 million, $6 million, $7 million a store. We can go set one up for less than $500,000. And so it's really hard when you think about the organic growth engine of this company to kind of go pay that. So we think about it like that as well.

M&A feels so sexy, but when you come right down to it, you've got to really look at focus, return on invested capital, what's the best path to really gain the market share you think you deserve.

That makes a lot of sense, and that's really helpful. I wanted to get a question in on supply chain. From different perspectives, there's a lot of focus on potential inflation coming through the system and all sorts of places. How -- are you guys seeing any kind of bottlenecks in securing lenses? How are your suppliers doing this? Are there bottlenecks from ports? Is anybody raising prices downstream? Would you maybe have to raise some prices going forward?

Yes. And hats off to our product group here for their planning and their management of this. I go all the way back to when they really sort of were on their game in mid-2019 and the tariffs were raising, they're rearing their heads. And we sort of bought in inventory to be prepared for whatever might happen there, and that held us in good stead in that way. And just as you'd imagine with just macro uncertainty, we're sort of gradually diversifying some of our frames, manufacturing outside of China just to provide us with options. But the short answer, Robby, is our supply chain is nice and solid and no drama and very consistent, and we plan ahead. And there's no drama on the lenses, no drama on the frames and no drama on the contact lenses. Safe, secure, not something we discuss around here because it's been under control and well managed.

That's very helpful. And I think another follow-up question, Patrick, I think you mentioned advertising will probably come back on. You guys have had some great TV campaigns in the past. The way you spend the advertising money, could that be changing going forward, more digital or more other things you could still be doing?

Right. So I grew up as a marketer, and I'd like to say, I was a really good marketer back in the mid-'90s. I was like really on top of it there. If I had to sort of talk about the history of our marketing efforts of recent years, let's say, let's call it 2014 or so, I would say we were really good at the traditional advertising. We broke our ad campaign in 2015. That was a probably the best ad campaign in optical for the past decade, and we're still running that campaign, but traditional TV, network TV and local TV with that. And we're very good at that traditional side, and we are very good at sort of the bottom of the funnel, Google ad spend pieces. But I would say it wasn't until late 2019, early 2020 that we really had the sort of digital marketing horsepower. And again, let's put the flag in the sand at early 2020 that we had the digital marketing horsepower and really understanding of full-funnel marketing from the broadcast TV at the top through sort of streaming video and the social and all the online options, the retargeting, et cetera, all the way down to the Google ad spend. And we are now much better full-funnel marketers. We are -- our marketing spending is much more digital than it was. There's still a strong presence for America's Best especially of network TV, but we are far more full-funnel marketers. And I would say that we have -- we are now in the more modern world of digital marketing than we had been prior to 2020. And I'm pleased with it, and it's an exciting -- yes, it's about time. And quite honestly, I look back and say, wow, look how well we are doing when we are probably a little behind the curve on that during the 2015 to 2020 period.

That makes sense. We're running out of time. But actually, Reade, I wanted to ask just one quick more -- one quick question. The ESG is pretty important to Bank of America. We've got a dedicated research team on it as well. Can you highlight some of the ESG initiatives that you guys are doing?

Yes. And thank you for that, Robby. It's funny, as a company, it's been key to our DNA to provide low-cost health care and low-cost glasses and contact lenses. So we consider ourselves sort of the front line of American health care in that most of our patients are uninsured. They're intimidated by medical buildings, but they're happy to walk into America's Best store next to a Marshalls in a strip center. That's not intimidating for them. And so we've always felt like at our core, our product has positive social ramifications. We have always had initiatives in the area of providing eyeglasses to especially children in need around our stores who could not afford glasses otherwise. And school nurses programs have been a part of who we are for the past 2 decades. And we've been extremely involved in a variety of efforts to bring eyeglasses to the world's poor in India and Bangladesh and Latin America to the tune of playing a role in helping millions of people to get glasses around the world. And again, key part of who we are, but we have not traditionally done sort of a lot of the more formal aspects of ESG. And we started that a few months ago. We brought in a wonderful firm to help guide us in that area and where we've done a materiality assessment, and we're doing various assessments of our environmental footprint. And so you'll be seeing, along with the parts that have been our DNA for a long time continuing, you'll see much more formal reporting of the metrics that are so important to ESG investors to be able to benchmark our efforts versus others. So we are still early in the formal journey. We've always felt that being a responsible corporate citizen is core to working in the modern world in an outstanding manner. So you'll be seeing more and more on that, but we're off on the journey and learning and enjoying it as we go. And it fits who we are very well. Thank you for that question.

That's great. Well, thank you. We've run out of time. Reade, Patrick and David, thanks so much for participating in the conference.

Robby, thanks for having us. Always enjoyable.

Thank you, Robby.

Yes. Bye.