Oxford Industries, Inc. (OXM) Earnings Call Transcript & Summary

Thanks, and good afternoon, everyone. I want to start by reminding those listening that some of what we say on this call, including during the Q&A portion, could be considered forward-looking statements under the federal securities laws. Such statements aren't promises, and what actually happens may end up differing materially from what those statements express or suggest. The key factors that might cause our actual operating results or financial condition to come out differently are covered in the press release we put out earlier today, as well as in the documents we file with the SEC, which includes the risk factors in our Form 10-K. We're not obligated to revise any forward-looking statements. We'll also be talking about certain non-GAAP financial measures today. A reconciliation between non-GAAP and GAAP financial measures appears in our press release from earlier today, and you can find it under the Investor Relations tab at oxfordinc.com. Now let me introduce who's joining us on the call. Here with me are Tom Chubb, our Chairman and CEO, and Scott Grassmyer, our CFO and COO. I appreciate your time, and now I'll hand things over to Tom Chubb.

Good afternoon, and thank you for being with us today. As we move further into fiscal 2025, the second quarter delivered developments that were complicated yet clarifying for the narrative we started telling you last quarter. The macroeconomic backdrop is still under pressure — characterized by increased tariffs, heightened promotional activity throughout the industry, and consumers behaving cautiously — yet our team has steered through these obstacles with discipline and focus, landing net sales inside our guidance range and adjusted EPS above it. Although these results are lower than a year ago, they demonstrate our capacity to respond to shifting market conditions while remaining true to our identity as a company and preserving the strength of our brands and our margin profile. Examining how each brand performed recently, Lilly Pulitzer sustained its strong bond with its core consumer during the second quarter and generated positive direct-to-consumer total comparable sales, extending the robust engagement seen in the first quarter. One major factor behind that momentum in Q2 was the exciting innovation we brought to our casual assortment, among it the linen sea spray jacket, which sold out in every color, plus an expanded selection of elevated everyday items, among them polished shorts, silk tops, and new stretch twill pants, all of which did extremely well. Carrying forward the idea of connecting with the brand's most devoted shoppers, early in the third quarter Lilly Pulitzer introduced the much-anticipated Lilly's Vintage Vault, which premiered Lilly Zoo — a reproduction of a cherished archival print dating to 1974, rendered in its original colorway; this limited edition capsule marks the first in a series that explores Lilly's hand-painted print legacy as the brand begins a fresh celebration of its treasured heritage, attracting both Lilly loyalists and new customers. Although it's still early, the initial reaction to the Vintage Vault has surpassed our expectations and confirms the strength of heritage storytelling and brand authenticity — the foundations of Lilly Pulitzer's lasting success. Now to Tommy Bahama. Although our second quarter results fell short of the brand's goals, we're encouraged by the efforts underway to turn performance around. As they always do, our teams have stepped up, getting out into the field, hearing from our customers, and examining the data closely to figure out what's behind the softness. What we discovered is heartening because it can be acted upon; we've determined that certain spring and early summer deliveries missed the mark in a number of areas — above all in color assortment and how complete the line was — creating gaps in the offering that matter especially to our customer in Florida, where results remain under our expectations. In contrast, performance was better in the West, where the assortment connected more strongly with the regional aesthetic; these findings energized our team, and we moved quickly to make improvements for late summer deliveries so that what's available to our customers is curated more thoughtfully and relevant to local tastes. Tommy Bahama possesses outstanding customer devotion along with a lifestyle narrative that connects deeply; provided we make the proper tweaks, we're confident about getting performance accelerating again and bringing our shopper back into the fold more meaningfully during the back half of the year and afterward. One strong illustration of what's clicking right now would be the just-released Boracay Island Chino. That refreshed trouser — which extends the remarkable goodwill built through our initial Boracay line — carries a steeper retail tag at $158, yet demand hasn't eased up at all. Sell-throughs have run extremely high both through our company's direct-to-consumer outlets and among wholesale accounts, who've been bumping up orders lately after seeing that early traction. We understood from the outset that once Boracay buyers discover a cut they adore, their allegiance runs deep, and this item has connected straight into that devotion. It brings the ease, adaptability, and refinement that characterize the Tommy Bahama way of life, doing so in a manner that's plainly striking a chord with both current and fresh shoppers; we'll be rolling out additional iterations of this trouser, among them a five-pocket style plus shorts, over our coming seasons in order to ride this wave. Shifting to Johnny Was, difficulties persist and the brand stayed under strain during Q2. Even though results fall short of our targets, our confidence in what Johnny Was could become hasn't wavered, and we're pursuing additional steps. Collaborating intimately with in-house groups as well as outside partners, we've crafted — and have begun, at an early stage, putting into place — a thorough blueprint aimed at lifting Johnny Was's results. We perceive substantial room to sharpen merchandising approach, boost brand narrative and marketing efforts, and hone how we handle customer segmentation along with pricing. What we're after is restoring forward motion at this gorgeous, one-of-a-kind label and making certain it adds real value to Oxford's overall portfolio. Toward that aim, we hold the view that Johnny Was's finest chapter has yet to arrive. Let me also pause to recognize how our Emerging Brands Group performed, posting healthy top-line expansion driven by both additional locations and comparable store gains amid what stays an extremely tough backdrop. These labels — Southern Tide, The Beaufort Bonnet Company, Duck Head, and Jack Rogers — remain at an early point in their evolution inside our portfolio, yet keep proving they draw customers strongly and carry real brand energy. The expansion we're witnessing only strengthens our conviction that considerable room to grow lies in front of us, and we're eager for the chance to develop these labels into still greater contributors down the road. Now shifting toward our efforts to offset tariffs and our capital investments, we stated during the prior quarter that we'd keep managing whatever falls within our control, and that's exactly what we've done. Tariff exposure has been meaningfully reduced by our teams via ongoing supply chain repositioning and by arranging for goods to arrive sooner so as to sidestep rising tariffs, and our gross margins — despite facing certain pressure relative to a year ago — mirror that rigor. We've made moves as well to protect profitability, strengthening how we handle inventory and holding firm on pricing, even as retail gets more promotional. Meanwhile, we're still dedicated to finishing the long-term investments already in motion, which will benefit us well past this fiscal year. Our distribution center in Lyons, Georgia is proceeding as planned and keeps getting the capital it needs to be fully operational at some point late in fiscal 2025 or early in fiscal 2026; we're likewise still set to open three new Marlin Bars and add a net of roughly 15 full-price stores throughout our portfolio by the time the year ends. The landscape is still shifting, but what we're seeing early in the third quarter gives me encouragement. Scott will share more on our financial results and the outlook for the rest of the year. Quarter to date, total company comp sales are slightly positive, in the low single-digit range, a clear sign that our teams' efforts to refine the assortments, improve storytelling, and reconnect with our consumers are starting to deliver. Results like these come from listening closely, adjusting thoughtfully, and executing with discipline. Without question, this is a difficult stretch for our industry, yet we believe our portfolio of differentiated lifestyle-driven brands, guided by our outstanding teams, is uniquely positioned to endure the volatility. As we enter the second half, we're intensifying our focus on the brand equity we've built, keeping our sights on the long-term horizon while tackling short-term headwinds with determination. We stay confident that our ongoing emphasis on execution, brand authenticity, and customer happiness will let us come out of this cycle stronger, with even deeper connections to our customers; now, I'll turn it over to Scott for more on our second quarter results and what we expect for the balance of the year. Scott?

Thanks, Tom. As Tom pointed out, our teams demonstrated remarkable discipline and resilience when facing extraordinary uncertainty and difficulties tied to trade and tariff matters during the year's first half. Even with those difficulties, our teams managed to produce top-line results that fell inside the guidance range we had previously issued, along with bottom-line results that came in slightly above the guidance range we had previously issued for Q2. During the second quarter of fiscal 2025, consolidated net sales reached $403 million, versus $420 million in the same period of fiscal 2024, landing close to the midpoint of the $395 million to $415 million guidance range we had given. At our full-price brick-and-mortar spots, sales dropped 6%, pushed by a negative comp of 7%, partly offset by new store locations being added. Our wholesale channel saw a 6% sales decline, e-commerce sales fell 2%, and outlet location sales were down 4%. Compared with our other channels, food and beverage locations did better, posting modest year-over-year sales growth. All told, we closed the second quarter of fiscal 2025 with a total company comp of negative 5%, matching the guidance we had for that quarter. Worth noting, Lilly Pulitzer enjoyed another solid quarter. Although total sales at Lilly Pulitzer declined modestly versus the prior year, that drop came from lower wholesale channel sales, partly offset by a low single-digit positive comp. The positive comp sales at Lilly Pulitzer, together with positive comp sales and overall sales growth across our Emerging Brands businesses, helped counter the high single-digit negative comp at Tommy Bahama and the low double-digit negative comp at Johnny Was, which caused sales declines in both of those businesses. Adjusted gross margin shrank 160 basis points to 61.7%, driven by roughly $9 million of higher cost of goods sold from additional tariffs put in place in fiscal 2025, net of mitigation efforts, which was partly offset by better gross margins during promotional events at Tommy Bahama, a shift in sales mix with full-price retail and e-commerce sales making up a larger proportion of net sales at Lilly Pulitzer and Johnny Was, and a shift in sales mix with wholesale sales accounting for a smaller portion of net sales. Absent the effect of the incremental tariffs, our gross margins would have gone up. Adjusted SG&A expenses rose 5% to $224 million, compared with $213 million last year, with roughly $4 million, or 40%, of the increase attributable to higher employment cost, occupancy cost, and depreciation expense from opening 26 net new brick-and-mortar retail locations, among them three new Tommy Bahama Marlin Bars since the second quarter of fiscal 2024. That figure includes the 11 net new stores, among them two Tommy Bahama Marlin Bars, opened during the first half of fiscal 2025; we also took on pre-opening expenses tied to some planned new stores, including one more Tommy Bahama Marlin Bar set to open in the fourth quarter. This led to adjusted operating profit of $28 million, which works out to a 7% operating margin, versus $57 million of operating profit, or a 13.5% operating margin, a year earlier. The drop in adjusted operating income comes from the effect of the investments we've made amid a tough consumer and macroeconomic backdrop. Turning from operating income, our adjusted effective tax rate came in at 29.6%, above what we had expected, because of certain discrete items — chiefly the unfavorable hit to tax expense tied to the yearly vesting of stock-based awards in the quarter, which happens when shares vest at a price below the amount expensed for both purposes. Interest expense ran $1 million above the second quarter of fiscal 2024, driven by higher average debt levels. Taking all of that together, we finished with $1.26 of adjusted net earnings per share. Now I'll turn to our balance sheet, starting with inventory. In the second quarter of fiscal 2025, inventory rose $27 million, or 19%, on a LIFO basis, and $29 million, or 13%, on a FIFO basis, against the second quarter of 2024, with gains in every operating group other than Johnny Was, largely because of the effects tied to the U.S. tariffs put in place in the first half of 2025, including accelerated inventory purchases made to try to soften the blow of possible upcoming tariff increases, plus $5 million of higher costs capitalized into inventory following the tariffs' implementation. Importantly, now that the tariff picture has settled somewhat, at least relative to the start of the fiscal year, we anticipate inventory levels coming down over the rest of the year, apart from any further capitalized tariff cost, as the need to speed up inventory buying fades. We closed the quarter with long-term debt of $81 million, against $118 million last quarter and $31 million at the close of fiscal 2024. Cash flow from operations supplied $80 million in the first half of fiscal 2025, versus $122 million in the first half of 2024, mainly because of lower net earnings, shifts in working capital needs, including accelerated inventory purchases, and $15 million of expenditures for implementation costs related to cloud computing arrangements that are classified as operating cash outflows; we also had $55 million of share repurchases, capital expenditures of $55 million, mostly tied to the Lyons, Georgia distribution center project and the addition of new brick-and-mortar locations, and $21 million of dividends, which pushed our long-term debt balance up since the start of the year. I'll now take some time on our updated outlook for 2025. Comp sales figures in the third quarter to date are positive in the low single-digit range, also consistent with our expectations. Since our comparable sales results for the second quarter and for the third quarter so far line up with the outlook we gave earlier, and with a number of the third quarter's biggest events now completed — among them the Tommy Bahama Friends and Family sale — we have confidence in reaffirming the guidance we previously issued for the rest of the year. In line with that earlier guidance, we anticipate that comparable sales will keep running from flat to slightly positive through the balance of the third quarter and into the fourth quarter. Looking at the whole year, net sales should land somewhere between $1.475 billion and $1.515 billion, which works out to a decline of 3% to just slightly negative against the $1.52 billion we recorded in fiscal 2024. Our 2025 full-year sales plan, matching the guidance we put out before, factors in declines in our Tommy Bahama and Johnny Was segments, mainly the result of negative comps. Growth in our Lilly Pulitzer and emerging brand segments should blunt that decline, coming from positive comps as well as new store locations. Turning to distribution channel, the sales plan calls for a low single-digit decrease in e-commerce and wholesale sales, partly offset by a low to mid-single-digit increase in our food and beverage channel, which will get a lift from three new Marlin Bar locations opening during the year. In full-price retail and outlet, we anticipate flat sales, as modest negative comps are offset by roughly 15 net new locations added over the course of the year.

Looking ahead to fiscal 2025, our expectation remains that gross margin will shrink by roughly 200 basis points. The main reason is tariffs, especially the newer increases announced in Q2 — among them higher duties in places such as Vietnam and India, which had become part of our move away from China. Those pressures are being mostly offset by the steps we've taken to lessen the damage, like pulling in inventory sooner and reworking our sourcing footprint quickly. Even with the recent legal disputes, what we're forecasting right now assumes such tariffs stay in effect through the rest of the year. Drawing on present tariff rules and how we sourced in 2024, we figured an extra tariff hit of about $80 million could land in fiscal 2025 before counting any mitigation moves, whether faster receipts, sourcing changes, vendor givebacks, or price hikes. Pulling receipts forward and switching sourcing let us offset close to half of that figure. Thanks to further vendor givebacks and chosen price rises in the back half, our annual guidance today shows a net tariff effect of about $25 million — $35 million, equal to roughly $1.25 to $1.75 per share after tax. Tariffs are the biggest reason margins are tightening this year, yet we also anticipate ongoing promotional efforts across our brands holding margins down, since shoppers still react strongly to value and bargain-focused buying right now. Beyond weaker sales and gross margins, SG&A should rise in the mid-single-digit range, mostly from the effect of our recent and ongoing business investments, which include the full-year cost of added SG&A tied to the 30 net new locations opened in fiscal 2024 plus added SG&A from roughly 15 net new locations coming in fiscal 2025, among them three new Tommy Bahama Marlin Bars — two that opened in Q1 and a third set to open late this year on the Big Island of Hawaii. Within operating income, we also anticipate royalties and other income coming in about $1 million lower in fiscal 2025. On top of that, our fiscal 2025 guidance bakes in the negative effect of non-operating items, among them $7 million of interest expense versus $2 million in 2024, which works out to an incremental EPS impact of about $0.20 to $0.25. Higher debt levels in fiscal 2025 stem from our ongoing capital expenditures on the Lions, Georgia distribution center, technology investments, and returning capital to shareholders, all of which outpace cash flow from operations; we likewise project a higher adjusted effective tax rate of about 26% — 27%, up from 20.9% in 2024. That larger tax rate comes mainly from a major shift in how our annual stock vesting affected stock compensation expense in 2025 relative to 2024. We expect this elevated tax rate to produce an impact of roughly $0.20 to $0.25 per share. When we take into account all of those factors — the $1.25 to $1.75 tariff hit, greater interest costs, and a higher tax rate — our 2025 adjusted EPS guidance remains $2.80 to $3.20, against $6.68 in adjusted EPS a year ago. For the third quarter, our sales outlook is $295 million — $310 million, versus $308 million in Q3 of 2024. The main driver here is a high single-digit drop in wholesale sales, partly offset by our assumption of flat to low single-digit positive comps plus the contribution from non-comp stores. Gross margin should also shrink by roughly 300 basis points, largely because of added tariffs and a bigger share of net sales landing in promotional and clearance periods. SG&A should rise in the low to mid-single-digit range, mostly tied to new store locations, along with $1 million more in interest expense, flat royalty and other income, and an effective tax rate near 25%; the resulting third-quarter adjusted loss per share should land between $1.05 and $0.85, versus a loss of $0.11 in Q3 of 2024. Now I'll cover our CapEx outlook — capital expenditure outlook for the rest of the year, which is largely in line with what we previously guided; we anticipate roughly $121 million in capital expenditures for the year, against a total of $134 million in fiscal 2024. The rest of that spending goes toward finishing the new distribution center in Lyons, Georgia, plus executing our pipeline of new stores and Tommy Bahama Marlin Bars, which includes growing store count at Tommy Bahama, Lilly Pulitzer, Southern Tide, and The Beaufort Bonnet Company; once the Lyons, Georgia project wraps up, we expect this elevated level of capital expenditures to come down significantly in 2026 and beyond. As is normal given the seasonal pattern of our business, outstanding borrowings should climb as we move into the third quarter, which tends to be our smallest quarter of the year. Given lower net earnings in fiscal 2025, high capital expenditure levels, the share repurchases we finished in the first half of 2025, our dividend payment, and working capital requirements, we anticipate staying in a debt position through the rest of the year. Thanks for your time today — we'll now open the call for questions. Julian?

Hello, and good afternoon — I appreciate you taking our questions. To begin with, you said that comparable store sales have been running positive for the quarter so far. Could you expand on what you think is behind that momentum, or what you're observing in terms of traffic or transactions? Also, is there anything to share at the brand level? Thank you.

Yes, thanks, Ashley. Comps for the quarter to date are positive. Every one of the brands has contributed to that. Lilly remains positive. Tommy Bahama is roughly flat right now, though that marks a big improvement over where it stood in the first and second quarters. That's been really encouraging for us to watch. I'd characterize it as primarily driven by traffic. Through the first two months of the second quarter, traffic was really our problem. Conversions, by and large, held up fairly well. Average order values were in fact solid and even rose somewhat in the second quarter. Once we reached July, traffic began to come back a little, and that carried on into August. I believe that's the pattern pretty much everywhere. As I mentioned, we're posting good comps at Lilly Pulitzer. Tommy Bahama is in a far stronger spot than it was in the first and second quarter, and their business also began improving in July, then kept going in August, in particular. What we're seeing there has us feeling encouraged, Ashley.

All right, that's helpful. One more question, this time about promotions. The climate is still unpredictable, I realize, and you said you expect margins to come under strain both from tariffs and from shoppers hunting for deals during promo windows. Are you approaching anything differently when it comes to mapping out your promotional schedule for the second half of the year, and are there any distinctions across the brands? Thanks?

My sense is that for the most part, we'll stick with the patterns we've seen historically; naturally, we always aim to stay flexible and respond as circumstances evolve. I don't believe we have any significant changes planned relative to how we've done promotions before. It's simply that, as you pointed out, Ashley, we anticipate a larger share of sales occurring in those windows, since our read is that many shoppers are essentially holding out for those chances. If you examine the second quarter, it was a heavily promotional climate, and tariff pressure was certainly a factor, but you likely heard Scott mention this. Without that tariff pressure, our gross margins would have risen versus the prior year in Q2. I believe we're applying considerable discipline, acting prudently, and working to protect pricing and brand integrity as much as we can, while also weighing the requirement to clear inventory and bring in revenue. Scott, I'm not sure whether you'd want to add anything there.

Yes, regarding promotional activity, the sole adjustment was with Tommy Bahama's Friends and Family event — we moved it from September, specifically early September in the prior year, to August in the current year. That shift delivered solid results for us, so we believe it was the correct decision. Beyond that, the events were largely of the same nature.

That is all within the same quarter.

Yeah, yeah.

As Scott mentioned, I believe we're of the view that it likely proved to be more successful.

Sure.

Alright, that's really useful insight. I'll share it with the team, thanks.

Alright, thanks, Ashley.

Hi there, appreciate you fielding my questions. It stood out to me that you could keep the gross margin outlook unchanged despite that extra $80 million of tariff pressure; sounds like a portion of that comes from additional price hikes. I'd like to understand how you're approaching pricing, how your thinking has shifted because of tariffs, and what results you've seen so far from the increases you've already implemented. Thank you.

As Scott put it in his remarks, these have been select price increases; we haven't taken anything resembling a blanket approach to pricing. Each item has been evaluated individually, weighing the goal of shielding our margins and recouping part of the tariff hit against the risk of moving too early, since that tariff figure, as you're aware, Janine, remains quite uncertain. We feel fairly confident that 2024's tariff levels won't hold and some additional tariffs will land, yet the specifics are still unclear to us. So we're deliberately avoiding getting ahead of the situation. Broadly, our approach has centered on recovering gross margin dollars through the rest of this year. Then, once spring 2026 arrives, that's when it truly takes effect, as we aim to recoup gross margin dollars rather than the percentage rate. Typically, this translated into roughly low to mid-single-digit or low mid-single-digit price increases, somewhat larger for spring at Lilly Pulitzer, and I'd say overall you're seeing a combination of tariff-driven price increases alongside, in certain instances, shifts in mix contributing to that. Take the new Boracay Island Chino I referenced earlier as an illustration of raising prices without, in my view, hurting ourselves too badly. It now costs $158. Previously, the Boracay sold for $138. At $158, that works out to roughly a 14.5% bump. The product is meaningfully better; we earn full margin on it while offsetting the added tariffs tied to it, and customers don't seem bothered. My sense is that since it's new, innovative, distinct, and superior, they accept the higher price. With that item, we capture both the margin dollars and maintain the percentage. For other products already in our lineup, we're proceeding carefully, avoiding too large a price jump until we have clarity on how everything shakes out.

That's useful. Perhaps just one additional question about gross margin. You mentioned better gross margin driven by promotional activity at Tommy Bahama. Could you say a bit more about what that involved, and whether it's the kind of thing you can count on again, especially when you weigh it against your outlook for additional promotions or shoppers concentrating their buying around those major events.

I'd say one factor was that we ultimately moved a greater amount of merchandise at full price while the promotion was running.

Right, our inventory was simply lower, and with the end-of-season sale, we had fewer goods available to move. The market's level of discounting also wasn't as intense.

Okay, thank you very much, and good luck.

Thanks, Janine.

Good afternoon, everyone. Tom, I believe a few calls back, you brought up the competitive landscape in relation to tariffs and mentioned that certain rivals wouldn't even be producing some of their lines because of how tariff pricing has shifted. What are you observing now? Is that allowing you to take share? Looking ahead to the coming holiday period, Scott, perhaps you could share how you're approaching marketing dollars and new offerings to spark engagement? And finally, regarding the comp breakdown, what did you notice on the DTC side, from both the online channel and your own stores? Thanks.

Alright, I'll take those in reverse sequence. I'd say that across the quarter, foot traffic — our retail locations were comparatively better than e-commerce, if that tracks. We did experience some softness on each side over the quarter, though relatively speaking, I'd characterize stores as stronger than e-com. Honestly, I think that lines up with what we keep hearing from plenty of other companies that report — physical retail appears to be showing somewhat more momentum than online. As for those competitors who might not be putting out a line for resort season and could be taking more drastic steps on spring pricing, those are largely private companies we're referring to, if not entirely; we aren't seeing much disclosure from them at this point. What I'd say is that I do believe we're maintaining and even picking up share within our wholesale channels, which is the area where we can actually measure it, with the caveat that on the whole, that market is being extremely careful about their forward commitments. The broader market isn't truly expanding, yet I think we're doing well and are receiving — and will continue to receive — some credit for that. I'll toss in one more remark on this, even though it wasn't precisely your question, which is that one of the earliest signals we get regarding how consumers will respond to our pricing is how wholesale accounts react to it; they've been incredibly, incredibly favorable about the approach we're taking with pricing. For me, it's ultimately still the consumer who will decide that, but those merchants at those wholesale accounts are highly skilled, talented, seasoned individuals. If they're responding positively to how we're approaching pricing, my guess is the consumer will likely respond quite well too. Scott, I'm not sure whether you'd want to chime in on any of that, or whether I overlooked something.

No, I think you got it. I think you covered it.

Great. Is there anything else, just as a follow-up regarding the marketing outlook for the fourth quarter — how are you getting ready for Q4?

I believe we're going to do many of the same sorts of things that we've done before. Around the holidays especially, there are a couple of initiatives I'd rather not reveal just yet, since they'll include a few small variations. If you'll permit me, I'd truly prefer not to give that away.

And finally, could you give us some color on the consumer?

Dana, what we're describing here is really just the tactics. From a broader perspective, I don't believe things look all that different, though a number of the particular tactics we plan to pursue, I'd say, will differ somewhat from those we've employed previously.

Understood. Then regarding wholesale partnerships — is there anything you're noticing that's different about them, and how you're approaching the planning for them?

Having genuinely strong partnerships matters a great deal, and that's what we have with our very best customers. Our relationships with them are extremely tight. We put a lot of effort into creating businesses together that succeed for both sides and turn a profit for both sides. That portion of the business is something we truly enjoy, and in my view, having partnerships of that kind matters more now than it ever has. While this period is difficult for everyone, ours are generally in better shape than at any point before.

I appreciate it.