Ulta Beauty, Inc. (ULTA) Earnings Call Transcript & Summary

Good morning, everybody. My name is Chris Horvers, I'm the broadlines and hardlines retail analyst here at JPMorgan, and welcome to our 7th Annual Retail Roundup. We started as a small event as virgins and we have a full-blown conference this year. So thank you for joining us, and we look forward to next year, hopefully, doing some of this in person. It's my pleasure to have with us the Ulta management team, including President and CEO-elect, Dave Kimbell, for a first set of meetings since the big news of his assumed succession to the CEO seat as well as Scott Settersten, CFO; Chief Store Operations Officer, Kecia Steelman; as well as Kiley Rawlins and Patrick Flaherty from Investor Relations. Thank you for all your participation. In terms of this format, it's fireside. Dave is going to start with some opening remarks. I'll do questions, but we will reserve some time at the end when you can ask direct questions to the management team, there are 2 options. One can use the raise hand feature, where you will ask questions directly or you can use the Q&A feature at the bottom of the screen, where we'll actually pose that question for -- to management, anonymously, and you can signal at any time. So with that, let me pass it over to Dave.

Thanks, Chris, and thanks, everyone, for joining today. I really appreciate your time and your interest in Ulta Beauty. Before I get started with our chat, I just want to take a few minutes to provide some comments about the leadership transition we announced a few weeks ago and an overview of the steps we are taking to position Ulta Beauty for the future. I am, of course, excited and grateful for the opportunity to become Ulta Beauty's next CEO, and I'm looking board leading with both Scott and Kecia, and the rest of our exceptional executive team and service of Ulta Beauty our associates, our guests, and of course, our shareholders. As President, I've worked very closely with Mary Dillon and the entire executive team, to build our culture, to strengthen our guest engagement and to develop the company's strategic plan. Of course, our strategies have and will continue to evolve, but we feel that we're operating from a position of strength. So you shouldn't expect a radically different approach to the business or strategies under my leadership. Fiscal 2020 was, of course, a difficult year, but our teams met the challenge with agility, creativity and unwavering focus on serving our guests. As a result, we feel we began 2021 with a strong foundation from which we can accelerate our growth and shape how guests experience beauty in a post-COVID environment. We feel like we're strongly positioned to thrive going forward, and I'm very confident our team will continue to lead with creativity, passion and continued care for each other and for our guests, while leading the beauty industry and continue our efforts to be the definitive leader in the industry. And before I turn it over to Chris for our Q&A, I do want to just give a quick update on our current business trends. In addition to good growth in our e-commerce business, we continue to see nice momentum in our stores. As a result, our first quarter comp trends quarter-to-date have been higher than we initially planned. While we believe stimulus payments are driving a portion of the strength, we also believe the relaxation of restrictions and increasing consumer confidence have positively impacting consumer spending. We are encouraged by sales trends we've seen so far this quarter, but recognized the recent strength may be transitory. We'll provide more color on the category and channel performance when we result -- when we report our results for the first quarter in May, and I look forward to sharing more details with you. So with that, Chris, why don't we turn it over to questions.

Excellent. Thank you. I appreciate that introduction. Dave, segueing off of what you just said, you've been a key architect of the Ulta strategy since you joined the company, obviously, and you've been promoted up to line to CEO. But with any change, there's always opportunity for change in strategy. So where do you see opportunities to change your broader strategy? To what degree do you think change is needed? And do you expect any sort of step-up in investment once we get through this COVID period?

Well, I'll start by saying that we're a 31-year old company, and we've had a long history of success that has been built off a foundation on which we were founded, which was to really deliver a unique experience in beauty that allows our guests to discover beauty and experience beauty on their own terms, to find the possibilities within themselves through the power of beauty. And that's been our mission for a long time and will continue to be going forward. And I, along with Kecia and Scott have been actively part of shaping the path that we've been on, our core strategies, the way we're delivering for our guests and the culture that we're building. So as I mentioned in the remarks, we -- you shouldn't expect all of a sudden, a radical shift because we don't think the business needs it. We feel very confident about the performance that we've had and the foundation we've built and the path ahead of us. But of course, we're in the middle of a highly disruptive period that demands that we make sure that we continue to evolve. Our guest experience continue to evolve our strategies, make sure our culture remains highly connected with our over 30,000 associates across the country so that we can continue to lead the category, define the future of beauty. So a few things I might highlight, Chris, just a big areas of focus, and they probably won't be a surprise, but they're -- we believe that they will define the next 5 to 10 years of the category, if not longer. Of course, all things omnichannel are high on our list. We've long had of strengthened our stores. We're very proud of the performance, the way our store associates show up every day to deliver a great experience. By the end of the year, we'll have close to 1,300 stores plus stores within Target. So we're excited about the future of physical retail. But at the same time, our e-commerce business has dramatically increased. And so continuing to find those connections will be a big part of our future strategy. We feel proud of the results that we've had, but believe that there's more opportunity for us to continue to find ways to service our guests whenever, wherever they want to, and we feel we've got a number of key steps that we'll be taking in order to drive that. So that would be an area for sure of continued evolution of our strategies and a big focus. Second area I would just highlight is around our members. So we have a loyalty program of over 30 million guests, something we're incredibly proud of. We believe it's really best-in-class. [indiscernible] our guest experiences better than we think than anybody. So we've got -- and again, just like omnichannel, we'll announce here probably [indiscernible] as we think of more personalized approaches to continue to excite our guests, both in-store, online, in our salons, in our app and all other touch points. So a big, a big focus on that. And then the third thing I would just highlight is just a continued focus on operational excellence. And I'm thrilled to have Kecia as a partner here as she steps into the Chief Operating Officer role. She is just perfectly positioned to help lead the effort for us to raise just effectiveness, efficiency and profitability across the company, really with every touch point. She brings such a diverse level of background and experience. So we're examining now, and Kecia and others have been leading this effort to look end-to-end across our operation to continue to find efficiencies and focus areas. So I guess I sum up by just saying, yes, we feel good about the path, really confident in the foundation though, and so we're not going to shift off of the core elements that have made us unique and special in the marketplace. But clearly, continuing to evolve on some of those key drivers that we know will be required for us to continue to lead the industry in the future.

Excellent. And so as a follow-up to that, especially in light of the Target announcement, how are you feeling about your existing store target? I think it's 1,500 to 1,700 stores. And you've backed off on Canada in the height of COVID. How are you thinking about that opportunity from a long-term perspective as well?

Well, so from a store standpoint, again, we feel very confident in the -- our targets that we've laid out in this 1,500 to 1,700 stores. We're really confident in the future of physical retail. And the reason we're confident is we continue to both see in -- as we've emerged out of COVID and see behaviors that our guests are coming back in the store. But all of our research continues to suggest that while digital and e-commerce will play a bigger and bigger role in our guest total experience with Ulta Beauty, we know that the primary source of engagement and the highest level of service that we'll be able to live, the human experience that we'll be able to live, happen in our stores. So very confident in the future of physical retail. We are continuing to examine as we always do, how many stores and what formats. The addition of Target gives us a whole new avenue to reach guests. So we'll continue to evolve our thinking. We announced at our earnings call that we'll be having an Analyst Day in the fall, and so you could expect to hear any updated thinking about specifics. But for sure, we believe there's a lot of opportunity to continue to grow the number of stores and the connection that we have. At the same time, we're investing in our e-commerce business. As far as Canada, we're -- as we -- as you know, we paused that effort. We're really -- we really believe that, that was the right decision. We're glad that we made that decision. As we entered into COVID, we felt like we really needed to focus our efforts on the U.S. business. We saw the disruption coming. Obviously, we're in the disruption. And we felt like concentrating our efforts, concentrating our resources on our core business to really take advantage of the full opportunity that we clearly see in the U.S. was our immediate focus. It doesn't mean over time that we will not explore or consider international opportunities, but for the foreseeable future, a focus in the U.S., we think is the best use of our efforts and our investment and because -- largely because we see a large runway for us to continue to gain share and grow our business.

So it's a good segue. Prior to the pandemic, 83% of customers only shopped in stores. She shops across brands, she shops across categories, prestige versus mass. Do you think COVID changed this? And how do you think about the long-term e-commerce mix in the business?

Well, certainly, COVID will change a lot of things, and we're working hard to make sure we really understand the consumer dynamic. We don't go through what we've all been through over the last year-plus, and not have some lasting changes in our behaviors and how we engage with the world around us. So we are certainly anticipating change. We have been just hyper-focused on understanding and staying connected to our guests throughout this, tracking along with our guests to understand the ebbs and flows of their confidence and how they're feeling. And the consistent theme, week after week, as we do -- as we've done research, in connection with our guests, is while the current moment has changed their behavior, I mean, the most extreme example is we had all our stores closed for a while. So of course, they were shifting all their behavior online and -- but -- so even through all those times, the connection that our guest has with beauty, the role that beauty plays in our guests' lives, we think continues to be very strong. It's one of the reasons that I think Scott, Kecia and I love the beauty category is because of the emotional connection and the importance it plays in our consumers' lives and our guests' lives. And so that has stayed true. So as we merge out of this, as we do research, we continue to see the connection, the passion, the engagement, the interest in beauty despite the disruption remains really high. Then you layer in a desire to experience beauty in human terms, and that's particularly where our stores come in. A recent study came out with teens, and we ranked #1 with teens. It's their preferred retailer by a significant amount. One of the things that continues to be top of mind for teens is a preference to shop in store, and we think that's because of the role of beauty in their lives. So when you have an emotional category and a desire for human connections and exploration and discovery, we really feel confident that, that will stay true. Having said that, the -- we do believe that -- clearly, a desire and demand for more touch points and more ways to engage and experience Ulta across an omnichannel experience will be important. And we're really excited about it. The fact that we've had so many more millions more guests come and try our e-commerce business for the first time in 2020, not only helped us sustain through 2020, but also will fuel us in the future because what we see so consistently is when a guest taps into a different part of our guest experience, a store guest shopping online or trying our app or going to salon, their total spend increases, their total loyalty engagement. We get a greater share of wallet and we're seeing it with our e-commerce business. Last thing I'd say is that we also believe that we'll see it with our target business because it will yet be another omnichannel touch point, that by engaging them there, we'll be able to connect with them more holistically across the whole omnichannel. So certainly, we see guest experience evolving and guest expectation evolving, and we'll adapt to that. But that core underlying connection to beauty, we think, remains strong, which really bodes well for our business in the future.

Excellent. So maybe we can transition a bit and talk about some of the disclosure you provide upfront, which is very appreciated. And what you're seeing on the reopening side. So I guess how has the customer behavior change over the last few months as vaccination efforts sort of set in? Spring, people can get outdoors? And are you seeing different behaviors in states, like in the south, like Texas and Florida, which are further and long and frankly, don't have the master requirements that perhaps you can see in the northeast?

Kecia, do you want to take that?

Yes, sure. Well, I just so happen to have been visiting the Texas market last week. So I popped into a couple of stores in Austin. And even though the mass mandate has been lifted in the state, I'm still seeing mass being worn in our stores, in the grocery stores and people are being really respectful of each other. So Texas, well, it's a very strong market for us, we're strong across the entire U.S. right now with our business. As Dave was mentioning earlier, we're starting to see those trends, the consumer trends. People are ready to get out. There are some definite pent-up demand. And I think as the vaccine is starting to come through the U.S. a little bit more, people are ready to get out and look their very best stuff. So I was pleased with what I saw in Texas. I do see mask that we worn. I don't think that's necessarily as relevant as getting this vaccine through and having the confidence of going out safety in public. But we like what we're seeing right now. Trends have been still strong, I would say, the above the mask. But there's still a lot of newness and exclusivity and excitement. So when we have launches, we like what we're seeing. In 21 days Of Beauty, we had shape tape sealer that was a little bit more of a hydrating concealer. It was strongly received. There's a new lift technology with the NYX, that's this double wear, where it's sets your color, which the guest was responding really well to that, which makes a lot of sense because it's under the mask. And then Jaclyn Hill, we have an exclusive relationship with her. We're in 350 stores right now and online, and we like what we're seeing in regards to the response to the guests with cosmetics. So it's an exciting time. I think we're well-positioned to continue to take share as the states continue to reopen.

So as a follow-up to that, Kecia, one of the questions that we already received in Q&A is skin care versus cosmetics. How did that evolve as you got sort of further into last year? And more importantly, how is it evolving the consumer, particularly in the cosmetics, where, I think, from our perspective, we're expecting some sort of restock of the cosmetics draw. The further you get into reopening. So just curious how those 2 parts of the business are performing over time?

Yes. I'll start and then maybe flip it back over to Dave. But I will say that skin care has continued to grow and become a very relevant category for us. People investing in their self-care and their wellness and their skin care. I don't see that changing. I see that continuing to grow. It's going to be a part of consumer behavior going forward. I do think the upside potential is as color cosmetics and prestige cosmetics and mass cosmetics comes back, people are ready to kind of lam it back up again. So I do think, while skin care has been a big growth vehicle for us, I think it's going to continue to be growth for us. And I just think there was huge upside potential opportunity with color cosmetics.

Yes, I'll just add, Kecia said it well. We're very confident in the long-term potential of the color category. And we've been a leader in that. We've been continuing to gain share even through the pandemic. We think we're well-positioned to really lead the return to growth could make up have been struggling for a while. Pre-pandemic, pandemic certainly took another hit to it, but we think all the signs are pointing in the right direction. Question is, in our mind, as we'll make up kind of come back, it's just a question of when. And we're prepared, and we've got a lot of great newness. Kecia just said our store teams are ready to deliver, and we're confident in the path forward on makeup.

I just want to -- we talked a little bit about geography. I want to delve into a little bit on age demographics. It seems like some of the data that we see in the Chase credit card, millennials have been spending -- I think their spend has been above COVID since like the back half of the last year. Gen X has lagged. And it seems like what's really changed recently, and part of it's a comparison, is the baby boomer. So just curious, are you able to tease that out at all in terms of -- from the loyalty card perspective? How are you seeing the different demographics behavior over time? And is that baby boomer coming back?

Yes. Let me start in. I think one of the things that we're really proud of is we feel our business is built off the idea of beauty enthusiasts, not so much any individual demographic and beauty enthusiasts are everywhere, of all ages, all ethnicities, genders. I mean it's really a mindset and that we think is a -- how people want to engage in the beauty category. So we feel really good about our ability to connect across all ages and all demographics. We have had a strength across different parts of the business and continue to see connection. What we're proud of, I mentioned earlier, is the strength that we have with Gen Z, we think bodes really well. So in fact, we continue to gain share in connection and interest because of our assortment and our experience. But then with long ad as millennials have grown in their spending power, we continue to grow with them and play a key role. But then if you go into our stores, or certainly study our data, we see moms with their kids, all different demographics, all different ages, all different ethnicities. We're also really proud of our continued growth with African-American consumers, Latin X, Asian-American. We've really had a big focus and continue to push hard in making sure that we're delivering experience that reaches across all ages, all ethnicities, everyone because ultimately, we believe beauty is universal. Beauty -- everyone is welcome at Ulta to discover beauty on their own terms. And so with that, it does -- we think of it very much through this lens of beauty enthusiasts while we try to make sure we're focusing in on different groups. Our overarching theme and our overarching focus is this idea of beauty for all and making sure we're delivering an experience that reaches all of them.

Awesome. And then as you think about -- maybe try to tease out the stimulus side. You've had 3 periods of stimulus. A year ago, last April, sort of started to hit in the back half of this month right around now, your stores were closed. But then you had further stimulus in January, and then obviously, a big chunk of stimulus that started to hit around mid-March. So can you maybe talk about how much you think stimulus has sort of resulted in you being above where you had expected? Are you seeing sort of the behavior? Is there any interest in sort of product category behavior, January versus what you've seen -- what you saw in March and early April, in terms of what categories are being bought as sort of we've gotten further along? Is cosmetics getting more into the basket and so forth?

Yes.

So a broad question around stimulus impact.

Well, it is difficult for us to pinpoint the impact of stimulus in any of those time frames that you highlighted because like everything, there's multiple drivers of our business, whether it's newness or other promotional events or other activities. But as I mentioned in the remarks, we believe that stimulus is certainly having an impact on our business and contributing to the strength. And part of the reason that I discussed that we see our comp trends being stronger than we originally planned. And for sure, we believe the stimulus is contributing to that, in addition to some of the other relaxation of some of the restrictions and other core drivers of our business. So stimulus has -- continues as it's popped in over time over the different time frames. We believe beauty has been part of that, and we benefited from some of that. But again, it's really hard to exactly pinpoint consumer behavior and understand how they're behaving through that. As far as categories, I'm not going to get into a ton of detail other than -- as I said, we'll share more as we report our Q1 earnings, other than to say that we are seeing strength across the business, both online with -- as well as in-store and kind of a broad category strength. We talked in Q4, coming out of Q4 and the end of 2020, that we were seeing strength in skin care and haircare and fragrance and bath and then some signs -- some encouraging signs, but still challenges in makeup. And so that was through Q4, and we'll be sharing more about specific performance by category as we get -- as we wrap up this quarter.

Well, Scott, I don't want to not give you an opportunity to answer some very specific financial question. So maybe we'll transition a bit on that side. If you think about your guide, in the fourth quarter, on a 2-year basis, you comped down 1. That was in the midst of a COVID spike, that was prior to a mass vaccination, and it was certainly before warm weather, where -- which encouraged person gatherings. You guided the 2020 comp sort of at the high end of -- as a plus 18. But mathematically, if you were down 18 last year, to get back to sort of even a minus 1 sort of 2-year trend, you'd have to comp in the low 20s. So can you talk about what drove that guidance? And was there something that you felt the consumer behavior in 4Q was different and that wasn't necessarily a good read in terms of how you put the guidance out for 2021?

Thanks, Chris. And yes, good morning, everyone. I'm sure everyone has been waiting with bated breath for these -- for the finance specific question. So just as a backdrop, the guidance, when we pull it together in its final form, the pencil's down moment. We take every bit of knowledge that we have, right, that we have access to into account where we share with investors. So we're very happy with the performance in the fourth quarter. As Dave mentioned, we're excited to see the quarter-to-date trends here and are very optimistic about the rest of the year. But when we put together our initial outlook for the year, again, 2021 is a recovery year, right? That's a lot of uncertainty around when the social distancing things will mitigate somewhat, when the masking requirements will be removed again. You got to kind of look past some of the headlines, as Kecia said, tell one story. But out in the real world, you see people reacting a little bit differently. So we're taking all that into account. There were some specific trends in the fourth quarter. Again, very happy with the overall results. Things around gift cards. We did some great things last year in the midst of the COVID situation to expand distribution. We saw huge take rates on those and a lot of those redemptions come back in January. That's not necessarily something that carries over into the first part of the year. Fragrance was especially strong in the back half of last year. Again, having us look -- trying to identify exactly what the drivers of that are and the market share gains we were able to capture. Fragrance bath was another category that way over-performed our initial expectations. Again, taking all those things into account and then just taking a prudent, reasonable approach, again with the recovery year leading the way. So overall, very happy. We feel like it's guidance that's certainly achievable. Of course, we always hope to do better than what our initial communication is to investors, and we'll certainly be prepared to capitalize on market share opportunities as they present themselves this year. So we're already in the mode of thinking way ahead on inventory levels and what holiday this year might look like. So really getting the team mobilized and ready to take advantage as the situation develops.

A follow-up to that. So I know you don't want to comment necessarily on specifically what you're seeing quarter-to-date in the first quarter, and last weeks of the month where relatively strong for most retailers as stimulus hit. But does what you're seeing so far on a quarter-to-date basis makes you optimistic that you could get back to sort of 2019 type sales levels?

Yes. It's still early in the year. I think we did a good job kind of explaining some of the puts and takes, right? When you compare and contrast 2019 to what we were initially looking at for 2021 as far as our financial outlook is concerned, so we walked through some of the drivers there with channel shift being the biggest, right, with some of the margin headwinds that comes with that. So again, we've got a lot of good levers at our disposal to mitigate a lot of those margin rate headwinds with focus and things we're doing in the supply chain, and some of the promotion and discounting optimization things that we described on our fourth quarter call. So we still think we have a lot of room, a lot of opportunity to help on the rate side of things when it comes to the channel shift, which we think is just a natural part of the business. Now again, back to my use of the term, recovery. We're going to need to see, right, as we work our way out of the COVID crisis to see the stickiness, what the penetration rate is going to be on the e-com part of our business and how consumers react to coming back into stores, right? And when that starts to get some traction, and we feel more confident about that, we'll be in a better position to provide a more firm update, quantitative update on our guidance. So we're not going to be able to do that today. But like I said, we're very optimistic around developments. We know we're going to get our fair share of the stimulus. There's no doubt about that. And the beauty category is a good place to be, and we're very optimistic about the future.

Understood. So maybe diving in on the operating margin front a little bit and some of the questions that we've received in queue here. So as you think about the puts and takes, right, at one point, you were a 13.5% operating margin. You were talking about mid-teens. There's been a couple of changes. Like you said, e-commerce, over 30% this past year, you seemed to be implying like a low 20s penetration in '21. And as the offset -- as an offset, you had EFG savings of $150 million to $200 million. So I guess for the sake of having a framework, if we take the prior peak of 13.5% and you sort of can get back to those sales levels, ultimately, any mix in the blender, the EFG versus e-commerce mix coming back down in the low 20s and growing a little bit over time. Why isn't like a 12% operating margin a reasonable long-term goal?

Yes. So we're very optimistic that we're going to get back to double-digit EBIT margins in the not-too-distant future. Again, if 2021 shakes out better than what we initially expected, we could get back there sooner than our initial outlook. Now the question, again, when you're taking a historical perspective on that 13.5% operating margin number, you also have to remember what the store comps were back in those days, right? They were significant double-digit, right? And the amount of fixed cost leverage you get on the fleet and that kind of environment is just extraordinary. So since that point in time, there's been a lot of infrastructure investment. There's been wage pressure across all elements of our business. And the e-shift, the digital shift, has just been way beyond anything that we were planning for back in those days, right? Again, that was a long time ago. So again, collectively optimistic about double digits. Should we be able to get back to the pre-COVID levels, the 11, 12-ish range? Certainly, we should with time. Again, sales is the biggest variable here. We feel like if we get back on track with total sales, the makeup category, remember again, in 2019, we were having some challenges there. So we're confident about what the newness pipeline looks like. We're confident in makeup overall, in the beauty space that people want to get back out into social environments, makeup plays a big part in that. And so with those elements, helping to drive sales, we're optimistic. And then self-help things we've been doing behind the scenes. Again, we've been talking with investors about this over the last couple of years, but the things we have in the pipeline with EFG, our Efficiencies For Growth initiatives, not only in the merch margin area, along the lines of promotion and discounting optimization and process improvement and supply chain optimization, but also importantly, along our real estate portfolio. And a lot of hard work our team has done a great job. Again, this is a real core expertise at Ulta, finding real estate, optimizing our fleet, and the team has been doing a great job negotiating better overall economics in our stores. And so we still think there's lots of levers there for us to pull to not only get back into double-digit -- healthy double-digit EBIT margin ranges, but also to expand that over the longer term.

Understood. And then as there aren't any other questions in queue. So I'll just wrap it up with one final one. So a common question that we're getting is around freight and wages and some of those cost pressures that you've seen in the business. How are you in terms of your pay structure relative to the market? Are you seeing competition push up sort of accelerating wage pressure? Are there any needs to sort of double down and make a sort of bigger chain-wide payroll investment?

Yes. To this point, we've done a good job managing it, all right? So again, I don't want to give anyone the wrong idea. Yes, we have wage pressure just like all of retail has wage pressure, right? There's a lot of things going on, both out in our -- in the store portfolio, but also in our distribution centers as well. We feel like we're in good shape on the DC side, the supply chain. So we've been keeping pace. We've got some pretty big name competitors out there that have been making moves over the last couple of years. It's still -- we've maintained. We have to be competitive there. So we've maintained the pace there. So we feel like, overall, we're in a good position. On the store side, it's a little bit different, but we've been doing a good job. Kecia and her leaders have done a great job, along with our HR business partners, helping to manage that, right, in states where the East Coast in California, where there's regulations along those lines. We've reacted to that and had to meet the marketplace demands. But we've been able to offset that, right? In other -- the middle part of the country where the pressure is not quite as acute. And overall, I'd say they're still -- we're in a great space and a great category. People, there's a lot of people out there that love to work in the beauty space that want to engage with our guests and really -- we try to make it an enjoyable work experience, the culture and how we care about our people, which I think we demonstrate every day makes it a great place to be an associated at Ulta Beauty. So no doubt there's pressure across the board, but we're not feeling it, I would say, maybe as much as maybe some other spots across the retail universe right now.

Well, excellent. That's perfect timing. We are at time at 9:30. So Dave, Kecia, Scott, we really appreciate your time and with joining us today and appreciate the update and wish you the best for the year. We'll talk to you soon. Take care.

Thank you.

Thank you.

Thanks for your time.