Greetings. Welcome to the Columbia Sportswear First Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Andrew Burns. You may begin.

Good afternoon. And thanks for joining us to discuss Columbia Sportswear Company’s first quarter results. In addition to the earnings release, we furnished an 8-K containing a detailed CFO commentary and financial review presentation explaining our results. This document is also available on our Investor Relations website, investor.columbia.com. With me today on the call are Chairman, President and Chief Executive Officer, Tim Boyle; Executive Vice President and Chief Financial Officer, Jim Swanson; and Executive Vice President, Chief Administrative Officer and General Counsel, Peter Bragdon. This conference call will contain forward-looking statements regarding Columbia’s expectations, anticipations or beliefs about the future. These statements are expressed in good faith and are believed to have a reasonable basis. However, each forward-looking statement is subject to many risks and uncertainties and actual results may differ materially from what is projected. Many of these risks and uncertainties are described in Columbia’s SEC filings. We caution the forward-looking statements are inherently less reliable than historical information. We do undertake any duty to update any of the forward-looking statements after the date of this conference call to conform the forward-looking statements to actual results or changes in our expectations. I’d also like to point out that during the call, we may reference certain non-GAAP financial measures, including constant currency net sales. For further information about non-GAAP financial measures and results, including a reconciliation of GAAP to non-GAAP measures and an explanation of management’s rationale for referencing these non-GAAP measures, please refer to the Supplemental Financial Information section and the financial tables included in our earnings release and the appendix of our CFO commentary and financial review. Following our prepared remarks, we will host a Q&A period during which we will limit each caller to two questions, so we can get to everyone by the end of the hour. Now I will turn the call over to Tim.

Thanks, Andrew, and good afternoon, everyone. First quarter results highlight the importance and value of our diversified global business model and strong balance sheet. Overall, we were able to generate healthy net sales growth, up 8% year-over-year and up 10% in constant currency. I am pleased to report that earlier receipt of Spring 2023 inventories drove improved wholesale on-time delivery rates and a return to pre-pandemic service levels. For the last three years, supply chain constraints have impacted our ability to drive sales growth. As we look to maximize sales in this uncertain economic environment, it’s great to have those product lead time delays behind us. Looking at first quarter results. Consumer demand in many areas of our business remained strong. International markets were resilient, growing 17% on a reported basis and 25% on constant currency basis. In the U.S., outlet stores generated healthy growth as consumers seek out value and promotions in the marketplace. Apparel category performance was also a bright spot as sales trends benefited from better availability of Spring 2023 product. In other areas of the business, consumer demand signals were more challenging. Columbia.com had a softer start to the quarter, but performance improved in February and March as we increased promotional levels to spur demand. In the U.S., footwear market headwinds impacted both Columbia and SOREL performance, pockets of elevated footwear channel inventory, unfavorable weather for spring product and overall retail cautiousness presented headwinds. Additionally, key categories such as hike and trail have softened following growth over the last several years. We remain confident in our footwear strategy and our ability to unlock our long-term growth potential in this category. As I mentioned on the last call, reducing our inventory and aligning it with demand is a top priority. Inventory exiting the quarter was up 34%…

Absolutely. [Operator Instructions] The first question is from Bob Drbul with Guggenheim Securities. Please proceed.

Yeah.

Hi, Bob.

Tim, I had two questions really. The first one is when you look at the outlook for the remainder of the year, have you seen any changes in your order book. I know you kept your topline the same, but when you look at the performance in North America or in Europe, have there been any material changes from what you had seen a quarter ago? And then the second question is, can you elaborate a bit more in terms of what’s happening in the footwear category. I think you talked about how you can trail and just how big -- what’s the percentage of that in your business and just what do you think it will take to get that business to either slowdown in terms of some of the declines or actually improve maybe in the back half of the year? Thanks.

Yeah. Bob, so no significant change, in fact, no changes really of any consequence on the order book. As you know, we take orders every day and cancels every day. So -- but our order book is as we expected it several quarters ago and we are excited about the ability to perform on the order book much better and more timely manner than we had certainly last year. Last year was such an unusual period where we had an enormous order book and then the logistics issues really didn’t allow us to fulfill it. The final result, frankly, was the inventory levels that we are seeing today. So we are confident in that ability to perform there. As it relates to footwear, hike and trail over the total is the company’s largest category of footwear. But in the back half, it will certainly be challenged from a size perspective by our winter footwear business, which is actually the biggest part of the last part of the year. So we are very focused on creating great products, which are highly differentiated and democratic in terms of their pricing and promotion. I still am confident that the company can provide innovative differentiated products to have our business grow at the proper levels.

Okay. Thank you very much.

The next question comes from Laurent Vasilescu with BNP Paribas. Please proceed.

Oh! Good afternoon and thank you very much for taking my questions. I wanted to ask about SOREL the guide. Originally, I think last quarter or 90 days ago, it was to low double-digit growth and now I think it’s guided for high single-digit growth in the CFO commentary. Just curious to know what you are seeing there, was there a pickup in cancellations? And piggybacking off of Bob’s question, I think, fall order book was originally anticipated to be up mid-single digits overall for the company, is that still the case?

Yeah. The SOREL brand was impacted much like the Columbia brand in terms of large order book last year and poor fulfillment on our part last year due to logistic issues. So we talk about the spring quarter and the quarter just completed. It’s impacted with promotional activity with or merchandise that we carried over, as well as weather impact on spring product. So as the quarter has concluded and we have become -- we have seen activity in the latter part of the quarter and the early part of Q1 -- Q2 and we are seeing that the sandal category is now getting traction and improving. So we are very bullish on the brand and we expect that, that will get us up to clearly to where we guided at our Investor Day and that this will be a fast growing brand for the company.

And Laurent, there’s been no meaningful changes in the Fall 2023 order book. We are still planning that part of the business up for SOREL on a mid-single-digit percentage for the season.

Okay. Very helpful. And then, Jim, maybe a question for you on your CFO deck. Last quarter, I think from the first half commentary, you were expecting 1H gross margin to expand in the late modestly below the full year. I didn’t see that commentary in this CFO commentary. So just curious maybe for the audience, if you can kind of give us some guardrails on how we should think about 2Q gross margins, and if they are below, maybe can you walk us through like the moving pieces to get to the full year guide?

Yeah. From an overarching standpoint, we are still planning our gross margins to be up in the second quarter. They will be up north of 100 basis points, Laurent. With the revision we have made in our outlook, we have indicated that we will come in at the lower end of our first half outlook. And if you do the math on that, that will imply our Q2 operating income essentially being breakeven and so if you look at gross margin being up just over 100 basis points, you can do the rest and solve on that. But we are still anticipating the inbound freight cost benefits that we previously indicated. As Tim touched on, as it relates to what we are seeing from a promotional standpoint, the market has really been aligned to what our plan has been to-date.

Okay. Very helpful. And then just one last question on the on the Russia business. Can you just again maybe remind the audience the magnitude of the impact of just the timing as we think about modeling EMEA for the year by quarter?

Yeah. So on the full year in terms of what we fulfilled to Russia, there was -- it was around $50 million and that was fulfilling orders that had been taken prior to the invasion. And then specific to the first quarter, it’s a mid-single-digit millions of dollars that we shipped to Russia, I think, it was in the $5 million range.

Okay. And then so most of it came in into -- remind me, I think, it was in 3Q 2022, right, when you fulfilled it?

In Q2 -- that exactly right. There was essentially nothing in the second quarter and then it would have been predominantly third quarter that you would have seen those shipments.

Okay. Okay. Very helpful. Thank you very much, Jim, for that, so we can model it correctly. Thank you.

Next question comes from Mitch Kummetz with Seaport Research. Please proceed.

Yeah. Thanks for taking my questions. First question on supply or on the SG&A. So the SG&A rate has gone up. It sounds like that’s primarily supply chain. I guess I am wondering, what’s changed, why are those incremental costs now higher than three months ago? Is that because it’s taking longer to work through the inventory than you expected? And then maybe kind of a follow-up to that, like when I eyeball the slide deck, it looks like maybe supply chain is up around $20 million, like what are you thinking for the year now on those year-over-year incremental supply chain expenses?

Yeah. I am going to ask Jim to talk to you about the balance of the year. But what we saw in the first quarter was an impact of inventories on the efficiency of our logistics operations, just the sheer magnitude of the inventory that has impacted the ability for our distribution centers to act efficiently during that period. So we expect that as we reduce our inventories, and as we mentioned, we expect about a $600 million cash flow positive from this year in order to get us -- as the inventory levels are reduced, that our efficiencies will also increase along the way.

Yeah. Mitch and just to reiterate the point there, the increase in our SG&A in the quarter, that’s not a function of inventory, haven’t been greater than what we had planned. Inventory is really where we thought it would be. It’s just the degree of productivity. I think, frankly, we probably planned the business too aggressively with regard to how well we would be able to manage down the labor within our distribution centers. So that came as a bit of a surprise and we have incurred some transition costs related to our third-party logistics. When you look at the change in our full year outlook, which is in the mid-teens millions of dollars to the operating income line, essentially the entirety of that is associated with what we have seen in the first quarter as it relates to the incremental warehousing and fulfillment costs.

Okay. Are these costs that essentially go away next year when you have -- you are expecting inventory to be down a couple of hundred million?

That would certainly be our expectation. As we get the DCs back down into normal capacity levels and a better mix of what’s running through our own distribution centers and what’s in third-party logistics. Plus there are certain transition costs that would be one-time in nature that will accumulate during the year. So I would expect that provides us a bit more of a tailwind as we get out to 2024.

Okay. And then just a follow-up, Tim, on the footwear piece that was the hike and trail, the challenges there. Is this kind of a post-COVID hangover, where the pendulum is kind of overcorrecting away from these categories, and like if so, when might that normalize, do you think?

I think it’s going to be a comb -- yeah. And I would say, yes, it’s a combination of high demand during the COVID period for hiking footwear and then really an ability for us to provide new fresh merchandise this year. So I would think that, over time, when we have larger component of our footwear being along the lines of our Facet collection, which is a vast hike, sneaker-ish type product that you are going to be seeing a reacceleration of the footwear, especially in hike. So that’s the expectation and we are working hard towards that.

All right. Okay. Thanks. Good luck.

You bet, Mitch.

Up next we have John Kernan with TD Cowen. John, please proceed.

Good afternoon. Thanks for taking my question, guys. So just on SOREL, obviously, the targets you laid out at the Investor Day, 20% plus growth. It did have tough multiyear comparisons this quarter. I am just curious how you are planning the business for the rest of the year and how do we think about the return to growth?

Well, the brand is an incredibly strong performer inside our emerging brand portfolio and we would expect that as we continue to gain traction in that business with timely deliveries of product and the high quality standards that we have in styling and design will again produce great sales results. That’s our focus and that’s the plan.

Hi, John. As it relates to how we are envisioning growth for the balance of the year, in the CFO commentary, we indicated that SOREL’s planned up a high single-digit percent from what had been a low double-digit percent and that it’s pretty consistent across the quarters, with the exception of the third quarter, it will be a bit higher given the earlier delivery of -- the expectation of earlier delivery and shipment of fall product. So I think we look at Q1 as being a little bit of an aberration, as Tim touched on, in terms of it being a transition seasonal quarter for us and looking forward to the balance of the year.

Got it. How should we think about inventory dollars, as we start to cycle some of the bigger increases from last year and then within that, how do we think about the recovery of freight cost within gross margin?

Yeah. As it relates to inventory for the balance of the year, there are some comments in the CFO commentary that we have provided in our first half outlook. We contemplate inventory continuing to grow at the end of Q2, albeit it will begin to normalize from a growth standpoint. So we were plus 30% -- just over 30% here in Q1. We will see that come down into the low 20s in Q2. And our expectation is as we begin to move into the fall/winter season, leveraging that carryover inventory, utilizing that excess inventory through our outlets that we would see a sequential drop in our inventory in the back half of the year and we are still targeting and feel like we have got a clear path to our inventory being down north of $200 million and we are stretching to be far better than that as we exit the year. And then as it relates to the degree we get -- as we move through that excess inventory, we have got that plan into our margin in terms of still really thinking about this from a normalized discounting perspective and any changes that might have in our obsolescence or inventory reserves is also factored into the outlook that we are providing here today.

Got it. Then maybe one follow-up. Obviously, nice to see the revenue guidance reiteration. Just how do you think your wholesale partners are positioned for the back half of the year? I think March and April were tough on a lot of people, weather obviously not agreeable. How do you think people are prepared for the macro as we go into the back half?

Yeah. I think in general our order book is built on a conservative outlook from our retailers. So no one is expecting great things from the back half of 2023. So I think that’s how to build the book and our expectations are that we will -- based obviously on our inventory levels, we will have something to fill shelves with in addition to what they already have.

Got it. Thank you.

Okay. The next question is from Jim Duffy with Stifel. Jim, please proceed.

Yeah. Thank you. Good afternoon, guys. Just a couple of questions for me. I wanted to start on the D2C trends. I am curious is the positive comp you are seeing there supported by better in-stocks or are you seeing good traffic in transactions as well?

Yeah. Jim, well, as you know, we are -- we consider ourselves to be a wholesale company, so we don’t typically talk about the metrics in our own DTC stores. That having been said, the traffic was quite strong in the stores this quarter and we think that’s reflective of a number of issues, including consumers at this time looking for greater value and we have a strong outlet fleet. But pricing has remained strong and I think we are positioned correctly. And as we said, we were going to be liquidating our carryover inventory primarily to our own outlet stores for the fall, so.

Yeah. I’d say a modest benefit as it relates to the better stock levels. I think this is much more a function of traffic that Tim’s describing and increase in tourism in certain of our international markets.

Good to hear. I am also hoping you guys can speak to U.S. channel inventory dynamics. Is the footwear situation that you referenced unique to footwear in those categories or are you seeing channel apparel inventories elevated as well and what do you see as kind of the time line for path to resolution of that?

Yeah. I think in general our category of merchandise has been more challenged than others in the footwear area.

Got it. But how about apparel, Tim, is the apparel channel inventory situation in a fairly healthy state or are there imbalances there as well that you are contending with that are influencing the marketplace?

Yeah. Again, our retailers took a quite conservative approach to spring orders, but frankly, we have seen improved sell-throughs versus last year. And it would indicate that the merchandise categories that were strong in PFG, sportswear, rainwear are all performing well and I think in that area we have got good tailwinds.

Okay. Great. And then last one, Jim, I wanted to ask on the cash flow from operation guidance. Maybe I missed this earlier, but it looks like a bump of $100 million, what’s behind the lift?

I think more so than anything, we are a bit conservative when we put that together previously, Jim. As we have taken a harder look at and we have got more definitive view into the inventory purchases that we have made for the fall season and looking at our overall working capital, it just gives us increased confidence that we are going to end up in that north of $600 million range from an operating cash flow perspective.

Great. I will leave it that. Thank you, guys.

Thanks.

Thanks. The next question comes from Abbie Zvejnieks with Piper Sandler. Abbie, please proceed.

Great. Thanks for taking my question. Just on the earlier delivery of shipments in 1Q, are there any geographies or brands where we should expect that to create difficult 2Q growth rates? And then on the SOREL brand, just with the U.S. wholesale order books being conservative like you just talked about, I guess, what’s driving the better SOREL results in the second half? Thanks.

Yeah. Again, as it relates to the earlier deliveries, I think, our business will be quite strong at our retail partners during -- especially the balance of the year. Our biggest seasonal sales period for the Columbia brand certainly is Father’s Day and that’s where our PFG performance really shines and I think our retailers are well stocked there and certainly in better shape than they were last year. So our expectations are for a good second quarter sell-through with our retailers. As it relates to SOREL, as focused as we have been on changing it from a winter brand to a more year-round brand, it’s still heavily impacted by winter -- the sales of winter footwear. So our expectations are that the back half of the year for SOREL will be a tailwind as it relates to winter footwear requests.

And then maybe just to add to Tim’s comments, from an overall perspective, when you look at second quarter, we do anticipate second quarter being a slower growth quarter on the whole relative to the first quarter. So it will be at a low single to mid-single digit, kind of in that zone and the difference between the two quarters is effectively going to be the timing shifts on the wholesale business. And by geography, where you would expect to see the most of that would be in the U.S., Canada and our European direct businesses where we received inventory and we are able to get it out to our customer’s sooner. So you would see the adverse effect of that coming out of the second quarter. And you will see, well, that same trend phenomena occur in the latter part of the year as well, where Q -- will be heavy Q3 growth and lighter Q4 growth.

Got it. Super helpful. Thank you.

Okay. The next question is from Jonathan Komp with Baird. Please proceed.

Yeah. Good afternoon. Thank you. Can I just ask a broader question thinking about the shape of the earnings outlook for the year? First half, it looks like it will be down quite a bit year-over-year in your seasonally low period and then second half looks like embedding fairly healthy double-digit earnings growth for the second half combined. So could you just maybe walk through the pieces to sort of get comfortable with that outlook?

Yeah. There’s two to three drivers on that, Jon, that I would call out. First, keep in mind that we are lapping the prAna impairment charge that we took in the fourth quarter last year of $35.6 million. So if you set that piece aside, the other two major factors that are going to be in here is, one, we anticipate gross margin being healthier in the latter part of the year, that being as we see the full benefit of the lower inbound freight costs being a larger benefit to the gross margin, coupled with the fact that, from a retail promotional standpoint, the comps year-over-year will be a little bit easier in the latter part of the year. And then the second point I would make here is that, as you think about SG&A, we come into the year with a heavier rate of growth from an SG&A perspective. You are seeing that in Q1 as we work ourselves into the back half of the year. Again, we will be lapping some of the investments we made last year, plus some of the cost containment actions that we have taken. So when you look at the combination of those three things, that’s why you would see a bit more of an inflection with second half, mark that second half earnings growing faster than first half and we are perfectly confident in the plan we have put together around that with all the visibility that we have here today.

Yeah. That’s really helpful. And then just maybe a follow-up, Jim, just the thought on bringing down the high end of the earnings guidance for the year, but not changing the low end. Was there some maybe conservatism at the low end coming in or are you including some optionality, places you could pull back if needed, just any thoughts there? Thank you.

It’s really just more a function of the discrete nature of the change in the outlook and so when you look at first quarter and where the SG&A came in higher than we had expected, because it’s kind of a discrete event, we felt that the high end required an adjustment. We didn’t foresee as strong as a need on the low end of things.

Okay. Make sense. Thanks again.

Okay. Up next we have Paul Lejuez with Citigroup. Please proceed.

Hey. Thanks. It’s Tracy Kogan filling in for Paul. My first question is on Columbia footwear specifically and I am wondering what you are expecting for sales growth this year now compared to your prior expectations and then what are you looking at for margins in that footwear business? And then secondly, I was hoping you could talk a little bit more about that China-specific product that you mentioned. I am wondering how much of the assortment that represents and right now what you think it might eventually be and then what’s the price point like there compared to the rest of the assortment? Thanks.

So as it relates to the Columbia footwear side of things, we -- from an overarching standpoint, we still see the Columbia brand growing at a high single-digit rate of growth to have that right enters mid-single, I think, it’s more mid-single, sorry. And the footwear is slightly going to outpace still where we are from an apparel standpoint. And as we look at the order book that we have taken for the fall/winter season, that would contemplate that higher rate of growth in terms of orders that we have taken for our customers. And then I might pass it over to Tim as it relates to China and the Transit collection.

Yeah. I just want to make one more comment on footwear for Columbia. Most important and impactful part of our business is winter footwear and due to the logistics issues we had last year, this will be really an improvement -- vast improvement, frankly, on delivery timeliness on the winter footwear. So our expectations are quite high there for a very successful season. The Transit collection was born in China and designed by our China merchandising team based in Shanghai. The product itself was commercialized and manufactured by the global team, which is based here in Portland. So we had great costs on it, very good gross margins and proves to us that we need to be synchronizing our investments in product to include local influenced merchandise. So I think what we have learned is that the more we link our global teams together and use design and creative folks that are based in market, the better we are going to be doing.

Great. Thank you.

Okay. The next question is from Mauricio Serna with UBS. Please proceed.

Hi. Good afternoon. Thanks for taking my questions. I wanted to ask about the gross margin cadence. I just thinking about second quarter, you provided an outlook, but if I think about third versus fourth, where should we expect higher gross margin expansion? And I guess from the SG&A perspective, I understand fourth quarter SG&A dollars will probably be down or probably the quarter with the least growth. But if I think about the other two quarters, how should we think about that, the growth in 2Q and 3Q? Thanks.

So gross margin, as I commented earlier, we do plan that to be up greater than 100 basis points in Q2. And sequentially, as you look at the third quarter, fourth quarter, they are both going to be relatively equivalent in terms of gross margin expansion and slightly above where we plan to be for the second quarter. So it should be relatively consistent and with the understanding that the ocean freight, the inbound freight cost benefits will be flowing through, each of those three quarters is ratably similar. That makes sense. And then as it pertains to SG&A growth, I think, we still have SG&A growth planned through each of the three quarters, albeit that rate of increase or rate of growth in SG&A will come down particularly towards the end of the year and more in line with where we have got the full year plan from a topline perspective.

Got it. Just to confirm, so that implies that fourth quarter SG&A dollars will be up despite including the prAna impairment from last year?

No. Because the prAna impairment charge, we did not include that as SG&A expense…

Oh! Okay. Okay. Got it. Got it.

…an item in the P&L.

Got it. And then just one follow-up maybe. If you could speak about the -- in the U.S. DTC business, a little bit more color on the sales growth trends intra quarter. Just trying to understand like how the sales evolved like across each quarter. You see a deceleration or acceleration? Any additional commentary would be very helpful. Thanks.

Well, we certainly don’t want to get into the monthly cadence of it aside from the prepared remarks that we have made. On the whole, what I would describe is that the DTC brick-and-mortar business was healthy really throughout the quarter. We saw nice traffic in that part of the business in the U.S. and internationally. And then, as Tim noted, I think, in the prepared remarks, the e-commerce business was a bit slower in the early part of the quarter and then with some incremental promotions that we have made, we began to see demand surge a bit there. And I would keep in mind, we are lapping first quarter of last year in which consumer demand was still quite robust coming off of some of the stimulus from the year prior and a quite cold favorable weather as well. So lapping against that still be able to put up the growth rates, we were -- we still remain pleased with the overall performance of the business and the brick-and-mortars more than offsetting some of the shortfall that we saw in the e-commerce side of the house. .

Got it. Thanks. Thank you very much.

The next question is from Alex Perry with Bank of America. Please proceed.

Hi. Thanks for taking my questions. Just first, what’s embedded in the guidance in terms of promotional environment from here? Is the assumption that is sort of moderates in terms of year-over-year pressure and how do you sort of square that away with your comments on sort of the consumer seeking out value with the really strong traffic you have seen in the outlet business? And then just on the DTC versus wholesale outlook, I guess, when you look at your D2C business, what are you sort of expecting in terms of D2C.com versus D2C brick-and-mortar? Is the thought that for the remainder of the year, given what you are seeing in your outlet business, that D2C brick-and-mortar continues to sort of outpace D2C.com? Thanks.

Yeah. I would say that the promotional activity we expect to be on par to previous, call it, pre-pandemic levels. So we expect the impact there offset partially by what we would see in terms of savings of freight. So I think that we have guided appropriately on our gross profit margin for the balance of the year. As it relates to DTC.com versus brick-and-mortar, it seems like consumers at least in the first portion of the year wanted to get out and shop. So we did that in a greater way certainly in our operations and sitting at home and ordering online. And it’s our expectation that, that will likely continue that we have a stronger performance from DTC, but we also expect our brick, excuse me, our dotcom business to rebound and be strong as well in the balance of the year. So we really haven’t given great granularity on the two. But it certainly appears that consumers like getting out shopping.

Yeah. That’s right. And Alex, there is a subtle change in our revenue outlook, where basically previously, we had indicated that our dotcom business would grow faster than our brick-and-mortar business and that’s reversed in the outlook we have provided here today, where we do see the consumer shifting a bit more to physical in-store shopping versus dotcom, but they more or less offset each other.

Perfect. That’s really helpful. And then I guess just my second question, on the cost containment actions, when do those start to flow through the P&L? Is that towards the end of this year or more next year and what exactly is sort of in there? Thank you.

It would be more second half. It’s much more a function of slowing rate of investment, slowing the rate of headcount additions, those types of costs. I wouldn’t necessarily describe it as a full blown cost reduction plan, but really just seeking to moderate our level of SG&A to bring it back down more in line with where we are from a sales perspective. And then, of course, to the point made earlier, to the extent there’s some incremental costs we are incurring as it relates to the supply chain and distribution, we would expect that as we lap those, that should provide us a bit of a favorable comp to be more efficient in the out year.

Perfect. That’s really helpful. Best of luck going forward.

Thanks, Alex.

We have no further questions in queue. We have reached the end of the question-and-answer session and I will now turn the call over to management for closing remarks.

Thank you for listening in. We are excited about the potential for the future and we have great opportunities ahead of the company. We look forward to talking to you in about 90 days time.

Thank you. This concludes today’s conference and you may disconnect your lines at this time. Thank you for your participation.