Alliance Entertainment Holding Corporation (NASDAQ:AENT) Q3 2025 Earnings Call Transcript

Alliance Entertainment Holding Corporation (NASDAQ:AENT) Q3 2025 Earnings Call Transcript May 15, 2025

Operator: Greetings and welcome to the Alliance Entertainment Fiscal 2025 Third Quarter Financial Results Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I will now pass the call over to Paul Kuntz, a member of Alliance Entertainment’s IR team at RedChip. Paul, please go ahead, sir.

Paul Kuntz: Thank you. Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates and other information that might be considered forward-looking. While these forward-looking statements represent the company’s current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements which reflect the company’s opinions only as of the date of this presentation. Please keep in mind that the company is not obligating itself to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.

Throughout today’s discussion, management will attempt to present some important factors relating to the business that may affect predictions. You should also review the company’s Form 10-K for a more complete discussion of these factors and other risks, particularly under the heading Risk Factors. During this conference call, management will discuss non-GAAP financial measures, including a discussion of adjusted EBITDA. Management believes non-GAAP disclosures enable investors to better understand Alliance Entertainment’s core operating performance. Please refer to the investor presentation for reconciliation of each non-GAAP measure to the most directly comparable GAAP financial measure. The press release detailing these results crossed the wire this afternoon at 4:01 p.m. Eastern Time and is available in the Investor Relations section of Alliance Entertainment’s website at aent.com.

Your host today, Jeff Walker, Chief Executive Officer and Chief Financial Officer; and Amanda Gnecco, Chief Accounting Officer, will present the results of operations for the fiscal 2025 third quarter ended March 31, 2025. At this time, I will turn the call over to Alliance Entertainment CEO and CFO, Jeff Walker.

Jeff Walker: Thank you, Paul and good afternoon, everyone. I’m pleased to welcome you to today’s call. Alliance Entertainment is a premier distributor and fulfillment partner at the center of the growing collectibles ecosystem. With over 325,000 unique SKUs and fulfillment relationships across 35,000 retail storefronts and 200 online platforms. Alliance connects fans with entertainment and collectibles they love, spanning vinyl, DVDs and Blue Rays, Arcade Systems, licensed toys, tabletop games and more. Our business caters to collectors and physical media enthusiasts a passionate and growing base of consumers who value tangible, high-quality products with emotional and cultural significance. For retailers, we make it simple to serve this demand, both online and in store.

Q&A Session

Importantly, our growth strategy is proven. Over the past two decades, we have completed strategic acquisitions that have enabled us to expand into high-growth categories and enhanced our position as a trusted, efficient partner for the world’s top entertainment brands. Ultimately, our competitive advantage comes down to three things. First, our exclusive products and licensing agreements give us a differentiated offering in the trailing 12 months. Our exclusive agreements accounted for nearly 1/4 of our overall revenue and our latest deal with Paramount which went into effect on January 1 has further accelerated growth in this key segment. Second, our reach across both B2B and direct-to-consumer channels allows us to serve the full spectrum of the market from global mass retailers to niche fan communities with scale, speed and precision.

And third, with powerful distribution infrastructure, a capital-light operating model and expanding access to sought after IP, we are strategically positioned to gain further market share in the global collectibles and premium home entertainment market. We’ve aligned our strategy around where the market is and where it’s heading and that clarity is driving stronger margins, improved earnings and long-term value creation. This slide offers a quick snapshot of our performance. Amanda will walk through the full Q3 and 9-month financials later in the call but I want to briefly highlight a few key metrics that reflect the strength of our business model and the progress we’re making. Revenue over the trailing 12 months was relatively consistent with recent years but with a significantly improved profitability.

Adjusted EBITDA rose to $26.4 million, with margins expanding to 2.5%, up from 2.2% in fiscal 2024. Earnings per share also jumped to $0.24, nearly triple the $0.09 we delivered last year. These gains reflect disciplined execution, improved cost structure and stronger operating leverage across our platforms. Strong working capital management, improved margin structure and better alignment between inventory and demand have positioned us to generate more EBITDA dollars from every sales dollar which is especially important in today’s environment. We have also made important progress on our balance sheet. Over the past year, we reduced our revolver debt, improved our liquidity position and strengthened inventory efficiency, all while continuing to grow our SKU count and support new product categories.

That balance expanding our portfolio while improving capital discipline has been a key area of focus across the organization. Looking ahead, our capital position and operational flexibility gives us plenty of room to pursue new licensing opportunities, particularly from major movie studios looking to monetize physical media in more efficient ways, Alliance is well positioned to be that solution. The financial progress we’re making is rooted in a clear market identity, Alliance is a collectibles company built for today’s fans and tomorrow’s demand. Pop culture is more than entertainment, its community, nostalgia, storytelling and self-expression. Collectibles are how fans participate in that culture. They do not just consume content; they own a piece of it.

Whether it’s vinyl records, box sets, games or character figurines, physical collectibles are gaining traction with both mainstream and niche audiences and Alliance sits at the center of this movement, uniquely positioned with the products, relationships, scale and fulfillment capabilities to drive growth in this dynamic space. We’ve been investing behind that conviction, expanding our licensing partnerships, acquiring emerging brands like Handmade by Robots and winning new distribution rights with top franchises like Paramount. With our infrastructure, industry experience and exclusive access to iconic IP, we are not just following the collectibles trend, we are leading it and we believe the best is yet to come. With that, I’ll now turn it over to Amanda to walk through our third quarter and year-to-date financial results in more detail.

Amanda Gnecco: Thanks, Jeff. Let’s begin with our third quarter results. For the quarter ended March 31, 2025, we reported net revenue of $213 million, a slight increase from $211.2 million in the third quarter of fiscal year 2024. Gross profit rose 3.7% year-over-year to $29.1 million with gross margin improving to 13.6%, up from 13.2% in the prior year period. This margin expansion reflects a more favorable product mix and continued progress on our operational efficiency initiatives. We also achieved a meaningful turnaround in profitability. Net income was $1.9 million or $0.04 per share compared to a net loss of $3.4 million or $0.07 per share in Q3 of last year. Adjusted EBITDA grew 66% year-over-year to $4.9 million, up from $2.9 million.

This improvement was driven by margin gains and disciplined execution across our operations. At the operational level, we’re continuing to see strong returns from our automation and warehouse consolidation efforts which helped drive a 10%-plus year-over-year reduction in distribution and fulfillment costs. Overall, our third quarter reflects solid execution, cost discipline and growing profitability even as topline revenue remained relatively flat. Now turning to the 9-month period ended March 31, 2025. We generated $835.7 million in net revenue compared to $863.5 million during the same period last year. This year-over-year decline primarily reflects timing of shipments and product mix, partially offset by strong performance in key high-margin categories.

Gross profit totaled $96.9 million versus $102 million last year, with gross margin holding steady at 11.6% compared to 11.8% in the prior year. Despite a revenue decline, we delivered strong earnings growth. Net income increased to $9.3 million or $0.18 per diluted share, up sharply from $2.1 million or $0.04 per share last year. That is a 349% improvement. Adjusted EBITDA rose nearly 10% to $24.4 million compared to $22.2 million, underscoring the leverage we’ve gained through cost control, automation and a more profitable product mix. We also made a notable improvement in our working capital. Inventory balance declined to $93.2 million down from $108 million a year ago. Accounts payable balance increased $139.6 million from $132.5 million, helping to support liquidity while maintaining strong supplier relationships.

Our ability to grow earnings, reduce debt, optimize inventory and preserve gross margin, all in a flat revenue environment highlights the resilience of our business model and the strength of our execution. With that, I’ll turn it back to Jeff for closing remarks.

Jeff Walker: Thanks, Amanda. One of the most important drivers of our performance and our differentiation in the market is our exclusive distribution and licensing strategy. These agreements give us access to unique in-demand products that can’t be sourced elsewhere whether it’s a limited-edition box sets, exclusive label content or collectible formats for major entertainment brands. Over the trailing 12 months, our exclusive partnerships accounted for approximately $250 million in revenue or nearly 1/4 of our total sales. These deals not only strengthen our supplier relationships, they also create a competitive moat around our catalog and reinforce our role as a preferred partner for retailers. A great example is our new home entertainment exclusive license agreement with Paramount Pictures which went into effect on January 1, 2025.

Under this partnership, Alliance is now the exclusive U.S. and Canadian distributor of Paramount’s full physical media catalog, including DVD, Blu-ray, Ultra HD and SteelBook titles. We’re already seeing a meaningful contribution from this relationship and we believe there is still significant room for growth as we expand placement and assortment across our retail network. We also continue to serve as an exclusive distributor for a broad range of partners in music and film including over 150 movie studios and music labels. These include marquee brands as well as rising independence giving us a diverse and defensible portfolio of content across formats. A recent and exciting addition to our exclusive portfolio is Handmade by Robots which we acquired in December.

This was the brand’s first full quarter as part of Alliance and we’ve already made strong progress expanding its retail distribution across our network. Looking ahead, we’re preparing for significant new releases in the second half of 2025, featuring iconic franchises such as DC Comics, Harry Potter, Jurassic World, Peanuts, Disney, Sonic the Hedgehog, Hello Kitty, SpongeBob SquarePants and Star Trek. These properties are beloved by fans and collectors around the world and we believe Handmade by Robots is well positioned to become a breakout brand in the licensed collectible space. Across film, music and collectibles, exclusivity is what sets Alliance apart and it’s a win for all parties. Retailers gain access to unique inventory content owner stuff into our scale and fulfillment expertise and Alliance deepens its leadership across the physical media and collectibles market.

In addition to exclusive content, our direct-to-consumer fulfillment model is another key growth and margin driver for Alliance. This model allows our retail partners to offer a vastly expanded online assortment without holding physical inventory, while Alliance handles the fulfillment directly to the end consumer. We shipped these orders on behalf of major retailers under their brand using our infrastructure which means we’re delivering value to both our partners and their customers. This approach benefits everyone. Retailers reduce inventory risk and expand their digital shelf. Consumers get fast, reliable delivery and alliance benefits from higher margin revenue with greater fulfillment control and operational efficiency. During the third quarter, direct-to-consumer fulfillment accounted for an estimated 40% of our gross revenue, up from 33% in the same period last year.

That expansion reflects both growing retailer adoption and increased consumer demand for collectible and specialty products that may not be widely stocked in store. What’s especially important is that this is a scalable and capital-light channel. We’re able to grow SKU count, serve a long tail of demand and drive margin expansion all without significant working capital investments. As the retail landscape continues to shift towards omnichannel and digital-first strategies, we believe our role as a trusted direct-to-consumer fulfillment partner will only grow stronger. And we’re continuing to invest in the systems, automation and relationships that make this model even more efficient. Another critical piece of our margin improvement story is the investment we’ve made and continue to make in automation and warehouse optimization.

We’ve implemented advanced automation systems that are delivering real measurable improvements in productivity and cost structure. That includes AutoStore, our high-speed automated storage and retrieval system installed in January of 2023 in our Shepherdsville, Kentucky facility. It allows us to process more than 2,000 lines per hour using a leaner workforce while also increasing storage density and improving throughput. In April 2024, we added the Sure Sort X from OPEX which has further streamlined our fulfillment operations, especially for larger nonstandard items like electronics and collectibles. This system has already delivered over $500,000 in annualized savings with another $400,000 expected future reductions as we continue to scale its use.

Together, these improvements have allowed us to optimize our facility footprint including the closure of 162,000 square foot warehouse in Minnesota last May, helping to reduce overhead and improve network efficiency. These are not onetime gains. They are structural improvements that enable us to handle higher volumes with greater speed, accuracy and cost control. In fact, automation was a key contributor to the 10.2% year-over-year reduction in distribution and fulfillment costs that Amanda referenced earlier. And just as important, these upgrades enhance our ability to serve the growing demand in categories like collectibles, electronics and direct-to-consumer shipments, all of which require precision, speed and scale. As we look ahead, we are focused on continuing to leverage automation, not just to cut costs but to unlock smarter growth, better service levels and stronger margins across the business.

To wrap things up, I want to briefly touch on one of the most important drivers of long-term value for Alliance, our M&A strategy. We have had a strong and proven track record in this area having completed 13 significant acquisitions to date, each one aligned with our goal of expanding content capabilities and margins. Our approach is highly targeted. We look for brands with passionate fan followings, access to exclusive IP or strategic value across our retail and fulfillment footprints. The acquisition of Handmade by Robots is a great example, a differentiated collectibles brand that enhances our licensing pipeline and our position in a high-growth category. It’s also a template for how we plan to continue building value by identifying assets that align with our core and scaling them through our platform.

Importantly, we’re disciplined, we evaluate every opportunity through the lens of financial accretion, operational synergy and long-term strategic fit. And we focus on capital-light growth leveraging our infrastructure and relationships to drive returns. We continue to maintain a robust pipeline of opportunities, including proprietary brands, licensing partnerships and tuck-in distribution deals that we believe could accelerate growth and deepen our competitive advantage over time. To close, I want to thank our employees, customers and partners for their ongoing support. As we execute against our strategy, we’re focused on building a business that is scaled, profitable and uniquely positioned at the intersection of entertainment, collectibles and commerce.

We’re proud of the progress we’ve made and we’re excited about where we’re going next. With that, I’d now like to hand the call back over to the operator to begin our question-and-answer session. Operator?

Operator: [Operator Instructions] At this stage, there seems to be no questions on the conference call. I’ll now hand over to Paul for webcast questions. Please go ahead, sir.

Paul Kuntz: And we do have some webcast questions. The first question we had has come in. Do you have a good relationship with Nintendo with the arrival of the upcoming Switch 2?

Jeff Walker: Yes, we do. This is Jeff Walker answering. Yes, we do. We’re actually very excited with the upcoming Nintendo release on the hardware and the software. Yes, we have a pretty significant relationship with them and significant customers on that hardware as well. So we’re pretty happy with the allocation that we’re getting from Nintendo. And we’re also working on some specially unique projects with retailers and Nintendo with us being a distributor in the middle there. So it’s definitely going to help our business here this current quarter and then going into — all the way through 2025 is that the console of — Nintendo’s new console is definitely going to help sales throughout this year.

Paul Kuntz: And our next question, how is Handmade by Robots going? Can you provide an update?

Jeff Walker: Yes. As some of you probably know, I love those brands. We’ve got some great characters coming and it was — as we acquired it from BDA and we’ve been able to transition it over to the Alliance platform and we’ve got so many great new renderings of characters that are coming out here in the second half of 2025 and we’re starting to plan into 2026 now with new characters and I think you’re going to start to see some significant A-level characters hitting the market here over the next few months. And we’re super excited with it. It is following our plans and so forth. So it’s the brand that we’re definitely got a lot of focus and attention on right now.

Paul Kuntz: And our next question, what do you attribute the decline in gaming revenue to?

Jeff Walker: Well, gaming is — there’s a couple of parts on the gaming side, I would say. Hardware, we’re a heavy Microsoft distributor and we’ve had — in fiscal 2025, we definitely had more of a limited allocation. I think Microsoft was pretty tight overall on allocation of hardware, especially through Q4. So that did impact us. And we have pretty high comp levels coming out of Q4 of ’24 as Microsoft kind of leaned in with heavy promotions and a lot of hardware into the marketplace. And they changed that some in ’25. So our comps were definitely tough for that. And then, we’re definitely — we’ve had some good progress with some new releases on the software side. We were anticipating seeing a Grand Theft Auto later this year but it looks like that’s pushed to next May.

That release will be an enormous release for the gaming industry next year this time. And so that’s — and I think you get the cycles on the hardware. So Nintendo is definitely driving hardware right now as well as software sales. So I think with the new Nintendo hardware, we’re going to see a pretty strong next 12 months within the gaming category.

Paul Kuntz: Thank you, Jeff. And our next question, you hit 2.5% EBITDA margin on a trailing 12-month basis, up from 2.2%. Do you have a long-term target margin range for the business? And what would need to happen structurally to reach 3% or more?

Jeff Walker: Well, we are definitely improving our EBITDA margin. I think we’re also improving our gross margin while we’re able to control our costs which is the combination of those two, improving gross margin and reducing operating expenses at the same time. I think we’re definitely on track to exceed 3% in fiscal 2026. We’re focused on getting ourselves back towards closer to that 5% EBITDA margin. But obviously, there’s work to do to get there. But we should see a continued improvement on our EBITDA margin and our net profit margin as well going forward into 2026.

Paul Kuntz: And our next question, what type of impact are tariffs having on Alliance’s business?

Jeff Walker: Yes, that’s the big question. So for us, one thing that was a very good thing when those came into place, is that music and video, we’re not seeing any tariffs on that product. So we have — as you see in our financials, we have pretty significant music and video business. And so that part was not affected at all which was really great. On the gaming side, we’re not seeing any changes in the software. Microsoft did announce a price increase. I don’t know if they’re going to change that now that the China tariffs came down a little bit. But we don’t really see that impacting the sales too much on the gaming side. With our Handmade by Robot business, when the tariffs were sitting at 145%, that is manufactured in China and that business was on complete hold during this last month that we had those high tariffs.

We’re all back full bore right now, 100% back on our plan. We really didn’t lose too much time. We didn’t ship products during that high tariff. So we got some stuff moving on its way over now and we kept production going. Now with 30% tariff on the Handmade, we are able to absorb that within our margin. And we’re holding our retail pricing the same right now on Handmade. We will revisit that later as we get into 2026 if we need to make a small adjustment. It would be a very small adjustment if we did that with respect to Handmade. We do have arcade business that’s has been pretty significant. And we haven’t had any impact to date as we have products here that we’ve been selling through and so forth. So we haven’t lost any sales to date. And now that we have clarity on the 30% tariff, there will probably likely have to be a small price increase on those arcade products.

We don’t really expect that price increase to dramatically impact the sales of the arcades that we sell. And one last thing on the positive side, our export department is pleasantly happy with the potential of some other countries reducing tariffs on U.S. imports which ultimately can help our export sales, also helps the consumer in those countries with a reduced price on the music and video and collectibles that we sell to international customers. And so we haven’t been able to quantify that benefit yet but that aspect of improving the export — the American export business worldwide should show up as a small benefit for us in our export department.

Paul Kuntz: And our next question, you’ve made progress on working capital and reduced debt. How do you see your financial flexibility evolving over the next few quarters, especially if the right acquisition opportunity emerges?

Jeff Walker: Well, we definitely have made a lot of improvements in working capital and debt reduction. A lot of the working capital is from inventory levels and so forth. Right now, we’re — we have a little bit further we can go with inventory levels but not too much farther as we need inventory to be able to sell and create sales. So we’ve got our inventory. If you look at the inventory turns per year, we’ve got a pretty quick inventory turns per year right now. So we won’t see too much more reduction in inventory over the next 12 months. And then as our debt continues to go down from profitability and net income that we’re generating that continues to help reduce our debt there. As far as acquisitions, we do have pretty significant availability on our line of credit right now.

And obviously, with our good profitability and so forth there, there’s ability to help to finance any acquisition opportunity that we see. And we’re constantly in a lot of conversations on acquisitions. And as I mentioned in the presentation there, we’re very picky on the acquisitions and all the different aspects need the lineup. So we follow that and I think that’s important. We got to make sure we always do get acquisitions here.

Paul Kuntz: And another question was direct-to-consumer fulfillment continues to grow. Can you talk about what’s driving the increased adoption from retail partners? And whether you’re seeing momentum with larger chains or niche players?

Jeff Walker: Well, direct-to-consumer is a core part of our business and it’s really based on the aspect of the selection of product that we have in-house, ready to go for the website for retailers, digital platforms. And they like that setup that we have, whether it’s music, video, gaming, collectibles, arcades, the ability for retailers to not hold inventory, how that product listed on the sites and take orders, send us the order within the next 24 hours, that product is going out the door to their customer. That’s a home run win for all of our e-commerce partners. As far as seeing the sales increasing, we have a pretty sophisticated team of people here at Alliance working on with the retailers on their websites to make sure products presented properly, products up there on time, all sorts of aspects to help the retailers sell more product on their e-commerce sites.

And there’s a lot of work to do in that area. And — but it produces results when landing pages and searches and things like that are enhanced and improved on retail sites for partners. And I also want to mention, we do a significant amount of e-commerce fulfillment for Walmart, Best Buy, Target, Kohl’s, Wayfair, Barnes & Noble, even Costco, we do quite a bit fulfillment for them. All of those big retailers, as we get new products in and new lines of products, we can get those up on to their retail websites and so forth and it just becomes incremental sales for us. And another area that we’ve been leaning into and had some really great success on our e-commerce side is with our retail division. We have mail order catalogs and websites but we’ve had really good success in this last year with Temu and Shein and even Instagram sales.

So going more towards the social side and these new sales platforms are generating a pretty significant sales increase. And those platforms are the same as all other web platforms. They’re leaning on the product that we have in the warehouse and our quick ability to ship that to their consumers. So we’re continuing to expand our customer base on DTC.

Paul Kuntz: And one more question looks like can you tell me more about the Paramount exclusive license agreement and what it means for Alliance?

Jeff Walker: Yes. I’m super happy with our relationship with Paramount. I personally spent a lot of time last year working on this with Paramount and coming through with a great solution that works for both them and Alliance. And it was time for Paramount to move towards a license agreement on all of their DVD and move their business into a licensing model. And so just like — a company like Paramount licenses for collectibles and hats and T-shirts and merchandise and all those different things that they do on their properties, on their IP, it was time for them to move that same model for DVD. And it was a win for Paramount. They’ve freed up. They no longer hold inventory of DVD. They no longer have to be the seller of record to big retailers.

And so we took that over January 1st and went live with that. We did bring over a team of people, primarily in sales and operations from Paramount to help lead that up. And then for Alliance, we’re now responsible for sales and marketing and we are working with a third-party company that manufactures all the DVDs for us. And so we’re the seller of record of that to Walmart to their stores, to Amazon and we do all the sales of that across all channels, including Barnes & Noble stores.com, walmart.com, target.com. Anybody who’s purchasing now a Paramount DVD is buying that through Alliance. And Paramount has a fantastic catalog. We all know Forest Gump and Top Gun and Titanic and Mission Impossible and all the catalog ones that they have as well as this first quarter and into this first half of this year, we did the release of Gladiator 2.

We did Sonic 3 already this year. We’ve got a new product for Yellowstone that’s going out later this month here in May with pretty significant DVD. And I want to say the last part on this is it’s really a good move to really extend the life of DVD and the physical format. At the end of the day, it’s becoming less core of a business to the studios overall and for Alliance and retailers and consumers that want to collect their favorite movie on a physical format and not just the digital version, watching it on TV. We’re going to continue to extend the life and the collectibility of physical DVD going forward. And it’s a big win, not only for Paramount. It’s a big win for Alliance. And at the end of the day, we do the manufacturing of the product.

We pay for the product manufacturing and then we pay — it’s a royalty agreement. So we pay a royalty on a quarterly basis to paramount for the sales that we do. So it’s a huge win for Alliance. It’s a huge win for Paramount and we’re super excited. As you know, we have a very broad range of customers in a lot of different sales channels. And we’re really motivated to expand where we have DVD available, different places where people can buy their favorite DVD or a collectible 4K or SteelBook version of that DVD. It’s going to contribute some significant revenue and earnings for Alliance going forward here and it will make a big impact in our fiscal 2026 numbers as well.

Paul Kuntz: One more question to come in while we’re going through that one. This one is, did any specific titles have an outsized impact on the surge in movie sales this quarter?

Jeff Walker: Well, overall, all of the Paramount business created a surge in movie sales. And we did have significantly good sales with Gladiator 2 and Sonic 3 in the quarter. But it’s pretty consistent. I think there’s right now, in this quarter, we got a Yellowstone 1 that’s a pretty significant one. So I think there’s really good consistent catalog business with respect to Paramount there. And then there’s kind of consistently a couple of key new releases on a quarterly basis. So I don’t think it’s just an anomaly here for this particular quarter.

Paul Kuntz: Great. Thank you, Jeff. And that was the last question that we had come in. Any closing remarks you’d like to leave the audience with?

Jeff Walker: Well, we’re super excited with where we’re going right now. We’ve got some good growth and profitability. And we’ve got some great new initiatives we’re focused on here for fiscal 2026 and I think it’s going to be a great year in ’26 for us. That’s what we’re focused on. And we’re coming in with finishing up here our fourth fiscal quarter. We’re halfway through it right now and we’re looking at a pretty robust ’26 for us with these new aspects that we’ve been talking about on this call. That’s it [ph].

Operator: Ladies and gentlemen, that then concludes today’s conference. Thank you for joining us. You may now disconnect your lines.