Helen of Troy Limited (NASDAQ:HELE) Q1 2025 Earnings Call Transcript

Helen of Troy Limited (NASDAQ:HELE) Q1 2025 Earnings Call Transcript July 9, 2024

Helen of Troy Limited misses on earnings expectations. Reported EPS is $0.99 EPS, expectations were $1.59.

Operator: Greetings and welcome to the Helen of Troy Limited First Quarter Fiscal 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Ms. Sabrina McKee, Senior Vice President of Investor Relations and Business Development for Helen of Troy Limited. Thank you. You may begin.

Sabrina McKee: Thank you, operator. Good morning, everyone, and welcome to Helen of Troy’s first quarter fiscal 2025 earnings call. The agenda for the call this morning is as follows. I will begin with a brief discussion of forward-looking statements. Ms. Noel Geoffroy, the company’s CEO, will comment on business performance and then provide some perspective on current trends and our strategy for the remainder of the fiscal year. Then, Mr. Brian Grass, the company’s CFO, will review the financials in more detail and discuss our revised outlook. Following this, we will open up the call for Q&A. This conference call may contain certain forward-looking statements that are based on management’s current expectation with respect to future events or financial performance.

Generally, the words anticipates, believes, expects, and other similar words are words identifying forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties that could cause anticipated results to differ materially from the actual results. This conference call may also include information that may be considered non-GAAP financial information. These non-GAAP measures are not an alternative to GAAP financial information and may be calculated differently than the non-GAAP financial information disclosed by other parties. The company cautions listeners not to place undue reliance on forward-looking statements or non-GAAP information. Before I turn the call over to Ms. Geoffroy, I would like to inform all interested parties that a copy of today’s earnings release and related investment deck has been posted to the company’s website at www.helenoftroy.com and can be found by navigating to the Investor Relations section of the site or by scrolling to the bottom of the homepage.

The earnings release contains tables that reconcile non-GAAP financial measures to their corresponding GAAP based measures. I will now turn the conference call over to Ms. Geoffroy.

Noel Geoffroy: Thank you, Sabrina. Hello everyone, and thank you for joining us today. The results we reported this morning are disappointing and not reflective of the measurable progress we’ve made on key initiatives or of the opportunities I believe we have ahead of us. Net sales and adjusted diluted EPS came in below our expectations with current trends setting up a challenging backdrop for the remainder of the fiscal year. As a result, we see fiscal ’25 as a time to reset and revitalize our business. We continue to believe that our strategies are the right ones to deliver sustainable and profitable growth. However, the additional work and time needed to reset and revitalize means delaying our delivery of the long term financial algorithm we aspire to.

The first quarter has revealed realities about the business and our company that have been a call to action for me, our global leadership team and the entire organization. While we have made important progress against Project Pegasus and our strategic initiatives, macro factors have worsened since we last spoke and we have more data and insight on the health of our brands and the business. These factors have put heightened focus on the work we must do in some key areas. I will walk you through the insights we’ve gained, the actions we are taking in response and evidence of the progress we are making, all of which give me confidence we are making the right choices for the long term health of our brands and sustained shareholder value creation.

First, let me level set with what has and has not changed. I will start with what has not changed. Our commitment to our purpose, vision and values has never been stronger and our goal of fostering a winning culture anchored in the four As of accountability, agility, taking action and accelerating growth remains steadfast. We are committed to the strategic choices we spoke to you about last October, growing our portfolio through consumer obsession, being and winning where our shoppers shop, fully leveraging our scale and assets and embracing next level data and analytics in everything we do. As a house of brands, we are proud of the diversity of our portfolio and the strong consumer following that our brands have across the home, outdoor, beauty and wellness categories.

Our imperative is to revitalize our brands with stronger marketing, innovation and execution. We are investing in the capabilities we need to successfully deliver our strategy over the planned period and well beyond. We are committed to investing in next level data, analytics and capabilities to improve our effectiveness and productivity across the enterprise. Lastly, we continue to work smarter. Project Pegasus has been instrumental in further solidifying our transformation from a holding company into a true global operating company, enabling us to work more efficiently and effectively across the organization. Our organization has embraced the changes and continues to learn new processes and new ways of collaborating. The savings generated from the changes are being reinvested back into our brands, which we expect to refuel the value creation flywheel.

Now, let’s discuss what has changed or been exacerbated in the first quarter. As has been widely reported, the macro environment and the health of consumers and retailers has worsened. Consumers are even more financially stretched and are even further prioritizing essentials over discretionary items. Specific to our business, we have seen some areas become more challenged over the last three months. For example, an unexpected slowdown in the global outdoor category impacted sales of our packs and accessories. There was also more pressure in the specialty beauty channel and mass beauty overall, especially in beauty tools under $100. Also, more discretionary household items like dry food storage continue to trend down. We’ve heard broadly from mass retail that traffic overall is slower throughout the country and promotional pressure is increasing.

In reaction to these dynamics, retailers are managing inventories more closely to account for the slowdown, and some are implementing new systems to allow for just in time inventory management. All of this exposes us to more volatility and less visibility into order volumes and timing. We are also recognizing the impact that the COVID pandemic had on our business. The industry has had to deal with massive changes in consumption patterns and consumer behavior. There were supply chain issues, overstocking, inventory clearouts, and an explosion in e-commerce. All of this has led to general uncertainty around what a post-COVID environment looks like for many consumer categories, including many of ours, from wellness to kitchen tools to home organization.

Also, since 2020, categories such as insulated beverage, prestige beauty tools and liquids, air purification and travel have become increasingly competitive. As we settled into a more normalized world, we have realized that while consumers were still responding positively to our brands, the COVID volatility had masked some underlying weakness in our brand health. My assessment is that we previously underinvested in our brand-building fundamentals and marketing. This is why one of my first actions as COO was to initiate Project Pegasus to create fuel and focus to revitalize our brands. We are taking actions to address this underinvestment by prioritizing strong brand-building fundamentals and continuing to increase our marketing and innovation spend.

However, it has become clear that the path to sustainable brand growth will take longer than we originally anticipated. I spoke earlier about the need to invest in our infrastructure and core capabilities to support the growth we are targeting. Our new distribution center in Tennessee is one of these necessary investments. While this facility brings us next level technology and capacity that will serve us for years to come, we have encountered some near term disruption as we go live with the last phase of automation. Some implementation hiccups are always expected, but the final phase of startup, which utilizes the highest level of technology and automation, has created some unexpected challenges affecting our fulfillment of small retail customer and direct-to-consumer orders for OXO and Hydro Flask.

These challenges have impacted us in three ways, lost revenue, delayed productivity savings and additional costs. The resulting shipping backlog was a factor that drove our net sales miss in the quarter, while the delayed savings and incremental costs to manually work around the system issues and address root causes hurt our profitability. Although these sorts of growing pains are disappointing, upgrading our processes and systems to state-of-the-art capabilities is critical and continues to be the right strategic choice. Our team in Tennessee is working diligently with our suppliers to address the remaining issues and we have seen our shipping throughput progressively improved during June and early July. I would like to turn now to the actions we are taking to address these issues and maximize our opportunities.

Everything starts with our brands, so let’s begin there. Beginning in fiscal ’24, we refocused on the health of our brands and invested in elevating our brand building fundamentals by developing and implementing a Helen of Troy brand-building framework across our entire marketing organization. This entailed a rigorous approach to quantitatively define and segment the market, selecting who we are serving and clarifying what our brands stand for. All our marketing content, activation and innovation will be grounded in these revitalized, data-centric brand strategies. It takes time to do this rigorous upfront work and then activate to rebuild brand relevance and the innovation pipeline needed to gain momentum and drive consistent revenue and share growth.

We are encouraged that eight of our key categories are growing share this fiscal year through May and five others showed share trend improvement in May in our US measured channels. However, we know we are still in the early stages and there is more work to be done. Let me share a couple of examples of our progress. Hydro Flask has embraced the shift in the category with new on-trend content that depicts young people in a range of activities extending beyond our traditional positioning. We have launched new designs that appeal to more consumers, such as the popular Sugar Crush line with a waterfall of pastel colors and the two-tone Ombre design that both tap into the fashion sense of our target consumer. We also have the timely Limited Edition USA water bottles for Americans to use as they cheer on our athletes this summer.

In addition, we launched a new loyalty rewards program called House of Hydro that allows consumers to earn points that can be used to purchase products on our website. I encourage you to visit hydroflask.com to see the change in our range and our content. Another example is OXO’s recent launch of silicone reusable bags, available in many sizes and colors. These bags solve the consumer’s need to keep food fresh at home and on the go in a planet friendly way. They are differentiated from the competition by a seamless design that easily flips inside out for effortless cleaning. They are also microwave, oven, dishwasher and freezer safe for maximum versatility. OXO is also standing out with its coffee line, earning wire cutter recognition for its nine-cup coffee maker and cold brew coffee maker in 2023 and now its Conical Burr Coffee Grinder in 2024.

I will now shift for a moment and focus on what we are doing at an organizational level to support and build up our brands. The hiring of our first ever global Chief Marketing Officer in mid fiscal ’24 and the related investment in our centralized marketing center of excellence or COE has increased our marketing capabilities exponentially. This COE is comprised of 16 subject matter experts bringing critical skills to the company, including business intelligence, category and consumer insights, experience planning and digital strategy and of critical importance, data and analytics. We now have a clear and consistent view of our category and brand performance, including the underlying drivers and the ROI on our spending by brand and by marketing tactic.

This will enable us to more accurately assess the landscape and our brand health and to invest more strategically. To that end, we recently concluded our first-ever marketing mix analytics study that provided detailed ROI data. This insight is already helping to inform our portfolio and brand level resource allocations. We will leverage this data to improve our ROI and to enhance our full funnel activation plans to ensure we are connecting with our consumers throughout their product and brand journeys. As it relates to efficiencies, our COE has helped us refine our mix of agency partners to ensure we bring best-in-class creativity and maximize our working media investment. This refinement not only enhanced our capabilities but also reduced the number of agencies we work with, resulting in a significant reduction in our nonworking spending.

I spoke to you last quarter about sales and marketing team’s success identifying and capturing incremental distribution so that our brands are available where our shoppers shop. Recently, we welcomed a new head of our North American regional market organization to provide further leadership to drive the implementation of joint customer business plans and sales capabilities including our new distribution strategies. I previously shared that we expanded the OXO SoftWorks kitchen gadget set at Walmart following a successful test. As of June, Oxo SoftWorks gadgets are in 3,200 doors and I’m pleased to report that our expansion is performing well, exceeding both our and the customer’s expectations. Walmart shoppers appreciate the value of OXO’s high quality and universal design in kitchen tools with items like our iconic peeler performing in the top 10.

Examples of new distribution include Braun and Vicks expansion in key drug and mass customers, Drybar tools and liquid expansion across various North American retailers, Curlsmith’s test in Sephora brick and mortar and Hydro Flask broadening presence in premium grocery customers and beyond At the brand level, with our consolidation of the beauty business to central Boston, we have brought in 65 new team members with extensive beauty and consumer products experience. I have been in the beauty and wellness offices several times over the past couple of months and I can tell you the team is energized and ready to revitalize our brands and pipeline. This team’s bold ideas can be seen in our upcoming new Drybar marketing campaign and our product innovation pipeline, as evidenced by the recent launch of Drybar Liquid Glass High-Gloss Smoothing Blowout Cream promising consumers up to 72 hours of smooth.

A woman in a spa setting, using Health & Wellness products.

This innovation delivers right at the heart of our sharpened brand promise of your best blowout and in line with recent consumer trends for glossy hair, especially when used as a regimen with our Drybar tools. Moving on to the business segment’s first quarter market performance, I would like to call out a few bright spots for our brands. In home and outdoor, despite the earlier mentioned softness in the global packs and accessories categories, Osprey continues to gain share in technical packs, where it remains the leading brand. Consumers choose Osprey over the competition for its technical prowess in carry, fit, durability and its use of sustainable materials. The spring introduction of our Escapist on-bike collection was well received and gained immediate traction with bike and outdoor media outlets like Gear Junkie, Bicycle Retailer and Bike Groomer.

Also, recent additions to our extended fit collection generated standout engagement on social media in the quarter. Hydro Flask, while performing below our expectations in the US, grew in all major international markets. This is the direct result of stronger collaboration between our teams as Hydro Flask leverages the experience of the international sales team to open up new opportunities. We expect this expanded distribution internationally, coupled with the previously mentioned distribution gains and new designs in North America to benefit us in the latter half of this fiscal year. Turning to OXO, the brand retains its number one share in kitchen utensils and we see signs that the category is stabilizing. We expect our leading market share, along with OXO’s award winning product design and innovation to benefit us as we continue to expand distribution in current categories and relevant adjacencies.

In beauty and wellness, Drybar expanded its retail presence in Canada, launching in 140 shoppers drug mart locations as well as online in the first quarter. The previously mentioned bold new Drybar campaign, launching later this month is a great example of what I mean when I say, we are elevating our marketing game. For wellness, year-to-date PUR and our Vicks and Braun thermometers have gained market share. Braun and Vicks will see an expanded presence in the drug and mass channels beginning in the second quarter, ramping up more in the second half of fiscal ’25. And finally, despite the delayed savings related to our Tennessee distribution center, Project Pegasus continues to move forward. We have made good progress on the cost of goods sold workstreams, implementing multiple projects that reduce costs and simplify our supplier base.

We have also made good progress on our distribution center optimization by reducing our footprint by four. In closing, when I spoke to you almost three months ago as I was stepping into the CEO role, I could not anticipate I would be sitting here today delivering this message. As I have discussed, the quarter has revealed some realities about our business and our company that we have acknowledged and are addressing. Even with these challenges, I want to reiterate that we remain committed to our strategic choices to deliver sustainable and profitable growth long term. I can assure you the organization has never been more focused and committed to addressing our challenges with speed and agility. We are committed to the actions needed to reset and revitalize our brands, embrace next level data and analytics, be and win where the shopper shops and fully leverage our new distribution network capability.

Our success will be driven by the passion and dedication of our exceptional people who remain committed to our purpose, vision and values. We can and we will do better. Now, I will turn it over to Brian.

Brian Grass: Thank you, Noel. Good morning, everyone. I’ll start by echoing Noel’s comments regarding the disappointment in our first quarter performance and the revision to our full year outlook. New headwinds emerged in the first quarter and some existing headwinds became more pronounced since we spoke to you last. These include a combination of executional challenges, a global outdoor slowdown, increased promotional activity, softer and more variable retail replenishment, and greater macro pressure and uncertainty. Many of these became more pronounced towards the end of the first quarter and some continued to evolve. Our first quarter adjusted EPS results include an adverse impact of approximately $0.50 from unexpected factors that we believe will be largely transitory by the end of the second quarter.

This includes the shipping disruption and additional costs from the automation startup issues in our Tennessee distribution facility, lost revenue from the Curlsmith ERP system integration challenges, and an unexpected spike in health insurance and product liability costs. We also faced higher tax expense from Barbados tax reform, which became immediately effective in the first quarter. We believe we are now past the Curlsmith ERP integration challenges, and we expect to largely overcome the automation startup issues in our distribution facility by the end of the second quarter. It’s important to note that the automation startup issues are only impacting a limited subset of OXO and Hydro Flask orders that rely on the highest level of automation, but unfortunately, the impact is enough to have a meaningful effect on our results for the first half of fiscal ’25.

In response to this backdrop, we are adjusting our cost structure in a thoughtful way that preserves our planned growth investment for the year. We are taking actions to realize between $30 million and $40 million of additional pretax profit improvement in fiscal ’25 to partially offset the impact of expected revenue decrease, lower operating leverage, the more promotional environment we now see for the remainder of the year, and our outlook for a less favorable sales mix than we expected as we entered the year. I’ll now move on to a more detailed discussion of our first quarter results. Consolidated net sales declined 12.2%, driven by a decline in sales of hair appliances, prestige hair care products and humidifiers in beauty and wellness, and a decline in home and outdoor driven by lower replenishment orders from retail customers and a global slowdown in outdoor.

Last quarter, we called out pockets of higher inventory in outdoor channels, which has led to a broader and more pronounced category slowdown this quarter. System executional challenges accounted for approximately $8 million of the consolidated net sales decline between the automation startup issues in our Tennessee distribution facility and the integration of Curlsmith into our ERP system. These factors were partially offset by international growth and higher sales of fans in beauty and wellness. We were able to expand gross profit margin by 330 basis points to 48.7% compared to 45.4% the same period last year. The year-over-year improvement was driven by a favorable segment mix with a higher percentage of home and outdoor sales, lower commodity and product costs driven by Pegasus initiatives, and favorable inventory obsolescence expense year-over-year.

These factors were partially offset by a less favorable product mix within the segments, a less favorable customer mix within home and outdoor, and a higher sales — and higher sales dilution from trade discount and promotional allowance programs in beauty and wellness. GAAP operating margin for the quarter was 7.4% compared to 8.6% in the same period last year. On an adjusted basis, operating margin decreased 360 basis points to 10.3%. The decrease was primarily driven by planned incremental marketing expense of 290 basis points and a 120 basis point estimated impact from additional cost associated with the automation startup issues I referred to earlier. The margin decrease also included higher sales dilution from trade discount promotional allowance programs, increased depreciation, unfavorable health insurance and product liability expense, less favorable mix within the segments, and lower operating leverage.

These factors were partially offset by a favorable overall segment mix with a higher percentage of home and outdoor sales, lower commodity and product costs driven by Pegasus initiatives, and favorable inventory obsolescence expense year-over-year. On a segment basis, home and outdoor adjusted operating margin decreased 520 basis points to 10.6%, driven by planned incremental marketing expense, the additional costs at our Tennessee distribution center, higher depreciation, lower operating leverage, and a less favorable mix. These factors were partially offset by lower commodity and product costs. Adjusted operating margin for beauty and wellness decreased 240 basis points to 10%, driven by planned incremental marketing expense, a less favorable product mix, higher sales dilution from trade discount promotional allowance programs, and lower operating leverage.

These factors were partially offset by lower commodity and product costs and favorable inventory obsolescence expense year-over-year. Our tax rate in the first quarter was 66.1% compared to 15.5% last year. The year-over-year increase is primarily due to Barbados tax legislation enacted during the first quarter of fiscal ’25, which resulted in a discrete tax charge of $6 million to revalue deferred tax liabilities as well as an increase in our ongoing income tax expense due to the change in tax rate. While we were aware of the longer term potential of Barbados enacting a tax change, we did not expect legislation to be enacted with immediate effect, as tax legislation is rarely introduced in this manner. In response to the global minimum tax changes, we have been developing and implementing various phases of our overall tax planning strategy.

We expect that the Barbados tax change will not have a meaningful impact on us beyond fiscal ’25. Net income was $6.2 million or $0.26 per diluted share. Non-GAAP adjusted diluted EPS was $0.99 per share, reflecting lower adjusted operating income and an increase in the adjusted effective income tax rate partially offset by a decrease in interest expense. We continue to generate solid cash flow with cash from operations of $25.3 million and free cash flow of $16.2 million. The year-over-year decline in cash flow is largely due to some strategic inventory build to take advantage of opportunities we see in our peak selling season. We ended the quarter with total debt of $748 million, a sequential increase of $83 million compared to the fourth quarter of fiscal ’24 due to the repurchase of $100 million of our stock in the quarter.

Our net leverage ratio was 2.37 times compared to two times at the end of fiscal ’24. Now, I would like to discuss our revised outlook for fiscal ’25. We have taken a hard look at the internal challenges that impacted our business in the first quarter as well as the more pronounced external trends to reestablish what we believe are obtainable objectives. We expect to resolve the remainder of the automation issues at our Tennessee distribution center by the end of the second quarter, leading to better volume throughput, lower costs and greater operating efficiency. Our outlook now reflects the expected impact of our executional challenges as well as our view of increased macro uncertainty, an increasingly stretched consumer, a more promotional environment, and retailers even more closely managing their inventories.

We now expect net sales between $1.885 billion and $1.935 billion in fiscal ’25, which implies a decline of 6% to 3.5%. This includes a full year estimated impact to net sales of approximately $13 million due to shipping disruption from the automation startup issues at our Tennessee distribution facility and the Curlsmith ERP integration challenges. In terms of our net sales outlook by segment, we now expect a home and outdoor decline of 3% to 1% and a beauty and wellness decline of 8% to 5%, which continues to include a year-over-year headwind of approximately 1% related to the expiration of an out-licensed relationship with respect to one of our wellness brands. We now expect GAAP diluted EPS of $4.69 to $5.45 for the full year and non GAAP adjusted diluted EPS in the range of $7.00 to $7.50, which implies an adjusted diluted EPS decline of 21.4% to 15.8%.

We now expect full year adjusted EBITDA margin to compress by approximately 150 basis points to 160 basis points year-over-year with approximately 60 basis points coming from the automation startup issues at our Tennessee distribution facility. We continue to expect benefits from Pegasus and other gross profit improvements to be reinvested for growth. While external factors have become more challenging than originally expected, we remain focused on the long term health of our business and our brands and continue to plan for a year-over-year increase in growth investment spending of roughly 100 basis points. Our adjusted EBITDA outlook continues to include a year-over-year headwind of approximately 50 basis points from the expiration of the out-licensed relationship referred to earlier.

We now expect some gross margin compression from our view of a more promotional environment and a less favorable sales mix. However, we still expect to expand gross margin year-over-year due to Project Pegasus. Finally, we anticipate lower operating leverage from the decline in revenue, which we expect to be more than offset by the additional profit improvement actions I referred to earlier. In terms of Project Pegasus, we are maintaining the cost savings, cadence and restructuring cost estimates that we discussed in our April call and which are outlined in our earnings release. We now expect a GAAP effective tax rate range of 27.3% to 29.5% for the full fiscal year and a non-GAAP adjusted tax rate range of 20.7% to 21.3%. We expect capital and intangible asset expenditures of between $30 million and $35 million for fiscal ’25, which includes remaining equipment and technology of approximately $9 million associated with our Tennessee distribution facility.

We now expect free cash flow in the range of $220 million to $240 million, which implies a free cash flow yield of 10.8% to 11.8% using Friday’s closing share price and adjusted EBITDA in the range of $287 million to $297 million. Net leverage ratio as defined in our credit agreement is now expected to be between 1.6 times and 1.5 times by the end of fiscal ’25. In terms of the quarterly cadence of sales, we now expect a decline of 7% to 4% in the second quarter of fiscal ’25 and a decline of 2.5% to growth of 1% in the second half of the year. We expect a decline in adjusted diluted EPS of 45% to 35% in the second quarter and a decline of 3% to growth of 3% in the second half of the year. Finally, our outlook does not include an estimated impact of a potential divestiture.

We have continued to advance in our process but have extended our timeline as there have been new entrants and we are prioritizing value over speed. We have a small team that is largely dedicated to the effort, so we believe the risk of distraction is minimal. We believe M&A requires discipline and if our value expectations are not met, we will not transact. We have improved the business significantly over the last couple of years and its dilutive impact to our growth rate and margin has been minimized. While we are disappointed with the start of fiscal ’25 and its implications for the full year, we intend to use it as an opportunity to reset and revitalize our business. As Noel mentioned, we see underlying improvement in many aspects of our business, but it is clear that it will take longer than originally expected to produce long term growth algorithm in our strategic plan.

However, I continue to see proof points that we are on the right path. We now have a much stronger brand building capability and culture within the company. We’ve generated savings to fuel a step level increase in brand and innovation investment. We are better leveraging data to invest that spend more efficiently and strategically and we are investing in state-of-the-art infrastructure that is critical for our future success. I’m more convinced than ever that these foundational improvements are positioning us to deliver reliable long-term growth and sustained shareholder value creation. With that, I’ll turn it back to the operator.

Q&A Session

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Operator: [Operator Instructions] Our first question comes from the line of Rupesh Parikh with Oppenheimer and Company. Please proceed with your question.

Rupesh Parikh: Good morning and thanks for taking my question. So I just wanted to go back to your quarterly cadence back half of your commentary. So just want to get a sense, what’s driving that confidence in being able to drive the top and bottom line improvement in the back half of the year? It just appears some of the challenges on the macro, consumer front and competitive side could continue into back half of the year. So maybe some more granularity in terms of the top-line drivers that drive that improvement, also some of the key drivers of the bottom line improvement. Thank you.

Brian Grass: Hey, Rupesh, it’s Brian. I can start and Noel may want to build. I’d say our outlook reflects what we believe is a conservative view of point of sale trends, and what we did is really assume that those remain constant for the remainder of the year. Our most recent trends are better than what we assumed, and share has improved across many categories through May as Noel has discussed. We also reflected visibility that we have into promotions, order replenishment with our retailers and any other factors we have visibility to do with our retailers into our outlook. As mentioned, we assume that Curlsmith integration issues are now behind us and that shipping disruption in our Tennessee distribution facility would continue through Q2.

And then any incremental kind of revenue layered on that base is really from tangible building blocks that we have clear line of sight to. So that would be new innovation. And we take a conservative view on new innovation because it’s a new product and sometimes those take time to get traction. So we look at that conservatively, new distribution that we have line of sight to, and then marketing investment that we’re making and retained in our outlook and the return that we assume on that is based on data and analytics that we feel comfortable with. So that’s kind of the top-line view. And then with respect to margin, we have a bridge in our investor deck that you may have seen that — that will talk about kind of the puts and takes that we did assume with respect to margin.

And we did take into account more promotional environment that we’re recently seeing. We’re also seeing a less favorable mix than what we expected as we were going into the year. So we factored that in and assumed it for the remainder of the year. It continues to reflect the impact of the out-license expiration. And then importantly, we intentionally made our cost structure decisions in a way that preserves the growth investment target that we had going into the year. So, our intent is to continue to invest in the — in brand health for the long term. And so we’ve retained our growth investment for the remainder of the year as a percentage of sales. And then we factored in what we think is a very conservative view of the incremental Iron Giant costs with respect to margin.

Pegasus, no change, as you probably saw in the earnings release. And so we think we’ll continue to get those benefits. And then importantly, we adjusted our cost structure and identified cost improvement or profit improvement actions of $20 million to $30 million that we’re using to offset operating leverage, offset the incremental Iron Giant costs, and allow us to preserve the growth investment spending. So those are the puts and takes in both revenue and earnings or margin. And I believe we’ve tried very hard to have a conservative view on all aspects.

Noel Geoffroy: Right. The only call I would make Rupesh is just that we, again, as Brian outlined in all the different pieces and parts, we really tried to work here as we got all of this information data in in the first quarter to reestablish what we believe are obtainable objectives for the remainder of the year across both the top and bottom line.

Rupesh Parikh: And then my quick follow-up question. Is there any granularity in terms of updated gross margin expectations? I know, last time, I think, you guys expected or implied a little over 100 basis points. I don’t know if there’s anything more granular you can provide?

Brian Grass: Yeah. What I said in my prepared remarks, and I’m trying to stay away from giving you any specific targets other than adjusted EBITDA margin and adjusted operating income. But what I said in my prepared remarks is we do expect some compression from the more promotional environment and the slightly less favorable mix, but we still expect to expand gross profit margin for the full year.

Rupesh Parikh: Okay, great. Thank you. I’ll pass it along.

Operator: Thank you. Our next question comes from the line of Linda Bolton Weiser with D.A. Davidson. Please proceed with your question.

Linda Bolton Weiser: Yes. Hi. So, I sort of get the feeling that there’s a little bit of a peeling back of the onion in terms of discovering, I guess, maybe things that were not as expected within the company. So I guess I’m wondering, like, do you feel that there’s been some holding back of information by some of the operating people in the company? Do you feel like you need maybe to bring in a Chief Operating Officer to help manage all these moving pieces? I just, like, I’m afraid that there’s more shoes to drop in terms of realizing that there’s some other issues because we’ve seen a couple of quarters now where things have emerged. So, maybe you could just kind of explain, like, kind of internally what’s going on communication-wise across the divisions and how, Noel, I guess, how do you feel about what’s going on? Thank you.

Noel Geoffroy: Yeah, thanks, Linda. And I appreciate the spirit of the question. And I would say, the biggest thing I would say in this quarter is a real emphasis on data and analytics as the basis for our strategy and a basis for our decision making. And that is new. It’s more of a new muscle for the company. I talked about in my prepared remarks bringing a lot of new subject matter experts from a marketing COE standpoint and data and analytics, business intelligence rigor behind our brand-building framework et cetera were all a part of that. And I would say during the quarter, several of those data points came together that allowed me to really get further under the hood on our brand health. And that was a combination of the quantitative data associated with the brand building framework.

But also importantly, we got the marketing mix model regression data in this quarter. And it’s a powerful wake-up call, I think, not only for me to get that data and insight, but also for the full organization. We had an organization of folks, and you’ve covered the company for a long time, who enjoyed strong growth during the pandemic. And so their mindset was in one of brand health. And I think as we’ve gotten some of this data in, we’ve recognized there are some things that the pandemic masked, some brand health, underlying brand health issues that it masked, and also some of the underinvestment that we had — have had previously on the business. So I think the new data and that data based approach to things and the insights that that brings is allowing us to bring more clarity across the organization of where we are, what — and acknowledge what we need to work on and now focus on the actions that we need to take and the momentum moving forward across the organization.

I would say, as I look specifically at the marketing mix data, a few things come out of that for me. One is, I’m actually generally very encouraged to see positive ROI on media investment across most of our brands and most of our tactics. So that tells me we have room to optimize further, and we’ve built that into our year to go, as Brian outlined. We also see there’s further room to invest. We’ve not reached saturation, which is why we worked so hard in our year to go to preserve the incremental growth investment that we have built into the P&L because that’s going to be really key for us. But it also showed us some underlying brand health weakness that’s slowing our progress and not allowing us to make as much headway as quickly as we might have anticipated before.

We do have a lot of positive building blocks that we’ve talked about in the past. We’ve got the incremental distribution, we’ve gained some. There’s some — a slide in the investor deck that you can see online that shows tangibly what we’ve gained and we’ve got more to come in the back half of the year. But we’ve also got some other areas of weakness that we’ve got to address in order to get the full portfolio turned back to a growth posture. So that’s what I would say in terms of kind of the brands and the brand health. I think some of the other areas that came up, probably the biggest one is the Tennessee distribution center and this was, as we’ve talked about for quite some time, a very significant state-of-the-art new distribution facility, most of which is operating very, very well and started operating back in fiscal ’24.

This last piece of phase-up is where the most complex part of automation has come in and that’s where kind of mid-May, we reached — we uncovered some challenges with the systems and the automation there. The team’s working really diligently and powering through now, shipping the business. But we still have some root cause work on some of the systems to get that last piece of the distribution center operating. That’s a little bit of a perspective of where my head is.

Linda Bolton Weiser: Okay. And then, my second question is, just to have a better understanding, like, maybe a breakdown somehow more of the 12% sales decline in the quarter, because you said the execution issues were only $8 million. That’s only about 2% decline. Your POS and track channels is actually running flattish against easy prior year comparisons. So, in track channels that should be worse than your non-track channels. So your POS is, I don’t know, do you have a sense for what your all-channel POS is in the quarter? Or what it was? I mean, was it up, was it down? But even if it was down 5%, it just seems like your 12% sales decline is far exceeding what your POS is. So is the rest of all that just the inventory reductions at retail? Is that the plug that is the difference between your POS and your sales performance? Thanks.

Noel Geoffroy: Yeah. So, I mean, as we look at our Q1 revenue shortfall, there were — there’s a piece of it that’s the executional challenges with both Curlsmith and [TNDC] (ph). And that’s about 1.7 percentage points of the decline that we saw in the quarter. The other areas, a big one for us was the global outdoor slowdown. That was, we talked last quarter about pockets of retailer inventory there. It manifested into a slowdown. So an area that had been much stronger has slowed down. There’s not a lot of that probably in the measured channels that you’re looking at. Outdoor tends to be outside of, I think, what you track. And that was a big change for us in the quarter. I would say we did, as we called out, see softer and more variable retail — retailer replenishment. So that impacted kind of the sales for the quarter that you’re not going to see in the POS. From an ordering pattern standpoint, those are probably the biggest drivers. Brian?

Brian Grass: Well, in promotional activity too, which is a reduction to sales, it’s a sales dilution. So that’s something that also you wouldn’t see in the POS data that you’re looking at. And we try and have a very complete view. We can’t get data on all channels and all categories. But, to your question about do we have a complete view? We attempt very hard and buy a lot of data to get the most complete view possible.

Noel Geoffroy: Yeah, we’ve increased our view, I would say, from a data and analytics standpoint of our view across point of sale and across our categories. I will say, as we’ve looked at June, we’ve seen some more favorable trends than what we saw in May. And as Brian mentioned, our assumption was, we would stay where we were for the remainder of the year on where we were in May. June was a bit more positive than what we were seeing through May.

Linda Bolton Weiser: Okay, thank you.

Operator: Thank you. Our next question comes from the line of Bob Labick with CJS Securities. Please proceed with your question.

Bob Labick: Good morning. I just want to kind of follow up on the last points you made there. The question I can’t articulate or answer yet is kind of what happened to the visibility. You gave initial guidance in kind of late April? So two-thirds of the way through the quarter. But then Q1 was obviously more difficult than expected, even with that. And this hasn’t really been typical for Helen of Troy. So, I guess, what’s impacting or what impacted your visibility and what can be done to change and restore it, or was it just faster macro and the kind of prior visibility that we thought was more an illusion? How should we think about your visibility and what impacted specifically this quarter’s — last quarter’s guidance to now?

Noel Geoffroy: Yeah, I would say, there are some things that got worse. Some things that back when we talked to you in April, we knew but got worse. That would be things like some of the macro areas, the weakening consumer, higher promotional activity, some of the retailer replenishment got worse as the quarter went on. The global outdoor slowdown that I just mentioned, that was more pronounced as the quarter went on. As I mentioned earlier, the marketing mix model data was something that we got in the quarter that gave us kind of, Linda used a phrase, peeling back the onion. It allowed us to peel back the onion a bit more and really understand what was going on some of our base businesses. What we didn’t know at all, Bob, when we talked to you in April were some of the TNDC issues, the distribution center issues.

Those arose in mid-May, so they were quite late in the quarter that those came to fruition. And then on the bottom line side, a couple of things that came at the end of the quarter was the unexpected rise or spike in our health insurance costs, product liability costs, and then the very sudden enactment of the Barbados tax reform. So those would be the things that I would say we — certain things we had some visibility to, but they were worse than what we were anticipating. And then some others that truly were very very late in the quarter of developments.

Brian Grass: Yeah, I’d add a little, Bob. If you just try and walk backwards from the 12.2% decline, the system challenges get you close to 10%. And then from there to look at the range that we had provided, I would say that for me, the biggest surprise was really the acceleration of the outdoor slowdown. That was something we were not expecting. Osprey was growing. Osprey was gaining share. By the way, it continues to gain share. The category is down, but it’s gaining share as the category declines. And then we did see a fairly sudden and abrupt adjustment in order patterns with two key retailers. So those were big adjustments that we were not expecting. And then we had not been seeing promotional activity very much up until very recently towards the end of the quarter, started to see that amp up fairly significantly. So for me, it’s kind of those three big things that kind of get you from 10% down to the outlook that we provided.

Bob Labick: Okay, thanks. And then maybe just help us level set, because there’s so many moving parts. What is the underlying demand from your categories right now? What do you expect it to be this year? And what do you expect it to be over a medium term period?

Noel Geoffroy: Yeah, I would say as I look across our categories, we have a lot, and they’re all in various different stages. I think we’ve got some categories that are performing fairly well, insulated beverage, high-end hair tools, prestige liquids in hair continue to perform well as a total category. I would say kitchen utensils, as I mentioned in my remarks are stabilizing. I think kind of coming off of the pandemic, that’s a category now that’s stabilizing. On the flip side, the dry food storage is declining. That’s one that I think really hit a spike during the pandemic. It’s been coming down since then, and it’s actually taken an even more dramatic negative turn more recently as consumers are tightening and not spending as much on discretionary items.

Outdoor had been, as Brian just mentioned, had been performing quite well from a pack standpoint, a travel standpoint, that’s also come down in the recent quarter somewhat unexpectedly, that has been a really strong performer for us. So that’s what I would say overall from a category standpoint. I would say, as we look at our performance in those categories, as I mentioned in my remarks, May saw some more positive green shoots. We grew share in eight of our categories, some of which are healthy categories, some of which are maybe less healthy categories. But grew share for example in thermometers on both Braun and Vicks, grew share in kitchen utensils on OXO, as Brian mentioned. We grew share in tech packs with Osprey despite the decline in that category, as well as some other adjacent categories in Osprey as we’ve extended that brand.

We grew share in insulated travelers on Hydro Flask in fiscal year to date through May. So we’re starting to see some positive momentum there. We would also say some share trend improvements in May in areas like hair appliance, insulated beverageware, and total travel packs, those kinds of areas. So there’s some kind of puts and takes in various areas. But I would say overall, I was encouraged by some of the positive momentum in our share performance in May. We still have a long way to go, a lot of work to do, but I was encouraged by that — the progress.

Brian Grass: And just to clarify, Bob, when Noel refers to May, that’s data that we’ll get in June or later, and that’s not what we use to for our outlook. So our outlook would have — we had an earlier view of point of sale trends, demand category, all the share, all those things. And so to — one of the questions I answered earlier, the conservatism, we feel like we’ve taken a conservative point of view of all those trends from an earlier point that we saw kind of in May. But what Noel is referring to is the data through May that we got after that, which has improved in many aspects.

Bob Labick: Okay, I think I get that. Thanks very much.

Operator: Thank you. Our next question comes from the line of Olivia Tong with Raymond James. Please proceed with your question.

Olivia Tong: Great, thanks. Good morning. Just following up on share performance, as we go into sort of the fall reset period, how should we think about not necessarily share moves, but the risk that there is going to be less space — less shelf space for the categories that you’re in?

Noel Geoffroy: Yeah, I would say, Olivia, we continue to have a strong strategy of being when, where the shopper shops as part of our strategic plan, and that has been a focus we’ve successfully gained new distribution across many different customers and channels already, and we’ve got more lined up in the year to go period. So I see us successfully using data and analytics, bringing good perspective on our brands and broadening the presence of our brands in retailers. So I think overall, that’s going to be a positive for our portfolio and for our brands. There are pockets and places where we’ve lost some ground in places. Maybe we’ve lost a couple of items that aren’t performing as well or shelf presence or placement might have gone down.

And those are some of the factors that come into some of the underlying brand health issues. And part of what we need to really focus on is strengthening the core brands so that we maintain all the facings, all the eye level placement, all of those things that really help ensure that the brand is physically available and front and center on the shelf.

Olivia Tong: Got it. And then maybe I want to pivot this question a little bit to a couple of line items, one being the hair categories, because you mentioned the greatest pressure is on tools under $100. Can you talk about order of magnitude of sales versus your expectations at the low end versus the high end? If you could give us an idea of order of magnitude of the differences there?

Noel Geoffroy: Yeah. I would say, we’re — for several quarters now, that the — kind of the energy in the category has been at the high end of hair tools. I would say at the low end, there’s — that’s where the pressured consumer is kind of not making purchases of discretionary items like new hair tools. And so we’re seeing more pressure there. I will say we do still have a strong presence there as we look at the build-out shelf stuff that we have in mass retailers, for example, of what I would call kind of more opening good items basic hair dryers, basic curling irons, basic straighteners, et cetera. We’re performing well there from a share standpoint, but the category overall at that under $100 is more depressed as consumers in that — shopping that range are looking to spend their money more on the essentials and less on the discretionary items.

The energy in the category is more at the high end. We play not at the very high end that the category has traded at, but we do have Drybar in that area, and that’s an area, quite frankly, I want us to play stronger in the future. And that’s part of the brand building framework work was really to get after who is our target there, what are our points of difference and how can we play even more successfully at that higher end where the category is performing well. I think Regimen is going to be a key to that. We’re one of the few brands that offer both liquids and tools. I talked about hot rollers last time, that’s doing well for us. We’ve launched liquid glass on Drybar that’s having a positive impact on our Drybar Liquids portfolio when used in combination with some of our Drybar tools.

You really get that perfect at-home blowout that our consumer is looking for. So those are some of the initiatives and angles that we need to continue to push in order to perform more strongly where the category action is in that higher end.

Olivia Tong: Got it. So, fair to assume that you’re doing better in hair at Ulta versus Walmart, I assume?

Noel Geoffroy: I would say that our performance at Walmart at the — on the entry level tools is strong. The category overall isn’t performing, is not as strong as consumers are changing there, but our performance with Revlon tools in particular at Walmart from a share perspective is good. The category is less good. Where the category is stronger is in that higher price range.

Olivia Tong: Got it. That’s very helpful. Just last question, two for me. One on shipping and logistics and just thinking through the potential for higher tariffs. First, on shipping and logistics, can you talk about your — whether that higher shipping costs, Red Sea avoidance, things like that are embedded into the revised outlook. And then on the manufacturing exposure, just thinking through the potential that we’ll have higher tariffs, what percentage of your products are made in China and how difficult would it be to diversify your manufacturing footprint, if that made — if that was a logical choice should tariffs go higher? Thank you.

Brian Grass: So, Olivia, thanks for the question. With respect to shipping costs, we are contracted for a very high percentage of our costs. And so we feel good. And we purposely don’t contract 100%, so we can have some level of flexibility to take advantage of opportunistic pricing, but somewhere near 80% is contracted into next fiscal year. So we feel good about that and the protection that, that provides. With respect to tariffs, I would say, look, there’s no way to perfectly protect ourselves. We manufacture about 79% of our goods in Asia and about 15% of that is outside of China. And so that’s — the difference there is what we would be dealing with respect to tariff exposure. We are currently working on several significant projects with our suppliers to move production into areas outside of China that are still in the Asia region.

And right now, that seems like the best strategy to diversify the supply base and reduce potential exposure to tariffs. We also have North America sourcing that we were taking action there as a strategic initiative. That one has proven out to be not as successful as I would say the Asia areas outside of China. That’s proven to be a more successful strategy, and that’s one that we’re leaning into. And like I said, we have several projects underway to move production there. So hopefully, that gives you a sense.

Olivia Tong: Very clear. Thank you very much.

Operator: Thank you. Our next question comes from the line of Peter Grom with UBS. Please proceed with your question.

Peter Grom: Thanks, operator, and good morning, everyone. So I wanted to take a step back and kind of think about the long-term strategy in the context of what you’re running both internally and externally right now. And maybe going back to the commentary to prior questions, maybe just to start, do you still feel like these targets are achievable? And then, Brian, I think you mentioned that it could take longer to achieve these targets. Just any thoughts on when that may happen? I mean, is this more of a one-year reset? Or do you think kind of these internal external changes could make [experiencing] (ph) targets outlined back in October, a multiyear process?

Brian Grass: So, Peter, just to clarify, when you say these targets, I think you’re referring to the long-term Elevate for Growth strategic plan targets. Is that correct?

Peter Grom: Correct.

Brian Grass: Okay. Yes. I mean, look, I think we — at this point in time, that’s what we’re working towards. I think we have to assess, obviously, how the environment progresses for the remainder of this year. We do see this as we mentioned, a reset and revitalize year, and we are making investment. We’re — over two years, we will have increased our growth investment by over $40 million and I’ll point out that it was very back-half weighted in fiscal ’24, and it’s going to be very front-end weighted in fiscal ’25. And so we feel like we are making the right choices for the long-term health of the business. And with that level of investment, new distribution, new innovation, we feel like that gives us a lot of tangible building blocks to get on the path towards Elevate for Growth.

And so, yes, we have to see how the rest of the year plays out, how the environment plays out. But I would say at this point in time, that’s still very much our vision. I don’t know if you want to add anything.

Noel Geoffroy: No. I agree. I mean I would — the only thing I would build on is, as I’ve gotten the marketing with modeling data and seen fairly positive ROIs across our portfolio, across the tactics with opportunity to optimize with opportunities to continue to invest smarter and strategically that only bolsters my confidence that that’s the right path forward for us. We’ve got to get our core brands growing consistently. And the data actually shows that, that will work with the right continued fueling and the right kind of brand fundamentals in place.

Peter Grom: Okay. That’s really helpful. And then just maybe two quick follow-ups. Just on the outdoor declines, can you maybe just talk about the channel more broadly? A lot of the commentary seems to be concentrated in packs rather than weakness across the entire channel, but I’m not sure if that’s a fair read or not. And then on Hydro Flask, you mentioned you’re disappointed with North America performance, maybe could you unpack that a bit more? Is that a function of category softness? Or are you seeing share losses versus some of the brands in the category. Thanks.

Noel Geoffroy: Yeah. So I would say on outdoor, we’re seeing a slowdown overall in outdoor. Our outdoor retailers in general are — have slowed down, and they’re managing their inventories accordingly. So for us, the major impact is on our packs business. That’s where our predominant outdoor is a little bit on Hydro Flask. But as we know, and I’ll pivot to the answer to the second question is the insulated beverage wear category has broadened well beyond kind of an outdoor consumer lens to a much broader consumer base. So while it has — it is impacted somewhat by outdoor, it’s actually much, much broader than that now. And then I would say on Hydro Flask, my disappointment in North America is it has become a big competitive category.

And I think Hydro Flask has now really embraced the shift of where this category has gone. And I think that’s really evident in a lot of the new designs that we see. If you look at our website, you look at our content, you look at the designs we have out there from the Ombre to the Sugar Crush to the USA Limited Edition, we just launched a new Happy Days, Floral, Limited Edition, et cetera. These are very, very different looking designs than you would have seen from Hydro Flask probably just six months ago, where everything was more of an earthy tone and very focused on hiking and outdoor activities. Now it’s a much broader view of where the category is and we’re seeing positive traction from that. As I mentioned, we’re now growing shares in the tumbler section.

And in May, we’re starting to see a share trend uptick across the entire insulated beverage category and I think we’ll continue to see that momentum and we’ll continue to see a broadening distribution footprint that’s going to help us get back on track for this brand.

Peter Grom: Great. Thanks so much. I’ll pass it on.

Operator: Thank you. Our next question comes from the line of Susan Anderson with Canaccord Genuity. Please proceed with your question.

Susan Anderson: Hi, good morning. Thanks for taking my question and all the details today. I guess maybe just a follow-up on the consumer softness that you saw in the quarter. I guess I’m wondering if you’re expecting that to improve in the back half based on the guidance or is it really just those other external factors improving? And then maybe just talk about kind of what you’re expecting for second quarter for demand as well. Thanks.

Noel Geoffroy: Thanks, Susan. No, I would say, as Brian outlined earlier, what we did when we put together this outlook as we assumed the deployment of sales trends that we were seeing kind of through, call it, mid-May timing and that, that would continue through the rest of the year, and those were difficult trends. And I would say, as we’ve now got a little bit more data through June, we’re seeing actually more positive trends in June than what we used for our outlook. So I would say we were not factoring in a measurably improved consumer outlook. Actually, we were assuming that the POS trends that were challenging in the first quarter continued throughout the balance of the year.

Brian Grass: And, Susan, the only point I would add is in the second half of the year, we’ll start to lap some easier compares, we did not assume any improvement in trend even though the comparisons will be easier in the second half of the year. So hopefully, that gives you a little bit of perspective in terms of our attempt to have a conservative view with respect to this outlook. So we’ve assumed that the trends that were pretty unfavorable mid-May and said that those would remain constant for the entire year. So no improvement even though the comparison in the second half of the year will get significantly easier.

Susan Anderson: Okay, got it. Yeah, that’s helpful. And then maybe just in beauty, a follow-up there. You talked about softer consumer demand, I believe, in both tools and liquids now, which — that’s the first time I think I’ve heard you guys talk about it in liquids. So, it seemed like last quarter it was still — the category was strong and, Noel, I think you mentioned too that, hair liquids is still a pretty strong industry. So I’m curious, I guess, how much of the softness you’re seeing is industry wide versus maybe some other share losses with your brands there? And then just on Curlsmith, I guess, when do you expect those disruptions to be fixed? Thanks.

Noel Geoffroy: Yeah, when I look at hair liquids, the category in prestige liquids is still pretty strong. It’s maybe a little less strong than it once was, but it’s — it still has some growth to it. The Curlsmith issue that you just mentioned at the end did adversely impact us. We had a stronger June than we did a first quarter as we put those behind us. We do believe those are now behind us on Curlsmith. Drybar, I would say from a liquid standpoint, we’ve had some wins and some losses from a retailer standpoint. The new innovation on liquid glass is doing well for us. Very, very strong ratings on ulta.com for the blowout cream that I mentioned, the finishing serum that’s showing some positive halo on the business. So I think starting to see some positive there on Drybar, but probably not as strong overall performance on Drybar as I’d like to see us. And I think some of the new innovation will help us trend in a better direction there.

Susan Anderson: Okay, great. Thanks so much. Good luck the rest of the year.

Noel Geoffroy: Thanks, Susan.

Operator: Thank you. Ladies and gentlemen, we’ve come to the end of our time allowed for questions. I’ll now turn the floor back to Ms. Geoffroy for any final comments.

Noel Geoffroy: Thank you all for joining us today. I know we covered a lot this morning, but I hope as you leave the call, we’ve been able to articulate how committed we are to the choices that we’ve made and that the entire organization is very focused on achieving the financial objectives that we outlined for you today. Thanks very much.

Operator: Thank you. This concludes today’s conference call. You may disconnect your lines at this time. Thank you for your participation.

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