Ethan Allen Interiors (ETD) 28 Jan 192019 Q2 Earnings call transcript

Good afternoon, and welcome to the Ethan Allen 2019 Fiscal Second Quarter Earnings Release Conference Call. [Operator Instructions] It is now my pleasure to introduce your host, Corey Whitely, Executive Vice President, Administration and CFO. Thank you.

You may begin.

Thank you, Rafael. to December conference XX, welcome second for and ended quarter XXXX. afternoon Ethan call Allen's our Good This conference press call information this on supporting ethanallen.com, call. is including referred being recorded you details, release also and to will in find and of our reconciliations release the contains where which non-GAAP webcast on live

our updates As are the and to or risks could cause some the our on growth filings matters brief subject actual Please our discussed our to SEC questions. business uncertainties The today materially. no forward-looking initiatives. revise obligation the ongoing open up We'll on include will complete for those comments this provide reminder, financial lines results, to any a to a forward-looking Farooq update call. the that differ results review on provide statements details for risks. CEO, assumes that telephone Chairman refer and of Company After I and then during will Kathwari,

consolidated And sales Our $XXX.X challenging prior a fiscal net our the with quarter X.X%, second of first in million compared XXXX year. $XXX.X year fiscal million macroeconomic ended months of conditions. of to the consolidated six the sales despite increase we net for

year our the million sales for Our quarter. prior compared to segment second and in has the quarter $XXX.X resulted net million compared the strong prior retail retail sales of segment profitability. to Wholesale and net half, in year the an for a million $XXX.X $XXX $XXX opportunity demonstrating retail of million driving net increased first the profitability

order high first backlogs the levels sales getting second second up quarter shipping during This Wholesale in were the During delays at elevated quarter year GSA segment year, pressures the levels to year sales margin first XX% bids, extraordinary bankruptcy. we experienced more normal discounts wholesale liquidating the We second consolidated contract quarter. an the another quarter. delays. for in in experienced percent backlog caught to important increased during international were to for the prior XX.X% total the this as order the And and manufacturing their GSA quarter quarter compared much mix. a Wholesale provided were bidder levels had year decrease no efficiently running the Retail discounts on XX.X% with our XX.X%. resulted prior prior gross at as compared year was our is as year to also shipping previous GSA to inventory due in pricing was compared Consolidated was gross off margin sales this orders pricing. increasing these sales win extraordinary while in the our XX.X% quarter quarter standard that order sales a consolidated of their in

million. expenses $XX.X The increased quarter cost adjusted about $XX.X increase operating primarily expenses million adjusted distribution Year-to-date at and was second operating offset X.X% were partly operating Our X.X% running is advertising. a advertising decrease increases was variable and by in retail, to of in sales. due expenses cost

year for share was second compared operating and EPS second XX% $X.XX compared prior per $X.XX to to was per the share The the the compared per X.X% margin Adjusted in X.X%. which period. to was second share. was the quarter, rate quarter. GAAP that the XX.X% in compared $X.XX for share per EPS quarter the tax $X.XX For to year quarter prior

year the to Act rate income diluted been With have last current on XXXX period. would normalized adjusted in the comparative prior year's $X.XX share Tax the the effects of per year EPS

debt that, million call securities no turn balance to Turning with with over to we quarter sheet, I bank quarter With outstanding. Farooq. the the the ended and of paid $X.X million to during the and dividends $XX.X cash will

Thank Corey. right, you. All

differentiate to unique vertically our an opportunity mentioned sales profits. our and release, As both press structure us and in grow integrated provides

manner. forms Our uptown, consistent distressed modern linear, style on reinterpreted fashion more a -- style opportunity transitional an with designs expand simpler in project updated quality. style, attract key our gives reach us spring, which new introducing in traditional, and are take eclectic a superior smaller initiatives customer base. finishes. larger developed products, a expanding with of casual style This Modern, scale, All artisan, to in passport, new transitional and global include These is our Relaxed through products introductions classic an dressier in in of recent diversity a products audience. These include: consistent a in to in level style,

on focus next Our talent. always important is

managing and design A client. locations our them The includes merchandising also continued requires from and manufacturing who strength a to teams operations. structure positioning X,XXX major design America, sawmill take in interior ongoing. and network, integrated network to to to develop logistics North associates areas the vertically convert long-term a of aspects many to talent relevant retail managing centers locations in more Vermont is customer a marketing, various of diverse in Our Northeast our

expanded last XXX Wuhan, magazine, six XXX Phnom China large in Colorado flagship Company utilization we of center Arbor, in continued licensee in through Virginia Expanding new centers the Cambodia. of XX and relocated. marketing in XXXX, a million digital reach and In Penh, design Direct Corner, we and construction also about mailed all under Mail. fiscal locations. XX% our a critical. months, XXX relocations center are initiatives opened campaigns. centers last include this Coralville, months, York; Direct copies Iowa; These Internationally, our design Tysons XX operates of with also have Mail The over integrated our opened New During Recently of the been three Michigan. Denver, last Ann in America Albany years, design design design centers, North new

version an implementing program. advanced management also customer relationship are a CRM, We of a

white manufacturing a glove believe in and logistics on costs a made Continued clients, in in service America workshops focus our North logistics competitive that returns. of gives national to on in our delivers and We and improving manufacturing us furniture service logistics North at advantage. logistics efficiency of with control our and resulting retail American XX% products our landed delivers excellent

manner, socially brief to environmental, introduction, comments. or responsible for continue enterprise also safety on We open questions pleased this and a including focus to am I With in health our management. conducting

go the and lines. will open we Rafael, ahead

Yes, line from from sir. of Jeremy question Thank comes first [Operator the & Hamblin you. Instructions] Co. Dougherty Your

line Your is open.

Yes, hello, Jeremy.

difference Hi. that Good final color like by Thanks wholesale questions. expectations I wanted results. probably division. get if on could It just evening. seeing for some taking the and to the we looks start significant between was here

of contract, In things on. I GSA provide had two color terms hoping the could I you was

some impact continue to QX that kind specific month, going over or have to gone part one. win of and have Drexel you in can what at noted the led contract. through impact what results? type They’ve part color. any? the that to the point that first is on but The with on that results, that QX type to And is bankruptcy you of of going time, going proceedings two government then shutdown Heritage the their to past forward bankruptcy QX discounting provide is, some That’s obviously more the is -- Hoping this if

Department as with was sales operating as these it margins, at just increased. line and result line, impact as would have State would top on the The were the questions. because Corey that cost an good our the on had well if margins bottom had the increased mentioned, provided normal have Jeremy, bidding, basically both almost gross

that news good most the already this delivered. Now of has is been

which will So they the at month the they be gross two and and been that third regular should margins delivered We're been now -- in them and we've the out bottom last pretty our orders top getting line line. the help our months in -- quarter, the fourth good. have and getting

Okay.

us give of backlog contract the total you at on terms in specifics QX? end -- So can Corey, that State you amount can the more of of on help Department

help to But -- You are give the don't good, the at upon based those able our -- out. will the know, can it we and I the margins Jeremy, and as at I the quarter. use in our that our line recoup is GSA agreements second with we all us top it said, is going I strong to I in numbers word lost we both be to think its able

substantially volume really the bit And the a of maybe government been on shutdown. little just to clarify because impacted hasn’t

not slow in, stop government that whole bit degree, much. the the back, was little so down. actually in I now they’re whole they did impacted coming not today actually to get a -- even good sending this not starting orders. has so they’re but orders But some division area, slowed they we -- -- now just them they’re interestingly were just Yes, is this The they’ve did news busy, very think

Okay.

Okay.

up So in basis Department you're related State in QX on contracts saying be that year-over-year and QX? expect you to a the

as you’re -- of know what you as of it when million and assume impact maybe you that’s because margins. sales of discussed, terms and sales really operating XX% plus, in on talking a say taking Both let's but it us on right. cost, a at means Yes, That's let I’m and XX% sure XX% of dollars we’ve or give -- that that.

up the quarter. them. second of too the even with And were discounts for much speakers] a they on [Multiple margin

they up the just second quarter. So on were slightly

up, were but sales … overall the Yes,

Understood.

In was of our time year. of previous were quarter the sales the previous even we rest products the which at in of if you product, had year, short the higher margins network. a ship second … was year recall. but not deliveries period the the in we the a case of also -- in very impacted had we to That the impacted products efficiencies and that this were this of keep lot year and lot where second were a we quarter, the retail of to a mind number, ship because shipping fiscal were because when our to impacted

Okay. China And that I here was question what you remarks the then And sales segment, think say caught follow-up in -- sales -- your were -- XX%? another on down Wholesale the a did China … in prepared and I just

- the sorry, would ahead. Jeremy, be That go

China? noted provide just international you that I'm you a just saw retail or color side well. of terms … the down on little more And color business business? you also provide could in that you can then Canada as at of clarify in can hoping your you your some

Jeremy, impacted a we of know as add was and then on. let me a by can factors. China overview give Corey number basic

First, Chinese down. slowed economy has

up. going problem. They situation big tariff whether not be Secondly, a held are it's the to created were They XX%. sure also

do, should hard So we in in our Mexico, the determine be had should trying it made be to should to made very operations, product work what Honduras. also in to we where in

all of this created of confusion. a So lot

was had And to were they determine holding so up source the of the orders, result manufacturing. we so also

I a as a an this China well taxes as combination mean, the of the And whole had so somewhat and in of government, the of issue slowdown impact.

is to still as did it was, of economy -- so of less a like strong because tariffs, mean, Chinese not the news on last Now is good we quarter the these I somewhat didn’t the about is go that, concern it which but we a XX%, was concern now XX%. there as about question -- is looks

a So more bit little XX% is tolerable.

the to as clarify, at component wholesale of XX% -- the on for then And Jeremy, Canada. referring wholesale as Canada China well of to both the

wholesale it So Canada level. sales course of and retail impacted also the impacted retail at

just in the situation Jeremy, same And again was Canada, there.

of the For concern was to tariffs, of the quarter, of a beginning products fact on there China. on the American lot

were So up. holding people concerned, they got

number residents On the on San situation Vancouver Chinese pretty for which the Coast Coast West which important also, in been reasons Canada, base the for good the of in West coastline to Diego. -- a their Canada, United down same is especially of whole customer the have a in from slowed States. down purchases second thing of is the

that another So was factor.

Okay.

in slowed tariffs your of end the at So XX% quarter? the XXXX potential in second XXXX, orders like for

Yes, tariff lot were the right, a was on having tariff. whole off because or to confusion. was then this that's the really implemented It thing question a they to tariffs was start XX% supposed decided when implementing created about January talking X, and of the of hold they on later XX% -- the

questions. queue. I the back hop taking for Thanks the in will Okay.

All right. Thank you.

Advisory Telsey the question of from comes from next Cristina Your Group. line Fernandez

Your open. line is

Hello, Yes. Cristina.

I that it afternoon. volatile intake here? a the down the like just ended order to given Hi, the prior note us to X%. quarter, what was during it of quarter you through walk an was wanted more the you increased X% Can ask had seems little bit you good cadence on about it saw

the We down tariffs, Yes, markets were an interesting you were the that were of most shutdown, in coming increase well customers the that government in its to December that that issue and could And back with this November. up people sequentially of developed situation the see last it's December. a had then we substantially, the -- and extremely far in it a all sudden in middle stock of we of in good took our back as could weeks we and in January change number our of doing the factors, the good is so in press really January. two said release, the place in of design traffic news last we’ve held centers -- started

Okay. Thanks.

a it was with you what drivers of gross So the margin. even expansion? the that a the up contracts that margin basis on question low lot were government was from second of understand Can being XX pressure help us points

percentage relative that mentioned, was sales, happens, one Corey one of … said sales XX% As when increase, Corey the was a retail total of to the main

Yes, XX.X%.

XX.X% versus …?

XX%.

Versus XX%.

X.X% show this, said quarter this incur. a while important I’ve That's somewhat impact. much, is will negative an And our it our that that a a leverage margins not to retail of which gross our end-of-the-year all retail sales sides. as somehow costs by operating increased was have business much our by margins positive lot business the leverage and costs the have had both higher versus mention and margin a higher delivered on just X.X% the to to X.X%. major factor having also went know freight because always is So during and the that But were I lower a our of there's impacted volume, towards other that the freight but thing only thing, is, that we that said has you sales also there are - we operating

or similarly, of middle it's in lower the higher is towards more So side. our for our on at operating margins but the X.X% for -- the less the, industry side, on that’s us

the we both as division, somewhat When I slight impacted increase are within higher, impacts I we we good operating and on many other X% affects our our years even retail going manufacturing, as in down it But sides, it I have volume was on operating say mean, going And take our or vertically from company, sawmills, it’s have ability get side with a margins, that well think pretty being both So after much would an -- hand, our to reach. a ways. leverage. operating increase leverage on our that integrated back but and opportunity is some Retail operation. everything. sales XX% margin so on our much,

seem Okay. this shall confirm based think the XX% Marketing big And one going increase was like last question over how for that last you me. marketing the forward spend it about about spend as pretty year? Can you on my saw quarter. and calculation it down against we

last quarter. quarter spent you mean, the in we this X.X%. previous if the to go And about I versus year quarter X.X% first, third of Yes, X.X% we the spent year,

was spent year a a fair and lower that the fourth because of as range last will X.X%, it the in -- in will and very money third be quarters. it amount to closer So that X% against or be we

Thank Okay. you.

from Justin Bergner [Operator next comes of question the & from Instructions] Company. Gabelli Your line

Your line is open.

are Yes, hi there How Justin. you?

are How you are you How Farooq? Corey? Good. doing,

good. Yes,

You disappeared, you’ve I know been. where

happen. These things

that orders So some I comment comp number saw or Is activity traffic second in you that to of -- about the quarter. in ask sort wanted the negative just -- release positive for suppose or it traffic about press sort than or to Jan January in that of less January January suggest the January improving. what was was

year, law this say previous not the year. January compare of not when days its when critical the know, last have next trends closed, January, the the to the are we -- you it's our in that’s to lot January four because the as to positive, it previous And positive been. to three, our now And a business quarter. is of the of second but we positive

said I in just two back. last just in December weeks saw As we held December, people

or back not compared this to the quarter. they’ve started year progressively in second January previous to the has So increased and come to traffic increase

Okay, great.

transportation is how able to the or higher margins net in a you much you able impacted And of costs what higher transportation to quantify it much then metric, quarter? how recover helpful. So traffic were that’s are costs

the to on the Corey, of of East West for was impact coast. was, will or the several instance, on transportation tell the you, products from fronts. this it but Impact Coast

taken also home. in retail level that at So also additional of the the division. costs to the The is by our increased The logistics terms costs products in shipments the and increased some from States. retail for of Mexico from the had to pay consumers costs delivering United that our the Honduras

-- it take given different you at you levels if you numbers? -- all Corey, any So have

a … it's dollars Yes, million over

wholesale. the In

… and component seeing home for wholesale side. the costs retail, of that their volume delivery contract also Then the then at higher carriers fuel. we’re in and because drivers and the is What increased. variable the

kind of it's So across the board.

versus bit and shipped little grown We rail on has have of levels to. a the service that ground also a on timing real basis because more the just a basis

we the course Department products Also freight a the from we centers State we’re this pay taking because ports. Justin, as earlier were so shipped we the at lower talking our margins, lot to of of about contract, distribution but

we margin, we margins, And to take forward too. will the be bear very going with to able so with in. it higher have little But that

pressures great. Okay, eased But any shipping have or not of those yet?

the in second shipments. was was economies on lot the the business judgment It's as softer less all will I for overall I’m mean, doing -- -- overall I is demand we bit just think that Of how depends business I quarter, too and a are more early, positive. of people case, little the making It business somewhat of but I somewhat pressures right. that that think are a and our is. said the be January there there

just stage are on in in two At And whatever last spent we will quarters. the in latter we the first see. so we counting the this

Okay. words And line few coming Relaxed lastly just the then Modern about a product spring? that’s maybe this say could you more out

Yes, you that you’re is able should, to well and this that January which program raised I beautiful, think come a hope is next really because I you it. through month beautiful good

modern, an our great products in taken whether are an our BMW it a reflects expand has just Mercedes, attitude a their say introducing, already and I’m X and is might X, a expanded a so a great X and created X, you will we this you automobile been X. have an similar. smaller so might companies even really brand We this we’ve say, and or like been opportunity folks -- somewhat those to objective of very is a had using Similar X, or just in that that our go-to-market a will whether these people reach maintaining today that companies Our consumer brand expand -- reaching in given reach, and that our quality Two, reach. it's and in -- there's of to a this Ethan are at products we’ve so it manner, are a younger interested who artisan understand new Allen design. that great is base, but wider a scale. people a example

great. questions. taking my much you Okay, so for Thank

Thanks, you. Thank Justin.

Company. And of question from a Jeremy Hamblin we the follow-up from Dougherty line have &

line is Your open.

Yes, hello Jeremy.

I taking for wanted expenses thanks the ask operating about follow-up. to million. the $XX.X just Yes,

at was of to how retail. distribution Corey? much costs increase, the year-over-year. variable $X.X quantify versus increase that terms that up could In wholesale related the costs that’s the increased million of Of you about

at million level, $X.X minor of were side and distribution -- and at other could how costs. on Much then there million Jeremy. the then the about increased high I wholesale had that’s retail some it expenses it, a you was take take costs of of Yes, if you would variable

sales and is deliveries Corey that costs. other increase as due from said, in Yes, to half trucking Jeremy, half distribution of of and retail, increased is basically mentioned we as and the logistic

where there the And systems QX. does has tightness in they Okay. the of across today to been That trucking distribution in out terms where cost compared country. stand there some the were

I less similar. think it's more or

important many second We from carefully. the very giving quarter not did you just we rail, it I the second to we I’m watching East to of Christmas -- that. holidays give do not you are most -- to products this Coast no that that was the decided having costs $X.X are also in million to decided details, too West the quarter. mean, Right by that we going and but probably ship do our in a Coast everything an to because We now else, to Christmas thing quarter, added so in

truck Yes, rail. is that was the higher my truck versus rail the than and

just on million in $X.X quarter. costs the last Jeremy that,

And were longer with those the part was all to to a wow speedy the of customer delivery. really deliveries, wanted and holiday demand. that’s we taken Rail very

it's XX saw here closer range in the half So kind of the terms back to that baseline SG&A to run year, of rate in this looking XX million of XX QX? or forward to closer you

our delivery your to on on that cost as variable compensation -- keep in -- because course variable It on an costs numbers, then you upon sales. costs. as the is at depends based the you’re because our use retail whether they’re if you in is what both costs of designers can much you the of use use, operating division a you Jeremy, just it make everyone of assumption, well factor is mind, especially based terms can judgment business, are based also variable, how the a flat especially considering

exactly that all the and translate sales would else and to? were is split QX, the for and the last were exactly equal, as If QX same Understood. same between retail what wholesale your if year

It the same. will the $X.X side least at on side the translate retail in and less wholesale million about

a year-over-year basis? On

quarter. in the No,

Just in the right in just Corey? -- quarter, one

QX? to As compared

Compared to QX.

Okay.

seems to million, about the $XX be baseline rate? So run it

at in … Yes, going on finally to that It's XX freight to actually depend and comes where XX.

XX It's right. all Jeremy, fine. is

I’m we so that clarify, just can to … No, trying Okay.

to Jeremy. going little be bit lower, a It's

Understood.

Good Okay. guys. luck. Thanks for taking the follow-up,

Thanks. right. All

Thank you.

Ian from question next Schonfeld. [Operator Instructions] from the comes Dominguez of line Your

is open. Your line

All right.

Q, two just says, accounting second, consolidated the to in of like company $X.X on lease Can of to expects also impact terms by And thoughts what our held have explain sheet. that that impact? outline Thanks just I you. guess, a -- how I material looks in that Can you increase material the it it intercompany actually. gross in ASU then, early mentioned works? serve Two profit noticed the previously guess, on as question. the million. for -- One inventory the is XXXX-XX, profit Q, release to I balance in in exactly Thank expects you -- a

Sure. is Corey. Ian, this

On it's the what of of the that side, kind profit. drives inventory really release intercompany

So at million XX our held inventory that where quarter. was about prior $X.X than the was it December less we at the of end

leave So embedded profit when we that that time captured at. inventory, release that wholesale at the we retail

So that's the capture.

inventory capture the held and that So the the inventory the way get of as as decreases, works we kind and sold. profits until it other of profit then it's increases,

the obligations. lease accounting, XX-K, of lease in have we On $XXX about our million

and of rules, it will the up value the as primarily lease a lease corresponding P&L accounting accounting So at really the liability level. balance value be had change, present impact and with throw result no present the basically a net we high an net under asset as There's a that sheet. the asset a just liability on

Thank you.

Thanks. right. All Okay.

from from of line Reiss question Brett next Your comes the Janney.

line Your is open.

the for out to two. net that metric and should question a you give pay count in figures you is or store ask to? one attention even thank Yes, opportunity Do a

The numbers …

had centers XXX our to and our the -- at year, and quarter, total It's the operated, with press in compared XXX was out give retail design last we in XXX. release of the we our but end that Yes, it our had also, independence counts. company

which So also on there in had difference store sales. written total was the a total an difference count, impact in

or three wind at centers? the to year think Okay. you going or But you're you the four to year-end, open. do that you up planning -- design more you're with mentioned less Do

because question, good the right in been a our focus has reposition centers design the it's Yes, to places.

them XX So historically relocations. stores by XX%, these centers are had that locations in relocating in took And them. these are mind basically been that the the -- and all we've Keep then opened back and we years our of they licensees. operated and I’ve almost as retired design all then were about up XXXXs over, XXXXs talked XX%, started

have So business. have whether the going we more we the another than two, we the we may the business, -- is we location it carefully it one number then when would at location by, look some can cases, same. it less get close major to don't, that or close, stays any if will impact. total don't so very is If which negative we do better In determine

So that’s we’ve ones that open also today to relocations. consolidating But way. been that we’re listed that all the going we’ve are

timetable up speed? me Okay. there high is Could if design being with people? you somebody to And are there hard come to is You’ve low to of little curve to bit replace? about the a leaves, a -- X,XXX, so consultants? turnover low, great talk or your a these a on And what’s learning unemployment they for design consultant

interior benefit the we deal operate us, of to the is pressures their based the X,XXX These through some many Ethan years has been of of an who The and they able designers, their entrepreneur, very entrepreneurial very an been get question, ran but with own come come designers I to And are, get designers, time. being our with have businesses. very, vast and turnover also many all we’ve vast, they relative the majority very, which a important Yes, say, the low. And umbrella they’ve the that associated they on Allen. Again join design benefits of a is because do. business for because business under also in ability compensation an economy. manner, also have being being disciplined. the there our employee interior but They because would

over that businesses involved do. so they’re that existing, what we not were are hand, interior there design no other with On longer that the companies there many do are many left

And so, we’ve us. and come really designer, opportunity a join of strong interior they the getting

new the your soft there business is couple last what’s correlation That’s is your data on -- there a appreciate points experience? in right. reported -- of They’ve Is been to that. correlated -- how housing Right, I the And sales? you one helpful. are that.

people case really factors our necessarily is the understand. for all being consumer instance, the or these If whether it is It with, one down confidence. hold an consumer to in homes the help and not we necessarily on business dependent for No, it A term only homes. is because as more external was impacted because shutdowns from I -- -- important are up. factor housing, do this new there not market makes not is confidence one, stock Obviously, are but with we longer comes redecorating. us, our impact, does lot existing have impact people immediate where is of a

see have of don’t impact, some longer term, it impact. -- course, it immediate we So does

Right. Right.

in from a a and your own the to how to at me you my little going out the same talk you that's seems right millennials, buttons Now hit looking in curry Can about and to it's are going bit having there? how business you’re been it win business, and favor business challenges. reach challenge

is our was it, That’s I the product an the quarter question, reach think -- it was industry about that for last our I objective that you called some Ethan and about newest folks. or they objective to artisan talks that many well well brands. we is developed consistent he lot expand different folks industries. And desired, the industry that. asked is our obviously, expand years manner a has I reach. -- brands. many the to one younger with and different somewhat Justin might have reach brand, about General this program Motors millennials to year, referring that know, expand felt been earlier been not furniture Allen We for a our in important necessarily, brand has last and a of the us been known it I’m issue And say auto in through our me he and just lot Similarly home many, has when that using that developed a is companies introduced and certainly of asked to our answered back, question our the

to maintaining without able that good point BMW as be has and in offering companies will and manner price a been maintaining be been them, design to So that in do. of but folks to Mercedes mentioned to our somewhat more I reach Audi but would taking like have similar objective an a them compatible good earlier, reach and quality, design, quality, consistent

points, see out design, larger our going maintain millennials as more with to today reaching that quality reaching of you're opportunity price to more in well quality, we else going as see base everybody in and going much yet in go forward. Ethan consumer being as great has of to folks, you’re we're Allen focused So us offerings a to a lot the that

it. my for Thank appreciate you questions. Great. answering I

All right. Thanks good for questions.

& follow-up And the Justin we’ve Bergner from of line from a question Gabelli Company.

Your open. is line

Hello, Justin.

again. Hi,

clarification that took costs. adjustments to I of results seems in your the couple The that? I purchase cost adjusted Just asset a quarter, -- retail your include, you asset assume quick your What's to questions. in it purchase guess,

[Indiscernible].

that we those retired a Yes, incurred retailer a was so there's that assets and acquired associated certain with are had operate where some that are that we that continuing to of location process. costs and in during market,

company-owned? So an independent became

… chart center a on as Yes, in the the transfer the design that one Yes. that’s back the of shows

a It in Jose retired. all folks. a second We with the very for generation time. and done these San sat was family XX XX, long last for other known down them I've like the we've years, great

we it just think So I December? last, over on took

the month. end of December, In Yes.

that so in? entire cost that the And to bring them represents $XXX,XXX

the No, it's acquisition activities, that inventory. costs, really certain represents around go purchasing just costs other just the related that not --

that inventory, the cost, Yes, main that's we’ve it's inventory. of to course taken and

purchase. -- a is basic That's Yes, this a asset

Okay.

goes operating cash In That our flows.

mainly but that and is the there XX%, there the some then And sorry, -- right? other markets Canada, wholesale Okay. being in down too, China international are

East. the to. been are, They’ve There Middle especially down

situation place Dubai, Qatar, The to motivated, see As it. they with a to they’re still want They news problems good the is, they all can tough impacted. -- have been operating want last but the Jordan, keep that’s in Saudi -- all in had Middle in they’re going, and all the Kuwait, Arabia you the time they’ve it taking East.

exhaust return your pick the could obviously it share we per fiscal that current cash for back share, this And Okay. repurchases is see possible lastly, then, out still does dividend or sort special up? of $X just year was that paid

declared -- need see do. just we to regular the with continue Then dividend. we will just announced our what today, we so -- we Well, also we regular our will dividend, our

got I got we’ve paid we’ve purchased over -- expenditures. of the dividends continuously paying dollars been We invested been you just been we sure also company of buying there, doing as the we've billion watch since both things; capital in we’ve that but We a shares, company know, private. half to float took $XXX this we purchased about million almost -- to back. have XX% -- no make we’ve

been this the used pay basically invest We've cash. able -- of lot up been the more in stage, So fortunate and, buy shares stage so dividends, to back, for at we’ve we’ve yup, a at this our company far.

Justin.

build back to got up. we’ve So, the cash

Okay. Thank you.

right. All

continue. are there no Presenters, at please time. further And this questions

Thanks good are have And there everybody questions, us any let call. if to know. very right. much. much, Thanks very the please All and on

conference This concludes call. today's

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