Earnings Call Transcript - BBW Q1 2020

Operator, Operator

Greetings and welcome to the Build-A-Bear Workshop First Quarter 2020 Earnings Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Allison Malkin of ICR. Thank you. You may begin.

Allison Malkin, Host

Good morning. Thank you for joining us. With me today are Sharon Price John, CEO; and Voin Todorovic, CFO. For today's call, Sharon will begin with a discussion of our first quarter 2020 performance as well as our positioning and actions in response to the COVID-19 pandemic. After that, Voin will review the financials in more detail. We will then open the call to take your questions. Members of the media who may be on our call today should contact us after this conference call with their questions. Please note, the call is being recorded and broadcast live via the Internet. The earnings release is available on the Investor Relations portion of our corporate website. A replay of both our call and webcast will be available later today on the IR site. The COVID-19 pandemic continues to have a significant impact on our operations, cash flow, and financial position. The uncertain and dynamic nature of current conditions and its ongoing impact could materially alter our outlook. I will remind everyone that forward-looking statements are inherently subject to risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors, including those set forth in the Risk Factors section in the company's annual report on Form 10-K. We undertake no obligation to revise any forward-looking statements. And now I would like to turn the call over to Sharon.

Sharon John, CEO

Good morning. Thanks for joining us today. I would like to update you on the current status of our business and our plans for the coming months. As you are well aware, globally, COVID-19 has disrupted the way families, friends and colleagues interact with each other, including how they shop and what they do for entertainment. This has significantly impacted not only our business, but the global economy overall. However, we believe that Build-A-Bear is well positioned to both manage through this crisis and to emerge for future growth as we work to accelerate strategic changes that have been previously initiated. In fact, as we've consistently shared, we've been executing a strategy to build on our brand strength and diversify our retail channel, expand digitally, and add incremental profitable revenue streams. Our goal has been to leverage the synergy between retail and intellectual property initiatives to profitably grow the entire business. We have been methodically upgrading systems, adding talent, and aggressively managing change within the organization given the backdrop of a rapidly evolving retail, consumer and geopolitical environment. That fluidity and flexibility has never been more relevant than in the circumstances that we currently face. In addition to a sound strategy, upgraded foundation, and enhanced infrastructure, on the onset of the pandemic, we were in a positive cash position with no borrowings on our credit facility. We believe that our strategic repositioning that has been underway will be vital to surviving and ultimately thriving in the new world normal. Our advantages include our powerful brand with high consumer awareness and affinity; a passionate and engaged consumer base with over 8 million accounts opted in for marketing communications; high optionality on our retail store portfolio with over 70% of leases up for renewal in the next 3 years; a rapidly growing e-commerce segment that is leveraging the expanding digital economy and reaching a broader demographic of affinity and adult-gifting segments; and the groundwork in place to further leverage our intellectual property through new revenue streams, including outbound licensing, wholesale, and entertainment. As we discussed on our year-end call in March, in addition to a stronger cash position, we ended fiscal '19 with growth in total revenues and improved profitability. We were building on the momentum of last year's fourth quarter as we started fiscal 2020 with a positive sales trend and we had expected to deliver profit growth for the year. As the severity of COVID-19 became apparent, we put plans in motion to comply with new international governmental recommendations regarding health and safety, which led to the temporary closure of all of our North American and European corporately managed retail stores. This, in turn, necessitated the furlough of over 90% of our workforce and a reduction in salaries for all other staff. We moved to a work-from-home model for our remaining corporate associates and quickly instituted aggressive cash preservation and expense aversion policies. Simultaneously, we shifted our focus in remaining resources to support our e-commerce channel. Since the store closures, we have seen triple-digit e-commerce growth with high volume of key affinity products, including record-setting demand when we launched an initial offering of a furry friend based on the Child from the Disney+ series, The Mandalorian. We quickly modified processes and enhanced capabilities to more efficiently respond to the digital demand, which I will discuss further in detail in a moment. While we made meaningful progress in moving forward, we were not able to offset the complete closure of our store base. Historically, e-commerce has represented less than 10% of our revenues. So even with aggressive growth in that channel, we will still need to reopen a significant number of stores to regain overall growth and profitability with the current business model and mix. Our expectations for the balance of the year continue to evolve as we collect additional data and monitor government decisions and actions. Let me update you on the progress regarding our retail stores and retail portfolio, key digital initiatives and cash generation and preservation. First, as it relates to our retail stores, which, as noted, are a vital component of our revenue stream, we have started to reopen retail stores on a staggered basis in select areas with the goal of delivering a modified version of our beloved retail experience, recognizing the new guidelines that are now standard to essentially all public businesses. In preparation for the reopenings, we modified our in-store experience to accommodate these new standards, including limited occupancy based on store size to allow for social distancing; protective face coverings for our store associates; floor markings, directional signage and new processes in interactive areas, such as the Stuffing Station, to limit personal contact; heightened sanitation processes throughout the store; and associate training focused on the consistent delivery of these new requirements and safety practices. Thus far, with approximately 40 stores reopened, the modifications have been well received based on the positive feedback from both our associates and our guests. We have seen varying levels of business recovery compared to the prior year at stores that have reopened with tourist locations generally faring better than traditional mall sites. Most recently, a limited number of select locations have also been impacted by protest and social unrest in certain areas. Separately, in the U.K., the government has announced June 15 as the day for retailers to begin to reopen, and we are planning accordingly. At this time, we expect to continue to roll out store openings as restrictions ease while we monitor the business rebound and consumer traffic patterns in the upcoming weeks. As I previously mentioned, we began the year with high levels of lease optionality with over 70% of locations having a lease event in the next 3 years, a strategic position we took as we recognized the shifts that have been underway in consumer shopping patterns away from traditional malls into places where families increasingly spend time, including the digital space. We have been working to leverage this position with our landlords to achieve more favorable and flexible terms. In the discussions and negotiations with landlords, we believe that Build-A-Bear is perceived to be a valued tenant that is also seen to be a part of the long-term outlook and the new retail landscape. Thus far, we have maintained the lease optionality that has been so important to our strategy to diversify and evolve our real estate portfolio, and we'll continue to aggressively manage this process. There are many scenarios that we continue to review and modify, which may include selective store closures if terms are not able to reflect the impact of reduced traffic and changing mall performance going forward. Turning to our digital progress, including e-commerce, the investments in platforms, systems and talent that we have systematically made in recent years enabled us to deliver our tenth consecutive quarter of double-digit growth in online sales. After the temporary store closures, the rate of increase grew to triple-digit rates on a sustained basis. With reliance on our e-commerce channel as our primary revenue source during this crisis, we took several actions. These include reworking processes at our fulfillment center to incorporate recommendations of governmental and health agencies. While this initially negatively impacted our order processing time, we also made additional changes to improve our processing, such as increasing our throughput and overall efficiency. After recording the largest single e-commerce demand day in our history with initial quantities of the stuffed animal version of the Child from the Disney+ series, The Mandalorian, which sold out within hours, we added new features to support high-demand product launches. These include a virtual waiting room and a chat bot. We have now had two additional sold-out events of the Child. Notably, the second event set another record demand day, already eclipsing the level previously set in the first quarter. We intend to use these enhancements to support additional business capabilities going forward, including ongoing releases of the Child and other affinity products. In addition, we expedited the infrastructure to be able to buy online and ship from store in order to supplement e-commerce fulfillment while leveraging labor that we would already have available in retail stores after they've reopened. We continue to review all aspects of e-commerce with the goal of driving further growth on both a short and long-term basis, and we expect demand to remain high even with the reopening of stores. Separately, as a tool for consumer engagement and platform for key digital marketing messages, we introduced a program called Workshop Wednesdays as a resource for families to find entertainment, activities, and fun product ideas. This platform further positions Build-A-Bear in the entertainment space, suggests options for gift-giving, and increases awareness of key products while helping stay connected to our valued guests. We garnered almost 100 million media impressions when we announced Workshop Wednesdays, indicating the continued interest in our brand. Importantly, the concept is one that we plan to transfer to our retail channel in the future to increase destination-driven traffic when appropriate. We also plan to continue key actions that were immediately instituted to address the initial crisis, including assertive cash preservation, tight inventory management, a revised marketing strategy, and a reduced workforce. As we look forward to the balance of the year, we are focused on accelerating our digital transformation inclusive of e-commerce, content development, CRM advancement, and entertainment platforms. While we are actively executing a staggered store reopening plan, we believe that our future state will reflect the business transformation that has been the underlying driver of our strategic plan. In closing, these are clearly unusual times that necessitate innovation and flexibility as well as the reevaluation of a wide array of previously held business models, beliefs and corporate constructs. Even with that standard, I continue to believe that our stated strategy of evolving our company to better monetize the innate value of our brand across more channels to more consumers remains directionally on course. In fact, shifting our business focus to the acceleration of our digital transformation will be key to our future as new consumer shopping patterns and preferences are expected to also accelerate at an even more rapid rate to an online space. Build-A-Bear has weathered storms before. We have proven ourselves to be a resilient organization with an authentic emotional brand that continues to be meaningful to consumers. And while I am truly moved by the devastating impact of this pandemic, I still have great hope for the future and remain genuinely proud and grateful to not only lead, but to be a part of a team that has proven time and again that they are passionately believers in this company and that this brand by facing and emerging from a wide variety of challenges in recent years. I'm also pleased that through the efforts of the Build-A-Bear Foundation, we've been able to support organizations that have been providing assistance to those in need during this time. Finally, even as life and business move forward in a very different world, recent events clearly indicate that we are likely to face continued uncertainty on many fronts. Our goal is to emerge in a position of growth, understanding the need to remain flexible while accelerating these key initiatives of our strategy we mentioned to take us into the future, whatever form that may take. For our company, it circles back to our mission statement of adding a little more heart to life and choosing to believe that people will still want to experience joy and special moments by creating their own furry friend for life and having the comfort of a teddy bear hug maybe now more than ever. And now I would like to turn the call over to Voin to review our financials in more detail.

Voin Todorovic, CFO

Thanks, Sharon, and good morning, everyone. I would also like to start by thanking our team and their dedication to our company throughout this challenging period. Not only have they dealt with the store closures, but our headquarter associates transitioned to a full work-from-home model and our warehouse employees have worked diligently to modify processes and fulfill our web orders at record levels. With the reopening of approximately 35 locations, we have begun to welcome back some store employees who were furloughed. I'm proud of how our team has managed thus far through this time. As Sharon mentioned, the first quarter ended very differently than it began. At the start of the year, we expected to report profitability above 2019, and at the time of our last earnings call, we were aligned with that goal. That said, with the spread of the coronavirus, we made the difficult decision to temporarily close all of our stores starting on March 18. At the same time, we implemented several initiatives to provide financial flexibility to manage through this crisis while evolving our business to further capitalize on and expand our omnichannel capabilities to meet the needs of our guests. As it relates to containing costs and as previously announced during the first quarter, we took several actions, including furloughing over 90% of our employees and reducing compensation by 20% for all employees not on temporary leave, including our executive officers. We also eliminated the annual cash retainers for all non-employee directors serving on the Board for the first quarter. In addition, we delayed full payment of bonuses earned by executive officers for fiscal 2019 and 80% of such bonuses for associates, as well as delayed the payment of our contribution to our 401(k) plan, as we shared in an 8-K filed with the SEC on March 27. Separately, we generated savings from a reduction in marketing expenses and the extension of payment terms, among other areas. As of the end of the first quarter, we have not made any cash payments for April store rent. And while the expense was appropriately recorded, we are in active discussions with our landlords to obtain some combination of rent abatement and deferral on an immediate basis, along with more favorable and flexible terms going forward. As Sharon noted, we maintained high lease optionality with over 70% of our leases coming up for renewal in the next 3 years, including approximately 120 locations with natural lease events before the end of this fiscal year. While the vast majority of these locations have historically been profitable, we have the flexibility to accelerate store closings if store traffic and profitability do not meet our expectations going forward. Over the past few weeks, we have reopened approximately 35 stores where governmental orders have been lifted or relaxed, and we currently expect to have the majority of our locations open by the end of the second quarter. As Sharon noted, most recently, a handful of our stores were negatively impacted by local protests and social unrest. We continue to run multiple scenarios and to maintain tight control of expenses as the situation remains fluid and thus, our rollout schedule may change. As we open stores, we are monitoring traffic patterns and sales recovery. In May, while relatively small in number, reopened stores recaptured approximately 65% of their sales from the prior year. This rate improves when the web order fulfillment from our buy online, ship from store program is added on. Notably, in the past two weeks, the sales performance has improved, although there is a wide variability with tourist locations meaningfully outperforming the average. The investments we have made to elevate and upgrade our website and e-commerce platform, along with our partnership with Salesforce, and technology upgrades have been critical as we navigate through this time. Unlike many other retailers, e-commerce is a highly profitable channel for us as we benefit from low return rates and minimal discounts. In fact, EBITDA margin in this channel is better than the higher end of our store four-wall EBITDA contribution margin. Post store closures, our web demand has gained momentum posting growth at triple-digit rates. Moving now to a review of the preliminary first quarter results. I want to note that our GAAP results include $6.3 million in non-cash pretax expenses comprised mainly of estimated store asset impairments, foreign exchange losses due to the fluctuation of the British pound to the U.S. dollar, and we also recognized additional bad debt expense. In addition, we recorded $3.3 million tax valuation allowance taken on our deferred tax asset, which has no impact on cash flow. While my remarks will focus on our adjusted results, you can find our GAAP results and reconciliation of GAAP results to adjusted results in our press release that we issued earlier this morning. In total, for the first quarter, total revenues were $46.6 million compared to $84.4 million in the first quarter of fiscal 2019, reflecting the temporary closure of our stores midway through the quarter. Retail gross margin was significantly lower compared to the prior year as it includes full occupancy costs for 13 weeks while we only had sales from stores for approximately 6 weeks. However, during the quarter, merchandise margin was up compared to the prior year driven by low promotional activity on our website. SG&A was $26.7 million, down $9.1 million from the first quarter of 2019 driven by lower store and corporate payroll due to our COVID-19 mitigation efforts during the last 6 weeks of the quarter. SG&A includes approximately $3 million in payroll expenses related to the pay made to furloughed employees across countries, which we expect to be partially offset by government reimbursements. In addition, we recorded a bad debt expense of $600,000. Adjusted pretax loss was $12.4 million. This compares to pretax income of $2.4 million in the prior year. Turning to the balance sheet. We ended the first quarter with cash and cash equivalents of $21.9 million with no borrowings on our credit facility. This represents an increase of $1.6 million compared to the end of the first fiscal quarter in 2019. We ended the first quarter with approximately $53 million of consolidated inventories, down about 5% from the end of the 2019 first quarter. We are comfortable with both the composition and level of our inventory. We will continue to manage our inventory prudently as business conditions evolve and normalize, and we currently expect inventory to be down at the end of the fiscal year compared to fiscal 2019 year-end. We will continue to stay focused on working capital to ensure that we have financial flexibility to navigate during this unprecedented time. We believe with our current cash position and the actions taken to reduce expenses and maintain continued disciplined expense and cash management, we will have sufficient liquidity for the next 12 months. Separately, as we reported yesterday, we amended our credit facility with U.S. Bank, which will now expire on September 30 of this year, although we do not expect to draw on the credit line during that time. We expect to secure additional financing during the second quarter, which could include a new credit facility, government loan, or monetization of our warehouse assets. This decision will be based on the solution that will give us the most flexibility at the lowest cost. As previously highlighted on our fourth quarter earnings call due to the rapidly evolving nature of the pandemic, we do not believe it is prudent to provide guidance given the ongoing uncertainty. In closing, we believe we have the financial flexibility and strategy to navigate during this challenging time while continuing to make progress on our initiatives that evolve our business model to maximize the power of our brand and drive value for our stakeholders. This concludes our prepared remarks.

Operator, Operator

Our first question comes from Eric Beder with SCC Research.

Eric Beder, Analyst

The online business has shown considerable strength and offers higher margins. Looking ahead, it has remained under 10%. What is your perspective on its long-term potential? Additionally, how do you view the opportunities for savings through the buy online, ship from store model in terms of enhancing productivity?

Sharon John, CEO

Yes, great question, Eric. I hope you're doing well. I'll start by providing some context, and then Voin may have additional comments. This year, we are likely to achieve our largest share of e-commerce in our history, representing a much larger percentage of our total revenue. However, this situation is somewhat unique due to a lower base. I want to be cautious about overstating future sales of e-commerce as a percentage of our total business for this year. On the positive side, as I mentioned earlier, this has revealed a much broader opportunity for e-commerce than we initially anticipated, accelerating our digital transformation efforts. With stores closed, we concentrated our IT and creative resources on boosting e-commerce sales, unlocking significant potential for growth. The buy online, ship from store model could be an essential part of that strategy, as we've previously discussed the development of small warehouses across the country that our stores could transform into. This would help with labor utilization; even if traffic decreases slightly, we can fulfill orders efficiently with our teams. Additionally, with advancing technology, we can manage product shifts to stores to optimize delivery times, potentially extending gift-giving periods by a few days, which could lead to significant sales, particularly during Christmas. So, Voin?

Voin Todorovic, CFO

I think you covered it really well. And we continue to make investments, as we said, in our partnership with Salesforce to drive strong and continuous investments in this channel as there is a big opportunity. We do have really strong margins in this particular channel. As I mentioned earlier, we do have a business model where our web business has a low return rate as well as we are not very promotional. So we continue to drive some of those initiatives because we believe this is going to be the future as we continue to work with Salesforce suite of services and different clouds that have been implemented really to help drive some of the things that Sharon has been talking about to make the omnichannel experience possible for our guests.

Eric Beder, Analyst

Great. And just for a follow-up, do all the stores operate effectively in this new environment with different spacing and formats? Do these stores still make sense in terms of providing a healthy experience for a grandson and a grandfather going out to get a beer, for example?

Sharon John, CEO

Also a great question, Eric. We started this process within days of the shutdown, recognizing that the new world would be very different and that we have, unlike a lot of retailers, which generally is a competitive advantage for us, a very interactive and engaging experience. So we started building and testing processes to assure that we were meeting CDC and governmental standards early on. The key, Eric, is that we will be following the recommendations on sanitation and enhancing all that sanitation no matter what the footprint and format is. Secondly, all of the distancing processes that you talk about and of course the use of masks where our associates will always wear masks, and they are expected to always wear masks. We will be following the individual municipality guidelines for guests in those areas or malls. The key is managing and minimizing how many people go into a location. We've made it as Build-A-Bear friendly as possible, so our masks for our associates actually are bear muzzles that are always smiling. Our social distancing signage is very friendly, and the 6-foot differentiation that people need to maintain is marked on the floor by bear paws. So it's easier for us to guide children through this process. We also have high-touch experiences like how you go through the Stuffing Station process. We have a place where the consumer can place the bear, step away, and the Bear Builder steps up and gets the bear, stuff the bear. They go through the same process, but over 6 feet apart. Most of our cords on our stuffing pedal are 6 feet long, allowing us to pull them away from the Stuffing Station. In most of our locations, the child or the child at heart can still step on that stuffing pedal and stuff the bear while being 6 feet away from the Stuffing Station.

Operator, Operator

Our next question comes from Steph Wissink with Jefferies.

Stephanie Schiller Wissink, Analyst

Voin, I have just a few housekeeping questions and then, Sharon, a couple bigger picture questions for you. So Voin, if we could just start. You mentioned in your prepared remarks that you had occupancy costs essentially carried in your P&L for 13 weeks, although you didn't necessarily pay cash rent in April. So can you just remind us you're expensing a full quarter of rent costs that didn't actually pay? So just help us tie together those comments. And then I think you also mentioned that with respect to your furloughed employees, you had some expenses related to personnel that will be reimbursed. And I'm just curious if that is a reimbursement effect that will come in the second quarter or if you take an accrual for that reimbursement in Q1.

Voin Todorovic, CFO

Steph, thanks for the question. First, as we talk about the occupancy expense, yes, from the P&L perspective, we recognized 13 weeks of expense in the quarter. We did fully pay February and March rent in the quarter. We did not pay the April rent as of the end of Q1. We are in discussions with our landlords, as I mentioned, as we work on a variety of solutions from both abatement and deferral, extending or changing some of the terms on the existing leases. We will continue to work with them to navigate through this challenging time and have an occupancy structure that does make sense for our business on a long-term basis. In addition to that, regarding the government programs and some reimbursements, we did pay our furloughed employees in different jurisdictions, and some of that is outside of North America. The local governments are reimbursing us for some of those costs as a result of the COVID-19 situation. We also have applied for the employee retention credit program with the U.S. government, and some of those funds are expected to come in the second quarter or later in the year. We did recognize some of the receivables as we expect to get that cash, and some of that has already come after the second quarter.

Stephanie Schiller Wissink, Analyst

Okay. That's very helpful. And then, Sharon, my two questions for you. One is just related to a prior question. If you think about the post-COVID or new normal experience in your stores with distancing and other measures of safety, how do you think about the throughput of your stores into the future? If we're operating in a more constrained volume basis over the next couple of years, does that change the way you think arithmetically about your store performance and overall fleet? Does it change the mathematics of the number of stores that you need? How should we be thinking about the fleet performance separate from e-commerce?

Sharon John, CEO

Yes, Stephanie, that's a multimillion-dollar question. The challenge right now is, as we both closed our prepared remarks, there is an incredible amount of uncertainty about what traffic will be like, how we can manage throughput, and how long these procedures and recommended changes will last. In its current form, clearly, our throughput is likely to be less, even if the demand was there, simply because of how long it takes people to go through the process. We may have one cash register closed down or a Name Me station closed down because of social distancing guidelines. I think we're going to have to watch all of that very closely and at the same time, driving capabilities on our e-commerce business while understanding the value of taking our CRM to the next level. This will provide us with additional ways to engage the consumer and remind them of additional reasons to think of Build-A-Bear, particularly from affinity products and gift-giving products. While we believe stores will remain an important part of creating the affinity and love for the brand from the beginning, our recent experiences indicate that the online engagement and approach we have is incredibly satisfying for customers wanting their Build-A-Bear and seeking a new furry friend. There are opportunities to continue to enhance that, and as we're monitoring government perspectives or when we might see changes, we will respond accordingly. The bigger question, Steph, feeds into the lease optionality: no matter what happens with throughput, how many stores do we need, and how much flexibility do we have to respond to this new environment? The truth is that we have a tremendous amount of flexibility. With 70% of our leases with natural lease events, we won't have to buy out a lease. We are in a leverageable position here, and 120 of those leases, as Voin mentioned, are up before the end of our fiscal year. If we cannot reach the proper flexible or variable rent required for a partnership in this physical retail environment, we may end up with a very different footprint. Still, it is important to manage both sides of this coin, recognizing that the retail experience feeds our ability to drive other revenue channels, e-commerce, entertainment, or outbound licensing, which eventually feeds the retail store environment. We also recognize that in the near-term future, we will have to manage large experiences and events differently, whether that's National Teddy Bear Day or some form of the new versions of Pay Your Age Day. We're looking at different ways to implement those that do not create crowds before it's appropriate.

Stephanie Schiller Wissink, Analyst

Okay. That's helpful. And then my last question is just with respect to the success you've had not once but twice now with The Mandalorian and the Child. Does that also reshape the types of brands, properties, and events, and the affinity audience that you think about in terms of expanding the total addressable market? Are there other opportunities like that in the pipeline, whether through licensing or through your own brand creation that could create a much more robust online offering for key milestone or tent-pole events in entertainment or other areas that you've learned now through this experience that there is an affinity customer and an audience for your brand in that form factor?

Sharon John, CEO

Well, we already knew there was an affinity customer and audience. That group is very robust and growing, willing to buy our products online. We significantly over-index with our adult consumer and our gift-giving consumer on e-commerce. We learned from a number of Star Wars products, where any given quarter over 60%-70% of those items are in the 12-plus age range. It has been hard to remember that Build-A-Bear has been around for over 20 years, meaning something to that consumer base that grew up with both those brands and ours. The mash-up of those two beloved characters creates a special meaning for consumers that goes beyond a Pikachu in a different form. The Child is a perfect example of a lot of different elements coming together that proves this point in a powerful manner. The demand for the Child would have been unpredictable. We had over 0.25 million people sign up for notifications when the character was going to be available. A lot of raw volume came from potential buyers outside our Build-A-Bear family, which benefits our brand moving forward. During this timeframe, we also launched Scooby Doo, which also had significant success, along with Stitch, another key Disney property. We've unlocked a lot of potential here. The IT team and marketing team deserve credit for quickly implementing a virtual waiting room to manage demand. We also employed a chat bot for guest services to manage the enormous volume of questions and requests for order timings and delivery. These two assets will enable us to drive concentrated volume for these types of items.

Operator, Operator

We have no further questions at this time. Ms. John, I would now like to turn the floor back over to you for closing comments.

Sharon John, CEO

Thank you so much and thanks, everybody, for joining us today. We look forward to providing further updates on our next call following the second quarter.

Operator, Operator

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.