Earnings Call
Interparfums Inc (IPAR)
Earnings Call Transcript - IPAR Q4 2022
Operator, Operator
Greetings, and welcome to the Inter Parfums 2022 Fourth Quarter and Year-end Conference Call and Webcast. 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. It is now my pleasure to introduce your host, Karin Daly, Inter Parfums' Investor Relations Representative and President and Vice President at The Equity Group. Thank you. You may begin.
Karin Daly, Investor Relations Representative
Thank you, Doug. On behalf of the company, I would like to note that this conference call may contain forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from projected results. These factors may be found in the company's filings with the Securities and Exchange Commission under the heading Forward-Looking Statements and Risk Factors in their most recent annual report on Form 10-K. Forward-looking statements speak only as of the date on which they are made, and Inter Parfums Inc. undertakes no obligation to update the information discussed. It is now my pleasure to turn the call over to Mr. Jean Madar, Chairman and Chief Executive Officer of Inter Parfums. Jean, you may begin.
Jean Madar, CEO
Thank you, Karin. Good morning, everyone, and thank you for participating in today's call. I will start the ball rolling and later, you will hear from Michel Atwood, our CFO, who has been with us now for 6 months. For anyone new to Inter Parfums, keep in mind that when we refer to our European-based operations, we are talking about our 72% owned French subsidiary called Interparfums SA. And when we refer to our U.S.-based operations, we are talking about our wholly owned domestic subsidiaries. 2022 will always be remembered as the year we topped $1 billion in net sales. In 2022, our sales reached $1.087 billion to be exact, resulting in diluted EPS of $3.78—a record year marked by a 24% increase in net sales and a 38% increase in earnings per share. 2022 will also be remembered as the year Donna Karan and DKNY fragrances joined our portfolio as the first full year producing and selling Ferragamo fragrance, and also the first full year that our Italian office was operational. And finally, the year in which we entered into a license agreement with Lacoste, but it wasn't easy selling. 2022 was also a year of ramp-up inflation, surging dollar, holdups in transportation, component shortages, and other supply chain headaches along with lockdowns in China and, of course, a war in Eastern Europe. Let's move on to business by region. First, I want to focus on North America, our largest market. You may recall that for several reasons, through the first nine months of 2022, sales were up by only 4% in North America. As we reported earlier this year, we had logistic difficulties stemming from a change in shipping software, which delayed shipments. Plus, in 2021, you may recall, many U.S. customers trusted us to deliver their holiday shipments in the third quarter, fearing supply chain problems. Those two factors were the main reasons why North American sales rose 140% through the first nine months of 2021. But that fell flat in 2022 when a large amount of holiday sets initially scheduled for delivery in the third quarter didn't get shipped until the fourth quarter, making for a huge fourth quarter comeback. We booked $147 million in sales in the final quarter, resulting in a 22% increase in 2022 North American sales for the full year. Now for the rest of the world, sales in Western Europe and Asia rose 28% and 19%, respectively. Central and South America grew sales by 24%, and the Middle East by 44%, even Eastern Europe achieved modest sales growth of 6% despite the conflict in Ukraine and sanctions on Russia. What is notable about Eastern Europe is that through the first nine months of the year, sales were down 16%. So to be 6% ahead at year-end is a good turn of events. With the exception of China, our travel retail business has shown remarkable resiliency. As we have stated over the course of 2022, the strength of the dollar minimized the accomplishments of our European operations, which grew sales in U.S. dollars by 12%, but grew 20% in constant currency. For Montblanc, we launched a new flanker called Legend Red, which contributed to a 15% sales increase in dollars but a 22% increase in constant currency. Jimmy Choo welcomed the Iron Forever, Pillar, and Man Aka, both flankers, combined with legacy scents, produced a 23% increase in sales in dollars but a 29% increase in constant currency. Coach fragrance sales were up 18% in dollars and 22% in constant currency. As we introduced a new men's fragrance family called Open Road and Wild Rose for women. Our Moncler deal was on the market for a full year, while in 2021, the program debuted in a limited number of our checks late in the year. Among our other new product launches, we have introduced a fragrance for Boucheron called San Julie, Spark for Kate Spade, and several others. Now let's discuss U.S. operations, which achieved sales growth of 58% in 2022, and we have doubled our sales versus 2019 pre-COVID. In the U.S., we launched Momo for men and the scents for the Belavia fragrance family, which spurred brand sales growth by 24%. With the introduction of Alibi and the continued sales of brand favorite, Oskaret, brand sales rose also by 24%, and Abercrombie & Fitch, along with largely authentic and OA pillars saw new flankers growing sales by 28%, while Hollister welcomed Kenyan and Wave brand extensions to grow the brand's fragrance franchise by 16%. As we have said, newer brands such as Ferragamo were included for all of 2022 but only in the final quarter of 2021, and Donna Karan and DKNY sales were consolidated starting in July of 2022. It now appears very clearly that the combination of Donna Karan and DKNY franchise will emerge as our second largest brand within U.S. operations. Starting this year, we have taken over production from the former licensee holder, and have been able to build inventory and gain better control over the supply chain, which in 2022 limited sales and shipments. As our guidance implies, 2023 should be an even better year with new products and brand extensions building throughout the year. 2023, much like 2022, will be defined by brand extensions for all our major and mid-sized brands following an exceptional new product launch schedule in 2021, which included many that we had delayed from 2020. As I have said on previous calls, the advantage of flankers and extensions for successful pillars is that we can leverage the design elements, packaging components, photography labels, as well as advertising and promotional materials across all numbers of the fragrance family. And the big news we announced in December was the signing of a 15-year exclusive fragrance license agreement with Lacoste, perhaps the most widely recognized sports fashion brand globally. Effective in 2024, we will take over the brand's legacy fragrance collection for men and women, and our plan calls for something new to hit the market this year. For generations, the instantly identifiable crocodile logo has advanced sportswear, eyewear, leather goods, home goods, watches, and of course, fragrance. In fact, I recently read that Lacoste was founded in 1933; it was the first brand to feature a logo on its clothing. Lacoste should rank among our largest brands, having generated 2022 sales of over $100 million. As I say on every conference call, our search for additional brands, both established and rising stars, remains a priority for the company. Another piece of good news is Richemont, the owners of Montblanc, our largest brand with sales approaching $200 million, has agreed to extend our fragrance license through December 31, 2025, adding five years to our partnership. So with a seven-year window, we are better able to plan new product launches, promotion and advertising, and distribution plans well into the future. While our new ERP system is hardly a fun topic, it is vitally important to our future. I admit that we outgrew our old system faster than we could replace it. But it was worth the wait. With component suppliers, fillers, and customers across the globe, it was quite a task to keep track of inventory in real-time. Today, authorized personnel can easily access from any secure device anywhere in the world whatever they need, from the quantities and location of goods to the status of existing orders. They can reserve goods pending sale, and we have implemented EDI for certain large customers. A major portion of the ERP system has been deployed with additional modules in the works, including more vendor portals. This was a big investment and a significant headache along the way, with many problems still to solve, but the payoff, even this early in the game, will be very rewarding. I don't have to tell you that the growth of the fragrance industry has been extraordinary over the past two years, and we see no sign of a slowdown. Of all the key beauty categories, fragrance is the fastest-growing, far outpacing hair care, makeup, and skincare. As a pure play in fragrance, with a diverse, well-balanced, and well-recognized portfolio of brands, plus an exceptional staff, we are well positioned to continue to gain market share. We now have four brands with sales ranging from $100 million to $200 million, and they have been growing annual sales by double digits. Overall, our mid-sized brands are performing exceptionally well as well. Among the trends working in our favor and for most of our peers is the popularity of higher concentration products and higher-priced luxury brands. In addition, while perfume has always been and continues to be a popular gift for Mother's Day, Christmas, and Valentine's Day, in recent years, more shoppers are buying fragrance for themselves. They are building fragrance wardrobes and indulging in brands that may be out of reach price-wise in clothing and jewelry. During the pandemic, fragrance buyers have grown exponentially, and when consumers start taking interest in a category, they typically continue. While our 2023 guidance barely factors in China, perhaps kicking in late in the year, the opportunity over time is enormous. I have read estimates that only 3% of the Chinese population wears fragrance, but those that do are young, high-end shoppers. Doing business in China has a host of challenges beyond COVID-related restrictions, such as China's weaker economy and sluggish store traffic. For example, it can take 8 to 12 months to be granted a health registration on a new fragrance product. That said, if the Chinese retail and online market opened faster and if Chinese travel retail becomes more robust, we will need to revisit the subject of guidance. But for now, we are rightfully conservative, cautious, and comfortable with our estimate. Similarly, as the year progresses, we will have better visibility as to orders and sales that may once again call for guidance adjustments. Now I will turn the call over to Michel for a more detailed financial review. Michel?
Michel Atwood, CFO
Thank you, Jean, and good morning, everyone. I'm delighted to be on today's conference call, my second since joining Inter Parfums in September, as Jean pointed out six months ago. Before moving on to our financial results, I will again address the subject of foreign currency exchange rates, specifically the strength of the dollar against the euro throughout 2022. Over 50% of our net sales of our European operations are denominated in U.S. dollars, while almost all its costs are incurred in euros. That has a negative effect on our sales, but it boosts our gross margin. For the fourth quarter of 2022 and full year, net sales reflect a negative 10% and 7% foreign exchange impact versus comparable periods in 2021. We also expect that these headwinds will also impact the first quarter of 2023. As we reported in the final quarter of 2022, net sales were $311 million, a 47% increase from the $211 million in 2021, but at comparable foreign exchange rates, fourth quarter sales actually increased 57% from the same period in 2021. For the full year, 2022 net sales rose to $1.087 billion, up 24% from the $880 million in 2021, while at comparable foreign exchange rates, net sales increased 30% from 2021. I will again point out that our U.S. operations reported sales growth was 58%, removing newly added REMS like-for-like 2022 sales rose 24%, with basically new brands adding 38% for the year. For European-based operations, the 2022 gross margin was 68.2%, up from 66.6% one year earlier, with the increase attributable to several key factors: First, the net sales of our U.S.-based distribution subsidiary increased 16% in 2022 as compared to '21 leading to a favorable mix. Also, as I just noted, our gross margins benefited from the strong dollar. Finally, we announced modest price increases last year and all these inputs combined more than offset higher costs of materials and transportation. For U.S. operations, gross margin rose to 54.7% from 53.1% in '21. The scale benefits coming from our significant growth, combined with pricing actions and favorable channel and brand mix, especially with our newer designer brands, have enabled us to more than offset the impacts of inflation and thus expand gross margins by about 160 basis points in 2022. Moving on to SG&A expenses, for European operations, 2022 SG&A expenses increased 9% from 2021 and represented 48.2% of sales down from 49.4% in 2021 as we were able to leverage our scale. For U.S. operations, SG&A expenses increased 70% from 2021 and represented 39.1% of net sales compared to 36.5% in 2021. With regards to both European and U.S. operations, increased promotion and advertising expenditures were key contributors to the rise in SG&A as we invested to continue to build our brands. Additionally, in 2022, the U.S.-based operations increased expenses related to staffing as we built the organization and infrastructure to support our new brands and future growth. As Jean mentioned earlier, U.S. operations grew sales by 58% in 2022 and doubled versus 2019, which was pre-COVID. So quite a significant change over the last three years for this organization. While it would seem very cavalier to complain about upside surprises in sales, that's pretty much what has happened over the past two years. Already, we've raised guidance for 2023 twice since our initial attempt in November. The issue is not modestly or conservatism, but rather visibility. So when we say our goal is to spend 21% of net sales on promotion and advertising, we mean it, and we have done it back in the pre-COVID years. In 2022, promotion and advertising aggregated to $212 million, which came to about 19.5% of net sales. That amount, 40%, was spent in the final quarter of the year. As in past years, we do a significant amount of spending in the fourth quarter to stimulate holiday sell-through to diminish inventory in stores and push stores into stocking up in the first quarter of the following year. In 2021, we spent $171 million on promotion and advertising, which likewise totaled 19.5% of net sales. So strong spending, but not necessarily in line with our long-term goals. As you read in our release yesterday, an evaluation of Russia's fashion trademark value was conducted by an independent expert, who concluded that the brand value was $11.3 million at the end of 2022. This resulted in a $6.8 million impairment charge in the fourth quarter of 2022. So at the end of the day, our 2022 operating margin was 17.9%, up from 16.8% in 2021, both of which are in our high-teens sweet spot. Below the operating line, due to the sizable swings in currency rates during 2022, we went from recognizing a gain of $2.3 million on foreign currency in 2021 to a loss of $1.9 million in 2022. On a consolidated basis, our effective income tax was down—was 22%, down from 27% in 2021, with both U.S. and European-based operations charging a lower tax rate. In Europe, the lower rate was primarily because of the lower corporate tax rate in France. And in the U.S., the rate declined because we recognized a one-time tax benefit of $2.5 million associated with the 2021 Ferragamo acquisition, which we had discussed already in the third quarter. Overall, when we count the one-time gains and losses for the year, which include impairments, one-time gains and losses and other income, expense, and tax gains in Italy, they broadly neutralize themselves on an Atrox basis. A few other financial points worth mentioning: We closed the year with very favorable working capital of $443 million, including approximately $256 million in cash, cash equivalents, and short-term investments, and a working capital ratio of 2.3:1, a very strong balance sheet. The $151 million of long-term debt relates to Inter Parfums' headquarters acquisition, which was financed by a 10-year EUR 120 million loan, which is about $128 million, plus a $53 million four-year loan agreement for Inter Parfums' acquisition of the Lacoste trademark. With regards to accounts receivable, I think you would agree that the 24% increase from year-end 2021 is quite acceptable in light of the record fourth quarter sales levels. We haven't had any real problems in terms of collections as days sales outstanding was 64 days, up slightly from 2021's 61 days, but down significantly from the 86 days we had in 2020. Inventory levels are up 46% from year-end 2021, and I know it was up to Jean that percentage would be larger. To repeat a point raised in our last call, we have no qualms about carrying higher inventory levels in an environment where shortages abound and transportation is often unreliable. It is better to carry more inventory than risk the sale due to a lack of goods. Our inventory doesn't go stale due to color, size, or season, protecting us from any risk of obsolescence. For the foreseeable future, we will continue to maintain oversufficiency in inventory of components and finished goods. Inventory days on hand increased to 231 days in 2022 compared to 208 days in 2021. Turning to the outlook for the new year, we see more growth ahead, but as you can see from our guidance, the growth we envision for net sales should exceed that of earnings, which is attributable to our commitment to the 21% of net sales invested in promotion and advertising. With the addition of more upscale designer brands, our gross margin, particularly for U.S.-based brands, should continue to grow. And for European operations, the average euro-dollar exchange rate has moderated, and we don't look for that to be a gross margin catalyst in 2023. Lastly, as you've probably also seen in our press release, we are pleased to increase our annual dividend by 25% from $2 a share to $2.50 a share, which further demonstrates our confidence in our prospects for our business for both the near and the long term. Our strong financial position enables us to continue to invest in growth opportunities within our portfolio and enlarge our brand portfolio while continuing to reward our shareholders. Now operator, please open the line for questions.
Operator, Operator
[Operator Instructions]. Our first question comes from the line of Linda Bolton-Weiser with D.A. Davidson.
Linda Bolton-Weiser, Analyst
Yes. Congratulations. I remember when you were much smaller than $1 billion. So congrats on reaching that milestone. So can you maybe just update us on what you're seeing in China since the market has reopened? Are you seeing an uptick in store traffic? And also, Estee Lauder had mentioned some excess inventory in the Hainan region; I guess that's in travel retail. Are you experiencing that? Or is that more of a skincare situation?
Jean Madar, CEO
Yes. I can try to answer that. For us, the start of China is quite slow. Of course, because of Chinese New Year, we saw a lot of people traveling and a lot of traffic in the stores. But I still have some reservations about when China is going to be really opening. It’s quite slow. On top of that, as it was said in my remarks, there have been some changes in the importation of fragrances and cosmetics in China, making it increasingly complicated to get products registered. So, any new product that we want to sell in China, the registration could take anywhere from 6 to 12 months. So that's why we are quite conservative in our business in China. If we see at the end of the first quarter or the beginning of the second quarter that it is still opening up faster, of course, we'll let you know and revisit, but right now, especially in the last 30 to 45 days, it has been quite slow. As for Hainan, yes, that has reopened, but we do have issues of inventory per se. That's what I can tell you now.
Linda Bolton-Weiser, Analyst
Okay. And then—can I ask you, is there any way to quantify how much in sales shifted from the third quarter to the fourth quarter?
Michel Atwood, CFO
Yes. We said it was about $10 million.
Linda Bolton-Weiser, Analyst
$10 million?
Michel Atwood, CFO
Yes, in quarter 3.
Linda Bolton-Weiser, Analyst
Okay. And then what are you seeing in terms of the component shortages? Is that improving at all? Or is it still a challenge?
Jean Madar, CEO
It has been a challenge, and it is still a challenge for especially certain categories of plastic and certain metals that are difficult to obtain. But as you know, we have taken the decision to multiply the sources of supply; we are buying from the U.S., and also not only in Europe. It's still very tight. Just to give you an idea, we have to place our orders a year in advance. So for instance, now all our orders for glass have been placed for this year. You can imagine the difficulty in reacting in case we need more or when we need less. But like Michel said, we think it's better to have more inventory than less. So we are taking some positions on inventory that will enable us to meet our own projections if the market continues to go. Michel, do you want to add something?
Michel Atwood, CFO
Yes. No, no. I was—nothing specific to say. I mean, the other thing we're seeing is we're also seeing some significant inflation on glass products, particularly with the stuff that's purchased in Europe due to the higher increases in energy. As you know, glass is primarily composed of sand and energy. So we have been diversifying also our supply base to evaluate new markets where energy is less of an issue.
Jean Madar, CEO
There is one good news, if I may. The cost of transportation is going down at a very, very fast rate. We used to pay for a container from Asia to America $25,000 for a 40-foot container a year ago; now the price is less than $3,000. So the cost of transportation is going down, and the cost of energy is not going up. So we should see—we could see the light at the end of the tunnel soon.
Operator, Operator
Our next question comes from the line of Korinne Wolfmeyer with Piper Sandler.
Korinne Wolfmeyer, Analyst
Congrats on a really good quarter. So first, could you just comment a bit on what you're seeing with your retail partners, particularly in the United States? We've been hearing from some other players that maybe there is some inventory rebalancing in the department stores. So if you can provide any color on the state of business in the United States?
Jean Madar, CEO
I didn't hear the full question. I'm calling from overseas. You asked us about the inventory at our retailers in the U.S.
Michel Atwood, CFO
Yes.
Korinne Wolfmeyer, Analyst
Yes, the inventory positions of your retail partners in the United States.
Jean Madar, CEO
Yes, yes. What I can tell you is that Christmas was very strong. The sell-through was very, very good. So the inventory at store level is quite low. That's why we have to replenish quite strongly in the first quarter. There is no piling up of inventory at U.S. retailers. On the contrary, I think we need more merchandise right now. Michel?
Michel Atwood, CFO
Yes. I think if you look at the market, the U.S. market grew about 12% last year. We obviously grew ahead. What we found is, I think December was—all relative, right? I mean to what we've had; I think December was at 10% versus the year average of 12%. So maybe a little bit of a, I would say, slowdown is still a very high number. But yes, our inventory levels in trade are actually quite low is what we're finding. All our gift sets have sold through, and we're entering 2023 in a pretty good position.
Korinne Wolfmeyer, Analyst
Very helpful. And then can you just touch a little bit more on the planned increase in marketing spend that you mentioned? Is that going to be pretty balanced across the year? Or are we going to see it maybe hit a little bit heavier towards the back half? How should we be thinking about the cadence of that marketing?
Michel Atwood, CFO
Yes. I mean our marketing spending, at the end of the day, involves two parts. There’s the ongoing building of the brand, the overall equity. But in most cases, what you really want to do is you want to be advertising at a moment when the shoppers are in the stores buying our products, which are going to be during your key consumption periods. The largest one is obviously Christmas. As we run up towards Christmas, it's always a very big quarter. Typically, 50% of our spending happens in that quarter. We expect that this will be very similar. I would say, during the rest of the year, it's more equally spread, even though we generally do spend a lot during Mother's Day and Father's Day, so in the second quarter.
Operator, Operator
Our next question comes from the line of Ashley Helgans with Jefferies.
Unidentified Analyst, Analyst
This is Sidney on for Ashley. I was just wondering if you could talk about expectations around the durability of demand. And then just any differences by region in trends that you would call out?
Jean Madar, CEO
Durability of demand across the region. The demand is not slowing down. What we see in U.S. department stores, in European perfume, and what you see from NPD is a continued growth of this category. Stores are giving more space in Europe, in the U.S., in the Middle East, and in Asia. We are recruiting new customers. I would like to tell you that we think that one day it's going to slow down, but right now, it's still very, very strong.
Michel Atwood, CFO
Yes. Maybe just to build on Jean's comments. If you look at the world today, you've got really three groups. You've got Europe where typically fragrance penetration has always been very, very high—above 50%. What we're seeing there is continued strong demand, premiumization of the category, and increased usage habits as opposed to merely more penetration. So, much of the growth there is coming from increased usage and premiumization. If you look at the U.S., the U.S. historically has had a much lower level of penetration. We're really hitting across all cylinders. We're seeing a clear increase in penetration that started during COVID, and that continues to be strong. This offers a strong pipeline of new consumers entering the category. We know that when consumers enter these categories, they build their knowledge, they get more premium, and they increase their usage. So that could be a strong pipeline of growth for us going forward. The other thing we're also seeing in the U.S. is more and more people are increasing their usage. We're seeing heavier usage, with people using it at different moments throughout the day. Lastly, China and Asia generally have a very low penetration. We are seeing, as we said at the beginning of the call, young affluent people entering the category, looking for more premium brands, more aspirational brands. That offers obviously a huge growth opportunity.
Operator, Operator
Our next question comes from the line of Hamed Khorsand with BWS Financial.
Hamed Khorsand, Analyst
Just on the ad spend—given the demand dynamics that you're experiencing, do you need to spend 21% of your sales?
Jean Madar, CEO
I love this question. Thank you for asking, Hamed. So to answer, do we need to spend? Absolutely because the spend on advertising and marketing our brand is our insurance for the future. This will guarantee repeat sales going forward. So yes, I think it's very important to continue to spend not only on total advertising but also at the point of sale, also in training beauty advisers behind the counter. All this makes the 21% a good spend for the present and the future. This is why we are able to grow faster than the market. Michel?
Michel Atwood, CFO
Yes. I would just maybe build on that, right? It really depends if your focus is on driving short-term profits or growing your business sustainably. If your goal is to deliver short-term profits, then yes, you could reduce spending. But if your goal is to drive total long-term shareholder return, which is ultimately our goal, you need to maintain the right level of spending. This is a category with a lot of innovation—so when you innovate, you need to communicate that innovation and drive trial through sampling. You need to educate people in the stores so they can talk about the product. There is a significant amount of activity that goes behind ensuring that these products stay top of mind for consumers. Remember, this is a very fragmented category, which is good because it means that if you have something that is working, there's potential for significant growth, which we've seen. It also means that you have to be on your toes because competition isn't standing still.
Hamed Khorsand, Analyst
Understood. So given that you didn't spend as much as you'd like in 2022, are you doing some sort of catch-up process here in the first half of 2023, or do you feel comfortable with the ad spend that you have planned out?
Michel Atwood, CFO
Yes. I think it's more of a philosophy, right? This isn't just about equity. It's about having the advertising at the right moment. It's about share of voice versus market share and versus the market share that you're trying to achieve. So we're looking for ROI. As we do our long-term planning, we are planning for more spending, and so we wanted to make sure that that was clear as we were guiding for 2023 that we weren't looking to expand our margins at this point in time. We're focusing really on growing our top line.
Hamed Khorsand, Analyst
Okay. And then just a housekeeping question on the script; you were saying about having better control of the supply chain and shipments. Was that related to DKNY? And what kind of difference have you seen so far with that comment that you just made?
Michel Atwood, CFO
I'm not sure I understood the question. Sorry.
Jean Madar, CEO
Around me, I will have to go over it again. If you don't mind, I will look at it and will answer you offline.
Operator, Operator
There are no further questions in the queue. I'd like to hand the call back over to Jean Madar for closing remarks.
Jean Madar, CEO
Yes. So I'm going to let Michel do the closing remarks. But I can say thank you to everyone for listening. Michel is going to tell you that we’re going to participate in a certain conference soon. Michel?
Michel Atwood, CFO
Yes. Yes. Thanks, Jean. So yes, we will be participating in the Denison conference in New York on the 21st of March. I wanted to thank Linda for inviting us. I hope we'll be able to meet you all or some of you at that time. I want to thank you all for joining the meeting this morning. If you have any questions, please contact Karin Daly at The Equity Group, and we'll be happy to help. I wanted to just close this call by thanking the IP of the U.S. team who has been working relentlessly on fixing some of our startup issues related to our ERP. It's been a huge effort. We've made tremendous progress, and we're in a great place now. I want to recognize those heroes that aren't on the call today who have put in long hours to get us back on track. So I wanted to thank them as well in this call. And so I wanted everybody to stay well and safe, and thanks again for your time today.
Operator, Operator
Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.