Bluestem Group, Inc. (BGRP)

Transcription

1 Total Pages: 13

2 CORPORTE PRTICIPNTS Christopher Tukua Vice President, Treasurer & Investor Relations, Bluestem Group, Inc. Bruce M. Cazenave President, Chief Executive Officer & Director, Bluestem Group, Inc. Peter G. Michielutti Executive Vice President & Chief Financial Officer, Bluestem Group, Inc. OTHER PRTICIPNTS George Brickfield Managing Director, BTIG MNGEMENT DISCUSSION SECTION Operator: Greetings and welcome to the Bluestem Group Inc. Fourth uarter Earnings Conference Call. t this time, all participants are in a listen-only mode. s a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Christopher Tukua, Vice President, Investor Relations. Christopher Tukua Vice President, Treasurer & Investor Relations, Bluestem Group, Inc. Good morning, everyone, and thank you for joining us on our fourth quarter earnings call. Before we get started, I'd like to point out today's presentation can be found on our Investor Relations page at bluestem.com. If you haven't already, you can find it there while I run through the forward-looking statement. s a lead-in to the forward-looking statement, we adopted a new revenue recognition standard SC Topic 606 effective February 3, 2018 using the modified retrospective method. s a result, our results are published using this standard. Furthermore, to provide the proper context to the prior-year results, today's discussion will be before the impact of the change. For additional details on the impact, please refer to pages 20 and 21 of the investor presentation. s always, I need to remind you that during the course of today's presentation, various remarks we make about the expectations of our company and other statements that make use of forward-looking words, such as expect, believe, or similar expressions constitute forward-looking statements. ctual results may vary materially from those contained in the forward-looking statements based on a number of factors. 2

3 lso in today's presentation, we supplement historical financial data derived from Bluestem's financial statements, which are prepared in accordance with GP, by the use of non-gp performance measures, including adjusted net sales, net selling margin, contribution margin, adjusted G& expense, adjusted EBITD, and lender adjusted EBITD. Please refer to the press release document available on our website at for further information. With that, I will now turn the call over to Gene Davis, our company's Executive Chairman. Thanks, Chris, and thank you, everyone, for joining us for a discussion of our fourth quarter financial results. Presenting on today's call will be Bruce Cazenave, our recently appointed President and CEO; and Pete Michielutti, sorry, Pete, I screwed that up, our CFO. Looking back on 2018, we made significant progress at Northstar, as we took strategic steps to increase the quality of our credit portfolio and drive improved profitability. t Orchard, we've recently announced that we made the strategic decision to exit six retail brands that combined generated less than 5% of total company revenue. We now have the opportunity to redirect those resources towards a streamlined portfolio, which we believe will accelerate our return to consistent profitable growth. I am truly excited to welcome Bruce to the Bluestem team as we continue the execution of our turnaround plan and path toward profitable growth. I look forward to further advances with Bruce at the helm. I also want to thank Lisa Gavales for her strong leadership and valuable contributions during her tenure as the Interim Chief Executive Officer. On today's call, Bruce will provide some brief comments on his initial observations and priorities. Pete will then review our fourth quarter results and update you on the progress regarding our turnaround plan. s always, we've set aside some time at the end of the call to take your questions. With that, I'll turn the call over to Bruce. Bruce M. Cazenave President, Chief Executive Officer & Director, Bluestem Group, Inc. Thanks, Gene. nd thanks, everyone, for joining us this morning. Let me begin by saying how excited I am about the opportunity that Bluestem presents and I look forward to working with the team as we forge our path forward. Looking across the business portfolio, I see an opportunity to scale the business by leveraging our solid building blocks of brand equity, customer intelligence and strong consumer finance competencies. I've also observed that we have a wealth of talent at the company with a dedicated and results-oriented management team and a great culture. In addition, we have a very engaged and experienced Board of Directors that is highly aligned with the company's best interests, as well as open to new approaches to achieve our collective goals. Overall, I am energized by the potential we have in front of us and I'm delighted to have been received with openness and enthusiasm. Given my past experience in similar situations, I've learned that it's critical to quickly diagnose the business challenges and market opportunities and then set creative, strategic and practical solutions that position the 3

4 company for success. lot of good work in this area has already been done, formulating a three-year strategic plan that can be used to align resources and priorities against the highest importance and the highest impact initiatives and getting the entire organization mobilized towards achieving the overall desired growth trajectory will be key. To that end, over the last few weeks, I've spent the majority of my time meeting with our executives and gaining greater insights into the business. My overall observation is that there are opportunities to simplify the business model, which will enable greater focus, stronger execution and the capture of process efficiencies. s mentioned earlier, I've been very pleased to see the level of talent and strong motivation that exist across the management team. There is clearly a collective focus on supporting the execution of our key priorities and driving profitable growth. Lisa has accomplished a great deal in terms of restructuring and strengthening key aspects of the business, in addition to having taken steps to rationalize the portfolio. With solid progress already underway, I am looking forward to moving to the next phase of our transformation. During the next six months, my priority will be focused on diving deeper into the organization and continuing to meet with managers and key external partners across our businesses. I will be collaborating with the team to identify and activate key profit drivers for the company and develop an action plan for the areas that are underperforming. My goal is that by year-end, we will not only have identified and implemented action plans to improve core business processes, but also in parallel identified new potential areas for growth that should be explored and that can deliver increased long-term shareholder value. I'm happy to provide more specifics on our strategy and game plan on future calls. Now, I'd like to turn the call over to Pete to provide more details on the business and financial results. Pete? Peter G. Michielutti Executive Vice President & Chief Financial Officer, Bluestem Group, Inc. Thank you, Bruce and good morning, everyone. s a reminder, we adopted SC Topic 606 at the beginning of the fiscal 2018 on a modified retrospective basis. The effect of the adoption was a decrease of $13.9 million and $4.7 million for the fourth quarter and full year, respectively, in direct response advertising costs and a corresponding increase in adjusted EBITD. To provide comparability, my discussion will focus on adjusted results which exclude the impact of Topic 606, adjusted for non-cash servicing valuation changes, excludes the inventory write-down of $6.5 million associated with the exit of six Orchard brands and restructuring costs of $2.5 million related to employee costs and professional fees. These adjustments are detailed on pages 5 and 6 of the investor presentation. Starting on slide 5 of the presentation materials, I'll walk you through the fourth quarter adjusted results for Bluestem Brands, Inc. Net sales decreased 5.9% year-over-year compared to the fourth quarter of The decline can be primarily attributed to sales decline at the Orchard portfolio related to our strategic initiative to reduce catalog circulation and a decrease in loyalty program enrollments. Secondarily, sales were impacted by an acceleration of Northstar sales into 3 associated with third quarter marketing efforts to activate or reactivate customers ahead of scheduled account closures. Gross profit rate decreased by 160 basis points to 43.7%. I will discuss this in more detail when going through the results of each of the portfolios. The adjusted sales and marketing expense for Bluestem Brands improved by 210 basis points to 18.4% of net sales reflecting decreased catalog circulation at Orchard, partially offset by higher marketing investments in digital advertising at Northstar and Orchard. 4

5 Bluestem's net credit expense, excluding the impact of non-cash loss on servicing rights, decreased 180 basis points year over year due to lower collection costs and lower merchant discount rate primarily related to the actions we have taken to improve the performance of the SCUS portfolio which are focusing on credit quality and secondarily on net credit margin. djusted G& expenses increased $1.3 million as compared to the same period last year, primarily due to higher incentive compensation offset by lower litigation costs. In the fourth quarter, we recorded a $25.6 million impairment charge related to intangible assets of the Orchard portfolio. In the fourth quarter of 2017, we recorded $191.9 million non-cash intangible asset and goodwill impairment charge. Both of these charges are related to the Orchard trade names and goodwill [ph] and intangible (00:09:17) assets resulting from a decline in net sales attributable to lower [ph] rebate (00:09:21) rates, active customers and new customer acquisitions. djusted EBITD was $60.7 million compared to $54.5 million in the fourth quarter of fiscal 2017, an increase of 160 basis points as a percent of net sales to 10.4%. Turning to slide 7, at the portfolio level, Northstar's fourth quarter net sales decreased 3.2% to $386.1 million due to the acceleration of sales into the third quarter at Fingerhut that I mentioned earlier, in addition to higher discounts. This was partially offset by a modest increase in Gettington sales related to the benefit of new customer acquisition efforts and merchandising improvements. Overall, full year net sales for the Northstar portfolio increased 0.4% compared to fiscal We continued to make progress on our merchandising strategy with a shifted focus on fashion and with brands such as Free People, Michael Kors and Levi's. Most notably, athletic and denim categories have delivered strong results. Beyond fashion, we saw a solid growth in our entertainment business, particularly video games. We also moved our Sahalie product offering into Gettington in late March. While it's early, we are pleased with the results and look forward to reporting their performance in future quarters. In addition, we continued to advance our private label businesses within kitchen appliances such as air fryers in addition to TVs and laptops, which have been effective traffic drivers. Given the higher margin profile of fashion and private label products, we believe these initiatives bode well for gross margin going forward. While we've brought some inventory in early [ph] to get ahead of (00:10:58) tariff increases and Chinese New Year, which created inventory build, we are pleased with the content and quality of our inventory heading into the spring selling season. Gross profit margin for Northstar increased 50 basis points to 43.4% resulting from the benefit of favorable vendor pricing and product cost initiatives being largely offset by higher discounting and shipping expense. Sales and marketing expense as a percentage of net sales increased 60 basis points at Northstar due to higher new customer acquisition, marketing and digital testing, partially offset by lower catalogue and order entry expenses. New credit accounts in the quarter rose by 22% compared to the fourth quarter of last year. Net selling margin for the Northstar portfolio decreased by 10 basis points as compared to the fourth quarter of 2017 due to lower volume and higher customer acquisition costs. Net credit expense decreased 320 basis points as a result of lower collection costs and lower merchant discount rate related to the actions we have been taking to improve the credit quality of the customers in the portfolio. 5

6 The average merchant discount rate declined 220 basis points to 7.6% in 4 compared to 9.8% in 4 of Delinquency rates were up very modestly in , ending at 16.6% compared to 16.3% in the fourth quarter of One action we are focusing on to improve credit quality is more conservative credit line assignments and credit line increase strategies. This has led to lower average account balance declining modestly by 1.4% compared to the end of last year. s the delinquency trends continue to stabilize, we are encouraged about the direction we are headed with the credit portfolio and look forward to continued improvements. We once again saw improving contribution margin which was up 310 basis points to 21.3%. Turning to slide 8, we saw the portfolio continuing to stabilize in the fourth quarter with trends in our 2018 vintages performing 5% to 6% better than the comparable 2017 vintages, which also improved compared to the 2016 levels. While the 30-plus day delinquency rate increased 30 basis points as compared to the fourth quarter of 2017, this was related to lower year-over-year sales impacting the outstanding balances. Overall, we continue to benefit from our credit underwriting adjustments. The risk-adjusted margin before the merchant fee improved 70 basis points over the fourth quarter last year. The 420 basis point increase in net credit revenue margin was attributable to higher net finance charge yield driven by an approximately 230 basis point decrease in interest and fee write-offs and a 190 points related to increases in the prime rate, as well as increase in [ph] PR to 29.9% (00:13:40) for new credit obligations beginning in the second quarter of The increase in net credit revenue margin was partially offset by a 210 basis points increase in principal credit losses primarily related to a 2017 change and a shift in the application of payments between principal, fees and finance charges, a 70 basis point decrease in recoveries that we do anticipate to continue, and a 70 basis point increase in the cost of bank debt related to the increase in variable rates. Turning to slide 9, the Orchard portfolio. s Gene mentioned on January 31, we announced our plan to exit six brands to create increased focus on the most productive brands in the Orchard portfolio. This will enable us to focus resources on ppleseed's, Blair, Draper's & Damon's, Haband and Old Pueblo Traders. We believe these brands provide the greatest potential for sales and profit growth. s part of this effort, we will have dedicated resources for each brand in multiple areas including marketing and merchandising. We are exploring multiple options for the brands we are exiting including discontinuation, sale or a combination with an existing brand, and we'll provide an update as appropriate. s I mentioned earlier, we moved the Sahalie product offering over to Gettington and are encouraged by the early success. Overall, we expect the exit of these brands to be neutral to earnings and generate positive liquidity for the company. We anticipate completing the process in 90 to 120 days and we'll have more to report during our 1 conference call. Turning to the financial results for Orchard, net sales for the fourth quarter declined 13.5% to $179.6 million. The decrease was related to lower catalog sales associated with reduced circulation, decreased enrollments in our loyalty programs, partially offset by sales driven by an increase in online promotional activities. Gross margin decreased 470 basis points to 43.3% in the quarter excluding the impact of Orchard from the aforementioned inventory write-down associated with the exited brands. The remainder of the decrease in gross margin rate is associated with lower enrollments in our loyalty program and increased promotional discounts to drive demand. Sales and marketing expense as a percentage of sales declined 560 basis points year over year due to lower catalog direct mail expense related to a double-digit decrease in catalog circulation, partially offset by an increase in digital marketing. s we have mentioned on prior calls, we continue to build out and refine our digital marketing efforts within the Orchard portfolio. To that point, in 4, we reallocated savings in our catalog marketing costs to our digital and promotional strategies. We have instituted more testing and analytics around catalog circulation to 6

7 better understand elasticity around demand. In addition, we are evaluating our digital spend to optimize our investments with an increased focus on new customer acquisitions with paid searches. Our strategy to improve contribution margin by sacrificing some top line and improving marketing productivity resulted in improved contribution margin. Contribution margin as a percent of net sales increased 110 basis points to 11.8% compared to the same period last year. Looking ahead, we are focused on enhancing our digital customer experience by moving to an upgraded web platform. Our Haband brand moved to the new platform in 2018 and saw improved conversion and sales penetration. We're moving the remaining brands to this upgraded platform before the end of the third quarter this year. dditionally, we are improving our mobile app to drive increased conversion. For example, we are reconfiguring our s to right size at the mobile screen, which we believe will improve the customer experience and drive more traffic to the sites. On the product side, we are emphasizing our top 30 performing products per brand and ensuring we achieve four-star and above ratings with quality enhancements. We are also taking steps to reduce lead times by improving the efficiency in our product cycle. Turning to slide 10, full year net sales were $1.8 billion, a decrease of 4.9% compared to fiscal 2017, partially attributable to our circulation reduction strategies in our Orchard Brands portfolio. djusted gross margin was 46.4%, down from 46.9% in the prior year, primarily due to incremental discounting at Orchard Brands, offset to some extent by higher gross margin rate at Northstar. djusted selling and marketing expenses declined by 80 basis points to 24.2% related to discontinuing television advertising at Northstar and circulation cuts in the fourth quarter at Orchard Brands. djusted net credit expense decreased by $15.7 million to 6.9% of sales, reflecting the results of our ongoing efforts to improve the credit quality of our SCUS portfolio. djusted EBITD was $98 million, an increase of 6.2% from $92.3 million in fiscal Turning to slide 12, selected balance sheet and covenant compliance information. We ended the year with $210.7 million in merchandising inventories as compared to $194.7 million last year. Inventory turnover decreased slightly to 3.1 times for the fourth quarter of 2018 compared to 3.2 times in the fourth quarter of Looking into 2019, our expectation is for a refinement of inventory levels, balancing the negative impacts of back-order and sold-outs with fast returns. We ended the year with a lender leverage ratio of 2.99 times, well under the covenant requirement of 4.5 times, which reflects 12-month lender adjusted EBITD of $149 million compared to $122.2 million in the same period last year. We ended the year with lender net debt of $446 million. The improved lender leverage ratio was largely due to additional add-backs related to tariffs and duties allowed under our debt documents, which were not included in prior-period calculations. Lender net liquidity at the end of the fourth quarter was $85.4 million, well above our liquidity covenant requirement of $40 million, which reflects $3.8 million of cash and cash equivalents and $81.6 million (sic) [$81.5 million] (00:19:53) of availability under our inventory asset-backed line of credit. Turning to slide 14, Bluestem Group cash and cash equivalents were $119.5 million compared to $123.4 million at the end of the fourth quarter last year. In conclusion, we remain focused on initiatives to drive further stabilization in the business and return to profitable growth over the long term. s Bruce alluded to earlier, we believe we have additional opportunities to simplify the 7

8 business model and to enable greater focus and stronger execution. dditionally, we believe we can further reduce costs and operate more efficiently. We look forward to sharing more on our next earnings call. With that, I will turn it over for &. Operator, please arrange for the question-and-answer session. UESTION ND NSWER SECTION Operator: Thank you. [Operator Instructions] nd we'll take our first question from ndrew Gadlin with Odeon Capital Group. Hi. Good morning. Bruce M. Cazenave President, Chief Executive Officer & Director, Bluestem Group, Inc. Hi, ndrew. Bruce, you walked through in the beginning in your comments a couple of the operational and financing challenges, SCUS financing arrangement we know is hanging out there, there's a near-term maturity of the term loan. When you look at all these challenges, what do you think as the priority for first half 2019 which we're almost done with, so call it the next six months? Bruce M. Cazenave President, Chief Executive Officer & Director, Bluestem Group, Inc. Yeah, I think there are certain timelines that are coming upon us pretty quickly. There is a lot of good work underway to position us to handle those kinds of milestones that are up front of us and give us the structure that we need to continue to build and grow the business going forward. So, that's a high priority for our finance team and the board, et cetera, and there is ongoing discussions in terms of what we're going to do there and good work there. I also say that we have a lot of opportunities I feel that are low-lying fruit that we potentially can harvest here in the next six months and put things in place that I think would take a little bit longer to bear fruit, but we intend to work along parallel paths. One is to improve the business key things that we think that could be leaks or opportunities to improve our profitability near term, but also look at more of the longer-term things that could be profit drivers that we can layer on top of our core current businesses that we intend to improve. 8

9 So, it's kind of moving along parallel paths, ndrew, and that's what we're going to start doing right away. nd the team, last two days, we've had good discussions already about some of the thoughts we would have along those two paths. Bruce, let me just interject [indiscernible] (00:23:09) answer ndrew's question directly. ndrew, the exclusive arrangement run through 2022, but obviously we're not sitting on our thumbs and we're looking at a variety of different options there. I think we're comfortable that when and if the time comes to do something different than what we're doing with SCUS, it will be in place long before we run out of time. I mean, we have a high level of confidence there. With regard to the term debt, the maturity of the term debt is a year from December, as you probably know, so it's about 19 months away. Pete and his team have been tasked with dealing with that problem well in advance of our audit date, which is sometime in the spring of next year. nd again, we have a high level of confidence that we will be able to put a term facility in place that will replace the existing facility or amend and extend the existing facility. gain, we're early days on that stuff, but everything we're seeing right now indicates that we're not going to have a difficulty getting that done. nd Gene, it sounds from your comments like you would look to refinance the term loan debt before dealing with the SCUS arrangement. Not necessarily, they're really two separate things. The SCUS arrangement is something that, as you know, we've been working on, gosh, since we bought Fingerhut. So, there's ongoing work at all times around that and we're looking at a number of alternatives, some of them may present themselves faster than others and we will keep in touch with investors on that, but I wouldn't say that one follows the other. So, I wouldn't suggest that they're going to happen seriatim. The one that's got a nearer deadline on it is the debt because it's a year from it's December of 2020 as opposed to 2022 which is where the issue is with SCUS. But like I said, there're separate work streams and they're going to follow their own course and their own timing. nd there's a lot of speculation that the company might use parent company cash as part of that process. Can you comment on that? Which process are we talking about? ctually, both. 9

10 Right now, there are no plans to use parent company cash. Well, if you're talking about [ph] just like secured defaults (00:25:28) and things like that, we don't have any defaults, we don't need to do that. In terms of the way that a refinancing of the company was to occur, or if we were to find the some sort of replacement mechanism for SCUS, I honestly don't know. I mean, the we've always promised our investors that we weren't going to use the parent company cash or we're willing to endeavor not to use the parent company cash to solve short-term problems and we don't have any short-term problems. But in terms of what's the best structure for the balance sheet going forward and for the business as we see it, I'm not going to rule anything out, but right now, there's no anticipation of us using parent company cash. Got it. Thank you. nd then, last question and thank you for all your answers. Regarding the sort of credit extension, thinking right now, you've done a lot of tightening up over the last two years, there's two, essentially, spurts of that, has it been stable over the last few quarters? Stable from what perspective, ndrew? Just... Maybe, you tightened up credit quite a bit a year-and-a-half ago... Yeah....I think two years ago. Have you been stable recently because it looks to me like the competitive environment is getting a little more attractive for you as other lenders, other credit card companies have pulled back a bit? Yeah. I think the when we talk about the fact that our 2018 vintages are running about 5% to 6% better and it's not 500 or 600 basis points, it's 5% to 6%, and our 2017 were better than 2016, shows that we're it's a combination of I think the with others pulling back, we're probably attracting a little better quality customer, at the same time, we just continue to refine our process and our credit strategies to enable us to maintain the credit costs, really, or drive them down. Not a lot of changes one way or the other over the last couple of quarters in any of those strategies. 10

11 ll right. Thank you all for your answers. Bruce M. Cazenave President, Chief Executive Officer & Director, Bluestem Group, Inc. Thanks, ndrew. Operator, any other questions? Operator: We'll take our next question from George Brickfield with BTIG. George Brickfield Managing Director, BTIG Hi. Good morning. So, just to follow up on that last question, can you elaborate a little bit in terms of what the plans are to get the merchant credit rebate lower? Sure. nd I think we've made a lot of progress year-over-year on getting it lower and just obviously in the fourth quarter, we were substantially lower compared to the fourth quarter of last year. The merchant discount is driven by a number of factors. One is credit quality. nd so, we continue to refine some strategies around there. s I said, tighter credit line initial assignments and a little bit slower credit line increases are one of the strategies. New models to better differentiate good customers from bad or high quality customers from lower quality customers is something that we continue to do. We just updated those models at the beginning of March to differentiate on a more refined basis and also improving yield, right? So, we increased our rate to 29.99% on new purchases and that is getting us additional net credit margin, which also is going to reduce the merchant discounts. So, we're looking at it from all fronts on both the [ph] specialty (00:29:11) costs side, as well as the revenue side. George Brickfield Managing Director, BTIG Thank you. Did you feel like you have a line of sight to get that number to zero, or is there still some things that uncover that you haven't solved for yet? I mean, zero is a long way from where we are today and we don't necessarily know effectively is zero the right number because you obviously balance sales growth with credit costs and we are focusing on maximizing our contribution margin both rate and dollars. So, something north of zero may be the best answer relative to where we want overall profitability to be. So, that is not the goal, the goal is to get more contribution and EBITD dollars. George Brickfield Managing Director, BTIG Fair enough. So, just as a follow-up to that, the drop in sales at Northstar, how much of that would you say is attributed to the changes you've made in the underwriting? 11

12 Every fourth quarter, we try to get a little bit tighter. s we said, we accelerated some sales in 3 which related to some account closures that we did. Traditionally, we left inactive accounts open for a longer periods of time. We decided from a credit quality perspective that having a finite period of time that we're going to leave those accounts open before they close. So, we're not just having risks sit there that we may get a negative sale in there because of adverse selection from a customer standpoint. That was part of the sales drop in the fourth quarter, but so, that led to some of it. I would we don't pinpoint exactly how much is credit versus other things and the fourth quarter, but we do employ strategies in the fourth quarter to tighten up a little bit when there are maybe more credit seekers out there. George Brickfield Managing Director, BTIG Great. nd then, just last question. The inventory levels were up a little bit year over year. Has that been worked through and are inventories back where you want them to be? We're working through it, I mean, one of the things that as it relates to the exited brands, we've had between $25 million or $30 million of inventory associated with those brands which we're moving through right now through a liquidation process. nd so, as I said in my commentary, that will generate positive liquidity for the company. t the same time, as we go through our circulation reduction strategies on the Orchard side, we are paring back on the inventory and we believe as the year goes as we go through the year, we'll get inventories to a place that we're comfortable with and we do not see a lot of exposure based on our current inventory levels today. George Brickfield Managing Director, BTIG Thank you very much. Thanks. Operator: nd it appears there are no further questions at this time. I'd like to turn the conference back to Gene Davis for any additional or closing remarks. ll right. Thank you very much, operator, and thank you to all of our investors for your continued interest and support. nd I want to thank our management team for its exceptional performance during a transition year. s you know, we parted ways with our former CEO back last February and Bruce was only recently seated in the job. So, it was 12 full months of working together to run the company and turn it around in a situation with a permanent leader had not been identified yet. Lisa Gavales was absolutely invaluable in the situation and again I want to reiterate how much we appreciate her time and her effort. But everybody else in the senior management 12

13 team pitched in above and beyond. It's very gratifying for us to see the turnaround at Northstar and anticipate the turnaround at Orchard and we'll look forward to bringing you guys better news with each successive call. nd with that, we thank you again for your support and we will talk again next quarter. Thank you everyone. We're adjourned. Bye-bye. Bruce M. Cazenave President, Chief Executive Officer & Director, Bluestem Group, Inc. Thanks. Operator: nd that does conclude today's conference. We thank for your participation. You may now disconnect. Disclaimer The information herein is based on sources we believe to be reliable but is not guaranteed by us and does not purport to be a complete or error-free statement or summary of the available data. s such, we do not warrant, endorse or guarantee the completeness, accuracy, integrity, or timeliness of the information. You must evaluate, and bear all risks associated with, the use of any information provided hereunder, including any reliance on the accuracy, completeness, safety or usefulness of such information. This information is not intended to be used as the primary basis of investment decisions. It should not be construed as advice designed to meet the particular investment needs of any investor. This report is published solely for information purposes, and is not to be construed as financial or other advice or as an offer to sell or the solicitation of an offer to buy any security in any state where such an offer or solicitation would be illegal. ny information expressed herein on this date is subject to change without notice. ny opinions or assertions contained in this information do not represent the opinions or beliefs of FactSet CallStreet, LLC. FactSet CallStreet, LLC, or one or more of its employees, including the writer of this report, may have a position in any of the securities discussed herein. THE INFORMTION PROVIDED TO YOU HEREUNDER IS PROVIDED "S IS," ND TO THE MXIMUM EXTENT PERMITTED BY PPLICBLE LW, FactSet CallStreet, LLC ND ITS LICENSORS, BUSINESS SSOCITES ND SUPPLIERS DISCLIM LL WRRNTIES WITH RESPECT TO THE SME, EXPRESS, IMPLIED ND STTUTORY, INCLUDING WITHOUT LIMITTION NY IMPLIED WRRNTIES OF MERCHNTBILITY, FITNESS FOR PRTICULR PURPOSE, CCURCY, COMPLETENESS, ND NON-INFRINGEMENT. TO THE MXIMUM EXTENT PERMITTED BY PPLICBLE LW, NEITHER FCTSET CLLSTREET, LLC NOR ITS OFFICERS, MEMBERS, DIRECTORS, PRTNERS, FFILITES, BUSINESS SSOCITES, LICENSORS OR SUPPLIERS WILL BE LIBLE FOR NY INDIRECT, INCIDENTL, SPECIL, CONSEUENTIL OR PUNITIVE DMGES, INCLUDING WITHOUT LIMITTION DMGES FOR LOST PROFITS OR REVENUES, GOODWILL, WORK STOPPGE, SECURITY BRECHES, VIRUSES, COMPUTER FILURE OR MLFUNCTION, USE, DT OR OTHER INTNGIBLE LOSSES OR COMMERCIL DMGES, EVEN IF NY OF SUCH PRTIES IS DVISED OF THE POSSIBILITY OF SUCH LOSSES, RISING UNDER OR IN CONNECTION WITH THE INFORMTION PROVIDED HEREIN OR NY OTHER SUBJECT MTTER HEREOF. The contents and appearance of this report are Copyrighted FactSet CallStreet, LLC 2019 CallStreet and FactSet CallStreet, LLC are trademarks and service marks of FactSet CallStreet, LLC. ll other trademarks mentioned are trademarks of their respective companies. ll rights reserved. 13