Michael Porter - VP, Finance and IR Bob Rosenblatt - CEO Diana Purcel - EVP and CFO

Tom Forte - D.A. Davidson & Company Mark Argento - Lake Street Capital Markets Alex Fuhrman - Craig-Hallum Capital

Greetings and welcome to EVINE Live First Quarter 2018 Earnings Conference Call. At this time, all participants will be in a listen-only-mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Michael Porter, Vice President of Finance and Investor Relations. Please go ahead.

Good morning and thank you for joining us today. Joining me on today's call is our CEO, Bob Rosenblatt; and our CFO, Diana Purcel. Bob will provide his thoughts on our business and Diana will follow with the highlights of our financial and operational performance. We issued our earnings release earlier this morning. If you do not have our earnings release, you may obtain a copy through the news section of our Investor Relations website at evine.com. Some of the statements that we make during the call are considered forward-looking and are subject to significant risks and uncertainties. These statements reflect our expectations about future operating and financial performance and speak only as of today's date. We undertake no obligation to publicly update or revise these forward-looking statements for any reasons. We believe the expectations reflected in our forward-looking statements are reasonable, but give no assurance such expectations or any of our forward-looking statements will prove to be correct. Please refer to the Safe Harbor section in our earnings release today and our SEC filings for additional information. Finally, we will make references to non-GAAP measures on this call such as adjusted EBITDA. The information required to be disclosed about these measures including reconciliations to the most comparable GAAP measures are included in the earnings release. The earnings release is also an exhibit to our Form 8-K that can be accessed through the SEC filings section of our Investor Relations website. Now I would like to turn the call over to Bob.

Thanks Michael and good morning everyone we had a nice start to our year and we continue to gain traction with our strategy and turnaround efforts. We had a number of accomplishments in the quarter that I'd like to highlight. We achieved comparable revenue growth for the first time since first quarter of 2016. We introduced 13 new brands to our product portfolio. We realized adjusted EBITDA of $3.3 million which is a 7% increase over last year. We ended the quarter with a solid balance sheet decreasing net debt by approximately $10 million as compared to our 2017 fiscal year end. We bolstered our executive team with the addition of Mark Locks and Diana Purcel. Mark was brought on to support new business development, product sourcing, and increase our speed to market with product development. And Diana, a seasoned CFO veteran is a perfect fit to usher us into the next growth phase of our strategy. We achieved our goal of expanding our geographical presence coast-to-coast and now have a studio and office space in both Los Angeles and New York. A prominent footprint in these markets will result in major opportunities for our network. And having studios in the backyard of brands that are doing business in these cities will make it more convenient for them to appear on our shows and help optimize our programming calendar. In short it was a very productive quarter. I'm encouraged by the results and I'm thankful for everyone's efforts. But of course we still have much more to do. We have more work to do to ensure that the investments and initiatives we put into place over the past two years continue to drive sales growth and maximize profit potential over the coming quarters and beyond. To steer us near-term we continue to operate with three primary tenants. The first tenant is to grow our products and programming. As I mentioned earlier we introduced 13 brands to our portfolio in the quarter specifically across our fashion, beauty, and home products categories. We will forever be looking for new and exciting brands that allow us to leverage our strength in storytelling and support our goal of being the best platform to serve as an incubator of emerging brands to a mass audience. We provide these new and unique brands instant access to an enormous audience. Our merchants are much more than vendor process facilitators and editors and our platform is not simply a blank canvas for individual brands to be allocated air time to assess what resonates with our customers. Along with our marketing team they work tirelessly to curate brands, collaborate, and strategize with vendors to purposefully bring forward brands that we believe in and that believe in us so we can grow to mutually benefit both us and that brand. The new brands and products launched this quarter all hit on certain key criteria; high quality, uniqueness, and the ability to meet demand projections and contribution margin. Our merchandising team does an excellent job of finding these unique brands and products that we believe will resonate with our viewers and then we rely on our creative, broadcast, and programming experts to introduce these exciting brands and their stories to the broad reach of our platform. This is where the art and science of our business meet and provides the springboard for an emerging brand to grow. We believe our video commerce platform both online and on air which is fully distributed into over 87 million homes creates a competitive advantage for us to introduce and build brands for growth. We look forward to continuing on with the success stories in our current brand lineup such as Mackenzie-Childs which we launched last year and Nutritionary which is an exclusive to EVINE meal replacement and nutrition line in partnership with Heather Thomson which launched just last week and sold out much of its inventory. Another example of this is exemplified with Beekman 1802. Beekman launched on EVINE in 2015 and the EVINE team in collaboration with the Beekman 1802 brand brought the story of the brand's founders to life for our viewers. The brand grew on EVINE from a niche bath and body line to a full lifestyle brand. We're saddened to report that Beekman will be having their last show on EVINE in June, however, the whole EVINE team couldn't be prouder of watching this brand grow over the last few years. Based on the significant number of new brands that we are currently incubating we are confident in our ability to continue to accelerate the velocity of these success stories. Our fixed programming initiatives continue to drive viewership. We had two very encouraging shows roll out this quarter, Morning Perk airs on Friday mornings and is a fast paced show that provides customers with an early start to the weekend by providing a sneak peek to the best new products and deals to be featured over the weekend. We also debuted Inventor Showdown featuring Akos "The Solutionist". The concept brings inventors from across America to showcase their innovative products, a tournament style competition compares products head-to-head each week where viewers cast their vote by purchasing their favorite product. We also released Season 2 of EVINE After Dark, a program that airs at 1 AM Eastern Time and sells products for women and couples who want a safe and confidential platform to facilitate their intimacy journey. Season 2 included a special two hour episode where we partnered with Cosmopolitan Magazine. In addition to exclusive content, viewers and online shoppers were offered special subscription offer to Cosmopolitan Magazine. All three of these examples showcase our efforts to produce cutting edge differentiated programming that has had an enthusiastic response from our customers which is demonstrated by viewership, revenue, and customer growth compared to regular programming. Next our remote broadcast continued to be an integral part of our programming strategy. These remotes enhanced the customer experience by bringing an increased emotional connection to our storytelling using unique venues for our broadcast. It was a busy quarter for remotes that started in February with our broadcast live from Tucson Arizona. The live from Tucson event starred our newest jewelry artisan Victoria Wieck. During the event Victoria launched over 25 designs highlighted by items that featured the rare Sleeping Beauty turquoise gemstone sourced in a mine that closed several years ago. Shortly after Tucson we executed the longest live remote broadcast in our history with our Invicta and Friends Ocean Voyage. This second annual event was a six day live broadcast that kicked off at the Invicta Marine Pavilion in Miami and then set sail to the Bahamas on a sold out carnival cruise ship with over 2300 loyal EVINE passengers. The event featured 70 never before seen designs from Invicta including the launch of the Marvel Black Panther watch. This year we also expanded our assortment to include some of our customers favorite jewelry brands such as Gem Treasures, FE, and Gems en Vogue. This was a huge success and based on our customer response we will look to expand the assortment even further next year. We also celebrated an 11 year partnership with Waterford Crystal with Live Remote from Ireland during the first quarter. As one of Waterford's top selling retailers we were able to offer exclusive to EVINE Waterford Crystal items while using some of Ireland's most charming locations as the backdrop. The second tenant is to grow our content distribution. Our most important priority here is to drive our HD platform with new channels in the new high definition neighborhoods. As a reminder we added HD distribution in over 10 million homes in 2017 predominantly in the fourth quarter. This was a 40% increase compared to the end of fiscal 2016. We are pleased with the results so far on our 2017 HD distribution which historically has taken 6 to 12 months to mature. We are continuing to evaluate opportunities to further grow our HD distribution in 2018 as well as continuing to proactively review and negotiate all of our distribution deals. In addition to launching more HD channels we have several distribution concepts under development using emerging over the top platforms and we continue to experience growth on these platforms most notably with Roku. Installations of Roku increased 25% for the first quarter of last year and sessions were up 64%. The third tenant is to generate sustainable growth and profitable performance through decisions that drive sales contribution margin, adjusted EBITDA, net income, and free cash flow. We believe this discipline will deliver the most value to our stakeholders over the long-term. These three tenants guide our strategy as we look out over the next 12 months and beyond. As important, this strategy supports our long-term plan of gaining market share, increasing our audience of customers, and significantly increasing shareholder return. Along those lines I'd like to make some comments on our customer file. During the quarter although our customer count was down 7% year-over-year our loyal customer group remains strong and is driving growth in purchase frequency, average spend, and lifetime value. More importantly overall customer momentum grew throughout the quarter which we attribute to the expanded HD presence, our improved merchandise mix, and most importantly our improved customer experience. Growing our customer base starts with customer satisfaction and this is a key focus area which we continue to see promising results. We improved our alive agent contact rate which measures the post sales support calls compared to units sold by 50 basis points year-over-year. Additionally we continue to see positive sentiment from our customers with an overall net promoter score that has been solidly above industry benchmarks and continues to increase. This gives our entire team confidence that we are delivering great products at great value to our customers. In addition to our focus on products, programming, and customer service we are addressing our customer growth challenges in other ways. We recently switched our digital marketing agency and the early results are promising from both a revenue and a new customer acquisition perspective. We continue to work closely with our new agency to optimize our digital marketing spend with a focus on categories that drive the highest performance, return on ad spend, and lifetime value of the customer. This relationship is important as we continue our efforts on digital, mobile, and social platforms. These efforts help grow digital sales to be 53% of our total sales in the first quarter, a 240 basis point increase over last year and they also helped to boost our mobile sales penetration as a percent of digital sales to 49.4%, 140 basis point increase compared to last year. We also launched the refer a friend campaign during the quarter with our current customers and the results so far are exceeding expectations. Based on consumer data we know the most effective way for new customers to discover EVINE is to be introduced to us from friends. I'd like to highlight our beauty and wellness category for having a terrific quarter with sales growth over 17% but the key driver of this growth within our subscription business. Our subscription service is intended to give the customer a simplified way to get items that are part of their regular regimen. We've been in the subscription business for many years and it is a great service for our customers to lock in product pricing and have orders delivered automatically. Additionally it provides a great opportunity for us to generate a recurring revenue stream without having to use valuable airtime. In the first quarter we were able to grow subscriptions by 24%. So as you can tell we have a lot going on at EVINE and we have a strong foundation to work with. The video commerce space continues to grow and the ability to infuse an interactive shopping experience with story-telling has become a key strategic priority for many retailers regardless of how the customer chooses to shop and companies are investing in increasing amount in online video marketing to capitalize on this priority. Lucky for us this is a core competency. Our longstanding business model continues to provide unique, compelling, and entertaining access to products on television, social media, mobile, interactive advertising, and community. This ultimately helps us deliver on our vision of being a truly interactive marketplace. With my update on the business complete I am pleased to formally introduce our new CFO, Diana Purcel to you. Diana joined us recently to replace Tim Peterman who accepted a position with the company outside of our industry to be closer to home. Over the past three years Tim was instrumental in helping us become a much more efficient company. We thank him and wish him and his family well. Diana comes to us with a strong CFO experience at a number of consumer facing companies. She's only been with us for a short time but she has hit the ground running. She's continued our efforts at optimizing our efficiency, capital structure, and partnership with the business units without missing a beat. I will now passed the call over to her to walk you through our financial and operational results in more detail. Diana welcome aboard.

Thanks Bob, I'm excited to be here. For those of you who I have not worked with in the past I thought I would start with some additional background on myself and some insight as to why I thought this was an attractive opportunity. For the past 20 years I was the CFO for several direct to consumer companies including Cooper's Hawk Winery and Restaurants, a privately held private equity sponsored restaurant brand, Famous Dave's of America a publicly held restaurant brand and small cap company, and Paper Warehouse, a publicly held retail brand and microcap company. Over that timeframe I experienced just about anything you could imagine the CFO of a company in transition could including significant growth, frequent turnover in the fee suite, liquidity challenges, activism among others. I know that EVINE has experienced a number of these challenges in the past and I'm sensitive to the effects that can cause on shareholders, employees, and customers. Stability is important in following these challenges and I'm excited to be at EVINE and use my past experiences to help the team continue with this turnaround that started two years ago. I believe the job of finances to provide the visibility to data and transparency and information in order to make informed business decisions. One of my top priorities is to ensure that the business has access to data and information in an accurate, systematic, and timely manner. Bob and I are aligned on the areas for my focus including helping to drive top line and bottom line performance and working collaboratively with the senior team to enhance our disciplines and establish further accountability throughout the organization. Additionally I am focused on maintaining an active investor relations approach to share our story and broaden our shareholder base, sustaining a flexible balance sheet, and an optimal and efficient capital structure and serving as a strong strategic partner to Bob and the Board. I believe that these collectively will help maximize company performance and shareholder return. Having lived in Minnesota for nearly my entire life I was familiar with the EVINE brand, however, when I first sat down with Bob and he shared his vision my excitement to be part of the team grew fast. The power of access to over 87 million homes gives us an advantage and levels of playing field with consumer companies much bigger than ours. I am excited to join a phenomenal senior team and to be working with what I've seen so far are best in class finance and accounting team. And I look forward to earning your trust and confidence as quickly as possible. With that let me provide you with some additional color on our financial performance for the quarter. First I would like to mention that we adopted and implemented the new revenue recognition guidance in the first quarter. The adoption did not have a material impact on our revenue recognition and we do not expect the adoption of the new standard to have a material impact on our operating results on an ongoing basis. Bob provided you with quite a bit of information about our top line, some additional key operating metrics include our average selling price in the quarter was $57, a 6% increase year-over-year reflecting increases in our jewelry, watches, home, and consumer electronics category. Our return rate was 18.9% in the quarter which was up 10 basis points year-over-year. This modest increase was related to higher average selling prices particularly in the jewelry category. Our gross margin percentage remained steady at 35.9%. However our gross margin dollars and rate were impacted by contract termination cost. Excluding this impact, the gross margin rate would have been 36.4% or 40 basis points higher than last year's gross margin rate on a comparable basis. This increase was attributable to strong margin rate improvements within our beauty, fashion, and home categories. Our first quarter operating expenses totaled 58.2 million, an increase of 2.3% year-over-year and as a percentage of net sales was 80 basis points higher than last year's first quarter. The increase in both operating expense dollars and rate was driven by increased executive and management transition costs and general and administrative expenses. The general and administrative expense increase was primarily due to purposeful investments in our infrastructure to support the delivery of top line profitable growth and the impact of a bonus accrual that didn't exist in the prior year. As was the case all last year we had great performance with our key variable costs which include our primary operational functions, our customer solutions group, our fulfillment and logistics center, and our credit and payments group. Variable expenses for the quarter were 9.3% of total net sales compared to 9.6% last year, a 30 basis point improvement driven by continued efficiency improvements in all functional areas as well as a 4% decrease in units on higher sales. As Bob mentioned we are extremely focused on increasing our content distribution throughout our entire platform. My job is to help ensure we do that in a cost effective manner. We remain in more than 87 million homes as of the end of the first quarter including over 35 million HD homes. We continue to evaluate opportunities to increase the number of HD channels in fiscal 2018 with a focus on the back half of the year. We also continue to evaluate our alternative distribution platforms such as over the top in social where we have several distribution concepts under development to expand our Lifestream selling. We believe that these additional platforms can be differentiators for us long-term as more and more of our customers look for additional ways to access our programming in a convenient manner. Our focus on contribution margin helped us deliver 3.3 million of adjusted EBITDA in the quarter which was a 7% increase compared to the first quarter of 2017. Interest expense was $1 million in the first quarter which is almost a $0.5 million dollars better than last year as a result of our pay down of high interest debt during 2017. This reflects a good proxy as a run rate for the remaining quarters of the year. From a tax perspective we have approximately 321 million of federal NOLs available to us to offset future taxable income. Turning to the balance sheet, we ended the quarter with cash of approximately 30 million, an increase of 26% from year-end. We also had an additional 14 million of unused availability on our revolving credit facility which gave us total liquidity of approximately 44 million. Our inventory balance at the end of the quarter was 73 million which was down 3.4% compared to the first quarter of last year. We continue to feel good about our merchandising, supply chain, and fulfillment efforts to help us manage to appropriate levels of inventory to drive profitable sales. During the quarter we spent $2 million on capital projects primarily reflecting investments in upgrades to website optimization, IT infrastructure, and customer solution systems. We continue to expect full year capital expenditures to be in the $8 million to $10 million range. Overall our results for the quarter reflect the focus that the organization has had over the past couple of years. Sourcing the right products, ordering the right quantities, and setting the right prices with a keen focus on contribution margin. The results of this are showing up in a higher average selling price, an increased gross profit rate, and reduced variable expenses. I believe we have the right focus and a solid foundation for growth. In terms of our outlook for the full year of fiscal 2018 we have firmer expectations. As a reminder fiscal 2018 will have 52 weeks compared to the 53 weeks in fiscal 2017. For revenue we expect to generate 648 million to 668 million which equates to 2% to 5% growth on a normalized basis and 0% to 3% growth on a reported basis. We expect adjusted EBITDA to be 19 million to 21 million or growth of 5% to 17% year-over-year. As I mentioned earlier I'm very excited to join EVINE at this juncture and help the company achieve its growth expectations in revenue, adjusted EBITDA, earnings per share, and cash flow generation. We are off to a solid start this year and look forward to gaining further traction in the coming quarters. And with that said, Bob, Michael, and I are happy to take your questions.

[Operator Instructions]. Thank you, the first question today comes from the line of Tom Forte with D.A. Davidson. Please proceed with your questions.

Great, thanks for taking my questions. Bob what three teams of able bodied executives including the current one attempt to turn the business for nearly a decade yet the stock is trading around $1, how should investors think about mean for our shareholder value such as by selling the business?

Thanks Tom. So, there's no silver bullet here as you could well imagine. What we said early on I guess two years ago when we first started was we said that this was going to be a three year turnaround in terms of being able to have a meaningful business that's going to be accretive. The first year was all about making sure that we were able to pay the bills, the second was all about being able to put the right processes and people in place to be able to succeed, and this year is all about driving accretive growth. We are as you know a company that has a significant amount of fixed expenses and once you get over those fixed expenses usually you can see about 15% growth, 15% to 20% of that EBITDA go to the bottom line for every incremental revenue dollar that you bring to the table. And this year was all about being able to get that incremental revenue. So when you look at the multiple of EBITDA I think what the investors will see is all the increases that we can be able to drive to the bottom line plus the fact that we don't have to pay any taxes on those when we start doing the cash flow positive. So in my mind there's no silver bullet, we have to stick to the formula that we're doing which is continuing to become more relevant in the marketplace, be able to make sure that video commerce which is one of our core competencies is something that we're playing in all these different fields for. And we frankly believe that the fact is that the stock price is undervalued when you look at it from a book value which is about a $1.15 or $1.20 at this point in time. I think it's when you look at it as a multiple of EBITDA, when you look at it at a multiple of revenue, regardless how you look at it I think it shows that we're probably undervalued in the marketplace. And although we haven't seen the reflection of that, my job is mostly to make sure that we have a solid business plan in place which continues to drive profitability and have a healthy balance sheet.

Thanks for taking my question Bob.

Thank you, sir.

Our next question is from the line of Mark Argento with Lake Street capital. Please proceed with your questions.

Yeah, hi, good morning. I got a couple of quick ones here, just kind of bouncing around. So, customer file down 10% on a trailing 12 months kind of rolling basis, maybe you could help unpack that a little bit in terms of are you guys refocusing on the core customer, is this kind of churning off some of the customers that you brought on when you were little bit more experimental, maybe help us understand that a little bit?

Yeah, so from the first quarter we're essentially -- we've seen the turnaround begin based on what we believe are several elements. The biggest one I think is probably the HD homes that we are in. And the fact that we're now broadcasting both on the same cable companies in both the HD as well as in the basic package, we're starting to see a lot more people starting to be able to engage with us. And as you know that rollout really started in earnest in December. So as we see the roll out we start seeing the increases over the last three months and we've seen increases each month in a row and at this point we feel we've gotten to the turning point where we're starting to see the customer come in to the loop to be able to buy from us. So one, I think the most important piece is the fact that we're now being able to be seen by people in the HD realm which they weren't able to see before. I believe we're in about half the HD realm that is available which means we have another 30 million homes or so to be able to be fully engaged in HD. We believe that there's somewhere between 20% and 30% increases over a period of 6 to 18 months based on the history, so we expect to be able to see that increase in revenue happening month-by-month and we saw the increase month-by-month for the first quarter. So it got better every single month at this point in time as did the revenue along side of that. So we would see the increases that are happening based on that. The other piece is really the blocking and tackling of being able to make sure that we have the right merchandise mix and that we use our marketing tools as best possible. And a lot of that comes down to the fact that we're, well for the most part we have a marketing team now that is focused on looking at all the different ways that people want to shop. And we're seeing the engagement that's happening over there. So we're seeing the steady growth that we expected from going from analog to HD, we are seeing the fact that it's all accretive. And so although it certainly isn't something where you can literally see a switch click to be able to increase that, we see the growth that we expect and we're very happy so far with the increases that we've seen based on the history of turning on the HD channels. And we are going to continue to experiment in terms of ways of being able to manage to make sure that we balance the lifetime value of the customer and I think you saw a bunch of that when you looked at what we're doing in terms of subscription and contribution margin. So we believe some of the some of the drop off to your point was not so much about us testing stuff that didn't work but more about continuing to get out of businesses that do not make contribution margin for us or do not give the long term value to the customer that makes sense for our business plan.

Got it, which is kind of one and the same but I just wanted to understand what you are saying. So, reflecting on that a little bit more, so the way to get the top line to grow in your mind is you've got to be more digital, more digital channels, more HD channels and then some alternative distribution platforms with the right product mix. Is that kind of the punch line on how this -- how we go from bumping along at 1% or 2% and hopefully something higher and grow this business?

Yeah, I think the secondary part to that is the fact that there's disruption right now not only in the retail industry in general but also in terms of the competition. And I think to the point that they have a much higher revenue and customer growth pattern that is much higher on revenue and customers at this point in time that our opportunity to be able to mine and develop brands like we did with Mackenzie-Childs to me is a big opportunity for us to be able to drive customers to come over here while the disruption is happening at the two other networks.

Got it and then talking about some of the brands, what's going on with Beekman, are they moving on, are they going to different channel, or are they winding down, what's that all about?

We don't -- we are not really privy to what -- where they're going. They represent the small single digit percentage of our business last year so it wasn’t significant although we grew it significantly over three years. There's been talk about them opening stores, there's been talk about them going in to more distribution channels. We really don't know. We have a great relationship with them and we want to continue the great relationship with them. But I think their aspirations are differently aligned than ours and so I can't really speak to what their future is but I can tell you that having the training ground if you will to be able to make sure that we can continue to cultivate the brands like Beekman is the key for us and that's where we really ramping that up and especially in the home area at this point in time where we really have a lot of wide space that we haven't used before.

Great, thanks.

The next question is from the line of Alex Fuhrman with Craig-Hallum. Please proceed with your question.

Great, thank you very much for taking my question. Diana I was interested in what you said about making sure the whole team has access to data and that being one of your priorities I would be curious now that you have had a couple weeks at the company where do you feel the company stands right now in terms of the data it is able to provide to all the necessary teams and what do you think the biggest opportunites there are over the next few months?

Hi Alex, it is nice to talk to you and you have kind of hit on it. I have a couple of weeks under my belt, so I'm just kind of scratching the surface but I will tell you that across a number of brands that I have been involved in, there is a tremendous amount of data in this company that we can both continue to mine and understand by business segment as well as by customer. And we're just starting to scratch the surface. So, I see huge opportunities and better understanding our customer and giving them what kind of experience they want delivering an experience in the way that they want to experience it and just having the flexibility to do so.

Great, that's really helpful, thanks. And then Bob you mentioned a number of brand launches here in the first quarter that were successful. Are there any in particular that stand out as something that could become a lot bigger and then just more broadly assuming that new brand likely debuted to lower productivity and than brands that's had a few years of seasoning, what are the key metrics that you're looking at as you assess the performance of new brands and how do you feel the current slate of brands that have come out this year stack up for the last few years?

Hi Alex, so as an example I mentioned Nutritionary with Heather Thomson earlier in terms of health food brands that has a lot of the different components that we like to see. Heather has been -- she was I think at one point in time she was on TV with her own show, she's been it, she sells I think she did the Yummy brand she represented on HSM. She represented Tommie Copper for us for a while and she put out her Nutritionary brand that is spread across several different categories. She saw in her first show which she had just a few weeks ago she sold out of almost all the products that she had on. She's got a Nutritionary degree and she's really terrific and she's working with a bunch of scientists that are really cutting edge. So that's an example of a brand that has a lot of the different components that we like in a sense that it seems the audience is very engaged with the person, it seems that the product is something that is ripe for a subscription model. And the margins are very, very good. So that is one area that we are looking at. There is a beauty brand that is olive oil based that we put out in the quarter that did tremendously well and sold out in the hours that it was allocated to that we feel very strongly it is going to be another brand that is going to do very well. And we had a couple of other brands SeroVital and a couple of other brands that are strong in terms of hitting all the metrics that we like to see in terms of having a compelling person who is selling a compelling story with some cutting edge technology that leads to more subscription based growth. So those are just a couple of examples Alex at what we're looking at down the road. In the home area we're seeing a bunch of brands that are under-served, we believe under served as the constriction happens in the bricks and mortar retailers and it's hard to get people in. So someone like Mackenzie-Childs came on and when Mackenzie-Childs came on in the home furnishings area we started seeing a lot of other home furnishing brands that were in some of the better retailers stores that now want to tell the story on our network because they understand that not only will they be able to tell the story the way they want to tell it but -- and not only will be they be able to get the revenue that they can get from us but they are also seeing some flow through in revenue in the locations where they sell the merchandise for those people that are starting to be reminded about those brands that are out there.

Great, that's really helpful. Thank you both.

Thank you sir.

Thank you. At this time I'll turn the floor back to Bob Rosenblatt for closing remarks.

Thanks. Well, thanks again for participating in our business update this morning. We remain confident that we're using the right levers to grow our business and we look forward to providing you with updates throughout the year. As a final comment I want to thank the team members for all their efforts and results during the quarter. And I want to thank our vendors, partners, and customers for their continued trust and confidence. Have a wonderful rest of your day, thanks so much.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.