Good morning, everyone. Thank you for joining us for a discussion of Tandy's Q2 2023 financial results. I'm Dan Ross, General Counsel and Corporate Secretary for Tandy, and I will be co-moderating the discussion today. Our CEO, Janet Carr, will give just a very brief overview of the quarter, and then we will devote the conference to investors' questions and discussion. If you wish to ask a question or make a comment, please press the Reactions button, which is located at the bottom of your Zoom screen, and then select Raise Hand. Janet will recognize the questioners and ask you to unmute your line. You will need to ask your questions out loud yourself through your computer or phone audio. Please be sure to state your name and, if applicable, your company when you begin your question. I will not be reading questions or comments directly from the chat. With that, let's get started. Today's presentation will include statements other than historical results that constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, each as amended. These statements reflect our expectations or estimates based on the information we have today but are not guarantees or predictions of future performance. They involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from the statements contained in this presentation. You are cautioned not to put undue reliance on these forward-looking statements. The company assumes no obligation to update or otherwise revise these forward-looking statements except as required by law. Now, here's Janet Carr. Hi, everyone. I'm gonna ask Dan to mute you all, just because I think we're getting a little bit of cross-talk here. Thanks for joining us today. As Dan said, just a very brief overview of the quarter. Our sales came in, as we said in our filings- You are muted. Please mute or unmute yourself by pressing star six. Down 5% from Q2 of last year, due to continued weaker consumer demand, closed stores, and a weaker response to our promotions, as we've been discussing for the last several quarters. Operating expense came in at $10.1 million, down 10% versus last year. You see us getting traction on our goal of getting control of operating expenses and driving profitability. Accordingly, our operating income came in at $790,000 versus a $737,000 loss last Q2. Inventory was $37.5 million, down about $700,000 from year-end, and down $2.6 million or 6.5% versus Q2 of last year. Cash was $10 million, up $2 million versus year-end, and $5.6 million versus Q2 of last year. In general, despite weakening sales, we do feel good about managing our expenses and driving profitability. With that, we are open for questions or comments. Can you hear me all right? Yes. Hi, Joe. hey, Janet, can you talk a little bit about the New York City store and sort of the capital that was invested into the store and how it compares to some of the others? Yes. The New York City store is about 2,000 to 2,500 sq ft, which is small for our stores. It's on the small side. We have, you know, implemented a lot of new visual merchandising approaches that allow us to have more product in a much more condensed space, in addition to having a big maker space. That store has already got traction and, you know, with virtually no marketing, with almost entirely word of mouth. We already have good traffic, good flow for classes, and our store director is making a lot of connections with the leather crafting community, including the big fashion community that's based in New York. I don't have an exact number on the store build-out, but it is significantly more than what we have spent in other locations, driven primarily by the higher costs of general contractors in the New York area. It's gonna be about twice as much, but keeping in mind that our average store build-out is about $50,000. This store may come in between $75,000 and, say, $150,000. It may be more, but in the whole scheme of things, it's super low. The return is. We look for a cash-on-cash return of about 18 to 24 months on our store investment, and given where this store is trending so far, we're not concerned that we'll be able to see that. Thank you. You're welcome. Other questions? Andrew. Hi. great job on the profitability. I was wondering if you could elaborate a little more on the sales environment and how the units are trending relative to, let's call it inflation by unit of item? How, how should I think about what's going on in the store? If sales are down 5 and inflation is up 5, are your units down 10? I can't do that math for you in my head, and I don't have it, but I will ask the team to, to do some of that math. We have been limiting our price increases to what is absolutely necessary, given that we have a very price-sensitive consumer. On-- in aggregate, overall, we're seeing price increases of about 10% versus 2 years ago. That's been happening gradually and across various units. You know, how that averages out at an average unit retail, I can't tell you exactly off the top of my head. Point being, you know, I'm not sure that the decline in sales, well, I can tell you, well, I, I, I'll tell you, generally speaking, I don't think the decline in sales is a result of increasing price. Because we have absorbed some of those prices. We've switched to other vendors. We've done everything possible to try to maintain pricing. If you're, if the crux of your question is, are sales down because you've raised price? The answer is, we don't think so. Were that the case, we would expect to see greater responsiveness to our promotions. You know, if regular retails are increasing, then people would likely be more responsive to promotions, and we're not seeing that either. We're seeing people continue to buy more at regular retail. That's been our long-term strategy overall, is to make sure that we're providing good value every day. Good. I'm getting notes from our team saying, yes, about 10%, but there, there are lots of mixed questions as well. Abigail? Hi, this is Abigail. Hi. Hi, can you talk a little bit more about your best opportunities to reduce costs, like what you've already done or what you can do to get the cost structure down, whether it be gross margin improvement or operating cost reduction? Yeah. I, I think there's opportunity for both. From a cost perspective, the biggest bucket of opportunity is store labor. The challenge is that labor costs have been increasing, and especially retail store labor, and the market is very tight, and we, you know, have to pay more. In some places we are, have minimum wage pressures, and in some cases, we just have to pay more because the market has become a lot more competitive for people in these kinds of roles. That said, we have an opportunity to reduce store hours, and that is an initiative that we've been working on, to take the number of hours down. We've had in the past, a lot of full-time employees, and we are moving more toward having more part-time employees to give us more flexibility. We've had rules about having more than one employee in the store at all times, and we think there are stores that are small enough and there are periods, you know, certain days and times of the day when one employee can operate a store. Looking at all kinds of ways to improve the effectiveness of the hours that we do have and reduce them overall, while at the same time we know we will have to pay, you know, give some of that back and paying employees more per hour. That is the single biggest opportunity. From a gross margin perspective, we continue to work the sourcing side. You know, we did see improvements in, especially freight-in costs. you know, I don't know, in 2021, we were talking about cargo shipments at $15,000 a container, and now they're back down to, you know, below $3,000 a container for the most part, coming from Asia. We've got a lot of opportunity to continue to whittle away here and there at the gross margin. At the same time, we are feeling pressure, especially sourcing from places like Mexico, where the dollar is quite weak against the Mexican peso, relative to where it's been over the last year. you know, it's all like this giant juggling act. You know, I have to say, we are trying to selectively take price where we can, and where we feel like there are, there is lower sensitivity and especially keeping our, a sharp eye on competitors. You know, we, we are the biggest, we wanna make sure that we're always offering good everyday retails that are competitive. That said, there are some categories where, you know, we can take price and be more promotional. All ways that we're, we're, you know, juggling the millions of variables in this to try to drive higher gross margins as well. Got it. Thanks. I guess just as a follow-up question, maybe you can talk a little bit more about your biggest opportunities to drive revenue growth going forward. Yeah, revenue growth, we as you know, over the last year, we closed, a number of stores that were, trending down and cash flow negative, and didn't really have an opportunity to get to cash positive. So, you know, the number one opportunity for sales growth is finding store locations where we can operate cash flow positive stores. There are a lot of leather crafters that are spread sort of in a thin layer all across the US, and there's lots of geography that we're not covering, including some co- geographies where we closed stores during COVID. You know, we closed, like, 10 or 11 stores during COVID, where the leases were up, the landlords weren't willing to, to negotiate, and we were closed for, you know, the three or four months, that, that we had stores closed during that time. We got out of some of those locations and said, "We're gonna come back and find a better location." We are now actively working to find store locations. I think that we're also clearer on the kinds of locations that work for us. You know, part of the experiment in New York is to make a store with a full assortment work in smaller square footage. That allows us to get smaller spaces and lower rent, and improve the ability to drive positive cash out of these stores. So that's the number one opportunity that we're actively pursuing. We've got a lot of other... a jillion other initiatives that are, that are sort of underneath there, including, you know, lots of product improvements, lots of kits, focus on classes, community engagement, especially around youth, as we have new youth product lines coming out. veterans remain a, a big focus for us and, and being able to have a veterans-focused initiative and community engagement. It's a long list of things, but new stores is the number one thing that we can be doing right now. Got it. Thanks, that's helpful. I just had one more question, if you don't mind. Yeah. You kind of touched on it, but you had excellent free cash flow generation year to date. Do you think you can continue to generate free cash flow later this, into this year and next year? Kind of what are the puts and takes of that are? Yeah, that's, that's the goal. The fact is that a little bit of the, the big bump in cash at the end of this quarter is, is just timing, some product payments and product receipts. I don't expect to see that continue, you know, at that rate every single quarter going forward. As you know, Q3 is our low point in the year, just before a big Q4 Black Friday and the December promotions. But it is our goal to continue to drive positive cash, and to continue to grow it, and, you know, we're, we're pleased to see that we're making progress against that. Got it. Thanks so much. Other questions, comments? Andrew, sure. Last question is, can you talk a little about store manager labor? How, how is the hiring environment right now, and what kind of turnover are you seeing in the existing store managers then? Yeah. It's tough. I'll be totally honest with you, it's a tough environment out there. Labor in retail is tight, and we have a number of openings. I can't tell you off the top of my head what store manager turnover is today, but it's been relatively stable. Although we do have a number of both voluntary and involuntary, as we continue to improve, the quality of our talent pool, especially at retail. You know, retail stores are our, our competitive advantage, but, you know, the flip side of that is that you have to create an excellent service environment in, you know, 103 stores, and that can be challenging in a tight labor environment, and especially when we're looking to try to maintain, you know, discipline around cost. It, it is our number one opportunity to continue to recruit and importantly, retain, the good store managers. Can't say anything more than, for a lot of retailers, it's a tough hiring environment still. If you'd like to ask a question, just click the Reactions button at the bottom of your screen and select Raise Your Hand, and Janet will acknowledge you. Just type up. No other questions? Hey, I'll, I'll ask one more- Sure. Just sort of overall cash management. I'm assuming buybacks are just, given the liquidity, are difficult to do. You could maybe just briefly comment on that, as well as sort of now that the cash balance is getting back up a little bit, how the cash is being managed, and interest and all that? Yeah. We do have a T-bill ladder program that we are using for our undeployed cash. With, you know, T-bills delivering, I don't know, yields of north of 5%, that's been nice. Our buyback program, as you know, is in place and operating, it's something that the board considers in every discussion, how we deploy our capital and how we think about the balance of it. You know, the buyback programs in place, and, you know, I don't... frankly, Dan can probably speak more to the ins and outs of this, but my understanding of the regulations of this is that there are limitations to how much you can buy, given the volume that trades every day. given that we have limited, you know, trading volume, the amount that we can buy back and, is probably always gonna be pretty limited as well, under that program. I mean, that's just the reality. However, the program's turned on and operating, you know, the board is committed to doing that, for now. Thank you. Welcome. Thanks for asking. Anyone else? You can always reach out to us on Investor Relations. I think my email is actually on our press releases, so, you know, I do hear from some of you occasionally, and happy if you think of something later, that we can chat about that's public, happy to have those conversations as well. Thank you all for your interest. Really appreciate you taking the time to get on and chat with us. There's nothing else? Dan? Okay. Thank you all for joining the meeting today. Thanks. Bye.