Dollar General Corporation Reports Fourth Quarter and Fiscal Year 2022 Results
Thu, 16 Mar 2023
Reiterates and Provides Financial Guidance for Fiscal 2023 Full Year
Note:
- Fourth Quarter Net Sales Increased 17.9%; Fiscal Year Net Sales Increased 10.6%
- Fourth Quarter Same-Store Sales Increased 5.7%; Fiscal Year Same-Store Sales Increased 4.3%
-
Fourth Quarter Operating Profit Increased 17.1% to
$933.2 Million ; Fiscal Year Operating Profit Increased 3.3% to$3.3 Billion - Fourth Quarter Diluted EPS Increased 15.2%; Fiscal Year Diluted EPS Increased 5.0%
-
Annual Cash Flows From Operations of
$2.0 Billion -
Board of Directors Declares Increased Quarterly Cash Dividend of
$0.59 per share
“Our fourth-quarter sales results were strong, although below our expectations, and we are pleased with continued market share gains in both consumables and non-consumables, as well as continued growth with new and existing customers,” said
“We made significant progress advancing our operating priorities and strategic initiatives in fiscal 2022, including executing nearly 3,000 real estate projects, completing the rollout of our non-consumables initiative, nearly tripling our pOpshelf store count, more-than-doubling the size of our private tractor fleet, and opening three new distribution centers. As a result, we believe we are well-positioned to continue serving our customers with our unique combination of value and convenience in the communities we call home.”
“Looking ahead, we are excited about our plans for fiscal 2023, which include continued investment in our strategic initiatives and an incremental investment of approximately
Fourth Quarter 2022 Highlights
Net sales increased 17.9% to
Gross profit as a percentage of net sales was 30.9% in the fourth quarter of 2022 compared to 31.2% in the fourth quarter of 2021, a decrease of 35 basis points. This gross profit rate decrease was primarily attributable to an increased LIFO provision, which was driven by higher product costs; a greater proportion of sales coming from the consumables category, which generally has a lower gross profit rate than other product categories; and increases in inventory shrink, damages and markdowns; partially offset by higher inventory markups and a reduction in transportation costs.
Selling, general and administrative expenses (“SG&A”) as a percentage of net sales were 21.7% in the fourth quarter of 2022 compared to 22.0% in the fourth quarter of 2021, a decrease of 29 basis points. The primary expenses that were a lower percentage of net sales in the current year period were retail occupancy costs, incentive compensation, and retail labor; partially offset by certain expenses that were a greater percentage of net sales in the current year period, primarily utilities.
Operating profit for the fourth quarter of 2022 increased 17.1% to
The effective income tax rate in the fourth quarter of 2022 was 23.2% compared to 21.2% in the fourth quarter of 2021. This higher effective income tax rate was primarily due to decreased income tax benefits associated with stock-based compensation, and a higher state effective income tax rate compared to 2021.
The Company reported net income of
Fiscal Year 2022 Highlights
Fiscal year 2022 net sales increased 10.6% to
Gross profit as a percentage of net sales was 31.2% in fiscal year 2022, compared to 31.6% in fiscal year 2021, a decrease of 37 basis points. The gross profit rate decrease in 2022 was primarily attributable to an increased LIFO provision, which was driven higher by product costs; a greater proportion of sales coming from the consumables category, which generally has a lower gross profit rate than other product categories; and increases in inventory markdowns, damages and shrink; partially offset by higher inventory markups and an improvement in transportation costs.
SG&A as a percentage of net sales was 22.4% in fiscal year 2022 compared to 22.2% in fiscal year 2021, an increase of 25 basis points. The primary expenses that were a higher percentage of net sales in the current year were utilities, retail labor, and repairs and maintenance; partially offset by certain expenses that were a lower percentage of net sales in the current year, including incentive compensation and retail occupancy costs.
Operating profit for fiscal year 2022 increased 3.3% to
The effective income tax rate in fiscal year 2022 was 22.5% compared to 21.7% in fiscal year 2021. This higher effective income tax rate was primarily due to decreased income tax benefits associated with stock-based compensation compared to 2021.
The Company reported net income of
Merchandise Inventories
As of
Capital Expenditures
Total additions to property and equipment in fiscal year 2022 were
Share Repurchases
In fiscal year 2022, the Company repurchased
Dividend
On
Fiscal Year 2023 Financial Guidance and Store Growth Outlook
The Company previously provided preliminary expectations for same-store sales growth and Diluted EPS growth in its press release on
- Net sales growth in the range of approximately 5.5% to 6%, including an anticipated negative impact of approximately two percentage points due to lapping the fiscal 2022 53rd week
- Same-store sales growth in the range of 3.0% to 3.5%
-
Diluted EPS growth in the range of approximately 4% to 6%, including anticipated negative impacts of the following:
- approximately three percentage points due to higher interest expense in fiscal 2023, and
- approximately four percentage points due to lapping the fiscal 2022 53rd week
- This Diluted EPS guidance assumes an effective tax rate in the range of approximately 22.5% to 23.0%
-
Share repurchases of approximately
$500 million -
Capital expenditures, including those related to investments in the Company’s strategic initiatives, in the range of
$1.8 billion to$1.9 billion
The Company is also reiterating its plans to execute 3,170 real estate projects in fiscal 2023, including 1,050 new store openings, 2,000 remodels, and 120 store relocations.
“Our fiscal 2023 full-year outlook reflects our confidence in the business, even in a potentially challenging economic and operating environment,” said
“Our outlook for the year includes strong sales and operating profit, while also providing for investments intended to drive long-term sustainable growth. We continue to be disciplined in managing expenses and capital, while delivering on our financial priorities to drive profitable same-store sales growth, healthy new-store returns, and long-term shareholder value.”
Conference Call Information
The Company will hold a conference call on
Forward-Looking Statements
This press release contains forward-looking information within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act. Forward-looking statements include those regarding the Company’s outlook, strategy, initiatives, plans and intentions including, but not limited to, statements made within the quotations of Messrs. Owen and Garratt, and in the sections entitled “Share Repurchases,” “Dividend,” and “Fiscal Year 2023 Financial Guidance and Store Growth Outlook.” A reader can identify forward-looking statements because they are not limited to historical fact or they use words such as “outlook,” “may,” “will,” “should,” “could,” “would,” “can,” “believe,” “anticipate,” “plan,” “project,” “expect,” “estimate,” “target,” “forecast,” “predict,” “position,” “assume,” “opportunities,” “intend,” “continue,” “future,” “beyond,” “ongoing,” “potential,” “long-term,” “guidance,” “goal,” “outcome,” “uncertainty,” “look to,” “move ahead,” “looking ahead,” “subject to,” “committed,” “confident,” “focus on,” or “likely to,” and similar expressions that concern the Company’s strategies, plans, initiatives, intentions or beliefs about future occurrences or results. These matters involve risks, uncertainties and other factors that may change at any time and may cause actual results to differ materially from those which the Company expected. Many of these statements are derived from the Company’s operating budgets and forecasts as of the date of this release, which are based on many detailed assumptions that the Company believes are reasonable. However, it is very difficult to predict the effect of known factors on future results, and the Company cannot anticipate all factors that could affect future results that may be important to an investor. All forward-looking information should be evaluated in the context of these risks, uncertainties and other factors. Important factors that could cause actual results to differ materially from the expectations expressed in or implied by such forward-looking statements include, but are not limited to:
- economic factors, including but not limited to employment levels; inflation (and the company’s ability to adjust prices sufficiently to offset the effect); pandemics (such as the COVID-19 pandemic); higher fuel, energy, healthcare and housing costs; higher interest rates, consumer debt levels, and tax rates; lack of available credit; tax law changes that negatively affect credits and refunds; decreases in, or elimination of, government stimulus programs or subsidies such as unemployment and food/nutrition assistance programs; commodity rates; transportation, lease and insurance costs; wage rates (including the heightened possibility of increased federal, state and/or local minimum wage rates); foreign exchange rate fluctuations; events that create barriers to or increase the costs of international trade (including increased import duties or tariffs); and changes in laws and regulations and their effect on, as applicable, customer spending and disposable income, the company’s ability to execute its strategies and initiatives, the company’s cost of goods sold, the company’s SG&A expenses (including real estate costs), and the company’s sales and profitability;
- failure to achieve or sustain the company’s strategies, initiatives and investments, including those relating to merchandising (including non-consumable initiatives), real estate and new store development, international expansion, store formats and concepts, digital, marketing, health services, shrink, damages, sourcing, private brand, inventory management, supply chain, private fleet, store operations, expense reduction, technology, pOpshelf, Fast Track, and DG Media Network;
- competitive pressures and changes in the competitive environment and the geographic and product markets where the company operates, including, but not limited to, pricing, promotional activity, expanded availability of mobile, web-based and other digital technologies, and alliances or other business combinations;
- failure to timely and cost-effectively execute the company’s real estate projects or to anticipate or successfully address the challenges imposed by the company’s expansion, including into new countries or domestic markets, states, or urban or suburban areas;
- levels of inventory shrinkage and damages;
- failure to successfully manage inventory balances, issues related to supply chain disruptions, seasonal buying pattern disruptions, and distribution network capacity;
-
failure to maintain the security of the company’s business, customer, employee or vendor information or to comply with privacy laws, or the company or one of its vendors falling victim to a cyberattack (which risk is heightened as a result of political uncertainty involving
China and the current conflict betweenRussia andUkraine ) that prevents the company from operating all or a portion of its business; - damage or interruption to the company’s information systems as a result of external factors, staffing shortages or challenges in maintaining or updating the company’s existing technology or developing or implementing new technology;
- a significant disruption to the company’s distribution network, the capacity of the company’s distribution centers or the timely receipt of inventory, or delays in constructing, opening or staffing new distribution centers (including temperature-controlled distribution centers);
-
risks and challenges associated with sourcing merchandise from suppliers, including, but not limited to, those related to international trade (for example, political uncertainty involving
China and disruptive political events such as the current conflict betweenRussia andUkraine ); -
natural disasters, unusual or extreme weather conditions (whether or not caused by climate change), pandemic outbreaks or other health crises (for example, the COVID-19 pandemic), political or civil unrest, acts of war, violence or terrorism, and disruptive global political events (for example, political uncertainty involving
China and the current conflict betweenRussia andUkraine ); - product liability, product recall or other product safety or labeling claims;
- incurrence of material uninsured losses, excessive insurance costs or accident costs;
- failure to attract, develop and retain qualified employees while controlling labor costs (including the heightened possibility of increased federal, state and/or local minimum wage rates/salary levels) and other labor issues, including employee safety issues and employee expectations and productivity;
- loss of key personnel or inability to hire additional qualified personnel or inability to enforce non-compete agreements that we have in place with management personnel;
- risks associated with the Company’s private brands, including, but not limited to, the company’s level of success in improving their gross profit rate at expected levels;
- seasonality of the company’s business;
- failure to protect the company’s reputation;
-
the impact of changes in or noncompliance with governmental regulations and requirements (including, but not limited to, those dealing with the sale of products, including without limitation, product and food safety, marketing, labeling or pricing; information security and privacy; labor and employment; employee wages and benefits (including the heightened possibility of increased federal, state and/or local minimum wage rates/salary levels); health and safety; imports and customs; bribery; climate change; and environmental compliance, as well as tax laws (including those related to the federal, state or foreign corporate tax rate), the interpretation of existing tax laws, or the company’s failure to sustain its reporting positions negatively affecting the company’s tax rate and developments in or outcomes of private actions, class actions, derivative actions, multi-district litigation, arbitrations, administrative proceedings, regulatory actions or other litigation or of inquiries from federal, state and local agencies, regulatory authorities, attorneys general, committees, subcommittees and members of the
U.S. Congress , and other local, state, federal and international governmental authorities; - new accounting guidance or changes in the interpretation or application of existing guidance;
- deterioration in market conditions, including market disruptions, limited liquidity and interest rate increases, or changes in the company’s credit profile;
- the factors disclosed under “Risk Factors” in the company’s most recent Annual Report on Form 10-K and any subsequently filed Quarterly Reports on Form 10-Q; and
- such other factors as may be discussed or identified in this press release.
All forward-looking statements are qualified in their entirety by these and other cautionary statements that the Company makes from time to time in its
Investors should also be aware that while the Company does, from time to time, communicate with securities analysts and others, it is against the Company’s policy to disclose to them any material, nonpublic information or other confidential commercial information. Accordingly, shareholders should not assume that the Company agrees with any statement or report issued by any securities analyst regardless of the content of the statement or report. Furthermore, the Company has a policy against confirming projections, forecasts or opinions issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not the Company’s responsibility.
About
| DOLLAR GENERAL CORPORATION AND SUBSIDIARIES | |||||||
| Consolidated Balance Sheets | |||||||
| (In thousands) | |||||||
| (Unaudited) | |||||||
2023 |
|
2022 |
|
||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ |
381,576 |
$ |
344,829 |
|
||
| Merchandise inventories |
|
6,760,733 |
|
5,614,325 |
|
||
| Income taxes receivable |
|
135,775 |
|
97,394 |
|
||
| Prepaid expenses and other current assets |
|
302,925 |
|
247,295 |
|
||
| Total current assets |
|
7,581,009 |
|
6,303,843 |
|
||
| Net property and equipment |
|
5,236,309 |
|
4,346,127 |
|
||
| Operating lease assets |
|
10,670,014 |
|
10,092,930 |
|
||
|
4,338,589 |
|
4,338,589 |
|
|||
| Other intangible assets, net |
|
1,199,700 |
|
1,199,750 |
|
||
| Other assets, net |
|
57,746 |
|
46,132 |
|
||
| Total assets | $ |
29,083,367 |
$ |
26,327,371 |
|
||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Current portion of operating lease liabilities | $ |
1,288,939 |
$ |
1,183,559 |
|
||
| Accounts payable |
|
3,552,991 |
|
3,738,604 |
|
||
| Accrued expenses and other |
|
1,036,919 |
|
1,049,139 |
|
||
| Income taxes payable |
|
8,919 |
|
8,055 |
|
||
| Total current liabilities |
|
5,887,768 |
|
5,979,357 |
|
||
| Long-term obligations |
|
7,009,399 |
|
4,172,068 |
|
||
| Long-term operating lease liabilities |
|
9,362,761 |
|
8,890,709 |
|
||
| Deferred income taxes |
|
1,060,906 |
|
825,254 |
|
||
| Other liabilities |
|
220,761 |
|
197,997 |
|
||
| Total liabilities |
|
23,541,595 |
|
20,065,385 |
|
||
| Commitments and contingencies | |||||||
| Shareholders' equity: | |||||||
| Preferred stock |
|
- |
|
- |
|
||
| Common stock |
|
191,718 |
|
201,265 |
|
||
| Additional paid-in capital |
|
3,693,871 |
|
3,587,914 |
|
||
| Retained earnings |
|
1,656,140 |
|
2,473,999 |
|
||
| Accumulated other comprehensive loss |
|
43 |
|
(1,192 |
) |
||
| Total shareholders' equity |
|
5,541,772 |
|
6,261,986 |
|
||
| Total liabilities and shareholders' equity | $ |
29,083,367 |
$ |
26,327,371 |
|
||
| DOLLAR GENERAL CORPORATION AND SUBSIDIARIES | |||||||||
| Consolidated Statements of Income | |||||||||
| (In thousands, except per share amounts) | |||||||||
| (Unaudited) | |||||||||
| For the Quarter Ended | |||||||||
| (14 Weeks) | (13 Weeks) | ||||||||
|
% of Net |
|
% of Net |
||||||
2023 |
Sales |
2022 |
Sales |
||||||
| Net sales | $ |
10,202,907 |
100.00 |
% |
$ |
8,651,448 |
100.00 |
% |
|
| Cost of goods sold |
|
7,054,590 |
69.14 |
|
5,951,208 |
68.79 |
|||
| Gross profit |
|
3,148,317 |
30.86 |
|
2,700,240 |
31.21 |
|||
| Selling, general and administrative expenses |
|
2,215,143 |
21.71 |
|
1,903,571 |
22.00 |
|||
| Operating profit |
|
933,174 |
9.15 |
|
796,669 |
9.21 |
|||
| Interest expense |
|
74,818 |
0.73 |
|
38,506 |
0.45 |
|||
| Income before income taxes |
|
858,356 |
8.41 |
|
758,163 |
8.76 |
|||
| Income tax expense |
|
199,221 |
1.95 |
|
160,730 |
1.86 |
|||
| Net income | $ |
659,135 |
6.46 |
% |
$ |
597,433 |
6.91 |
% |
|
| Earnings per share: | |||||||||
| Basic | $ |
2.97 |
$ |
2.59 |
|||||
| Diluted | $ |
2.96 |
$ |
2.57 |
|||||
| Weighted average shares outstanding: | |||||||||
| Basic |
|
221,564 |
|
231,079 |
|||||
| Diluted |
|
222,702 |
|
232,513 |
|||||
| For the Year Ended | |||||||||
| (53 Weeks) | (52 Weeks) | ||||||||
| % of Net | % of Net | ||||||||
2023 |
Sales | 2022 |
Sales | ||||||
| Net sales | $ |
37,844,863 |
100.00 |
% |
$ |
34,220,449 |
100.00 |
% |
|
| Cost of goods sold |
|
26,024,765 |
68.77 |
|
23,407,443 |
68.40 |
|||
| Gross profit |
|
11,820,098 |
31.23 |
|
10,813,006 |
31.60 |
|||
| Selling, general and administrative expenses |
|
8,491,796 |
22.44 |
|
7,592,331 |
22.19 |
|||
| Operating profit |
|
3,328,302 |
8.79 |
|
3,220,675 |
9.41 |
|||
| Interest expense |
|
211,273 |
0.56 |
|
157,526 |
0.46 |
|||
| Other (income) expense |
|
415 |
0.00 |
|
- |
0.00 |
|||
| Income before income taxes |
|
3,116,614 |
8.24 |
|
3,063,149 |
8.95 |
|||
| Income tax expense |
|
700,625 |
1.85 |
|
663,917 |
1.94 |
|||
| Net income | $ |
2,415,989 |
6.38 |
% |
$ |
2,399,232 |
7.01 |
% |
|
| Earnings per share: | |||||||||
| Basic | $ |
10.73 |
$ |
10.24 |
|||||
| Diluted | $ |
10.68 |
$ |
10.17 |
|||||
| Weighted average shares outstanding: | |||||||||
| Basic |
|
225,148 |
|
234,261 |
|||||
| Diluted |
|
226,297 |
|
235,812 |
|||||
| DOLLAR GENERAL CORPORATION AND SUBSIDIARIES | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| For the Year Ended | ||||||||
| (53 Weeks) | (52 Weeks) | |||||||
|
2023 |
|
|
2022 |
|
|||
| Cash flows from operating activities: | ||||||||
| Net income | $ |
2,415,989 |
|
$ |
2,399,232 |
|
||
| Adjustments to reconcile net income to net cash | ||||||||
| from operating activities: | ||||||||
| Depreciation and amortization |
|
724,877 |
|
|
641,316 |
|
||
| Deferred income taxes |
|
235,299 |
|
|
114,359 |
|
||
| Noncash share-based compensation |
|
72,712 |
|
|
78,178 |
|
||
| Other noncash (gains) and losses |
|
530,530 |
|
|
191,040 |
|
||
| Change in operating assets and liabilities: | ||||||||
| Merchandise inventories |
|
(1,665,352 |
) |
|
(550,114 |
) |
||
| Prepaid expenses and other current assets |
|
(65,102 |
) |
|
(47,471 |
) |
||
| Accounts payable |
|
(194,722 |
) |
|
98,735 |
|
||
| Accrued expenses and other liabilities |
|
(25,409 |
) |
|
(37,328 |
) |
||
| Income taxes |
|
(37,517 |
) |
|
(14,642 |
) |
||
| Other |
|
(6,750 |
) |
|
(7,494 |
) |
||
| Net cash provided by (used in) operating activities |
|
1,984,555 |
|
|
2,865,811 |
|
||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment |
|
(1,560,582 |
) |
|
(1,070,460 |
) |
||
| Proceeds from sales of property and equipment |
|
5,236 |
|
|
4,903 |
|
||
| Net cash provided by (used in) investing activities |
|
(1,555,346 |
) |
|
(1,065,557 |
) |
||
| Cash flows from financing activities: | ||||||||
| Issuance of long-term obligations |
|
2,296,053 |
|
|
- |
|
||
| Repayments of long-term obligations |
|
(911,330 |
) |
|
(6,402 |
) |
||
| Net increase (decrease) in commercial paper outstanding |
|
1,447,600 |
|
|
54,300 |
|
||
| Costs associated with issuance of debt |
|
(16,925 |
) |
|
(2,268 |
) |
||
| Repurchases of common stock |
|
(2,748,014 |
) |
|
(2,549,669 |
) |
||
| Payments of cash dividends |
|
(493,726 |
) |
|
(392,188 |
) |
||
| Other equity and related transactions |
|
33,880 |
|
|
64,225 |
|
||
| Net cash provided by (used in) financing activities |
|
(392,462 |
) |
|
(2,832,002 |
) |
||
| Net increase (decrease) in cash and cash equivalents |
|
36,747 |
|
|
(1,031,748 |
) |
||
| Cash and cash equivalents, beginning of period |
|
344,829 |
|
|
1,376,577 |
|
||
| Cash and cash equivalents, end of period | $ |
381,576 |
|
$ |
344,829 |
|
||
| Supplemental cash flow information: | ||||||||
| Cash paid for: | ||||||||
| Interest | $ |
195,312 |
|
$ |
159,803 |
|
||
| Income taxes | $ |
500,814 |
|
$ |
568,267 |
|
||
| Supplemental schedule of non-cash investing and financing activities: | ||||||||
| Right of use assets obtained in exchange for new operating lease liabilities | $ |
1,836,718 |
|
$ |
1,778,564 |
|
||
| Purchases of property and equipment awaiting processing for payment, | ||||||||
| included in Accounts payable | $ |
150,694 |
|
$ |
143,589 |
|
||
| DOLLAR GENERAL CORPORATION AND SUBSIDIARIES | ||||||||||
| Selected Additional Information | ||||||||||
| (Unaudited) | ||||||||||
| Sales by Category (in thousands) | ||||||||||
| For the Quarter Ended | ||||||||||
| (14 Weeks) | (13 Weeks) | |||||||||
2023 |
2022 |
|
% Change | |||||||
| Consumables | $ |
8,054,072 |
$ |
6,562,770 |
|
22.7 |
% |
|||
| Seasonal |
|
1,191,702 |
|
1,127,600 |
|
5.7 |
% |
|||
| Home products |
|
658,398 |
|
638,753 |
|
3.1 |
% |
|||
| Apparel |
|
298,735 |
|
322,325 |
|
-7.3 |
% |
|||
| Net sales | $ |
10,202,907 |
$ |
8,651,448 |
|
17.9 |
% |
|||
| For the Year Ended | ||||||||||
| (53 Weeks) | (52 Weeks) | |||||||||
2023 |
2022 |
|
% Change | |||||||
| Consumables | $ |
30,155,218 |
$ |
26,258,605 |
|
14.8 |
% |
|||
| Seasonal |
|
4,182,815 |
|
4,182,165 |
|
0.0 |
% |
|||
| Home products |
|
2,332,411 |
|
2,322,367 |
|
0.4 |
% |
|||
| Apparel |
|
1,174,419 |
|
1,457,312 |
|
-19.4 |
% |
|||
| Net sales | $ |
37,844,863 |
$ |
34,220,449 |
|
10.6 |
% |
|||
| Store Activity | ||||||||||
| For the Year Ended | ||||||||||
| (53 Weeks) | (52 Weeks) | |||||||||
2023 |
|
2022 |
||||||||
| Beginning store count |
|
18,130 |
|
17,177 |
|
|||||
| New store openings |
|
1,039 |
|
1,050 |
|
|||||
| Store closings |
|
(65 |
) |
(97 |
) |
|||||
| Net new stores |
|
974 |
|
953 |
|
|||||
| Ending store count |
|
19,104 |
|
18,130 |
|
|||||
| Total selling square footage (000's) |
|
142,987 |
|
134,532 |
|
|||||
| Growth rate (square footage) |
|
6.3 |
% |
5.9 |
% |
|||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20230316005045/en/
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