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Month-to-month Furnishings Insights Report From Smith Leonard


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MONTHLY RESULTS

 

New Orders

As we famous final month, the comparisons of the March to Might outcomes of 2021 to these of the identical interval of 2020 are actually not significant aside from to acknowledge that the residential furnishings producers and distributors have rebounded fairly efficiently. We’ll report these outcomes in your info and for members to have the ability to measure how they’re stacking up in opposition to the business. Almost certainly the comparisons of April 2021 to April 2020 would be the most troublesome to check because the March and April shutdowns of 2020 have been very totally different for many individuals. So right here goes.

 

New orders in April 2021 have been up 239% over April 2020. As can be anticipated, the entire members reported elevated orders for the month. 12 months to this point, new orders elevated 73% over the primary 4 months of 2020. However for a greater comparability, we in contrast April 2021 outcomes to that of April 2019. These outcomes have been actually spectacular. For the month of April 2021, new orders have been up 30% over April 2019. For the 4 months ended April, new orders have been up 36% over the primary 4 months of 2019.

 

Shipments and Backlogs

Comparable outcomes have been reported for shipments. In April, shipments have been up 296% over April 2020 and have been up 39% yr to this point. As with orders, all of our members reported will increase. In comparison with April 2019, shipments have been up 26% and up 18% yr to this point.

 

Backlogs remained at unbelievable ranges, up 266% over April 2020. Backlogs have been up 5% from March ranges, regardless of transport cranking up once more.

 

Receivables and Inventories

Receivable ranges have been up 35% over April 2020. From our conversations, most everybody we speak with say their receivables are about as clear as ever because it pertains to overdue invoices. We proceed to consider that the PPP actually helped sellers have the funds to proceed to purchase merchandise.

 

Inventories have been up 21% from final April, very a lot consistent with what we might count on with the brand new degree of orders. Had supplies been extra accessible, inventories would probably have been larger.

 

Manufacturing unit and Warehouse Staff and Payroll

Once more, these outcomes are usually not that comparable, however right here they’re. The variety of manufacturing unit and warehouse workers was up 14% over April 2020. However we’re not positive what the April 2020 outcomes included as many had shut down, some furloughed workers, others had introduced them again as a result of PPP program, so these outcomes are simply that.

Payrolls have been up 170%, once more, not a significant comparability.

 

NATIONAL

 

Client Confidence

The Convention Board Client Confidence Index® improved additional in June, following beneficial properties in every of the earlier 4 months. The Index now stands at 127.3 (1985=100), up from 120.0 (an upward revision) in Might. The Current Scenario Index— primarily based on shoppers’ evaluation of present enterprise and labor market situations— rose from 148.7 to 157.7. The Expectations Index—primarily based on shoppers’ short-term outlook for earnings, enterprise, and labor market situations—improved to 107.0, up from 100.9 final month.

 

“Client confidence elevated in June and is at present at its highest degree because the onset of the pandemic’s first surge in March 2020,” stated Lynn Franco, Senior Director of Financial Indicators at The Convention Board. “Customers’ evaluation of present situations improved once more, suggesting financial development has strengthened additional in Q2. Customers’ short-term optimism rebounded, buoyed by expectations that enterprise situations and their very own monetary prospects will proceed bettering within the months forward. Whereas short-term inflation expectations elevated, this had little affect on shoppers’ confidence or buying intentions. In reality, the proportion of shoppers planning to buy houses, vehicles, and main home equipment all rose—an indication that client spending will proceed to help financial development within the short-term. Trip intentions additionally rose, reflecting a continued enhance in spending on providers.”

 

Customers’ appraisal of present enterprise situations improved in June. 24.5% of shoppers stated enterprise situations are “good”, up from to 19.9%. 19.5% of shoppers claimed enterprise situations are “unhealthy”, down from 20.6%.

 

Customers’ evaluation of the labor market additionally improved. 54.4% of shoppers stated jobs are “plentiful”, up from 48.5%. 10.9% of shoppers claimed jobs are “laborious to get”, down from 11.6%.

 

Customers’ optimism in regards to the short-term enterprise situations outlook rebounded in June. 33.3% of shoppers count on enterprise situations will enhance, up from 31.0%. Simply 10.6% count on enterprise situations to worsen, down from 14.4%.

 

Customers have been blended in regards to the short-term labor market outlook. 25.7% of shoppers count on extra jobs to be accessible within the months forward, down from 27.7%. Conversely, 16.0% anticipate fewer jobs, down from 17.5%.

 

Customers have been extra upbeat about their short-term monetary prospects. 18.6% of shoppers count on their incomes to extend, up from 16.2%. Solely 8.5% count on their incomes will lower, down from 9.3%.

 

Main Financial Indicators

The Convention Board Main Financial Index® (LEI) for the U.S. elevated by 1.3% in Might to 114.5 (2016 = 100), following a 1.3% enhance in April and a 1.4% enhance in March.

 

“After one other giant enchancment in Might, the U.S. LEI now stands above its earlier peak reached in January 2020 (112.0), suggesting that robust financial development will proceed within the close to time period,” stated Ataman Ozyildirim, Senior Director of Financial Analysis at The Convention Board. “Strengths among the many main indicators have been widespread, with preliminary claims for unemployment insurance coverage making the biggest optimistic contribution to the index; housing permits made this month’s solely adverse contribution. The Convention Board now forecasts actual GDP development in Q2 might attain 9% (annualized), with year-over-year financial development reaching 6.6% for 2021.”

 

The Convention Board Coincident Financial Index® (CEI) for the U.S. elevated by 0.4% in Might to 105.1 (2016 = 100), following a 0.3% enhance in April and a 1.3% enhance in March.

 

The Convention Board Lagging Financial Index® (LAG) for the U.S. decreased by 2.2% in Might to 103.0 (2016 = 100), following a 3.0% enhance in April and 4.2% lower in March.

 

Gross Home Product

Actual gross home product (GDP) elevated at an annual charge of 6.4% within the first quarter of 2021, in accordance with the “third” estimate launched by the Bureau of Financial Evaluation. Within the fourth quarter, actual GDP elevated 4.3%.

 

The “third” estimate of GDP launched late June is predicated on extra full supply knowledge than have been accessible for the “second” estimate issued final month. Within the second estimate, the rise in actual GDP was additionally 6.4%. Upward revisions to nonresidential mounted funding, non-public stock funding, and exports have been offset by an upward revision to imports, that are a subtraction within the calculation of GDP.

 

The rise in actual GDP within the first quarter mirrored will increase in private consumption expenditures (PCE), nonresidential mounted funding, federal authorities spending, residential mounted funding, and state and native authorities spending that have been partly offset by decreases in non-public stock funding and exports. Imports elevated.

 

 

HOUSING

 

Current-Residence Gross sales

Current-home gross sales decreased for a fourth straight month in Might, in accordance with the Nationwide Affiliation of Realtors®. Just one main U.S. area recorded a month-over-month enhance, whereas the opposite three areas noticed gross sales decline. Nonetheless, every of the 4 areas once more registered double-digit year-over-year beneficial properties.

 

Whole existing-home gross sales, accomplished transactions that embrace single-family houses, townhomes, condominiums and co-ops, dropped 0.9% from April to a seasonally-adjusted annual charge of 5.80 million in Might. Gross sales in whole climbed year-over-year, up 44.6% from a yr in the past (4.01 million in Might 2020).

 

Single-family dwelling gross sales dropped to a seasonally-adjusted annual charge of 5.08 million in Might, down 1.0% from 5.13 million in April, and up 39.2% from one yr in the past. The median present single-family dwelling worth was $356,600 in Might, up 24.4% from Might 2020.

Current condominium and co-op gross sales have been recorded at a seasonally-adjusted annual charge of 720,000 models in Might, unchanged from April however up 100.0% from one yr in the past. The median present condominium worth was $306,000 in Might, an annual enhance of 21.5%.

 

“Residence gross sales fell reasonably in Might and are actually approaching pre-pandemic exercise,” stated Lawrence Yun, NAR’s chief economist. “Lack of stock continues to be the overwhelming issue holding again dwelling gross sales, however falling affordability is solely squeezing some first-time consumers out of the market.”

 

“The market’s outlook, nevertheless, is encouraging,” Yun continued. “Provide is predicted to enhance, which is able to give consumers extra choices and assist tamp down record-high asking costs for present houses.”

 

The median existing-home worth for all housing sorts in Might was $350,300, up 23.6% from Might 2020 ($283,500), as each area registered worth will increase. This can be a document excessive and marks 111 straight months of year-over-year beneficial properties since March 2012.

 

Whole housing stock on the finish of Might amounted to 1.23 million models, up 7.0% from April’s stock and down 20.6% from one yr in the past (1.55 million). Unsold stock sits at a 2.5-month provide at this time gross sales tempo, marginally up from April’s 2.4-month provide however down from 4.6-months in Might 2020.

 

Properties sometimes remained available on the market for 17 days in Might, unchanged from April and down from 26 days in Might 2020. Eighty-nine % of the houses bought in Might 2021 have been available on the market for lower than a month.

 

First-time consumers have been chargeable for 31% of gross sales in Might, additionally even with April however down from 34% in Might 2020. NAR’s 2020 Profile of Residence Consumers and Sellers – launched in late 2020 – revealed that the annual share of first-time consumers was 31%.

 

A brand new research launched by NAR – the 2021 Trip Residence Counties Report – discovered that from January to April 2021, the share of trip dwelling gross sales to whole existing-home gross sales rose to six.7%. Trip dwelling gross sales jumped 57.2% year-over-year in comparison with the 20% year-overyear development in whole existing-home gross sales.

 

“The enchantment of trip houses has actually grown in the course of the pandemic, particularly amongst workers permitted to make money working from home,” Yun stated. “As companies resolve new tips for distant staff, even permitting everlasting distant choices in some circumstances, search for trip houses to stay a well-liked possibility.”

 

Regional

For the second straight month, solely the Midwest skilled larger gross sales from the prior month.

 

Current-home gross sales within the Northeast decreased 1.4% in Might, however the annual charge of 720,000 was a 46.9% leap from a yr in the past. The median worth within the Northeast was $384,300, up 17.1% from Might 2020.

 

Current-home gross sales within the Midwest rose 1.6% to an annual charge of 1,310,000 in Might, a 27.2% enhance from a yr in the past. The median worth within the Midwest was $268,500, an 18.1% enhance from Might 2020.

 

Current-home gross sales within the South declined 0.4%, posting an annual charge of two,590,000 in Might, up 47.2% from the identical time one yr in the past. The median worth within the South was $299,400, a 22.6% leap from one yr in the past.

 

Current-home gross sales within the West fell 4.1%, recording an annual charge of 1,180,000 in Might, a 61.6% climb from a yr in the past. The median worth within the West was $505,600, up 24.3% from Might 2020.

 

New Residential Gross sales

Gross sales of recent single‐household homes in Might 2021 have been at a seasonally adjusted annual charge of 769,000, in accordance with estimates launched collectively by the U.S. Census Bureau and the Division of Housing and City Improvement. This was 5.9% under the revised April charge of 817,000 however was 9.2% above the Might 2020 estimate of 704,000.

 

The median gross sales worth of recent homes bought in Might 2021 was $374,400. The common gross sales worth was $430,600.

 

New privately-owned home gross sales have been up from Might 2020 by 57.6% within the Northeast, 28.4% within the Midwest, 3.1% within the South and 6.7% within the West.

 

 

Housing Begins

Privately‐owned housing begins in Might have been at a seasonally adjusted annual charge of 1,572,000. This was 3.6% above the revised April estimate of 1,517,000 and was 50.3% above the Might 2020 charge of 1,046,000. Single‐household housing begins in Might have been at a charge of 1,098,000; this was 4.2% above the revised April determine of 1,054,000. The Might charge for models in buildings with 5 models or extra was 465,000.

 

Single household begins in Might in comparison with Might 2020 have been up 50.3% with begins up 80.0% in Northeast, 70.7% within the Midwest, 46.7% within the South and 40.3% within the West.

 

Housing Completions

Privately‐owned housing completions in Might have been at a seasonally adjusted annual charge of 1,368,000. This was 4.1% under the revised April estimate of 1,426,000, however was 16.1% above the Might 2020 charge of 1,178,000. Single‐household housing completions in Might have been at a charge of 978,000; this was 2.6% under the revised April charge of 1,004,000.

 

OTHER NATIONAL

 

 

Retail Gross sales

In accordance with the U.S. Census Bureau, Advance estimates of U.S. retail and meals providers gross sales for Might 2021, adjusted for seasonal variation and vacation and trading-day variations, however not for worth adjustments, have been $620.2 billion, a lower of 1.3% from the earlier month, however 28.1% above Might 2020. Whole gross sales for the March 2021 by way of Might 2021 interval have been up 36.2% from the identical interval a yr in the past

Retail commerce gross sales have been down 1.7% from April 2021, however up 24.4% above final yr. Clothes and clothes equipment shops have been up 200.3% from Might 2020, whereas meals providers and ingesting locations have been up 70.6% from final yr.

 

Gross sales at furnishings and residential furnishings shops in Might 2021 have been up 66.7 % over Might 2020 and up 49.5% yr to this point. Evaluating gross sales at these shops for the primary 4 months of 2021 vs. the primary 4 months of 2019, gross sales have been up 14.7%.

 

Client Costs

The Client Value Index for All City Customers (CPI-U) elevated 0.6% in Might on a seasonally adjusted foundation after rising 0.8% in April, in accordance with the U.S. Bureau of Labor Statistics. Over the past 12 months, the all gadgets index elevated 5.0% earlier than seasonal adjustment; this was the biggest 12-month enhance since a 5.4% enhance for the interval ending August 2008.

 

The index for used vehicles and vans continued to rise sharply, rising 7.3% in Might. This enhance accounted for about one-third of the seasonally adjusted all gadgets enhance. The meals index elevated 0.4% in Might, the identical enhance as in April. The vitality index was unchanged in Might, with a decline within the gasoline index once more offsetting will increase within the electrical energy and pure fuel indexes.

 

The index for all gadgets much less meals and vitality rose 0.7% in Might after rising 0.9% in April. Lots of the similar indexes continued to extend, together with used vehicles and vans, family furnishings and operations, new automobiles, airline fares, and attire. The index for medical care fell barely, one of many few main part indexes to say no in Might.

 

The all gadgets index rose 5.0% for the 12 months ending Might; it has been trending up each month since January, when the 12-month change was 1.4%. The index for all gadgets much less meals and vitality rose 3.8% during the last 12-months, the biggest 12-month enhance because the interval ending June 1992. The vitality index rose 28.5% during the last 12-months, and the meals index elevated 2.2%.

 

 

Employment

Whole nonfarm payroll employment rose by 559,000 in Might, and the unemployment charge declined by 0.3 proportion level to five.8%, in accordance with the U.S. Bureau of Labor Statistics. Notable job beneficial properties occurred in leisure and hospitality, in private and non-private training, and in well being care and social help.

 

In Might, the unemployment charge declined by 0.3 proportion level to five.8%, and the variety of unemployed individuals fell by 496,000 to 9.3 million. These measures are down significantly from their latest highs in April 2020 however stay nicely above their ranges previous to the coronavirus (COVID-19) pandemic (3.5% and 5.7 million, respectively, in February 2020).

 

Among the many unemployed, the variety of individuals on momentary layoff declined by 291,000 to 1.8 million in Might. This measure is down significantly from the latest excessive of 18.0 million in April 2020 however is 1.1 million larger than in February 2020. The variety of everlasting job losers decreased by 295,000 to three.2 million in Might however was 1.9 million larger than in February 2020

 

Sturdy Items Orders and Manufacturing unit Shipments

New orders for manufactured sturdy items in Might elevated 2.3% to $253.3 billion, in accordance with the U.S. Census Bureau. This enhance, up twelve of the final 13 months, adopted a 0.8% April lower. Excluding transportation, new orders elevated 0.3%. Excluding protection, new orders elevated 1.7%. Transportation gear, up following two consecutive month-to-month decreases, led the rise, at 7.6% to $74.2 billion.

 

Shipments of manufactured sturdy items in Might, up two of the final three months, elevated 0.4% to $248.3 billion. This adopted a nearly unchanged April lower. Equipment, up seven of the final eight months, led the rise, 1.1% to $35.1 billion.

 

In accordance with the ultimate report, shipments of furnishings and associated merchandise in April 2021 elevated 10.6% from April 2020 however have been down 1.4% yr to this point. Orders have been up 14.2% from April 2020 for this class and up 0.9% yr to this point. Clearly this class consists of a number of issues aside from residential furnishings.

 

EXECUTIVE SUMMARY

 

As we famous final month, the outcomes of our survey of residential furnishings producers and distributors might be troublesome to make a lot sense of as a result of pandemic that started in March of 2020. March, April, and most of Might leads to 2020 have been a combination of full and or partial shutdowns, or whereas some workers have been put again on payroll as a result of authorities help packages, there was little productive exercise at most locations. At the least till we began to see some issues come again in Might.

 

We have now offered some comparisons to the identical intervals from 2019 which proceed to point out that enterprise has actually not solely picked again up from final yr, however can be exhibiting very optimistic outcomes in comparison with 2019. New orders have been up 239% over April 2020 and have been up 73% over the primary 4 months of 2020. Evaluating to April 2019 outcomes, April 2021 orders have been up 30% and have been up 36% for the 4 months ended April.

 

Shipments have been up 296% in April versus April 2020 and up 39% yr to this point. Shipments in April 2021 have been up 26% over April 2019 and up 18% yr to this point. Backlogs have been up 266% over April 2020 and up 5% from March 2021. Backlogs are clearly too excessive as new orders proceed to exceed shipments. Whereas catching up considerably, it is going to probably be some time earlier than backlogs get again to extra affordable ranges. Provide of supplies, particularly foam within the upholstery world, in addition to labor shortages, are hurting upholstery producers. Provide of completed items imports have additionally slowed as a result of COVID results on sourcing nations, both shut down or simply considerably behind in manufacturing. We’ll talk about pricing extra in our Ideas part.

 

Receivable ranges proceed to be in fine condition for many. Most of what we hear is that so far, receivable ageing’s are very clear. We predict in comparison with the April time interval final yr, most had begun to obtain Paycheck Safety Program (PPP) funds and have been ready to make use of these to not solely pay the workers but in addition to assist with money stream as companies started to return to work.

 

Stock ranges additionally seem in line and if something, in all probability may very well be larger apart from shortages of supplies in addition to severe container stream points.

 

Employment outcomes are actually not all that significant for the April time interval.

 

Nationwide

 

Client Confidence

The Convention Board Client Confidence Index® improved additional in June, following beneficial properties in every of the earlier 4 months. The Index now stands at 127.3 (1985=100), up from 120.0 (an upward revision) in Might. The Current Scenario Index—primarily based on shoppers’ evaluation of present enterprise and labor market situations—rose from 148.7 to 157.7. The Expectations Index—primarily based on shoppers’ short-term outlook for earnings, enterprise, and labor market situations—improved to 107.0, up from 100.9 final month. The Index is now on the highest degree because the begin of the pandemic.

 

Housing

Single-family dwelling gross sales dropped to a seasonally-adjusted annual charge of 5.08 million in Might, down 1.0% from 5.13 million in April, and up 39.2% from one yr in the past. The median present single-family dwelling worth was $356,600 in Might, up 24.4% from Might 2020.

“Residence gross sales fell reasonably in Might and are actually approaching pre-pandemic exercise,” stated Lawrence Yun, NAR’s chief economist. “Lack of stock continues to be the overwhelming issue holding again dwelling gross sales, however falling affordability is solely squeezing some first-time consumers out of the market.”

 

Gross sales in Might have been down in comparison with April in all areas besides the Midwest, the place they have been up barely. However all 4 areas reported vital will increase over Might 2020.

 

Gross sales of recent single‐household homes in Might 2021 have been at a seasonally adjusted annual charge of 769,000, which was 5.9% under the revised April charge however was 9.2% above the Might 2020 estimate. New privately-owned home gross sales have been up from Might 2020 by 57.6% within the Northeast, 28.4% within the Midwest, 3.1% within the South and 6.7% within the West.

 

Housing begins continued to enhance in comparison with final Might. With lumber to be used in housing costs beginning to fall, we might even see some choose up in begins quickly.

 

Different

U.S. retail and meals providers gross sales for Might 2021 decreased 1.3% from the earlier month, however have been 28.1% above Might 2020.

Retail commerce gross sales have been down 1.7% from April 2021, however up 24.4% above final yr. Meals providers and ingesting locations have been up 70.6% from final yr. Gross sales at furnishings and residential furnishings shops in Might 2021 have been up 66.7% over Might 2020 and up 49.5% yr to this point.  Evaluating gross sales at these shops for the primary 4 months of 2021 vs. the primary 4 months of 2019, gross sales have been up 14.7%.

 

The buyer worth index elevated 0.6% in Might and was up 5% for the previous 12 months. The index has been trending up each month since January, when the 12-month change was 1.4%. The index for all gadgets much less meals and vitality rose 3.8% during the last 12-months, the biggest 12-month enhance because the interval ending June 1992. The vitality index rose 28.5% during the last 12-months, and the meals index elevated 2.2%.

 

Whole nonfarm payroll employment rose by 559,000 in Might, and the unemployment charge declined by 0.3 proportion level to five.8%. Notable job beneficial properties occurred in leisure and hospitality, in private and non-private training, and in well being care and social help.

 

The Convention Board Main Financial Index elevated by 1.3% in Might to 114.5 (2016 = 100), following a 1.3% enhance in April and a 1.4% enhance in March. The Convention Board now forecasts actual GDP development in Q2 might attain 9% (annualized), with year-over-year financial development reaching 6.6% for 2021.

 

Ideas

The June Excessive Level Furnishings Market gave the impression to be very profitable for many. Many individuals commented that there have been few tire kickers right here, as most have been writing orders. A few of the bigger sellers that did a good quantity of enterprise at Premarket didn’t come again, however those who did appeared to come back to do enterprise. For those who bought to the design commerce, you have been busy.

 

Essentially the most prevalent discussions at market, aside from about enterprise being written, was what to do about pricing. Upholstery exhibitors have been troubled by having 12 to 25 plus week deliveries together with costs of most supplies going up. For instance, how do you worth items on the market right this moment that received’t be made for say 15 to twenty weeks? On the case items facet, the identical pricing points have been there as nicely, with some worth will increase in completed items, but in addition loopy container will increase, even when you will get one. When some costs of supplies are going up 4 to six instances, wholesale costs must comply with swimsuit.

 

We consider that one good factor that could be coming from these worth will increase and shortages is that many sellers are studying that they really can promote items at larger costs, even once they didn’t suppose they may. This proves once more that the typical client has no concept what a bit of furnishings ought to value to start with.

 

How lengthy will this nice enterprise final? We want we knew, however it looks like it might last more than we thought early on. For positive shipments will proceed to develop as backlogs are labored down, however it looks like orders will proceed to enhance as shoppers appear to actually be into upfitting and redesigning the areas they stay in.

 

This Furnishings Insights® publication report has been re-published with the permission of Smith Leonard PLLC an unbiased member of the BDO Seidman Alliance.

Agency Profile: Based in 1930 by BDO Seidman, LLP, the Excessive Level, North Carolina apply was not too long ago acquired by 4 people who’ve spent the vast majority of their 100+ yr careers constructing the present apply. Starting January 1, 2007, Smith Leonard PLLC turned an unbiased member of the BDO Seidman Alliance. Companions are Ken Smith, Darlene Leonard, Jon Glazman and Mark Bulmer. Among the many agency’s 32 workers are 18 CPAs.

Service Space – Smith Leonard concentrates primarily within the Triad, but in addition providers firms with home places all through North Carolina, Virginia, South Carolina and Texas.

Smith Leonard has an intensive community of worldwide relationships that helps service their shoppers’ wants all through the world with places in Asia, Europe, South America, Mexico and Canada. These firms vary in income measurement of $2 million to $300 million.

Apply Focus – Nearly all of the consumer base consists of producing and distribution firms.

Lots of its shoppers are both furnishings producers, distributors or suppliers to the furnishings business. Smith Leonard additionally providers firms in retail, transportation, insurance coverage, not-for-profit entities and worker profit plans. Smith Leonard provides a full vary of accounting and consulting providers together with audits, compilations, critiques, tax planning and compliance. The companions and workers of Smith Leonard additionally assists shoppers in mergers, acquisitions, enterprise consulting, money stream projections, and tax outsourcing. Particular person shoppers profit from intensive expertise in household wealth providers together with property tax planning.

The agency continues to provide month-to-month and annual statistics for the furnishings business. For extra info name (336) 883-018 or e-Mail: ksmith@smithleonardcpas.com.

 



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