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spk03: Good afternoon and welcome to the second quarter 2022 Collavo Growers Earnings Conference Call and Webcast. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. I will now turn the conference over to your host, Julie Kegley of Investment Relations for Collavo. You may begin.
spk01: Good afternoon and thank you for joining us today to discuss Colabo Grower's financial results for the second quarter of 2022. This afternoon we issued our earnings release and it is available in the investor relations section of our website at ir.colabo.com. With me on today's call is Brian Cooker, President and Chief Executive Officer of Colabo. We will begin with his prepared remarks and then open up the call for your questions. Before we begin, I would like to remind you that today's comments will include forward-looking statements under federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases. Statements that are not historical facts, such as statements about expected improvements in revenue and operating profit, are also forward-looking statements. Our actual results may vary materially from those contemplated by such forward-looking statements. Discussions of the factors that could cause a material difference in our results compared to these forward-looking statements are contained in our SEC filings, including reports on Form 10-K and 10-Q. With that, I will now turn the call over to Brian Cooker.
spk04: Thank you, Julie, and good afternoon, everyone. We appreciate you joining us today. Let me start off right away with how proud I am of the progress we made and the sequential quarter-over-quarter improvement we delivered in Q2. We are focused on the right initiatives and making the necessary changes in our organization to deliver results. In fact, the quarter has been very busy in terms of improving our business and our future. I'd like to highlight four of the most significant accomplishments. In April, we announced plans to reorganize our leadership and business segments to clarify roles, authorities, and accountabilities. As a result, we believe we have strengthened our ability to execute Project UNO and to realize resulting customer service and efficiency improvements. We streamlined the organization into two reporting segments, grown and prepared. The grown segment will consist of fresh avocados, tomatoes, and papayas. The prepared segment is a combination of our previously disclosed RFG segment and food segment aggregated together. We expect to report under the new segment structure beginning with our third quarter results. Secondly, we launched a brand refresh of the company logo, tagline, brand personality, and website to support Colabo's one company vision. The new branding reinforces our core values, which can be found on our careers page at collabo.com, and allows us to consistently present our broad portfolio to the market under one name. Now and into the future, we will have connected the dots for our customers and the trade so they can clearly see the power our consolidated business brings to the produce aisle. Thirdly, we continue to advance Project UNO with initiatives such as product and ingredient optimization, procurement and labor effectiveness, freight consolidation, and administrative synergies across the business. We made progress up and down the P&L by driving efficiencies, improving controls, managing inflation, and importantly, raising prices at a continuously increasing pace. Finally, and the most important accomplishment in the eyes of our team, we translated the initiatives and projects to the P&L and are reporting tangible, visible progress in our financial results. We've delivered continued sequential improvement for the third quarter in a row. As a highlight, from the first quarter to the second quarter of this year, gross profit improved by $8.5 million, Net loss improved by 3.7 million, or 21 cents per diluted share. And adjusted EBITDA improved by $7.9 million. Let's dig a little bit deeper into our segment results. In the fresh segment, for almost the entire quarter, supply was constrained and the cost of fruit was historically high. We serviced accounts and kept our customers supplied by leveraging our sourcing expertise and our inventory management processes to meet the needs of our market. Though fruit costs were high, given extremely constrained supply coming out of Mexico, our price increase covered these higher fruit costs, inflation of other input costs, and modest negative currency effects, leading to a higher gross profit per case compared to both Q1 of this year and Q2 of last year. For context, Even considering the headwinds in supply cost and currency, we improved our average gross profit per case of avocados compared to Q1-22 and Q2 of last year by $1.50 per case and $1.30 per case, respectively. As a result, total gross margin dollars more than offset the 13% volume decrease caused by lower available export volume from Mexico. As a note, our market share was flat year over year and versus Q1 22, and our decrease in volume sold was consistent with the decrease in total exports from Mexico. Turning to our RFG business, I'm proud of our team's daily focus on execution. We have seen improvement in nearly every one of our key performance indicators. We increased pricing by 3% compared to Q1 of this year and by 6% compared to Q2 of last year. Our customer fill rate continued its upward trend, reaching an industry-leading 99% by the end of the quarter, up from a very solid 96% in the first quarter of 2022. Simultaneously with improving order fill rate, we decreased customer and consumer complaints by over 17% compared to Q2 last year, and by 8% versus Q1 this year. On materials cost, we managed to temper inflation through e-sourcing strategies and production yield programs as part of Project UNO. Labor has also improved. Through employee engagement plans, we improved production staffing levels to 96% of required positions. Now that our facilities are fully staffed, Our training and efficiency initiatives resulted in labor productivity gains of 9% sequentially from Q1. In terms of resource allocation, we eliminated more than 30 inefficient new product development projects and repurposed those resources to our product and ingredient optimization teams. The sum of our accomplishments and initiatives positively impact RFG's performance in the quarter. Our segment gross profit percentage improved sequentially from negative 1% to positive 2%, and our margins have continued to improve as we progress through the third quarter. Transitioning to our foods business, we are experiencing some challenges. The same constrained supply situation that pushed fresh avocados to historically high prices has had an adverse impact on our processed avocado and guacamole operations. The price of fruit used for processing nearly doubled versus the same time last year. While our team raised prices with contract customers on three separate occasions during the quarter, we couldn't keep up with the increase in cost of fruit. As a result, gross margins for our food segment, even after our series of price increases, decreased sequentially Q1 to Q2 of 2022 from $2.2 million to $1.3 million. We do see some light at the end of the tunnel for our guacamole and processed avocado products. During the quarter, we expanded our sourcing operations for processed fruit and acquired some volume from new sources that have helped slow the inflationary pressures. Immediately, we have incorporated these new options into our everyday supply chain. Additionally, customers and consumers have been receptive to price increases. And we are seeing retail prices on the shelf continuing to increase with little impact on sales velocities at present. Proactively, we eliminated products that either no longer made sense for us to produce or for the customer to sell. And even looking internally, we continue to evaluate our own processes to improve labor and throughput efficiencies at our foods facilities. Finally, and potentially the biggest impact to the cost of our fruit and margin headwinds in our foods business, the summer avocado crop in Mexico should arrive in mid-July. We expect the new supply will provide some relief to overall prices, which should also flow through to our margins in the food segment. our food segment remains an important piece of our overall business and strategy. Although pressured, this segment is still gross profit positive. We continue to see strong demand for both processed avocado and prepared guacamole at retail and in food service due to the ongoing consumer trends for healthy, flavorful foods. Additionally, the business provides a strategic advantage to our avocado portfolio as it allows us to buy the full crop from growers. For example, when we take an acre of fruit, we allocate retail-grade quality fruit to our fresh segment and other grades to our food business. They're providing an outlet for the entire harvest. In summary, regarding the foods business, we will continue working every line in this segment's P&L to drive a fair return on sales. That wraps up our segment discussion. Now let's move on to the balance sheets. We continue to maintain a healthy balance sheet. We paid down over $22 million in debt in the quarter and ended April with $48.1 million of total debt, which included $41.9 million of borrowings under our line of credit and $6.2 million of long-term obligations and finance leases. Unrestricted cash and cash equivalents totaled $2.3 million as of April 30, 2022. Total available liquidity at quarter end was $15.9 million, including unrestricted cash, investments, and available borrowings under the facility. We believe our existing liquidity position is sufficient for our working capital needs and investment plans as we continue to implement Project UNO and drive performance improvements across the business. Capital expenditures for the year are projected to total approximately $15 million, which is consistent with fiscal 21. However, we are being judicious in our capital allocation. We are prioritizing those projects which have an extremely quick payback or provide a significant structural advantage in the future. We will not spend the capital unless we are satisfied that the return is right and projects can be executed crisply and cleanly. For a moment, I would like to look ahead to the next several quarters. We expect to see continued sequential improvement in our operating results while generating positive cash flow from operations. In modeling our business, our investors should remember several things. With respect to Project UNO, we announced Project UNO in the third quarter of 2021 and targeted approximately $70 million of annualized EBITDA improvement within two years. As of the end of Q2, we achieved approximately $13 million in positive impact. Last quarter, we further indicated that investors should think about Project UNO benefits in terms of sequential, gradual improvement over the next seven or so fiscal quarters. While inflation headwinds have been more significant than we originally anticipated, we expect steady progress will continue subject to seasonality and that the project uno benefits will be predominantly recognized in our rfg business as it relates to rfg and we start thinking about the next fiscal year our rfg business is progressing toward our target gross margin range of 10 to 12 percent by the end of 2023 however Also remember, RFG has some seasonality, and profits in the back half of the year usually outperform the front half of the fiscal year. In relation to avocados, demand continues, and the cost of avocados from Mexico are historically high. As supply normalizes, we fully expect avocado prices in the market to decrease. Even as we anticipate supply and prices To return to normalized levels, we expect our sourcing initiatives and the breadth of our customers across all distribution channels and all product sizes will allow us to maintain gross margin per case within the historical range of $3 to $4. Specifically for our foods business, we are still seeing cost pressure for fruit used as ingredients in our guacamole and other prepared foods. We will continue to increase prices across our customer portfolio in our food segment. However, we believe the high prices of raw materials will continue well into the third quarter. And therefore, food segment margins will remain compressed. And lastly, as an overall outlook on our business, we expect inflation to continue. And we plan to combat higher costs with all the tools at our disposal, including pricing actions across the portfolio, throughput and labor productivity initiatives, and sourcing programs to leverage our scale. Now, finally, as one more update item before I conclude my prepared remarks, Colabo is conducting a search for a new chief financial officer, and we're working with an outside search firm as well as within our own professional networks to identify candidates. Interviews are already underway. While not one single initiative, project, or program has been postponed, slowed, or halted while the CFO chair is open, we are moving with great speed to place a successor. However, finding the right person, not speed, is our primary goal. And I'm confident we'll do that given the strong slate of candidates we're interviewing. In summary, I'm proud that we are controlling what we can control, and our initiatives and efforts are showing up as sequential improvements in our operating results. I'm happy that our team has embraced change and is driving our performance improvement with an everyday relentlessness. However, while happy and proud, I am not, and our team is not yet satisfied with our progress. We expect and hold each other accountable for continuous, sequential improvement and will not rest. We strive to be better today than we were yesterday and better tomorrow than we are today. We also know that while we have several metrics that are important to the health of our business, progress in our minds is measured by what shows up in the financial statements and how fast we are driving cash flow in our business. That concludes my prepared remarks. Now I'd like to turn the call back to the operator for questions.
spk03: And at this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
spk02: One moment, please, while we poll for questions. And our first question comes from the line of Eric Larson with Seaport Research.
spk03: Please proceed with your question.
spk05: Hello, guys. How's everybody today?
spk04: Eric, we're doing well, thank you. How are you? I'm well, thank you.
spk05: So my first question is, we don't have, I don't have the queue yet. Maybe it is out. I haven't seen it, but When you look at your fresh margins in the quarter, were they below your $3 to $4 number, or were you within that range?
spk04: So it's a great question. And, you know, Eric, you've been around this long enough, and you know when you're in a commodity business, almost every quarter is unique. And this was a unique quarter. We had very strong demand combined with actually a lot less available product to sell. And I think our organization did a really nice job, a really nice job in managing our gross margin per case. In fact, if you compared it to our historical range, it would be much higher than our gross margin per case. than our range. Our gross margin in the second quarter was higher. Now, I think we were priced right in the market. The market had moved up. We were priced right in the market. We satisfied our customers. We serviced our customers. But it was really some of our sourcing initiatives that allowed us to generate that gross margin improvement. But it was above the historic norm. And, you know, again, I would expect that it would normalize back to that historic norm. But I think it was a really unique quarter in that our gross margin increase and expansion for the quarter was able to offset 13% volume decline and still show improvement quarter over quarter.
spk05: Okay. Yeah, got it. So are we starting to see better supplies coming out of Mexico? How long? would you expect to see sort of these, you know, really, really elevated, we're talking, you know, somewhere around $70, $80 a case, a carton, really high costs, really high prices. When might that start trickling back down?
spk04: Well, we kind of are seeing the summer bloom and the initial estimates on the summer bloom say that there will be some relief in available product, and that would usually start in mid-July. But we're just trying to manage our category as it's presented. With high prices, we're trying to keep our inventory really tight. I think one of the advantages of being a marketer of fruit is that we're buying and selling at daily pricing each and every day. And we're carrying a week, a week and a half inventory. So as the market moves up and down, we're able to kind of move along with it very quickly. I mean, it doesn't mean that we'll never get caught in a situation, but I think over the long term, having that ability to move up and down with the market, buy and sell every day at a quoted price really is an advantage as you see some of these high market prices.
spk05: Got it. And my final question, before I go back into Q, the pricing at RFG, that has been an issue for some time. It looks like it's starting to get better. Do you need more pricing? Did your costs continue to increase again this quarter like we're seeing at other companies? And where do you think you are on sort of price recognition benefits? I would assume it's going to continue to improve over the next few quarters, but My sense is with a 2% gross margin, gross profit margin, I'm assuming you are not getting full pricing benefits yet.
spk04: It's a great question, Eric, but let me also put some context to that. First and foremost, we're kind of getting improvement. If you look at a P&L, we're getting improvement from top to bottom in the P&L. Now, we had talked about it's going to be gradual. We cannot hit a 10-run home run. Right? So it's going to be gradual. But if you look at our overall price increase, I think we were a 6% price increase year over year. Year over year. 3% quarter over quarter. Now some of that is price increases that went into effect during the quarter. So we don't have a full impact of that. But it's not just price increase. We were able to experience really only 4% now I'm talking sequentially, quarter over quarter material cost improvement, but we offset half of that with yield improvement on our manufacturing processes, on our fresh cut processes. Our labor productivity increased 9% from the first quarter alone. So we've got the rolls filled. When you have the roles filled, you can train, you can work on efficiency initiatives, and that's starting to pay off too. So I think the very positive thing for me to think about in RFG is, remember, we've kind of talked about a two-year plan with RFG getting to those target margins of sort of 10% to 12%. But each month, we're making progress. I mentioned during the first quarter earnings release that January was the best month out of the quarter. Well, guess what? February was better than January. March was better than February. April was better than March. So we're even during the quarter, during the quarter where overall we saw 2% gross margin, April was the best month of that quarter.
spk05: Okay. Thank you.
spk03: Our next question comes from the line of Mitch Piero with Sturdivant and Company. Please proceed with your question.
spk07: Yeah, hi. Good afternoon. Hey, Mitch. How are you? All's well. Had a good avocado last night, so that was good. Keep on eating. I'm trying. So staying on Eric's last question on RFG, Could you talk about, or maybe, you know, to some detail, like, in your cost of goods on RFG, what's the percentage of labor fixed cost in materials? Or, you know, and where has that gone? Is everything up directionally?
spk04: So, let's, I want to protect our competitive information. But let me give you a general feedback. And then these are all comparisons to the first quarter. Because remember, RFG is really a story about sequential improvement quarter over quarter, not versus last year. So much has changed. So I'm really talking to you about change from the first quarter. From the first quarter, labor productivity is up 9%. So labor as a percentage of overall sales is down. Right. Material cost is up only 2%. So we put in some e-sourcing initiatives. We put in some RFP initiatives that helped temper overall cost inflation on the buy side. But then an important part of that was the processes we were able to drive on the actual shop floor. And we offset 4% cost inflation with a yield improvement. We had actually 1.1% material yield during the quarter. So we were able to offset a lot of that cost. So really only 2%. So materials as a percentage of overall sales, I'd say we're about the same. Even in a period where transportation costs have been increasing, We mentioned during our last call that we put in a nationwide RFP and we're going to yield some cost benefits out of that. That went into effect in the second quarter. We actually saw transportation as a percentage of revenue decline in our RFG segment. And then pricing went up. So again, I want to be complete and robust in our answer. RFG will not hit a 10-run home run. We're going to need time, but we are getting gradual, sequential improvement, and it's coming throughout the entire P&L. It's not just pricing.
spk07: I guess, you know, and to then – that was very helpful, Brian. Thank you for that answer. But I guess the most important thing is ultimately have to grow volume. You need revenue growth, and particularly volume growth. Where – How do you see that coming? Is this, you know, I know you've cut back on SKUs and underperforming SKUs certainly, but is this coming from new products? Are there new customers, you know, that you know about that are coming? Where, you know, is it going to be taking market share from other vendors? Can you talk about how you see the components of the revenues?
spk04: Yeah, I can. And I'm going to describe it in broad terms. Mitch, I think it's really important to remember that during this quarter, we improved pricing. We improved our cost of goods sold efficiency. But the fact of the matter is we improved two really critical customer service metrics. Fill rate, which in the last month of the quarter was over 99%. So over 99% of what a customer ordered, we delivered on time. That is really special in a produce and fresh cut operation. And then secondly, we decreased customer and consumer complaints during the quarter. So simultaneously with increasing fill rate, we decreased customer complaints. That is one of the ways that we win service, that we win customers, is we demonstrate our service level. I just didn't want to lose that in the context of the script. It's a really important sales strategy. Where is the growth going to come from? First and foremost, the category is still growing. Grab and go fresh cut produce is still growing. It's growing on a dollars basis because obviously there's some price increases, but it's growing on a unit basis too. So we see some growth from the category altogether. We also have certain customers that we're looking to expand with. Either we currently do their business and are looking to grow in terms of another distribution center to cover or another region to cover. or potentially another segment. Maybe we do fruit with them only, but now we can do fruit and veg. So there's a block of existing customers that we want to grow with. And then lastly, there's new customers that we want to grow with. And you could say that, okay, that might be share that is just trading between competitors. And I would agree with you there. But we're not interested in gaining share by buying customers. We're working too hard on price increases. We're working too hard on efficiencies. That's not what we're interested in. We're interested in winning customers on service. on availability, on the completeness of our offerings, and just be relentless in that every day. So I think those are some of the areas that you'll see growth on the customer side with us.
spk07: And then, you know, you mentioned grab and go still growing. You know, just in light of COVID, the inflationary pressure on the average consumer's spending budget for food, do you think the fresh-cut fruit, even fresh-cut vegetable, would be at risk at all of some trade-down effect should inflation remain stubbornly high?
spk04: It's a great question, and here's a perspective on that. Even though the price of these products at retail are increasing, the fresh cut category continues to grow on a volume basis. So even though the price is higher, it's growing on a volume basis. And I think that's for two reasons. One is the lure of convenience and grab and go right now is still very strong. People have less time and people have less time to prepare products and the idea at home and meals at home and the idea that they can grab something quickly is still strong. So the growth in grab and go convenience is still strong and I think helping the overall fresh cut produce category. Consumer trends in health and wellness are still strong. So again, there's some support there. And then lastly, and this is probably another area of growth, we also see grab-and-go and fresh produce items becoming more and more prevalent in the convenience channel. So where a category five or seven years ago might only be at traditional retail, now you see it at traditional retail, now you see it at convenience, now you see it at airports. Now you see it at other non-traditional retail outlets. And I think that all continues to help the category grow. So while higher prices, I would say, are putting some pressure on the category, overall, there's a lot of tailwinds that are, let's say, covering or exceeding that downward pressure by price, at least what we've seen today. Okay.
spk07: Just one last question, if I can get it in here, is just on the avocado business. Can you talk to any differences in growth revenue volume between your retail and food service channels?
spk04: Well, unfortunately, it's tough to talk about growth in a quarter where supply is constrained. So overall, our volume was down 13% in avocados, and that's down a little less than the imports from Mexico. And we were able to soften some of that impact with sourcing from other regions. So I'd say the supply constraints make that comparison really difficult. Overall, our food service volume is down versus the year before, versus Q2 of 21, not unlike our overall volume is down. versus Q2 of 21. So it's really hard to kind of say one segment was more effective than the other when both were dealing with supply constraints. I am excited that overall, our market share stayed about the same. So again, we're dealing with a very unique market, extremely high prices, constrained fruit, And yet somehow we managed to service our customers, find enough fruit in the market that we could manage to keep our market share the same. And oh, by the way, do that while at least temporarily, I would say, doing a hell of a job expanding our gross margin per case. Okay.
spk07: Well, thank you for taking the questions.
spk04: Yeah, no problem.
spk07: Thanks, Mitch.
spk03: And again, as a reminder, if anyone has any questions, you may press star 1 on your telephone keypad to join the queue. Our next question comes from the line of Ben Clevey with Glick Street Capital Markets. Please proceed with your question.
spk06: Hi. Thanks for taking my questions. Just a couple from me here. First of all, just a point of clarification. You talked about the targeted gross margin structure of the RFG business coming out of next year at 10%. but noted the seasonality of that business. So is your target kind of full year, 10% plus gross margins for fiscal 24 out of that business? Is that correct?
spk04: We'd like to be at that run rate. Yeah, going into fiscal 24, we'd like to be at that run rate.
spk06: Got it, got it. That's what I thought. Just wanted to make sure I heard that right.
spk04: And then just one other- Ben, sorry, I'm almost obligated to say this too. look, our entire process and our entire culture is based on continuous improvement. So when we reach the goal, we've just got to drive for something better. Got it. No, I hear that a lot. That's aspirational.
spk06: Okay. Got it. Got it. Fair enough. And then, you know, one other just kind of big picture question for me. I mean, with the, you know, turnover in the C-suite over the last couple of years, I'm wondering if you can talk about you know, any ripple effects seen throughout the rest of the organization and the extent to which you've seen, you know, turnover at lower levels perhaps attributable to, you know, to loss of, you know, of folks in the C-suite over the last few years. Has it been pretty stable below that level or have you guys, you know, had to deal with challenges and turnover, you know, maybe that we don't see, you know, via press releases?
spk04: Yeah, I think overall I would say it's stable. Now, that doesn't mean we haven't had a loss or two here or there. But what's been really important is over the course of the last couple years, and particularly over the course of the last six months, we've added both talent and structure to help our operation be more sustainable. And I'll use the example of our recent departure of our CFO. There isn't one project. Not one. Not one initiative, not one program that slowed down, was canceled, was stopped, or deferred because of that resignation. We now have people in place and infrastructure in place to keep that going. And in fact, I'd even like at some point to not even ever talk about Project Uno again. Ideally, I'd like every one of those projects to be embedded in our everyday life. So for instance, now I'm 100% confident that our employees and our sales employees have pricing and pricing for inflationary cost pressure embedded every day in their life. We don't go a day without thinking about pricing. I'd like to think that labor productivity is embedded in our operations every single day. We measure it every day. We measure it every hour of every shift. And we can compare that. So again, I think part of what we've been able to do over the course of the last six months, but even the last couple of years, is put infrastructure and talent in place so that our operational improvements are sustainable and our processes are sustainable. And that's really critical to help manage when you do have some turnover. But to specifically answer your question, Our headcount, our resources beneath the C-suite have been relatively stable.
spk06: Okay, great. That's good to know and helpful context. I think the last couple of years has made everybody rethink how they operate on a daily basis. So good to hear that you guys are spreading that throughout the organization. Well, that does it for me. Congratulations on a really good quarter, getting some progress here flowing into the P&L. It's great to see you. Looking forward to continued progress here. in the coming quarters. So, thanks for taking my question. Thank you so much. Thanks a lot.
spk04: I appreciate it.
spk03: And we have reached the end of the question and answer session. I'll now turn the call back over to Brian Cooker for closing remarks.
spk04: Okay. Well, thanks again for joining us, for listening in on the prepared remarks and then the Q&A as well. There's a couple of things before I close that I'd really like everyone to remember. First and foremost, we're really proud of this quarter. We're proud of the quarter, but not satisfied. We know we have more work to do across our business, and we've got the projects and plans in place to do it. I've been really excited about our fresh business this quarter not only in the avocados But our tomato program did really work well, and I think we took advantage of some unique Market circumstances and eventually those will normalize and our returns will normalize to regular levels But but we were able to take advantage of that. I'm excited about the RFG progress again we're going to do this kind of one base hit at a time and slow and gradual, but going from minus 1% to 2% positive gross margin and then having the third month of the quarter be your best month out of the quarter is a really positive sign for our organization. And I'm really excited that in the grand scheme of all of this, we've worked our balance sheet too. We've worked receivables, we've worked Collections we've worked our accounts payable and we managed to pay down 22 million of debt in the quarter Which was really good for for the EBITDA we were generating so a lot of good things are happening We continue to press forward we continue to work for sequential improvement sequential month-over-month quarter-over-quarter improvement and And we're going to do that every single day. So again, thanks for your time. I'd also be remiss if I didn't thank the employees and the supporters of Colabo who are out there trying to do something better today than they were yesterday. And we appreciate everybody tuning in. Hope you have a great summer and look forward to talking to you when we can. Thank you.
spk03: And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
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