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spk00: Good morning, ladies and gentlemen, and welcome to the 22nd Century Group Second Quarter 2023 Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. I would now like to turn the conference over to Mr. Matt Krebs. Please go ahead, sir.
spk03: Thanks, Lara. Good morning, and welcome to 22nd Century's second quarter results conference call. Joining me today are John Miller, interim CEO, and Hugh Kinsman, CFO. Earlier today, we issued a press release announcing our results for the second quarter of 2023. The release, presentation, and 10-Q are available in the investor section of our website at xxiicentury.com. We'll start today's call with prepared remarks from John and Hugh before moving into Q&A. The Q&A will be a session with our analysts, and today's call will focus on key updates to the commercial activity in our VLN tobacco and GBB hemp cannabis business units. We will not be able to cover every aspect of the business in the time allotted for this call. If you have questions about our business not addressed in this call, you're welcome to email Investor Relations using the contact information provided in today's press release. On slide two, a few reminders for today's call. Some of the statements made today are forward-looking. forward-looking statements are subject to risks, uncertainties, and other factors that may cause actual results to differ materially from those contemplated by these statements. Additional information regarding these factors can be found in our annual, quarterly, and other reports filed with the SEC. During today's call, we may also discuss non-GAAP financial measures, including an adjusted EBITDA, which redefines earnings before interest, taxes, depreciation, and amortization as adjusted for certain non-cash and non-offensive expenses. For more details on these measures, please refer to our press release issued earlier today. And with that, I'll turn it over to Matt, beginning from slide three.
spk07: Thank you, Matt, and good morning, everyone. It is my pleasure to update you on the meaningful progress we made this past quarter and our company's path forward. I was appointed interim CEO of 22nd Century in late July, and I am grateful for this opportunity at such an important time in our history. I believe 22nd Century possesses unique assets in both the tobacco and hemp cannabis business to create meaningful value for the company. This is what originally attracted me to 22nd Century last year, and my enthusiasm about the future has not changed. As interim CEO, my number one goal is to grow the value of our assets while being fiscally disciplined. I am very pleased to report in our hemp cannabis business, we had another record volume quarter as we continue to assert our industry leadership. In the first six months of 2023, Kilogram shipments have already exceeded shipments for all of 2022, and we expect improved operating results in the second half of this year as we bring our internal production back online and move ahead with our Cookies and Old Pal license agreements. We have also made solid progress on the tobacco side of the business. We had some delays in our commercial plans earlier in the year, but we have quickly expanded both our state and store counts for VLN over the past couple months. This includes our recent launch in California, Texas, and Florida with the number one U.S. e-store chain and other retailers in those states. These retail placements are all supported by national and regional distribution programs we executed earlier this year. Additional retail chains continue to schedule launches, including our first drugstore chain that will push us to over 4,000 stores in 16 states in September. In addition to making strides building our brand, We are also revising our go-to-market strategy to better maximize the potential of our product portfolio by prudently deploying our capital. Another important element I will share with you today is the way in which we have previously supported VLN is changing. With our 16 to 18 state footprint, we are pivoting our VLN strategy to streamline operating costs, focus on demonstrating the unique brand attributes of VLN, and drive performance to create value from this incredible product. I have considerable experience in this product development and know it takes time and money to build a brand. Even after a brand is established in the marketplace, there are considerable resources required to keep the brand relevant. The path to creating value with VLN is within reach with our new footprint, and it requires a more targeted and efficient approach showcasing how VLN is a brand of choice for adult smokers who want to smoke less. These changes in our strategy are part of how we are able to target over $15 million in annualized cost savings from our business, as noted in our July press release. Starting from slide four, let me dig into the tobacco business and our continued evolution of the commercial plan. Slide five gives key updates in our VLN rollout so far this year. During the second and third quarter, we have expanded our state and store presence, which now stands at almost 3,000 stores across 14 states. We expect to surpass 4,000 stores in 16 states by early September with a drugstore chain launch in five states and the continued development of the diverse funnel of regional and national chains interested in VLN. We are pleased with the progress we are making bringing VLN to new states, yet we recognize the launch has not been without delays. We experienced longer than expected lead times bringing on new C-stores as we don't often control the retail distribution timelines. Delays are typical for any product launch. Our launch is no exception. But one thing is clear. Retail chains recognize that adult smokers are interested in this product. Our expanded retail footprint now gives us the base and scale on which to prove out VLN as a brand, which is the full focus of our new marketing and social channel activity in the second half of the year. This campaign emphasizes positive motivation and empowerment, as opposed to the typical negative messaging associated with anti-smoking campaigns. I'm pleased to report early returns on engagement and driving adult smokers to stores that sell our product are solid. We are also eagerly awaiting the FDA updates on its highly anticipated menthol policy, which is scheduled to be issued this month. Menthol is known to increase the addictiveness of tobacco products, and menthol products have for years targeted higher risk and minority communities. Banning menthol could be a transformative public health policy. But research and experience tells us that a menthol ban, absent an off-ramp product, is not effective at reducing smoking, and instead tends to drive menthol smokers to other traditional cigarette brands. We believe a clinically and scientifically informed policy providing for non-addictive off-ramp products, such as VLM menthol, can help these smokers truly cut back and make real progress. Millions of dollars have been spent on studies illustrating this fact, many of them used for MRTP authorization and funded by federal health agencies. This makes our product an ideal candidate for exemption. Turning to slide six, we began commercial efforts on VLN at the start of this year and made progress versus what is normal in industry, even for established brands. Perhaps most important, you'll see a larger number of dark green states where we have initiated VLN sales activity, including the three largest markets of California, Texas, and Florida. We now have line of sight to 16 states with our upcoming drugstore rollout, which will increase store counts to more than 4,000 locations. Much of this has been accomplished due to the national and regional distribution resources put in place early this year. It was an investment of time and money and added key chains quicker than we could have otherwise. This includes the three-state corporate launch with the number one C-store and upcoming five-state drugstore rollout. Proving out the brand with these chains will be a major part of our second half efforts where we are increasing our focus on maximizing market acceptance within our footprint as we continue to refine and update our strategy. Doing so will be the key to opening up new partnerships, licenses, and other opportunities for VLN and other reduced nicotine products our technology can support. On slide seven, the updates to our strategy are closely tied to what we have identified as key success drivers for VLN. including awareness, education, trial, repeat purchase, and advocacy as smokers see positive outcomes with VLN. Early consumer data from our new marketing campaign continues to affirm strong product acceptance at more than 70%, and a similar metric for VLN replacing their usual brand. An amazing 98% of smokers are willing to talk about VLN with other smokers. Getting the word out is important. And our new campaign deploys an extensive toolset, including marketing communications, in-store activations, digital and social outreach, our brand website, consumer engagement, peer-to-peer marketing, and PR efforts. We are augmenting our brand activities with regulatory efforts to drive a more favorable environment for harm reduction products. We are pursuing commercial development towards partnerships and licensing opportunities that could further the reach of reduced nicotine products. Governmental outreach has been initiated to educate and inform on the need for policies driven by science that build on good clinical research to reduce the harms of smoking. And marketing campaigns have launched to create a more favorable environment for adult smokers to choose a lower nicotine future. Slide 8 illustrates some of the new marketing campaign elements to reach adult smokers. Much of this is driven by targeted social and digital marketing, especially in channels where we can identify a likely smoker or person interested in reduced smoking, including influences with smokers, such as family members. As you know, VLN is a very different product from traditional FDA approved smoking cessation products. It recognizes that smokers are not just addicted to nicotine, but also the act of smoking itself. We want adult smokers to learn that VLN offers a new positive and optimistic approach to reducing smoking that gives them flexibility to keep moving forward with their health goals even if they have a setback. We empower smokers to confidently and capably take control of their habit, break the nicotine addiction, and then move away from the behavior. This education process takes time and is definitely a different mindset from traditional cessation tools, but a welcome new idea to many adult smokers who want to smoke less. Early data in key markets show that our campaigns are driving BLM messaging to interested adult smokers. We're seeing high impression and content viewership rates and strong click-through rates, as well as data demonstrating that the campaign interactions are creating store visits from potential BLM consumers. This and other data allows us to build efficient campaigns in specific markets. Moving on to slide nine, we'll discuss Pinnacle, a private label conventional product that we contract manufacturer for a top five C-store chain. Pinnacle is positioned as a well-crafted traditional cigarette, attractively priced versus other well-known brands. For those not yet ready to cut back or quit, Pinnacle offers a high-quality, reduced-cost option and is now available across more than 20 states and 1,200 locations. Early sales are good, and we look forward to the retailer's efforts to increase share and drive additional volume. Pinnacle can also help pave the way to other private label brands and placing BLM products in these partners' stores. That wraps up my overview on our tobacco progress and the revised strategy. Starting from slide 10, I want to spend a few minutes on our successful and growing hemp cannabis business, where we are now in position to further improve operating results with the return of our in-house manufacturing capabilities. On slide 11, GBP continues to assert its market-leading position for the supply of hemp-derived active ingredients and finished consumer packaged goods. We've built a solid global footprint, providing opportunities for further market growth as this industry becomes more mainstream in multiple markets. Sales have ramped strongly, and we believe we'll continue to do so, proving an important opportunity as we resume in-house production at our new facilities. In addition to record volume and the return of vertical manufacturing, we now have multiple additional growth and improvement vectors. These include our new license and distribution agreements with major brands such as Cookies and Old Pal, the launch of our own hemp extraction capability, rather than purchasing, extracting third parties, and our first direct biomass contract growing program. This will help to reduce costs and transfer more margin to 22nd century. Putting all these pieces together, we believe our hemp cannabis business is now firmly on a strong trajectory in an exciting new global growth market. Slide 12 details our record-setting ingredient volumes. I'm pleased to report that this quarter we delivered more than 76,000 kilograms of ingredients. That's three times what GVB delivered in the same quarter last year. Additionally, for the first half of 2023, kilogram sales have already exceeded 2022 deliveries. As you can probably surmise, this has put us in a strong position in the North American hemp cannabis extraction business. Our decision to ensure we maintained all customers' deliveries during the rebuild is paying off, even though we incurred a margin cost that has directly impacted our cash flow models and cash position. As noted in today's press release in 10-Q, we believe our business interruption insurance will cover a portion of these losses, which were estimated at $2.4 million in the most recent quarter alone. and we have initiated litigation to protect our interest in this matter. As our capacity comes back online, we expect our margins will return to positive territory and even increase through internal optimization efforts already in motion. This is an important point to reiterate as it provides true gross profit dollars to offset operating costs where we have not been able to do so for the past nine months. On slide 13, we're also moving into the implementation phase of our license and distribution agreements with Cookies and Old Pal. These exclusive agreements cover branded hemp-derived cannabinoid consumer products and accessories. Uniquely in the industry, 22nd Century can provide a single source of integrated supply, production, sales, and distribution, leveraging our industry-leading formulation, ingredient, and manufacturing infrastructure, plus a comprehensive sales and distribution platform. With 22nd Century providing these functions, the brand can fully focus their resources on product and market development, helping to grow a new market characterized by high margin, high velocity products that fit perfectly into the existing C-store and specialty channels that already serve the targeted consumer. To summarize, our GVB business remains strong. We are now well positioned to drive improved operating performance to generate cash flows to better offset our operating costs and improve total corporate performance for our stockholders. Now I'll turn the call over to Hugh for a detailed review of our financial results On slide 14.
spk05: Thanks, John. Starting on slide 15 with the second quarter financial results, net sales increased by 61.8% year-over-year to $23.4 million, reflecting the addition of GVB revenue and increased unit sales of our hemp cannabis bulk ingredients. This is partially offset by lower tobacco revenue as we reallocated production resources away from lower margin filtered cigars and towards higher margin VLN and conventional cigarette products. It should be noted we had approximately $600,000 of shipments intended to be recognized in the second quarter that will instead be recognized in the third quarter due to shipment timing around the 4th of July holiday. As John referenced, we had updated our full year revenue outlook to a range of 80 to 90 million to address changes in our VLN launch timing and retail rollout strategy. Gross profit decreased to a loss of $2.3 million, reflecting lower filtered cigar revenue as we shift production mix at our NASCO facility, along with the impact of reselling bulk ingredients for hemp cannabis products until production facilities are fully restored. Gross profit is expected to improve going forward with higher margin product mix for tobacco and completion of hemp cannabis extraction and distillation facilities in Q3 2023. Moving to slide 16, tobacco revenue for the second quarter decreased to $8.1 million from $10 million as we shifted production mix away from low-margin filtered cigars and towards higher-margin CMO, store brand, and VLM products. Gross profit margin on tobacco sales decreased reflecting this transition, which we expect to improve going forward. Moving to slide 17, hemp cannabis unit sales for the second quarter grew almost three times year over year, to $15.4 million in revenue, reflecting continued strong customer demand for the company's bulk ingredient products. Gross margin was impacted by reselling activity required under our new facilities until our newer facilities are restored. Both extraction and distillation capabilities are now both online, which will enhance gross margin in the second half of 2023, and we are also contracting biomass cultivation to further increase margins later in the year. And on slide 18, you'll see a few key highlights from our balance sheet. Quarantine cash balance was approximately $12 million, which does not reflect the benefit of almost $15 million in gross proceeds from our July 2023 equity raises, as well as cash we expect to be recouped for our business interruption claim. And it should be noted we still have not received business interruption proceeds due from our insurance provider. 22nd Century's cash requirements are anticipated decrease, reflecting improved gross margin profile, as well as our cost reduction initiatives. And with that, I will turn it back to John for closing comments and Q&A.
spk07: Thanks, Hugh. On slide 19, as you've heard today, we continued advancing on our goal to increase the value of our brands. Despite the timing issues on the VLN rollout, we have doubled its availability in just the last few months. We believe we will be able to demonstrate that the VLN brand will play an important role with consumers who smoke. By demonstrating that value, we will be able to better capitalize on the potential of VLN. Furthermore, we are delighted to be back online with GVB manufacturing, which brings us significantly higher production capacity and improved economics. Our GVB business may be underappreciated by some in the investment community, but not by us. The growth is dynamic and the market opportunity is large. That combined with demonstrating the potential of VLN and our focus on cost reduction enables us to continue endeavor to build the value of our proprietary technologies in the near term. Last, I'd like to thank all those at the company for their contributions and continued dedication this quarter. With that, I'd like to ask the operator to open the call for Q&A from our institutional research analyst.
spk00: Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star, followed by the number one on your touchstone phone. Again, that's star, followed by the number one. If you would like to withdraw your request, please press star, followed by the number two. Your first question comes from the line of Vivian Azar from TD Callen. Please go ahead.
spk02: Hi, good morning. Thank you. Just going to start with the tobacco business, please. As we think about your revised outlook, from a revenue perspective, can you help dimensionalize what you think the mix is going to be between VLN, Pinnacle, and the deprioritized filtered cigar business?
spk04: Thank you.
spk05: Thank you for the question. We're not providing detailed guidance right now according to product line within tobacco revenue. We typically haven't done in the past. Right now, we're just not in a position as we're rolling out, continuing to keep rolling out and getting more density in the markets to provide that level of grain and wood detail.
spk02: Okay, that's fine. But maybe I'll try it a different way. Because if our math is right, we're showing that your tobacco cartons sold declined 46% year over year. Your price per carton was up 49% year over year. So I'm just wondering whether We're just seeing that you guys have taken pricing because competition has taken pricing. Has there been underlying mix shift that has driven that price per carton growth? Can you offer any incremental detail on that?
spk05: Sure. Yeah, definitely. It's not so much a price and market share issue as it is just an overall decline in demand across the board industry-wide for the filter cigar business. So it's something that we began to see in Q1. It's been sustained throughout the year. Typically what's happened in the past is, you know, in the first half of the year, you know, filter cigar unit volume demand is sluggish reflecting probably, you know, accelerated purchasing in the, you know, fourth quarter. And then what you'll normally see is starting in late Q2, going into Q3, you know, significant pickup in orders. But we haven't seen that so far, so we're being pretty conservative about the forecast going forward in terms of guidance just because, you know, until we start to see that type of unit demand pick up again, we want to be relatively conservative going forward.
spk02: Okay. I appreciate your comment on conservatism. I'll just squeeze one last one in before I turn it back over because it does seem like that was, you know, the real deficiency, right, in establishing guidance and now the meaningful While I appreciate, you know, the timing of retail rollouts, you know, certainly can kind of move, you know, from quarter to quarter based on, you know, something like 4th of July, which you called out. But it seems to me that perhaps there was an excessive amount of optimism around the rollout of DLN. You know, if you're a larger company and you're launching a new beer brand, say, you know, you can get 95% ACV in six weeks. So is this just a function of you guys overestimating the negotiating leverage that you guys have with retailers, given your relative size and the newness of the product, or was there something else? Thanks.
spk07: Yeah, Hugh, I'll take that. Vivian, to your point, if you're a large beer company or Altria, you can absolutely get distribution quicker. I will tell you that we've really started moving into the three-tier system at the beginning of the year. You know, to be able to achieve distribution in Cormark, McLean, EB Brown, which are three of the four biggest distributors, certainly expand through Circle K, getting into the number one C-store chain in the United States, number one drugstore chain. I know that seems like it was kind of slow to ramp, but quite honestly, the progress we've made, I think, has been actually pretty good. It just does take time. I mean, when you're a brand-new company going into a category, there are just things that you have to overcome. Now, once you're past those hurdles, especially on the distribution side and with the major accounts, you don't have to go through those hurdles again. And those hurdles aren't consumer acceptance. Those could be insurance claims. Those could be some other logistical issue that a chain has. So we're past that. It did take a little bit longer, there's no doubt, not necessarily on our side. But those are things that I've talked about in my opening comments about they're not our controllables. And quite honestly, you know, when you talk to the retailers, they're pretty impressed with what we've been able to do in a relatively short amount of time.
spk02: Yeah, but if it's outside of your control, then it's incumbent upon you guys to handicap what you're hearing. from the retailer. So, how have you guys adjusted your approach to handicapping what you're hearing versus what you think actually might materialize?
spk07: No, we, yeah, totally understand that. I mean, you know, and we understand the different hurdles we have to go through. We know, you know, we can only do what, you know, is promised to us by the chains. And, you know, again, there's hurdles there you overcome. There's things that happen internally in some of these organizations that, you know, You have mergers, acquisitions. You have multiple variables that impact distribution. And, again, I will say that, you know, to get into we're going to be in 16 states by the end of September, over 4,000 stores and growing with a clear definition and path forward, you know, we feel it's pretty solid. And we're getting there. And we continue to have more and more interest.
spk02: Okay. Thanks so much.
spk00: Thank you.
spk08: Thank you.
spk00: Ladies and gentlemen, just a reminder, should you have a question, please press star followed by the number one on your touchstone phone. Your next question comes from the line of Jim McElwain from Dawson James. Please go ahead.
spk06: Thank you. Good morning. If I can just follow up a little bit on Vivian's line of questioning. You answered her question by saying that you face distribution issues and you're past those now. And my question is, are you past those issues for the current retailers at the current locations, but you will continue to face those issues or similar issues for new retailers or existing retailers at new locations?
spk07: Good morning, Jim. Again, As we continue down this pageant of distribution and talking to these key retailers and understanding their goals for the category, understanding what's happening within their framework of their stores, we continue to keep learning. Our success continues to be based on being persistent, moving forward with these accounts. We feel very comfortable in where we are and how we're getting there. It's a challenging environment, and everyone knows that. We just continue to keep getting our story out about VLN, about what makes it unique, the attributes of the product. People are very interested in these marketing programs they're doing. They're very interested in how we're targeting the consumer. So all of those things are driving the interest, and we're going to continue to keep building distribution. I don't know if that answers your question, Jim, but it's very fluid, and we keep going.
spk06: All right. Well, thank you for that. And is it fair to say that the change in the revenue expectation is mostly attributable to VLN?
spk05: Yeah, Jim, this is you. Yes, that's correct. It's mostly attributable to the, you know, to the delay in the ramp in VLN, as John described.
spk06: Okay. And can you talk a little bit about the cost-cutting program? when you think we'll be able to see the effects of that? Is that something we're going to see a little bit of in Q3 and the full effect in Q4, or is it more extended or shorter than that?
spk05: No, it's going to be shorter than that. You'll see a meaningful impact in Q3. You'll see the full effect of it in Q4. We initiate all those cuts Basically, a week and a half, two weeks ago. So, that's my start of the cuts. So, you know, starting in the beginning of August is when you'll start to see the impact of it. So, you'll see a, you know, a fairly meaningful impact in Q3, and you'll have the full effect in Q4 going forward.
spk06: Okay. Thank you. And then, just back on VLN for a little bit. I'm trying to understand a little bit of the relative impact of what you're talking about in terms of the rollout that is coming from, I guess, John, what you've described as the challenging environment versus the cost-cutting program. If you can just try to help me understand which has the bigger impact on the change in the revenue outlook.
spk07: Well, I think, Jim, what we're talking about in the opening – do you want to start it? Go ahead. No, go ahead.
spk05: No, go ahead. Go ahead, John.
spk07: Okay, I was going to say in the opening comments, Jim, you know, we talked about the footprint we've been able to establish, those 16 to 18 states. We know what the path is to the consumer with awareness, education, trial, repeat, purchase, and advocacy. Once we've been able to establish the product now in these markets, especially the key markets like Florida, Texas, and California, right? Those three states are significant. They're the top three states in the country for cigarette volume. So as we continue to establish our footprint there, moving out to the other states, proving our brand, and what we've learned over the last nine months of commercialization, you know, all of this is playing into our discussions and pivots on what we need to do, you know, understanding the consumer's behavior, understanding if you saw in our marketing campaign about the optimism and how it's so much different than the other anti-smoking campaigns. All of that is now playing and being laid into our marketing plans. We also know that we can do this in an efficient manner, that some of the things we initially thought we might have to spend on, we don't have to spend on. And there's continual learning around these that allows us to drive efficiencies and get the message out in a much more effective way. Gary, if you have any follow-ups.
spk05: I'd just reiterate that as well. I think it's just making a more targeted effort. And I think it's just the natural sort of delay when you're trying to get penetration with some of the retail clients.
spk04: Okay. Yeah, that's it for me. Thanks a lot, guys.
spk00: Thank you. Your next question comes from the line of Aaron Gray from Alliance Global Partners. Please go ahead.
spk01: Hi, good morning. This is Remedy and Smith on for Aaron Gray. My first question is for gross margins. So they've continued to worsen. And while we understand there is some one-offs from the flyer and gross margins would have been roughly break-even, X to the $2.4 million impact, we're now seeing negative gross margins in the tobacco business. So I know in opening March you made out some initiatives to help improve gross margins, but if you could provide some specifics on where, as you expect gross margins to trend in the next few quarters, and which of the initiatives will be the primary drivers of that gross margin expansion. Thank you.
spk05: Thank you for the question. Really, the main issue with tobacco is the lower volume and the filter cigar revenue. fixed overhead and need throughput in order to cover expenses. And as volume decreases, there's just an embedded expense that's incurred. And that's why we're shipping our product next to where we're going to have more throughput and better margins and increase the overall margin profile of business going forward. That'll be a big driver in improving margin enhancement for that business unit. And then again, for They have cannabis business units, really just restoration of each sequential production capability. So we have extraction fully online right now. We have distillate fully online right now. And we expect our isolate capabilities to be fully online in Q1 2024, facing to meet that timeline. And that's a really big driver. The acute effect of that, not to mention our biomass cultivation effort is significant. So we're not providing detailed guidance going forward, but there's gross margin enhancement of at least going from break-even for hemp cannabis with the adjustment to you should be at the, call it the high single digits, low teens towards the end of the year, and then doubling that going through 2024 as you restore your isolation. Tobacco is more of a moving target just as we continue to change the product mix and reallocate resources to higher margin products, but we expect that margin to improve going forward as well.
spk04: Great. Thank you.
spk01: And then my second question in regards to sell-through for VLN, if you provide any additional color on any retention rates or market share in some of your legacy markets, I know you previously spoke to kind of the 1% share in some of your original markets, so any commentary on those trends in existing states would be appreciated.
spk07: Yeah, we're still tracking those things. And those are the metrics now that we're really starting to look at in terms of as we initiate these marketing campaigns. If you look at the process of getting into a store, you have to get your distribution set up, then you get your introductions. Once we've gotten store density, which we do have now in specific markets, Then you can start launching the bigger marketing campaign. We knew one of our biggest issues to pull through and, you know, volume was awareness and education, truly educating consumers about what this product is. Some of the better data I have is on what's happening in the digital marketing side, you know, with click-through rates, impressions, connecting with consumers. Our volume has remained obviously stable. All of our initial retailers continue to carry the product, but now we're starting to see that the marketing ramping is where we're going to have the biggest impact. So that's where we are. I don't have really any more information to share on that.
spk04: These programs are now starting, and we're starting to see the pull through more and more. Great. Thank you.
spk01: All back in the queue.
spk08: Thank you.
spk00: Thank you. Again, ladies and gentlemen, should you have a question, please press star followed by the number one on your touchstone phone. There seems to be no further questions at this time. I'd now like to turn the call back over to Mr. John Miller for any closing remarks.
spk07: Well, thank you everyone for joining us today for the call. We appreciate the continued support and please continue to look for more updates as we continue to move both of these businesses forward. Thank you and have a good day.
spk00: Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.
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