BRC Inc.

Greetings and welcome to the Black Rifle Coffee Company third quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone would require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Matt McGinley, Vice President of Investor Relations. Thank you. You may begin.

Good morning, everyone, and thank you for joining Black Rifle Coffee Company's third quarter 2025 financial results conference call. We released our results yesterday, and the press release and related materials are available on our investor relations website at ir.blackriflecoffee.com. Before we begin, I would like to remind you of the company's safe harbor statement regarding forward-looking statements. During today's call, management may make forward-looking statements, including guidance and the underlying assumptions. These statements are based on expectations that involve risks and uncertainties, which could cause actual results to differ materially. For a further discussion of these risks, please refer to our previous filings with the SEC. Additionally, this call will include non-GAAP financial measures, such as adjusted EBITDA. Whenever we refer to EBITDA, we mean adjusted EBITDA unless otherwise noted. Reconciliation of non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release, which was furnished to the SEC and is available on our investor relations website. Now, please refer to the presentation on our investor relations website and turn to slide four. I would now like to turn the call over to Chris Monzelewski, CEO of Black Rifle Coffee Company. Monze?

Thanks, Matt. Good morning, everyone. Joining me today are Evan Hafer, our executive chairman, Matt Ami, our chief financial officer, and Matt McGinley, our head of investor relations. The third quarter was another solid step forward for Black Rifle. Our team did an outstanding job executing against our priorities, driving strong commercial performance maintaining cost discipline, and positioning the business for sustainable, profitable growth. We continue to see encouraging momentum across both the wholesale and direct-to-consumer channels as our brand gains traction with new customers and deepens its connections with existing ones. As we move to the fourth quarter and into 2026, our focus remains clear, driving strong on-shelf execution as we expand our physical presence, maintaining costs effectively to enable reinvestment and growth initiatives, and continuing to build a scalable platform for long-term success. We're broadening distribution, driving stronger velocities with key retail partners, and advancing our product lineup to keep the brand fresh and relevant. The team's execution this quarter reflects a company that's more agile, more focused, and more confident in its ability to perform, even in a challenging cost environment. We're proud of the progress we've made and optimistic about the opportunities ahead. Move to slide six, please. In the third quarter, Nielsen data showed continued strength in the U.S. coffee category within food drug mass, growing 13.2% as higher shelf pricing to offset commodity inflation flowed through. Black Rifle once again outperformed the market, with sales up 36.7% year over year, nearly triple the category's growth rate. Our land and expand strategy continues to prove effective. We start with a focused set of SKUs to demonstrate performance and earn additional shelf space as we build retailer confidence. In grocery, ACV increased six points year over year to 48%. In total, ACV across all tract channels increased nine points to 54%. Even with a 70% increase in average items carried, velocity in grocery improved more than 7%, highlighting the brand's strength with consumers. This combination of faster terms and expanding distribution is translating into stronger partnerships and continued shelf gains. Move to slide seven. Across the category, most of the dollar growth is being driven by price increases. In contrast, Black Rifle's growth is coming from almost entirely unit gains, which are up more than 20% year to date. This reflects real consumer demand, not price inflation. The brand continues to win new households, drive repeat purchases, and gain share at retail. As we expand distribution and sustain velocity, we're driving durable volume-led growth that supports long-term brand health. Slide eight. Our direct-to-consumer business remains an important part of our omnichannel strategy, deepening customer relationships, strengthening brand loyalty, and providing valuable insights that guide how we engage with consumers across every channel. It also allows us to test new offerings. refine messaging, and stay closely connected to our most engaged fans. Through both our own site and digital retail partners, Black Rifle products remain easily accessible to customers who prefer the convenience of home delivery. While most of our recent top line growth has come from retail distribution and velocity gains, we're encouraged by the continued stabilization of our digital channels this quarter. Sales in our direct-to-consumer segment declined 4% year-over-year in the third quarter. However, after adjusting for the prior year benefit related to our loyalty reserve and the timing shift of promotion, results were slightly positive compared to last year. We also saw meaningful gains through leading third party marketplaces, where awareness of the brand and repeat rates continue to build. Beyond top line growth, we've made steady progress improving the overall customer experience. Website and mobile updates have enhanced navigation and checkout speed, while backend improvements support smarter merchandising and more efficient SKU management. Within our subscription platform, we're adding new functionality and greater flexibility for members, including prepaid options, exclusive offers, and a refreshed brand portal that highlights partner benefits and members only gear. These ongoing upgrades reflect our focus on building a digital ecosystem that not only drives sales, but deepens brand loyalty, and supports the broader omni-channel strategy. Slide nine. The ready-to-drink coffee category continued to face headwinds in the third quarter, particularly within the convenience channel. While category sales declined 3.1%, our performance remained resilient, down just 0.6% overall, reflecting solid execution and strong brand loyalty. In grocery, sales grew 18%, partially offsetting the softness seen in C-stores. Even in a challenging environment, we're gaining ground. BlackRifle remains the third largest RTD coffee brand in the US, and we expanded our ACV by seven points year over year to 53%. That growth underscores the confidence our retail partners have in the brand and our proven ability to perform on shelf. We're still in the early stages of unlocking the full RTD opportunity with roughly half the category yet to be reached. Slide 10. BlackRifle Energy continues to expand its footprint. now available in nearly 20,000 retail locations and reaching approximately 22% ACV. Distribution growth has been disciplined and targeted, guided by learnings from early markets. The energy drink category remains one of the largest and fastest moving segments in beverages, and roughly two-thirds of the category sales come from convenience stores. That channel remains a primary focus for expansion, as Black Rifle Energy currently has its lowest penetration there, and meaningful white space ahead. Our approach remains deliberate, focused on building awareness, driving new consumer trial, and earning shelf space through performance rather than overextension. We're encouraged by the early traction and see meaningful opportunity for the brand to expand reach and contribution within our broader beverage portfolio in 2026. Before I hand it off to Matt, I want to pause and reflect on what makes this company special. I'm incredibly proud of the progress we're making across the business, and just as proud of the way our team continues to live out our mission every day. As we approach Veterans Day, it's a time to honor the men and women who have served our country and to recognize the many ways our team continues to serve them in return. This year, we're working with Born Primitive and Forgive Co. to help forgive up to $25 million in medical debt for more than 10,000 veterans. One in five veterans carries medical debt in collections, compared to about 13% of the general population. That burden often leads to financial stress and housing insecurity, and this effort is about lifting that weight and giving back to those who have served. Whether it's helping rebuild communities after a flood, supporting warriors in crisis, or rallying around causes like suicide prevention, Black Rifle is driven by our mission to veterans. I'm proud of what this team has achieved and excited about the road ahead.

Thank you, Mons. I'll begin my remarks on the quarter with slide 12. Third quarter net revenue increased 3% year over year, driven primarily by growth in our wholesale segment. We are cycling a $2.4 million net benefit recognized in the prior year related to barter transactions and a change in loyalty reward accruals. Excluding these items, revenue increased 5%. Our wholesale segment, which primarily sells packaged coffee and ready-to-drink beverages to retailers, grew 5% year over year. Adjusting for the net $2.1 million in non-recurring revenue recognized in the prior year, sales in this segment increased 9% in the third quarter. Growth was driven by gains in velocity and distribution, including increases in the number of doors and items carried, as well as continued growth in sales from Black Rifle Energy. Revenue in our direct-to-consumer segment was 4% lower in the third quarter. A high volume promotional event occurred later in the quarter compared to prior year, which we estimate shifted approximately $1 million in revenue from the third quarter into the fourth. Excluding this timing impact and the prior year benefit from the loyalty reserve change, revenue would have been slightly positive year over year. Fans of the Black Rifle brand now have more ways to find our products as brick and mortar retail distribution expands and online sales through platforms such as Amazon and Walmart.com continue to grow. This increased availability is critical to the brand's long-term growth and health, and we will continue investing in wholesale and other channels that we expect will drive the most sustainable long-term growth. Outpost segment revenue grew 6%, benefiting from higher franchise fees and continued progress in merchandising. Better bundling and in-store presentation helped drive the average order value. Turning to slide 13. Gross margin was 36.9% in the third quarter, a decrease of 520 basis points compared to prior year. The decline was primarily driven by a 390 basis point impact from increased trade investment and a 300 basis point impact from green coffee inflation and tariffs, partially offset by pricing actions. These pressures were further mitigated by approximately 170 basis points of benefits, including productivity gains and more favorable product mix. Slide 14. Operating expenses declined by $3.6 million, or 9%, compared to the third quarter of last year. Marketing expenses decreased 14% on a dollar basis and improved 165 basis points as a percentage of sales, reflecting lower non-working advertising spend and reallocation of dollars towards programs more directly tied to revenue growth. Salaries, wages, and benefits declined 13% on a dollar basis and improved by 255 basis points year over year. The quarter included approximately $800,000 of severance expense, and total headcount was down 19% compared to the third quarter last year. General and administrative expenses increased 5%, primarily due to costs related to settled legal matters, partially offset by efficiency gained in our corporate infrastructure. Despite the gross margin pressure we faced, scale benefits from revenue growth and efficiency gains drove a 19% increase in adjusted EBITDA to 8.4% of sales, representing a 115 basis point improvement compared to the same quarter last year. Turning to capital and cash flow. We raised $40.25 million in gross proceeds through an equity offering in July. which enabled us to pay off the outstanding balance of a revolving credit facility and strengthen our cash position. We also generated $5.6 million of free cash flow in the quarter, further improving liquidity. Moving to the outlook on slide 16. On last quarter's call, we discussed our expectations that results would be toward the lower end of the full year guidance range we provided at the start of the year. We expect to finish the year with at least $395 million in revenue and at least 35% gross margin and at least $20 million in adjusted EBITDA, each of which remain within the previously communicated ranges. We continue to expect a sequential step-up in revenue throughout the year, driven by ongoing distribution gains across both packaged coffee and ready-to-drink product lines. In the fourth quarter, this step up should be slightly larger than the roughly $5 million quarterly increases seen earlier in the year, reflecting normal seasonality and a greater benefit from pricing actions. As a reminder, we are cycling $30.4 million of prior year revenue related to one-time items that are not expected to recur in 2025. This represents a $9.1 million headwind in the fourth quarter, which we expect will be the final quarter impacted by these prior year items. Turning to gross margin. While commodity pressures and tariffs have been a meaningful headwind to the gross margins this year, we delivered a solid sequential improvement in the third quarter, reaching 36.9% compared to 35% in the first half of the year. We expect to see additional pricing benefit in the fourth quarter, however, That period is typically more promotional and we'll also see a slightly greater impact from tariffs as higher cost inventory flows through the P&L. As such, we expect the fourth quarter gross margins to be closer to the 35% level we saw in the first half of the year rather than the nearly 37% achieved in the third quarter. Our assumptions regarding the key drivers of the margin outlook compared to the prior year remain unchanged and include at least a 300 basis point headwind from green coffee inflation net of pricing actions. A 250 basis point impact from increased trade investment behind the energy line in a more normalized promotional cadence. At least 100 basis point margin impact from recently implemented import duties with the full effect building through the second half of the year. These pressures are expected to be partially offset by at least 200 basis point benefit from productivity initiatives in a more favorable product mix. Spring coffee prices have been volatile and remain elevated relative to historical levels. While movements in coffee and tariff costs are largely outside our control, we are not assuming any relief as we plan for 2026. Our focus remains on the elements we can control. Executing productivity initiatives across the supply chain and refining our pricing architecture is needed. As part of our operational improvement plan launched in the second quarter, we continue to expect to deliver $8 to $10 million in annualized cost savings in the second half of 2025. We remain disciplined in managing expenses while continuing to invest selectively in capabilities that support growth and margin expansion. Looking ahead, our priorities are clear. Sharpen execution, drive efficiency, and build a stronger, more resilient business. The opportunities ahead are substantial, and we're focused on converting that potential into measurable progress. I'm confident in our plan, our team, and the momentum we're carrying into 2026. Operator, we're now ready for the Q&A session.

Thank you. We will now 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 two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up their handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from the line of Michael Baker with DA Davidson. Please proceed with your question.

Hi, thanks. Two-parter as it relates to the guidance. So there is a change in the language on that guidance. It feels to me as if it's a little bit more cautious than what you thought three months ago. Is that the correct interpretation? And then my second guidance-related question is, in the presentation, you're sticking with the three-year targets using 2024 as the base, and I think growing out to 2027. requires a pretty big ramp in 26 and 27 versus 2025. Can you remind us why you have confidence in that?

Hey, thanks, Michael. This is Matt Amy here. Yeah, you know, let me explain the language a little bit more about our guidance change. You know, we didn't change guidance overall, but we're guiding to the lower end of the range for sure. And as we mentioned on the last call, We want to go towards the lower end of the range, but the underlying puts and takes haven't changed. You know, we're still seeing coffee inflation. Trade investment will be higher in the fourth quarter than it was in the third. We still see tariffs, and they'll be offset by the operational improvement plan that we spoke about. You know, when it comes to the range, we use the words at least in that framework so that we don't ask, so that the analysts don't anchor on, like, a midpoint. We want to be clear about the floor of our expectations. Now, we're confident that we'll hit $395 million for the year. We're confident that we'll hit 35% gross margins for the year and at least $20 million in adjusted EBITDA. But, Michael, what that means, though, that means we'll deliver about $110 million in revenue in Q4. Gross margins will be relatively the same as what we saw in the first half of the year, and we'll have about $8.4 million in EBITDA, which is about what we did in Q3. Now, just as a reminder, that $110 million in net revenue, if you compare that against the Q4 from prior year and you exclude the one-time non-recurring revenue related to the barter transaction, that'll be a comparable base of $97 million in last year, or about a 13% growth. Switching to the second part of your question, we are confident in our long-term guidance. And again, that's 10% to 15% CAGR on the top line. approaching 40% margins by 2027. And then on the bottom line, a little bit more aggressive at 15 to 25% CAGR over that time period. We will see growth obviously when we get into 26, but we'll see even more growth moving into 27 as we start to really get the distribution points that we gain in 26 and they pay out on a full year benefit. When it comes to margin, we do have a ways to go on margin. We've executed two rounds of pricing in 2025, one in Q3. We have another one that is being executed right now in Q4. That'll pay dividends when it comes to 2026, but we're also seeing more inflation when it comes to green coffee. Green coffee right now is at all-time highs at $4 a pound in the nearby, and the forward curve is roughly about $3.30 for the year. So we'll continue to see the tariffs and the green coffee inflation. But we will see that margin pick up as we exit 2026 and into 2027.

Let me just build a little bit on that, Michael. As we think about the second part of your question, the three-year guidance that we gave for the business, we're feeling more confident than ever on that guidance. If you think about the fundamentals that we talked about in the opening remarks, we're growing share in every segment of the business. We are the strongest unit growth player right now in the U.S. in coffee. And we still have significant distribution room. So on top of the unit growth we're driving and the velocity that we're driving, we still have significant room to continue to expand distribution on every segment of our business. So again, as we think about that 10% to 15% guidance range that we put out there through 27, we feel highly confident in that.

Okay, great. Thank you. Very, very complete answer. If I could ask one more, just more, I presume this would be more qualitative, but any color on the energy drink, how consumers are accepting it? I think it's still in 12 markets, correct me if I'm wrong, but yeah, any color on how that's progressing relative to your expectations?

Yeah, I'll start off, Michael. I think we're pleased with the overall performance. So to remind Everyone, we had a very limited launch this year. We went into 12 what are called up and down the street markets in partnership with our distribution partners, KDP. And on top of that, we had two national customers, one mass customer and one C-store customer. That was all we wanted to bite off in the first year. And we're pleased with the results. We've seen improvements in those customers through the year as we've been able to track them. And as we think about 26, it's going to continue to be careful steps forward with that business. We have an incredible coffee business right now. We are growing every segment, as I just mentioned. And we want to be very careful that we continue to put as much investment as is necessary in continuing the momentum in coffee. We're excited about energy, and we're going to continue to take strategic steps to expand that on a more regional basis. So while I'm not in a position to talk specifically about our plan in 26, it will be a step forward from where we were, but still really managing that in a targeted way where we can build that business the right way. Thank you. Thank you.

Thank you. Our next question comes from the line of Saran Gwara with Telsey Advisory Group. Please proceed with your question.

Great, thank you so much. So one of the words you used on the transcript was expansion of portfolio. I think it related to the energy category. So can you help us understand how the category is expanding as you look at stronger growth out here along with distribution on the energy side?

Yeah, no, thanks, Sarang. Let me start that one. So as far as energy specifically, we had some information, I think, in the pre-read around that. We are continuing to evolve our portfolio to what we believe are the most relevant flavor segments of the market. So we're launching grape. We're very excited about that. We're seeing great initial response from the customers who we have presented that with in concert with KDP. And then we're also going to have a limited item, the Tiger Strike, which is, you know, we're taking advantage of the 250th anniversary of America next year, and we're very excited about, you know, this item on a limited basis as we think about the summer season. So, yeah, it's an important category to evolve yourself and make sure you're staying relevant with your flavor profiles. So we'll continue to double down and use that as a way to be able to increase distribution with some of our existing customers and as a way to go get new distribution. We're driving innovation in the rest of our business as well. So we're very excited about the items we have going into coffee, pods, bags. And then we actually have a couple of our RTD items in the presentation as well, our cold brew items. These are 25-calorie, low-sugar, exceptionally developed items that we, again, are already seeing a strong response from retailers on. And we look forward to it. We believe that we're at the point as Black Rifle where, yes, we participate in these categories. We need to be leaders in these categories. So you're going to continue to see us driving innovation into each of the segments that we compete in, in partnership with our retailers, And in the case with energy and partnership with KDP, and we're going to be doing things that we believe will drive leading growth in these categories, not just participating, but allowing us to continue to lead the growth and continue to drive share.

That's great. We can't wait to try new products. You know, I had a follow-up question on marketing. You know, dollars were down in the quarter. You know, you are very focused on marketing. There's new brands coming in. and these flavors profiles coming in, how should we think about marketing spend as you look out for like next year and just the broader role of marketing in leveraging the cost part of the business? Thanks.

Hey, Sarang. This is Matt. Yeah, where we're thinking about marketing as we go into 2026 is maintaining a relative marketing as a percentage of net sales as we go forward. But what we'll see is we'll see more of a shift that you're seeing now, which is a shift away from non-working into working. So we'll continue on with that shift, you know, reducing contractors, reducing agency fees and things of that nature, and putting it towards tactics and strategies that have more of an immediate impact on sales. So you'll see that. And, you know, one of the key things that the mods will talk about is how we're improving our activations against some of our key partnerships that we have. So it's really driving more with what we already have and converting that to sales quicker.

Yeah, just building on what Matt said, you know, we're going to continue to do what we're doing at a higher level, you know, as we build the business and make the business bigger. You know, as we, you know, generate, you know, more margin dollars in the business, we want to be able to reinvest those dollars into the marketing that already works so well for us. You know, we're very fortunate. We have an exceptionally strong brand team. We have an exceptionally strong brand. We focus very heavily on top line, or I should say top of funnel brand awareness, and it works. We have grown awareness every quarter over the last three years. Nearly half the country is aware of Black Rifle at this point, and we're going to continue to drive that number through very strong owned media executions. As Matt said, partnerships, we have strong partnerships with the UFC, with the Dallas Cowboys. We will have some additional major partnerships that we'll announce as we get into the year. And then, You know, the part that we actually got very good at this year that we're going to continue to expand on is that execution in store. So we'll drive that money into our retailer partners, and we'll ensure that, you know, we are available at that point of purchase on display, you know, at the right price point. So, again, we feel confident that we've got the right level of marketing in play as we go into 26th.

And, sir, just one more point on that is, you know, we have a maniacal focus on returns. So when it comes to the digital spending, we are looking at the right metrics to make sure the activities are working out and paying out and break even or better. So we're focused on that. That's great. Good luck. Thank you.

Thank you. Our next question comes from the line of Joseph Altabella with Raymond James. Please proceed with your question.

Morning. This is Martin on for Joe. I want to really quickly touch on the energy distribution. You've previously given a goal. It may be about 70, 80% by the end of next year. Is that still something you're targeting?

So in the case of energy, you know, I'll just double down on what I said before. We're going to expand off of the existing targeted plan that we have this year. We've not given guidance at this point on what we think 26 is going to look like as we get deeper into our 26 overall guidance. We can consider doing that. But yeah, I mean, it's going to be, again, we've had success in many of the markets that we've gone into. Others, we have learned some valuable lessons, as is true of any new brand launch. And then, as I said, most importantly, with the two national customers, we were in one C-Store, one Mass. We've actually had very good results. We've seen expansion of items on shelf. And so we're going to build off of those learnings, and we're going to take it into an expanded geography. But again, I don't at this point want to give guidance on specifically what that looks like.

No, I understand. That's helpful. Would you just mind reminding us how much of your green coffee needs are already locked in for 2026?

Yeah, right now we have approximately 50% of our coverage locked in in 2026. 50%? Great, thank you. 50-5-0.

Thank you. Our next question comes from the line of Daniel . Please proceed with your question.

Thank you. Good morning. Are you seeing a different demographic with your energy drinks versus the RTDs? And then do you envision the distribution to be the same between the RTDs and energy drinks when they're mature?

As far as the demographics, It's similar. There are some differences as we look at it. It does tend to skew younger on the energy drinks. Our coffee portfolio is actually quite broad. So when you look at the total coffee portfolio as a whole, we actually hit a very, very wide range of demographics with that portfolio. When you start to talk about the cold canned beverages, the RTD coffee and the energy, the demographics are quite similar. It does tend to be a younger customer um that skews towards that uh behavior um as far as energy uh you know ultimate distribution we'll see you know i think ultimately there's they're very different categories and so you know we're going to build those categories very differently it's important to us that you know when we take on a market with energy we can be concentrated in that market um and that we can really go and invest the right way to win there um in the case of rtd coffee we're already the number three player in america uh and we are the fastest growing of all of the major brands in America. So we're in a different position scale-wise. It allows us to play that differently from a national basis at this point with different forms of national marketing versus on energy in 26, you're gonna see us marketing very heavily against that business, but it's gonna be targeted within the geographies that we choose to go and compete within.

Okay, and if you could sort of bracket how much of your distribution gains for RTDs and energy is between the coolers versus the center of store. How would you think about it in 25 versus 26? Are you sort of pursuing the same sort of goal to be in the coolers, or is there more of an opportunity to maybe be center store or at some point the club channel?

Well, it's a great point you're making. I'm not going to give specific numbers on cooler versus center store. We do track that, right? Our sales team, we're very fortunate to have a lot of deep RTD experience in our sales team. And one of their favorite sayings is cold is sold. So when you can get canned beverages into cold distribution, you see your sales increase dramatically. So that's a big part of the game. We have a lot of tactics involved. that we operate down in our sales organization to ensure that we're not just getting distribution, but that we're getting that cold distribution. And that's a constant negotiation between us and our retailers. Some retail partners are exclusively in cold distribution. It's particularly true of the C-stores. A lot of times in grocery, you may have dual distribution. You may have center store ambient as well as the cold distribution. It can be harder to get that cold distribution in a grocery store simply because it's more limited, the amount of space they have available. But that is absolutely right, what you're saying. As we drive into 26, you know, we will have internal goals to increase those percentages, in some cases, pretty dramatically, right? In areas where we've already had success with the brand, it allows us to go in and say, you know, let's increase that percentage of cold distribution. So what you're describing is a very fundamental part of how we're going to build and drive that business.

And also keep in mind, like the... the growth in the business is going to be coming from our coffee business, our packaged coffee business. And when you look at our distribution we have right now, it's roughly 50%. So we have a lot of headroom in terms of growing that business out, great margins on that business. The business is not just grown in terms of distribution, but average number of items is increasing, velocities are increasing, and it's a real powerhouse for us. So, you know, that's a business that we'll be very, very much focused on as we exit the year and move into 26th.

Thank you. And there are no further questions at this time. Therefore, I would like to turn the floor back over to management for any additional or closing comments.

Yeah, no, thanks very much. To close, I'll just say, you know, we're delivering disciplined, profitable growth. We have a clear path forward. Our teams are executing well. We feel we have incredible brand momentum. We're going to continue to stay very focused on our customers, and we're going to balance that with our mission, as I talked about in the opening remarks. And we believe that that combination will continue to drive stronger and stronger results for us. So we're grateful for your continued support, and we look forward to updating you over the next couple of quarters here as we continue to build on this momentum.

Thank you. And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.