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spk02: Good afternoon, my name is Sergio and I will be your conference operator today. At this time, I would like to welcome everyone to Strass's second quarter 2023 conference call. All lines have been placed on mute to prevent any background noise. Following their prepared remarks, management will take questions submitted via the web link found on Strass's investor relations website and in the earnings press release. I would now like to hand the conference over to the company's external head of investor relations, Sean Mansoury with Elevate IR. Sir, please go ahead.
spk04: Good afternoon, and welcome to Schwoz's second quarter 2023 earnings conference call. Joining me on the call are Justin Dye, Schwoz's chairman of the board, Nirup Krishnamurthy, chief executive officer, and Forrest Hoffmaster, chief financial officer. The company will begin with prepared remarks, and then we will open the call for Q&A. I'd like to remind you that management's prepared remarks and answers to your submitted questions may contain forward-looking statements, which are subject to risks and uncertainties. Examples of forward-looking statements include, among others, statements regarding federal and state legislation and regulation, Schwoz's future results of operations and financial position, and Schwoz's business strategy and plans and objectives for future operations. Such forward-looking statements may be preceded by the words plan, will, may, continue, anticipate, become, build, develop, expect, believe, poised, project, approximate, could, potential, or similar expressions as they relate to Schwoz. Investors are cautioned that all forward-looking statements involve risks and uncertainties that may cause actual events, results, performance, or achievements to differ from those anticipated by Schwoz at this time. Additional information concerning factors that could cause events, results, performance, or achievements to differ materially is available in Schwoz's earnings release, made available before this call, and available on Schwoz's investor relations website and in Schwoz's annual report on Form 10-K for the year-ended December 31, 2022 filed with the Securities and Exchange Commission on March 29, 2023. In addition, other information is more fully described in Schwoz's public filings with the U.S. Securities and Exchange Commission, which can be reviewed at www.sec.gov or on www.cdar.com or on the company's investor relations website. Schwoz may discuss non-GAAP financial measures during today's call. A reconciliation of the differences between the non-GAAP financial measures discussed during the call and with the most directly comparable GAAP measure can be found in Schwoz's earnings press release made available before this call and available on Schwoz's investor relations website. I would now like to turn the call over to the company's chairman of the board, Justin Dye, for opening remarks. Justin?
spk00: Thank you, Sean. Good afternoon, everyone, and thank you for joining us to discuss our financial and operating results for the second quarter of 2023. To start, I'd like to briefly touch on the broader cannabis environment. As many of you are aware, nearly all markets throughout the country are contending with pricing pressure and inflationary impacts to consumer wallets. The capital markets environment also remains a challenge for cannabis operators. which has led nearly all companies to prioritize cash flow generation to fund their growth. We have always emphasized financial stewardship and tight cash management, which has resulted in strong EBITDA margins and cash flow generation. We plan to continue with that philosophy as we pursue our growth strategy. While we are hopeful for legislative change surrounding 280E and safe banking, We're committed to operating our business and driving growth without any government assistance. Before I pass it to Nirup to discuss our second quarter business update, I'd like to take a moment to thank all of our employees, shareholders, and our board of directors for their support while I led the company as CEO for the past three and a half years. When I first invested in and established the company, we had a vision to become one of the most profitable cannabis operators in the industry. And several years later, I'm proud to have been a part of a tremendous growth plan into becoming one of those top operators in both Colorado and New Mexico, as well as one of the most profitable cannabis companies in the US. Naroop's transition to CEO was part of the succession plan we established when he was appointed president last October. Since that time, we've worked closely together as he began to steer the company's day-to-day operations and spearhead our Colorado and New Mexico growth initiatives. I know that Schwoz is in excellent hands with Narup at the helm, and I look forward to advising the company as chairman as we continue to execute on our growth and profitability objectives ahead. Thank you again, everyone.
spk06: Over to you, Narup.
spk01: Thank you, Justin. I am excited to join everyone today in my first earnings call as CEO of Schwarz. Prior to being appointed president last year, I joined Schwarz initially in 2020 when we had no plan touching operations, and I'm proud to have assisted in growing the business to 62 retail stores across two states and more than 800 employees as of today. I'd like to convey my appreciation for Justin, along with the entire board of directors for entrusting me to continue executing the vision we established several years ago. Now let's dive into our results. In Q2, we continue to execute on our commitment to going deep in each of our markets, as reflected by our acquisitions of Everest, Apothecary in New Mexico, as well as Standing Akimbo and Smokies in Colorado. adding 17 new stores to our footprint. Two of these acquisitions have real strategic significance. For Everest, this transaction added critical depth to our footprint in New Mexico and positions us as a top operator in the state. Similar to our operating playbook in Colorado, we see an incredible opportunity ahead to drive economies of scale to improve both gross margins and EBITDA margins in the state. We have proven our execution in Colorado. New Mexico will be no different in the long run. For our Standing Akimbo acquisition, this transaction marks our first significant foray into the Colorado medical market. Standing Akimbo is the largest medical retail store in the state, accounting for approximately 9% of all medical sales in Colorado, and 26% of medical sales in Denver. We are grateful for the opportunity and proud to serve the medical cannabis patients of Colorado, which is approximately a $200 million market. Our experience in servicing the New Mexico medical market positions us well to extend the same dedicated and passionate level of service to the medical patients of Colorado. Although medical stores typically carry lower margins than recreational stores, It enables us to expand our market share in the state and likewise provides a channel for us to sell more of our own product. More to come on each of these acquisitions later in the call. Now, while we made significant progress in growing our footprint, we were not immune to the broader market challenges related to pricing and license saturation in both our markets. In Colorado, other operators responded to the oversupply of product by broadly dropping floor prices to all-time lows, as low as $39 an ounce, which we believe impacts brand and customer expectations. As such, while we increased our promotional investment, we made the strategic decision to protect our brand and quality standards by ensuring our customers have the highest quality products at the most affordable prices. With wholesale prices starting to stabilize in Colorado, we believe we are well-positioned to live up to our brand promise of offering the best assortment of high-quality products with exceptional customer service. Despite the market conditions in the quarter, we outperformed the market by 4% in Colorado. In New Mexico, we witnessed the proliferation of licenses throughout the quarter. For perspective, total operating retail stores in the states are up 29% compared to the end of 2022. as 133 new stores have opened year-to-date. There has also been pricing pressure at the retail level with new entrants lowering their flower prices to as low as $4 a gram. However, due to the durability of our operating playbook, we have been able to retain our loyal customers while expanding our footprint in the state, demonstrated by our most frequent acquisition of Everest, which brought our total footprint to 32 dispensaries across New Mexico as of quarter end. Our wholesale business is moving in the right direction as we experienced a modest revenue increase on a sequential basis. While we are still contending with a 25% year-over-year price reduction that impacted the wholesale revenue in the quarter by almost $1 million, we have been able to expand our business in both Colorado and the completely untapped New Mexico market. I am proud of the team's performance in both states during this quarter, which speaks to the effectiveness of our operating playbook and acquisition strategy to execute in a competitive market, all while delivering strong adjusted EBITDA margins and positive cash flow. For those who are new to our story, I'd like to briefly touch upon the four components of our operating playbook. First, go deep in retail, meaning we are focused on growing our store footprint in each of the markets we serve. Our emphasis is to go deep, not wide, enabling us to drive market share through customer experience, loyalty, and brand development, as well as cost synergies from economies of scale and purchasing power. As I mentioned earlier, being one of the largest players in a given market allows us to gain market share by providing our customers with quality products at affordable prices. For Schwarz, our market share by sales in both Colorado and New Mexico is approximately two times our market share of stores in each state. This is a direct reflection of our operating playbook and serves as a key differentiator for our business. The second component of our playbook is to run lean. We are able to achieve strong gross profit and adjusted EBITDA margins by implementing lean proven practices at the production, manufacturing, and retail levels. For example, our scale enables us to leverage bulk purchasing power during supplier negotiations to immediately reduce costs for newly acquired stores. In the second quarter, we began implementing various initiatives That will help cut costs, preserve cash, and improve margins. Our CFO, Forrest Hoffmaster, will touch on this later in the call. Third, we are intently focused on driving sales of house brands. In order to create a strong consumer brand, its distribution must first be established through retail. In cannabis, we firmly believe that retail brands drive customer brands. Our retail footprint consists of densely populated areas with high levels of consumer penetration. This deep footprint provides the foundation for rapid expansion of our CPG platform, which is currently an untapped channel for Schwarz. In addition, our leading market share provides opportunities to license brands from other markets to offer a variety of price points and form factors to our customer base. As mentioned on our previous call, we launched our everyday weed brand called EDW for a unique roll-your-own pre-roll offering, which we will now begin expanding into a branded house. And last but potentially most important for our operating playbook is to measure and manage. Our team of data scientists meticulously measures our performance by analyzing a variety of data points to improve both operations and customer service. We track metrics such as price investment and labor optimization, promotional effectiveness, store allocation efficiency, and customer loyalty, to name a few. Our data-centric approach enables us to optimize both our new and current assets to ensure they're running as efficiently as possible, which is a driving factor for our strong margin profile. Now let's take a deeper dive into M&A in each of our markets, starting with Colorado. As I mentioned earlier, in June, we closed our acquisition of Standing Akimbo. Not only does this acquisition provide us with a strong Standing Akimbo banner, but also allows us to leverage their best practices and ownership within the state's $200 million medical cannabis market. The medical market is an untapped channel for us as we have several stores that have underutilized medical licenses. Leveraging Standing Akimbo's medical expertise will enable us to accelerate the growth of our medical program at other stores and recognize cross-selling opportunities between our medical and recreational customer base. We're eager to test their methods at our recently opened Colorado Springs Medical Dispensary. In May, we closed the acquisition of two Smokies dispensaries in Fort Collins and Garden City, granting us access to two new markets. These two stores will be converted to our StarBuds retail banner over the next few quarters, which will provide customers with the full assortment of the StarBuds experience. Shortly after the Smokies acquisitions in May, we completed the remodel and grand reopening of our Emerald Field store in Denver. We believe this new remodel will enable us to penetrate the Highlands market to provide the best assortment available in the market, as well as home delivery in that area. Moving on to our New Mexico operations. In June, we completed the acquisition of Everest, which included 14 retail dispensaries, one cultivation facility, and one manufacturing plant. Although it is early in the integration process, in July we began to recognize synergies from bulk purchasing, introducing new product assortments, and leveraging best cultivation practices to improve yield. We expect to drive further revenue and cost synergies as we optimize the new assets in the months ahead. As of today, we have a leading footprint in New Mexico in terms of market share with 33 dispensaries, four cultivation facilities, two manufacturing plants, and over 400 employees statewide. Despite the pricing pressure in New Mexico, we generated 12% year-over-year and 7% sequential growth in retail sales in New Mexico. We see good potential in the New Mexico market and we will continue to deepen our footprint in the state. Our chief regulatory and policy officer, Dan Pabon, has been involved with New Mexico State to help protect the cannabis industry by working with the Cannabis Control Division to help develop guidelines and increase enforcement to prevent illicit product sales. Now turning to our cultivation and manufacturing operations. With the recent acquisition of Everest, we now have six cultivation and four manufacturing facilities between Colorado and New Mexico. Our cultivation leaders have continued to generate improvements in all phases of our indoor and outdoor grows, leading to increasing flower yields, higher quality, as well as lower cost of goods. In addition, our focus on lean manufacturing has helped us cut production costs of both flower and CPG brands to effectively compete in the marketplace. As mentioned in the last call, we began internal product distribution from our off-premise storage facility in Q1, and as of today, have migrated nearly all of our suppliers to the facility. Throughout the process, we were able to generate material savings through price negotiations with our vendors and expect to recognize additional benefits as we further optimize this operation in the months ahead. Pivoting to the federal landscape, we're taking steps to make ourselves heard. On behalf of Schwoz, I have been elected chair of the United States Cannabis Council as of July 1, 2023, for a period of 18 months. This council allows Schwoz and our industry partners to weigh in on federal guidelines and policymaking. As an example, we are closely monitoring the Safe Banking Act which we hope to have marked up by the Senate Banking Committee next month. We will continue to monitor the rescheduling of cannabis to enable cannabis business operators to compete on a more level playing field. I'd now like to hand over the call to our CFO, Forrest Huffmaster, to review our financials before returning for closing remarks. First.
spk03: Thanks, Nauru. Jumping right into our results, as a reminder, all financials are in U.S. dollars and variance commentary is on a year-over-year basis unless otherwise noted. Total revenue in the second quarter of 2023 was $42.4 million compared to $44.3 million for the same quarter last year. The decrease was primarily due to lower wholesale revenue resulting from a 25% year-over-year decline in wholesale pricing. and the proliferation of new licenses in key New Mexico markets. This was partially offset by new store growth compared to the same quarter last year. Gross profit for the quarter was $24.5 million or 57.9% of total revenue compared to $25.2 million or 56.8% of total revenue in the second quarter of 2022. The increase in gross margin was primarily driven by efficiency gains in retail, cultivation, and production, partially offset by wholesale pricing pressure. Operating expenses for the second quarter of 2023 were $19.6 million compared to $16.1 million for the same quarter last year. The increase was primarily due to the four-wall SG&A increases associated with 27 additional stores in Colorado and New Mexico that are still ramping. as well as an increase in stock-based compensation. This was partially offset by cost management efficiencies implemented throughout operations. As a result, income from operations for the quarter was $5 million compared to $9 million in the second quarter of last year. Net loss was $6.6 million compared to net income of $33.8 million for the second quarter of 2022. primarily driven by a $35.2 million change in non-cash accounting revaluation of the derivative liability related to our convertible note. Adjusted EBITDA for the second quarter of 2023 was $13.8 million, or $32.6 of revenue, compared to $15 million, or 33.9% of revenue for the same period last year. The decrease An adjusted EBITDA margin was primarily driven by lower revenue and higher SG&A associated with the new stores that are still ramping, partially offset by improved gross margin. We generated positive operating cash flow of $2.7 million for the quarter, as compared to cash used of $13.5 million in the second quarter of 2022. As of June 30, 2023, cash and cash equivalents were $19.9 million compared to $38.9 million on December 31, 2022, while operating working capital increased by $5.8 million to $10 million during the period. Total debt as of June 30, 2023, was $155.4 million compared to $127.8 million on December 31, 2022. As Narut mentioned earlier, we recently initiated a series of cost optimization initiatives across the organization during the second quarter, leveraging our scale and experience to preserve capital and protect our margins. These initiatives include retail operating expense optimization, supply chain efficiency, and corporate overhead reduction. We've already begun to see the benefit of these initiatives and expect to leverage further savings in the months ahead. I'll now turn the call back to Nirubh for closing remarks.
spk01: Thanks, Forrest. Looking ahead, we'll continue to run a lean operation while capitalizing on the depth of our assets in both Colorado and New Mexico. We expect to drive further operational improvements and cost efficiencies while accelerating growth across our markets. From an M&A perspective, we will maintain a regional focus while evaluating accretive acquisitions that will complement a geographic footprint. With our growing market share in both our markets, we are well positioned to continue driving strong adjusted EBITDA margins and consistent cash flow generation in 2023. That concludes our prepared remarks. I'd like to pass it back to Sean, who will open the call for Q&A.
spk06: Thank you, Justin, Nirup, and Forrest.
spk04: And thank you everyone for participating in the conference call. As we gather the queue for live questions, we'd first like to address questions that have come in via email over the past couple of weeks, as well as a question or two from the live webcast during the conference call. So first, can one of you share more about the synergies you expect to realize from your three acquisitions in Q2? as well as the timeline for integration?
spk06: I'll take that, Sean. Let's start with Colorado.
spk01: You know, over the years, we have shown ability to create economies of scale as we build depth into the states. So not dissimilar from the past, we're going to do the same thing with our acquisitions that we have announced. As a reference point, for example, with Smokies, we increased our gross margin by 15 percentage points in the first 20 days post-close. So we have an operating playbook where we go in and take the acquisitions in, initially drive up gross margins from our leveraged buying, and then implement an operating playbook to drive revenues and EBITDA optimization. The same thing goes for Stanley Akimbo. We can learn from their strong medical background, which has been an underutilized segment in our business across our broader Colorado footprint. We intend to, over the next few quarters, test a store within a store concept where we would have a medical banner within our retail stores for those stores that have those licenses. In New Mexico, Everest provides critical depth for us in the state, as it nearly doubled our store footprint and helped grow our market share there to double digits. Similar to Colorado, having a large number of stores provides purchasing power with other vendors. We also expect to bring our best practices for cultivation and production to improve quality and yields, which will also benefit margins. With respect to timeline, I mean, listen, we want to get integration in as soon as possible and realize the synergies as soon as possible. But, you know, we want to do it in a way that is accretive to the organization, ensures that incoming employees are well taken care of, and we do this for the long run. So typically anywhere from six to 12 months to fully integrate and realize synergies is
spk06: for these acquisitions. Back to you, Sean. Thanks, Naroop.
spk04: So for our next question, can one of you share a bit more about the current state of pricing and licensing in Colorado and New Mexico?
spk06: Yeah, I'll take that one as well.
spk01: You're handing me all the tough questions. As I mentioned, we are seeing pricing pressure in both Colorado and New Mexico, although each market has their own unique characteristics. In Colorado, cultivation licenses that peaked last year started to fall. And so we are now about 701 active licenses in Colorado. I think a year ago it peaked around 812. And so that's a significant drop in overall active license count in Colorado. Now, the effects of that will be seen over the course of time as inventory flushes out of the system and supply kind of starts to match up with demand. So for the first time, though, in I think over 10 quarters, AMR pricing for flour, which is the average market rate published by the state, went up in the second quarter to about $702. It reached its low in the first quarter at $649. To put this in perspective, two years ago, I think we were in the 1300s in terms of AMR. So while we have seen a decline in wholesale prices, that obviously translates into retail, we are seeing some signs of stabilization in wholesale pricing in Colorado market. The MIP licenses also have dropped in Colorado over 10% year over year. So I have some hope that the supply is going to start meeting the demand eventually. In spite of all that, obviously, we have continued to outpace the market by 4% during the quarter and also have increased our loyalty customers by over 17% in the last quarter. And we have over 300,000 loyalty participants in the two states combined, which we're happy with, but we're not satisfied with. We'd like to continue to keep growing that. In New Mexico, as I mentioned earlier, there's been an influx of new licenses, and therefore a bunch of new stores have opened up, which has impacted both pricing and and volumes due to transaction counter declines. There are 133 new stores opened this year, increasing 96% over last year. And we have done our share of increasing. When we got into New Mexico, we had 10 stores, and now we have 32 stores as of end of Q2, and we just opened one last week, so we have 33 stores as of today. But regardless of the license saturation, we have proven our ability to succeed and drive growth anywhere the most compared to markets like Colorado and New Mexico. Our focus is on what we control, and that is attracting everything and retaining new customers. I am a strong believer that we focus on the customers. We take care of them. They're going to take care of us in the long run. So that's my answer, guys. Back to you, Sean.
spk04: Thanks, Nirup. This next one, I know we touched on a bit in the prepared remarks, but perhaps one of you can expand a bit more on our perspective on the regulatory environment overall. Any insights to share with respect to legislative progress with descheduling or 280E or SAFE?
spk06: I'll let Justin take that one.
spk00: You know, Sean, great question. I think that we're going to continue to see the industry getting more organized from a lobbying perspective. I think that's going to be a positive. I think as we get more organizations organized and really speaking to the benefits of both medical as well as adult use cannabis. And, you know, recently, you know, CNN has done some stories on the health benefits associated with cannabis versus the opioid epidemic that we have. So I think it's coming in the mainstream and I think you're starting to see you know, probably more conservative, more socially conservative thinkers to start to really respond. We've got 38 states where some form of cannabis is legal and the U S government and our regulatory bodies are out of pace with that. So, you know, I believe we really believe that, you know, the argument and the strength of the benefit of the industry is coming through. And I think it's going to take time. uh, to do that. I think at some point in time, we will absolutely see safe. And I do think we're going to see some type of de-scheduling or at least rescheduling. Uh, the timeframe is, you know, it's, uh, it's down the road and I can't, you know, our, uh, our crystal ball is, as we've said many times is broken, but I can tell you the industry is doing a much better job of being organized. and having a very clear narrative around the industry, which I think is very, very positive and productive, and I think it's going to bode well for us in the future. So in the meantime, we're going to have to continue to do what we're doing, which is run a business with some tax challenges and some banking challenges, and we're prepared to do that. I think we've got a very good operating system. system and a team. So we're prepared to hunker down and weather the storm. We're going to be in great shape. We're going to be in great shape in New Mexico and in Colorado. And I think when we see these changes, I think they will lift the entire industry. And I expect us to get our at least fair share, if not more, of that uptick and re-rating from a value standpoint. I think we just have to be patient. This is a long-term proposition.
spk04: That's great color. Thanks, Justin. Next question. Last quarter, you guys referenced a target of 150 stores between Colorado and New Mexico. Is there any change in those expectations? And where else do you see opportunity for entering new markets?
spk06: I'll take that, Sean.
spk01: We have no change in these expectations. We would like to go deep. In Colorado, I think Colorado has over 760 recreational dispensaries, and we want to get to our target of 100 over a period of time. And I think scale brings a lot of good things to the business. And we are absolutely focused on increasing our footprint here in Colorado. And there's ways to go. We are at 30 stores right now. And similarly, New Mexico, we have grown there faster. We're at 33, and we'd like to get to 50 as well, again, making sure that we have a fair share of the market and are able to drive disproportionate share of the market share. So there is no change in our expectations and our goals in these two states. Now, in terms of new markets, we've always said we wanted to create a deep regional footprint. And that's what we intend to do. We have begun the studying of markets in and around us. And while we haven't decided on what we actually want to do, we will only enter markets if, one, it allows us to... if it gives us a clear path to getting to number one in the state and go deep in that state. And it allows us to take our products and service our customers and deploy our operating playbook in those states. So that's an ongoing exercise our M&A team does over here. And I don't know when or if we're going to enter other markets, but we are actively looking at it.
spk04: Thanks, Nirup. Last one, or excuse me, just a couple more. Are you guys comfortable with the balance sheet today, and where do you see opportunities to improve working capital and cash flow?
spk03: Yeah, I'll take it, Sean. Yeah, very comfortable. And starting with working capital, we're most heavily focused on the inventory efficiencies across the network, obviously the biggest part of our current assets. So strengthening demand planning, fulfillment practices, where our systems team is continuing to roll out our ERP system within cultivation for visibility from seed to sale, so we know exactly where we need to dial. We also began internal product distribution from our off-premise facility in the first quarter and continue to migrate all of our suppliers to that facility, which will further the supply chain efficiencies, our in-stock positions, holding power, And also the non-customer facing overhead in the retail side. On the top line of the balance sheet, we continue to generate positive cash flow from operations with nearly 20 million of cash on the books as of June 30. So we're very comfortable with our cash position, our liquidity. And excluding the acquisitions in quarter two, our cash balance is essentially flat compared to the first quarter. So happy with what we're generating there. And we don't borrow on taxes and are beginning to pay down a principal on our outstanding debt. So we also have room to free up cash with some of the initiatives that we have within the organization to improve operating efficiencies across the company, which we began to realize towards the end of quarter two and expect that will continue in quarter three. So, yeah, thanks for the question.
spk04: Got it. Thanks, Forrest. Last one that came in via email. This one's probably best for you, Forrest. You mentioned some of the work you guys are doing on cost initiatives. Can you share a bit more or expand upon that?
spk03: Yeah, I think it's just part of our evolution. We've had a lot of growth over the last couple of years and are turning more into the infrastructure improvements that we can realize with the economies of scale to preserve capital, protect our margins, and I think that's just all inherent or an inherent benefit of the strategy of Schwoz to go deep versus spread thin. And so we're taking full advantage of that. I've mentioned our working capital focus, and we've discussed our supply chain efficiency, off-site storage to protect margin. We're sharpening our focus on all key spend areas where we can leverage SG&A and operating expenses, which I think we'll see more of. including supply chain, retail efficiencies, overall structural changes in the way we support the two states. And we're just beginning to realize the gains, and I look forward to sharing more about those in the coming quarters as we refine.
spk04: Thanks, Forrest. And last one, this one actually came via the live webcast during the call itself. Okay. How much of the growth in inventory to $33.8 million during the quarter is How much of that was M&A related and where do you expect that to peak?
spk03: Yeah, we quarter one inventory right at 26. Now we're at 34. More than all of that was acquisition related. And, you know, we're always going to be opportunistic, but we expect those levels to come down in the coming quarters as we integrate the new acquisitions and continue to focus on that. We've done hand efforts in some of the stuff I mentioned earlier just around supply chain efficiency.
spk05: Perfect.
spk04: All right, that's a wrap for my end. Operator, do you want to turn it over for live Q&A, please?
spk02: Of course. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star 1. If you want to withdraw your question, please press star 2. Your question will be pulled in the order they are received. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question.
spk05: There are no further questions at this time. You may proceed.
spk06: All right, that concludes the call, ladies and gentlemen.
spk04: You may all disconnect. Appreciate your time today. Thanks.
spk02: Thank you, ladies and gentlemen. This concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
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