GURU Organic Energy Corp.

Energy third quarter 2023 results conference call and webcast being recorded today, September 14th, 2023 at 10 a.m. Eastern time. At this time, all participants are in a listen-only mode. Following management's presentation, there will be a question and answer session with financial analysts. Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulty hearing the conference, please press star then zero for operator assistance at any time. Guru's press release MD&A and financial statements are available in the investor section of its website and on CDAR+. During the call, the conference may refer to certain non-GAAP measures. Reconciliation are available in its MD&A. Also note that all financial figures are expressed in Canadian dollars unless otherwise indicated. I would also like to remind you that today's presentation may contain forward-looking statements about GURU's current and future plans, expectations and intentions, results, level activity, performance, goals, or achievements, or other future events or developments. As such, please take a moment to read the disclaimer on forward-looking statements on slide two of the presentation. I would now like to turn the conference over to Carl Goyette, Gourou's Chief Executive Officer.

Thank you, operator. Bonjour à tous. Good morning, everyone, and welcome to our earnings call. Joining me this morning is our CFO, Indy Seraf. For those who are following the webcast, you can turn to the presentation to slide five. We are very pleased with the results achieved in Q3, an all-time record quarter in terms of net revenue with $8.9 million. Our C&E and fruit punch, as well as higher velocities in Canada, were the main contributors to the growth in this quarter. During the last two quarters, we have been building on the sales momentum and gaining traction on many fronts, while being very disciplined when it comes to our spending. with a more targeted marketing approach to retail and online activities. This strategy has resulted in a reduction of our net loss to $3 million in Q3 from $6.5 million last year. We are seeing sustained sales progression in urban centres in English Canada, with market share pockets of up to 6% in certain grocery banners. This performance is a result of continued marketing to increase brand awareness and trial, notably through our spring and summer national marketing campaigns featuring the launch of Fruit Punch, currently ranked as our number one flavored product in Quebec, as well as our sponsorship of the Canadian Elite Basketball League and the Amazing Race Canada. Our record performance in Q3 attests to the resilience of our brand and our capacity to grow in a highly price competitive environment. Marked by our successful innovations, creative marketing, and ability to offer the best natural energy drink to consumers in Canada and in the U.S. To put our growth in perspective, consider the following Nielsen statistics. First, the energy drink category as a whole continues to hold an impressive growth rate of 15% over the last 52 weeks in Canada. And second, Guru is still the fastest growing brand in English Canada with a growth rate of over 44% in all channels over the same period. confirming our current strategy. As a last note on competition, you may have seen in the last few weeks that several brands of energy drinks have been recalled for not respecting Canadian regulations regarding to caffeine content levels and labeling. We support those regulatory measures as we believe that good energy should not come at the expense of health, and this aligns with our mission to clean up the energy drink industry. Turning to slide six, Since the beginning of the year, we have put more emphasis on building direct connections in Canada with consumers through our in-store activations, social media content, and influencer engagement. We recently announced our partnership with Grady Dick, the Toronto Raptors' first draft pick of 2023, who will become a Guru brand ambassador. Grady is a rising NBA rookie star at the start of his professional career, who wished to be affiliated with a responsible and clean beverage company. We are thrilled that Grady has joined the Guru team and look forward to him playing a significant role with us. This partnership also represents Guru's commitment to promoting the amazing sport of basketball in Canada. We also decided to do something different for our fall marketing campaign. with a first social media challenge that will be hosted by Grady, as well as other high-profile influencers in Quebec, Toronto, Vancouver, over the next eight weeks. Our goal with the Feel Good Energy Challenge, held in English and French, is aimed at leveraging the power of celebrities and influencers across Canada to continue building brand awareness and engagement. As in the last few years, we will return to Canadian university campuses this fall by hosting back to school activities. This initiative has been gaining traction over the years and enables GURU to continue building brand awareness in the young adult demographic, just like we did historically in Quebec, which earned us the number one leadership position with the 18 to 25 young adult demographic in that province. On top of our marketing initiatives, Our in-store execution continues to improve each quarter with our distribution partner. PepsiCo has been working diligently towards making our energy drinks more available to retailers and consumers in Canada, including upcoming listings in Freshco and Farm Boy grocery outlets in English Canada. We're also working with PepsiCo to increase our presence in the food service sector, including universities and recreational channels. Lastly, we are moving forward with our efforts to enter the wholesale Club Channel market, which we believe has the potential to boost brand awareness, trial, and market share. Starting this September, we're thrilled to say that we're participating in a rotational program with Costco Quebec, which will feature Guru Original in 24 Costco locations. Please turn to slide seven as we review our U.S. operations. Our U.S. expansion strategy differs from our Canadian strategy as we look to expand in selective areas and channels where we can realize the best return, namely through natural food stores, online platforms, and the wholesale club channel. Q3 net revenue in the U.S. grew by over 38% to over $1.4 million, driven by less promotional pricing, improved online execution, and a record performance during Amazon's Prime Day this past July. We also completed a very successful rotational program in over 40 Costco locations in Los Angeles by selling an exclusive format of Guayusa Tropical Punch, which sold faster than expected. This rotational program allowed us to showcase our Tropical Punch to a larger market of Better For You consumers, which we hope will open doors to new opportunities in the U.S. Tropical Punch has been performing extremely well, becoming Guru's number one selling skew in natural food stores and grocery channels. It's also our fastest growing product in the grocery and drug channel. This December, on the heels of our Tropical Punch success in the States, we will launch Fruit Punch together with new innovations to be unveiled in the coming months. This timing will allow us to launch our latest and newest innovations starting with the online channel just in time for the holidays. Online sales continue to increase in Q3, driven by improved execution, return on ad spend, and Amazon's Prime Day record performance. We will continue to work on growing this segment's performance with a focus on the U.S. market and profitable growth. I will now turn the call to NG, who will provide you with more details on our financial results for the third quarter. NG, over to you.

Thank you, Carl, and good morning, everyone. Turning to slide nine. As Carl mentioned, this was our best quarter to date. Net revenue increased by 15% to a record $8.9 million in Q3, from $7.7 million for the same quarter in 2022. In Canada, sales grew by 11% to $7.5 million, driven by increased sales velocities and the summer's marketing campaigns. U.S. sales grew by 38% to $1.4 million, mainly due to online sales optimization and stronger return on lower promotional spend in all channels. Gross profit increased to $4.5 million from $4.2 million in Q3 2022. Gross margin decreased to 51.2% in Q3 2023 from 54.8% for the same quarter last year. mainly due to higher cost of goods sold and more promotional activity in Canada due to the fiercer competitive environment. SG&E was $8.1 million for Q3 2023, compared to $11 million for the same quarter last year. Selling and marketing expenses decreased to $5.7 million from $8.5 million in Q3 2022. as we took on a more targeted approach to our investment in sales and marketing campaigns during the current fiscal year. General and administrative expenses decreased to $2.4 million from $2.5 million in Q3 2022. Net loss per the quarter decreased significantly to $3 million, or $0.09 per share, compared to a net loss of $6.5 million for the third quarter last year, or $0.20 per share. The improvement in our net loss position mainly reflects the decrease in costs associated with brand, field, and trade marketing activities. In Q3, adjusted EBITDA amounted to a loss of $3 million, a $3.5 million improvement from a loss of $6.5 million for the same period last year, mainly due to lower selling and marketing expenses. As of July 31, 2023, Guru had cash and cash equivalents of $38.7 million and unused credit facilities totaling about $10 million. Our prudent balance sheet management puts us in a strong financial position to continue self-funding our growth with the ability to deploy the right investments aimed at our return to generating sustained profitability. Carl, back to you for concluding remarks.

Thank you, Indy. Turning to slide 11. Last spring, we set things in motion in Canada with a successful product launch, amazing sponsorship, improved in-store execution, and creative and effective marketing campaigns, which resulted in the strong performance we have seen in the last two quarters. Our near-term goal is to pursue this positive momentum in the fall and winter months. New strategic initiatives will allow us to pursue our growth trend in the quarters ahead in Canada and in the U.S. These activities will include our social media challenge featuring Grady Dick, among other great influencers, our popular university campus program, and our U.S. launch of Food Punch together with a new innovation, which will all be supported by a strong social media calendar and unique activations as selected retailers. As we pursue our expansion efforts in Canada and the U.S., We are confident that our evolving strategies, refined marketing plans, and current momentum with innovation and our strong financial position will allow us to increase sales and gain market share, while focusing on clear paths to return to our historical profitability. As we have been profitable in Quebec, our legacy market, We believe that our goal of being profitable across the entire company is attainable with the funds we have on hand. From a broader perspective, we remain focused on meeting our objective of cleaning up the energy drink industry. This industry needs a transformation for the better with healthier yet as effective products that contain natural caffeine, zero aspartame, and zero sucralose. As always, we are excited by our long-term growth plans with a great team, solid partners, incredible products, and innovations in the pipeline, all contributing to a strong differentiated brand. This concludes our formal remarks. I will now turn the call over to the operator for the Q&A.

We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Martin Landry. with Stifel. Please go ahead.

Hi, good morning Carl and NG. Good morning. My first question is on your market share. You show in your MD&A that your market share in Canada is 4.6% and it looks like it's been stable in the last four quarters. despite a big push in marketing and despite some new product introduction. Can you talk a little bit about that? What's the reason why you're not able to maybe grab a couple more market share points with the push that you've done?

Well, good question, Martin. The reality is it's a complex answer, but I'll try to make it easy. First, the industry is surprisingly strong. So in order to gain market share in this industry, you need to grow very fast. The industry is growing at 15%, as we mentioned. So the industry is surprisingly strong. Consumers love energy, and we think this is an opportunity. We have been gaining market share. We're growing faster than the industry in English Canada, mainly in Ontario and West, where we have seen steady progress on a smaller base. Then when we look in Quebec, as you know, we're a more established, much bigger brand. The industry is growing just as strong, but we're more subject to different dynamics. It's really a three-brand story in Quebec. We are around a 13%, 14% share a month, depending on the month. And we have two big competitors that are Red Bull and Monster. And we are seeing bigger swings. The reality is consumers are more price sensitive, and we're seeing bigger swings than we've historically seen from month to month. So if you recall, if I try to summarize the last year, when we spoke in March for our Q1 results, we had mentioned that we had seen a little bit of a decline in our scan performance, and that was mainly due to aggressive pricing activity on four-packs by Red Bull. So in that period, we did not gain share. In fact, we lost a little bit in that period. Then we spoke in June again for our Q2 results, and that was the early spring, and we were very strong on market share gains, and that was driven by our innovation, while Monster was also launching a successful innovation at the time. So that's kind of different. There's three times where there's a little bit of a decline in Q1, huge growth in Q3. And then in the last few periods, last few months, then Red Bull has come back with a very successful summer edition. that drove market share for them. So a little bit of a recovery from the market share we had lost. And they even launched their winter edition in the middle of the summer. And that's also driving a little bit of market share gains while they came back with core pack for pack promotion. So a lot of dynamics at play. So if you look at an average, it's fair to say we haven't been gaining market share in Quebec, but there's bigger swings from month to month. And we're very optimistic about about the future with our stronger portfolio, the best execution we've ever had in this market. And we're also starting to be a little bit more aggressive to react to some of those pricing promotions. The long answer, because you can't look at it just in 52 weeks. There are different swings, bigger swings from month to month. So that's really the reality of this industry when you're a bigger established brand in the markets of Quebec.

Okay, so maybe a follow-up to that, because you did close up your opening remarks, Kyle, with saying that you see potential for market share gains. So, I mean, the industry is always going to be competitive. You've had a really successful product launch just now, which hasn't seemed to move your market share yet. So what's going to change in the coming year for you to be confident that there's potential for you guys to go and gain share?

Well, first, the innovation has moved share for us. I understand what your point is. You're looking at total, but then you could also look at, okay, what would have happened if we would not have launched? What's moving share right now in this industry is two things. This is focused on Quebec. Innovations are driving share. So expect more innovation from us in the future. And aggressive pricing on multi-pack formats is also driving market share. It's really the two dynamics that are at play here between Red Bull, Monster, and Guru. They're the three brands that are kind of exchanging shares month to month in this market that is growing very aggressively. Let's keep that in mind. So innovations are driving the growth. They're bringing new consumers to all the brands because all the brands are winning from innovations. So kind of what's driving growth right now will be what will drive growth in the future. And I would say what we will see moving forward is also more innovation, better execution, and more aggressive pricing when required.

Okay. Maybe switching gears, NG, your gross margins were down 360 bps this quarter. Would it be possible to do a bridge for us so that we can quantify the buckets that represent that erosion?

Yes, for sure, Martin. So like Carl mentioned, right, there was increased price competition. So that's part of the equation. That's half of it, actually. So if we're bridging, half of it is really due to this increased price competition that we're seeing and us responding to it. And the other half is our cost of goods sold to our input costs that are increasing as well, which, you know, that was normal with what we've seen since the COVID pandemic and everything and inflation. Okay.

So in terms of your increase cost of goods sold, is there a thinking about maybe putting a price increase to offset those increase in your input costs?

No, we're always right. Like you can see, we're not the leader in the market, right? Red Bull and Monster are much bigger than us. And like we've always done, we stay aligned to the pricing strategy of the industry. So we always look for opportunities, but at the same time, we remain competitive.

Okay, and then the last question for me, Cal, you're talking about a new innovation that you're going to launch, it looks like, in the U.S. along with Tianin by year-end. If I recall past conversations, and Tianin was launched during the planogram resets in the spring, what's the thinking about, what's the reasoning why you would launch a new product in the fall when the planograms are already established?

Very good point. In fact, what I said in my remarks, maybe it was missed, we're going to be launching online first with independent retailers. There are retailers that can bring us on board at the end of this year. But we are already in discussion with retailers to list this for the planogram season in the early spring. So you're absolutely right. The bigger distribution piece will come in the spring. But there are a portion of these, for example, on Amazon and other retailers that are more flexible with the recess of their planograms in the natural channel to bring these products earlier. That's the reason why. So T&E food punch will be coming. And there's another one as well. So just to complete a a food punch line. There obviously are tropical punch, food punch, and another one to be announced very soon. But we've seen, as you know, we've seen traction with these types of products, great flavors, lots of energy, but also great functionality. So we're going into that right direction because this is what consumers are telling us they want.

Okay. That's it for me. Thank you.

Thank you, Matthew.

Thank you.

The next question comes from John Sampero with CIBC. Please go ahead. Thank you.

Good morning.

Good morning, John.

Hi. I want to start with a housekeeping question. Can you say what scan data growth was in Canada just for the quarter on a year-over-year basis?

Let me look.

The quarter total. I would say I'm looking at months to months, right?

So, John, it's in the average of plus 15. Plus 15, plus 15. Okay.

Thank you.

And then I want to get into... both your recent flavors or new innovations and the success of them, but also distribution. And really what I'm trying to get a sense of is what the ACV is or what the availability is of these new products. And do you have a sense of what percent of stores these are in versus where you want it? Obviously, it's not going to happen immediately, but I'm trying to get a sense of if you can quantify the availability of these new products, given their success.

Yes, we know exactly this. We know exactly distribution, both from shipments, shipments information that we get from our distribution partner, PepsiCo, but also from a Nielsen scan point of view. So it obviously varies. It's extremely high in, for example, if we start with the Quebec market, it's extremely high. It's around like, 97%. So like the Guayusa tropical puncher, the T&E food puncher, pretty much everywhere. Grocery and drug is always more of a challenge because some of the discount banners, for example, don't list all the products. It's more in the range of 7%. And if you look at English Canada, it's also very strong. So pretty much the same distribution. I'd say our innovations are almost at the, almost at the same availability as the Guru original and light that have been there for a longer period of time. So more in the, I would say in the CNV more in 75% to 80% range. Always a little bit lower in grocery drug mass, more in the 16 range, which is a bigger gap in Ontario. Ontario grocery drug mass had a little bit of a gap, but we're bridging that gap now with the Freshco and PepsiCo is working very hard to make sure we bridge those gaps and bring all the innovation. But Guru as a total brand, has a gap to close in some banners, but also closing the gap on the availability of those innovations. It's the priority for our Salesforce, priority for our distribution partner.

We know that these innovations have traction, but they need to be available in-store to maximize their success.

Okay, that's helpful. The comment you made about the start of FQ4, you've mentioned there were some additional distribution wins in grocery. Is that doors you're referring to or shelf space of existing customers?

It's new doors.

Yeah, new doors that we're getting right now.

We expect to get more new doors again next spring because that's the main reset period. But we are getting some right now on a continuous basis. At Fresco, for example, Fresco is significant with over, I believe, 100 stores in Ontario.

Should deliver good volume.

Can you say how sales and marketing spend should trend over the coming quarters? I know there's always seasonality to this, and it's specific to certain programs you have, but we're always kind of wondering what the baseline level of spend is for sales and marketing.

Yeah, well, I don't want to give any forward-looking statements or anything of that kind, but just to give some color to it, I think, like you've seen what we've done recently, you know, with the signing of Grady and the Feel Good Energy Challenge, we are continuing to invest in Q4, In Q3, you saw some activation and we're continuing in Q4. But like we said in our remarks, we're very focused on making sure that we continue investment in what's working, like we've done in the beginning of 2023, and continue like that in the years to come to make sure that we come back to profitability with the funds we have on hand. And that's the mindset overall in the team. So you'll see a gradual continuation to get to a return to profitability in the coming years.

Okay, and then a couple more. You gave some color on competitive behavior and promotional activity from your peers. I'm wondering, did that change throughout the quarter? Has it continued post-quarter? Any additional color there would be helpful.

Changes every month, John, right? So we find out pretty much at the same time as you can find out because it's not like our competitors are giving them their promotional calendars and it's not something that other banners are disclosing. This is something that PepsiCo is negotiating for us. Obviously, we have visibility on our own promotions, but we don't necessarily have forward looking on what they will be doing, right? So what we're seeing right now is still a very, like if you go in the market right now, we're still seeing a very competitive environment. All brands want to go market share. All brands are seeing that consumers are increasingly sensitive to price, and everybody wants to win their fair share of the price. It's always been, but I would say what's really new is probably Red Bull being a little bit more aggressive on price.

Understood.

And then last one's on the PBC relationship. We're coming up on two years, and I wonder at this point, what are you most pleased with at the moment in that relationship and how it's evolved, and where is there an opportunity to improve further?

Yeah.

First, they're a fantastic partner.

The relationship was always great. As you know, we had hiccups in the transition last year with some labor shortages, but They're really becoming best in class in many fronts. As you said, over the last few years, we've improved significantly the ways of working with them. We find the right balance on how we work well together. We're gaining cold facings every day with the help of our own reps, but also their own reps and extra positioning. We're gaining secondary positions. We're getting half pallets in the floors in grocery stores. in Quebec. We're building creative trade programs with them. They were awesome with the launch of Food Punch. We saw those numbers that I gave you from a distribution point of view. It always takes a few months, obviously, to build distribution for new innovations, but they really brought it up to a point where we're very comfortable with the availability of these innovations.

And then lastly, I would say the

One big thing that we're seeing in Momentum is really a portfolio approach. They have this pep energy concept where they're merchandising all their energy portfolio together in some energy racks and some coolers and stuff, and that's really driving also availability but also visibility for the brand. So really we can't compare to last year. Compare what we're seeing in terms of execution now versus what we had last year.

You just can't compare. It's really, really good. All right, excellent. I'll leave it there. Thank you very much.

Thank you.

Thank you.

Our next question comes from Sean McGowan with Roth. Please go ahead.

Thank you. Good morning, Carl and Angie.

Good morning, Sean. Good morning, Sean.

Good morning, Angie. Circle back to some of the operating expense issues. questions. Was there anything that you would characterize as unusually favorable in either the sales and marketing line or the GNA line that would make those levels, you know, not kind of really indicative of actual spending?

No, not at all.

And, you know, I would imagine if your goal for the last couple of years has been eventually to return to the levels of historical profitability, you know, raise money in the public markets you pour a lot of it onto marketing you adjust the marketing to improve the efficiency but at some point the spending as a percentage of revenue needs to come down so is that that improvement that we're seeing is this the kind of improvement that you had expected or are you spending less than you had thought you know a couple years ago you would be at this point you know I'm just trying to get a sense of kind of where we are in that path towards

uh sales and marketing as a percentage of revenue you know relative to your original plans yes uh carl you want to go ahead or you want me to start it off well you can start you can start it up and i'll build on your point okay perfect so yeah you brought in a good point uh sean it yes it is as a percentage of the revenues of course right so like all the other players as well in the industry and we are We need to get back to a certain percentage, to your point, to come back to our historical profitability. And that's exactly also what we're doing. But we also learn, right? And that's what we were saying is we tried many things, right? Last year, the first year with PepsiCo, we tried many things and we learned from them. And we're adopting a much more targeted approach as well, which we're redoing the things that worked and stopping the things that didn't work. And that's also helping us all in the mindset of coming back to profitability.

Okay. Thanks. Um, on your comments or did you want to add something?

No, I was well said fully agree. They can return on investment on marketing spend is a key thing for us. Obviously we're using benchmarks from many other players on what should be the right, what should be the right percentage of the marketing spend. The goal is obviously to keep investing because we strongly believe in the growth potential. but also really having this mindset of return on investment. We tried a lot of things in the past few years, which gave us a lot of learning, but we can make mistakes and we can spend on things once, but we don't want to redo those mistakes. There was a lot of learning, and that's what's improving our marketing spend. Right.

I think you said earlier in the call that you saw less promotional spending in the U.S. market. Did I hear that right? You did. So how do you square that with what you're seeing as kind of persistent and maybe even intensifying competition in Canada?

It's more of a, you know, I'll take this one, Angie. It's more of a consequence of where we're focused, where we're focused and how much we invest. And we're looking, obviously, with the same type of thinking, we're looking at our business in the U.S. and we're looking at the amount of spend and, some promotions we decide to not compete in. We'll decide, for example, to run two for five even if some competitors are running two for four because we don't want to dig a hole that we will never make a business profitable out of this business. So we're building a sustainable brand that can be profitable eventually and we're picking the right retailers. So the U.S. strategy is a lot different. We're picking the retailers where we think we can have a return. We're investing in promotions that think we'll have a return. So Really, we're not saying that the U.S. environment is less competitive. We're just seeing we're a lot more methodical about where we play and how we play with each of those channels. For example, how we play online, how we want to play in the club channel, what's our play and how we grow in the natural channel, and then bringing innovations at the right price point and not trying to undercut the market. We're not going to build a better for you organic brand on pricing. We need to build it on the quality of our regions, the quality of our brand, but not trying to undersell everybody. This is not what this brand is about.

Now, I look at the Nielsen data for the U.S. We're seeing industry growth that's in the same ballpark as what you're seeing in Canada. It's kind of low to mid, double digits, low to mid-teens growth. But Red Bull and Monster are growing significantly more slowly. What are you seeing from those guys in Canada? Are they keeping pace in Canada, or are there other brands that are growing, that are taking some of their share?

No. So far, there's no other brands that are really growing significantly. There's a few new brands that are coming, but nothing worth noting at this point. They're all still very small. Um, we don't, we don't necessarily underestimate them and we're constantly looking for new entrants because I think they, they will come and they will have some success. Some brands will have success. This industry is right for disruption, but really the market dynamic right now is really in Ontario and West. It's that play again between monster and the Red Bull and in Quebec, it's a three brand play. Like I explained earlier on with the Red Bull monster and guru. If you look at the longer term, the brand that's winning in Canada, is Monster. Monster is growing faster than Red Bull on a longer term. They had a tougher year last year and they really recovered well this year. But there's no small players that are making any significant gains so far.

Okay. That's helpful. And last question for me. What's the nature of the promotional arrangement with Grady Dick? Is it Is he just getting paid cash? Does he have equity? Does he have some combination? Is it related to actual sales? I mean, no dollar figures, but can you give us a sense of what the structure of that deal is?

Yeah, it's a combination. I'll leave it at combination unless you feel you need to add more, but it's a combination of equity and cash.

Yeah.

And his equity would be optional. You know, he hasn't made an investment in the company, right?

Yeah. Yes, but I think it's a smaller one. So he's made some investments. Obviously, it's a publicly traded company, so he can buy. We don't know how much he invested, but the equity part is through stock options. Okay.

All right. Thank you very much.

Thank you.

Thank you. This concludes our question and answer session. I would now like to turn the conference back over to Carl Goyette for any closing remarks.

I just want to thank everyone for attending.

Thank you for being the analyst, for asking great questions, and thanks for everybody for supporting us.

Have a great fall. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Hello. Thank you. Thank you. Thank you.

Welcome to the Guru Organic Energy Third Quarter 2023 Results Conference Call and Webcast, being recorded today, September 14, 2023, at 10 a.m. Eastern Time. At this time, all participants are in a listen-only mode. Following management's presentation, there will be a question-and-answer session with financial analysts. Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulty hearing the conference, please press star, then zero, for operator assistance at any time. Guru's press release MD&A and financial statements are available in the investor section of its website and on CDAR+. During the call, the conference may refer to certain non-GAAP measures. Reconciliation are available in its MD&A. Also note that all financial figures are expressed in Canadian dollars unless otherwise indicated. I would also like to remind you that today's presentation may contain forward-looking statements about GURU's current and future plans, expectations and intentions, results, level activity, performance, goals, or achievements, or other future events or developments. As such, please take a moment to read the disclaimer on forward-looking statements on slide two of the presentation. I would now like to turn the conference over to Carl Goyette, Gourou's Chief Executive Officer.

Thank you, Operator. Bonjour à tous. Good morning, everyone, and welcome to our earnings call. Joining me this morning is our CFO, Indy Seraf. For those who are following the webcast, you can turn to the presentation to slide five. We are very pleased with the results achieved in Q3, an all-time record quarter in terms of net revenue with $8.9 million. Our C&E and fruit bunch, as well as higher velocities in Canada, were the main contributors to the growth in this quarter. During the last two quarters, we have been building on the sales momentum and gaining traction on many fronts, while being very disciplined when it comes to our spending. with a more targeted marketing approach to retail and online activities. This strategy has resulted in a reduction of our net loss to $3 million in Q3 from $6.5 million last year. We are seeing sustained sales progression in urban centres in English Canada, with market share pockets of up to 6% in certain grocery banners. This performance is a result of continued marketing to increase brand awareness and trial, notably through our spring and summer national marketing campaigns featuring the launch of Fruit Punch, currently ranked as our number one flavored product in Quebec, as well as our sponsorship of the Canadian Elite Basketball League and the Amazing Race Canada. Our record performance in Q3 attests to the resilience of our brand and our capacity to grow in a highly price competitive environment. Marked by our successful innovations, creative marketing, and ability to offer the best natural energy drink to consumers in Canada and in the U.S. To put our growth in perspective, consider the following Nielsen statistics. First, the energy drink category as a whole continues to hold an impressive growth rate of 15% over the last 52 weeks in Canada. And second, Guru is still the fastest growing brand in English Canada with a growth rate of over 44% in all channels over the same period. confirming our current strategy. As a last note on competition, you may have seen in the last few weeks that several brands of energy drinks have been recalled for not respecting Canadian regulations regarding to caffeine content levels and labeling. We support those regulatory measures as we believe that good energy should not come at the expense of health, and this aligns with our mission to clean up the energy drink industry. Turning to slide six, Since the beginning of the year, we have put more emphasis on building direct connections in Canada with consumers through our in-store activations, social media content, and influencer engagement. We recently announced our partnership with Grady Dick, the Toronto Raptors' first draft pick of 2023, who will become a Guru brand ambassador. Grady is a rising NBA rookie star at the start of his professional career, who wished to be affiliated with a responsible and clean beverage company. We are thrilled that Grady has joined the Guru team and look forward to him playing a significant role with us. This partnership also represents Guru's commitment to promoting the amazing sport of basketball in Canada. We also decided to do something different for our fall marketing campaign. with a first social media challenge that will be hosted by Grady, as well as other high-profile influencers in Quebec, Toronto, Vancouver, over the next eight weeks. Our goal with the Feel Good Energy Challenge, held in English and French, is aimed at leveraging the power of celebrities and influencers across Canada to continue building brand awareness and engagement. As in the last few years, we will return to Canadian university campuses this fall by hosting back to school activities. This initiative has been gaining traction over the years and enables Guru to continue building brand awareness in the young adult demographic, just like we did historically in Quebec, which earned us the number one leadership position with the 18 to 25 young adult demographic in that province. On top of our marketing initiatives, Our in-store execution continues to improve each quarter with our distribution partner. PepsiCo has been working diligently towards making our energy drinks more available to retailers and consumers in Canada, including upcoming listings in Freshco and Farm Boy grocery outlets in English Canada. We're also working with PepsiCo to increase our presence in the food service sector, including universities and recreational channels. Lastly, we are moving forward with our efforts to enter the wholesale Club Channel market, which we believe has the potential to boost brand awareness, trial, and market share. Starting this September, we're thrilled to say that we're participating in a rotational program with Costco Quebec, which will feature Guru Original in 24 Costco locations. Please turn to slide seven as we review our U.S. operations. Our U.S. expansion strategy differs from our Canadian strategy as we look to expand in selective areas and channels where we can realize the best return, namely through natural food stores, online platforms, and the wholesale club channel. Q3 net revenue in the U.S. grew by over 38% to over $1.4 million, driven by less promotional pricing, improved online execution, and a record performance during Amazon's Prime Day this past July. We also completed a very successful rotational program in over 40 Costco locations in Los Angeles by selling an exclusive format of Guayusa Tropical Punch, which sold faster than expected. This rotational program allowed us to showcase our Tropical Punch to a larger market of Better For You consumers, which we hope will open doors to new opportunities in the U.S. Tropical Punch has been performing extremely well, becoming Guru's number one selling skew in natural food stores and grocery channels. It's also our fastest growing product in the grocery and drug channel. This December, on the heels of our Tropical Punch success in the States, we will launch Fruit Punch together with new innovations to be unveiled in the coming months. This timing will allow us to launch our latest and newest innovations starting with the online channel just in time for the holidays. Online sales continue to increase in Q3, driven by improved execution, return on ad spend, and Amazon's Prime Day record performance. We will continue to work on growing this segment's performance with a focus on the U.S. market and profitable growth. I will now turn the call to NG, who will provide you with more details on our financial results for the third quarter. NG, over to you.

Thank you, Carl, and good morning, everyone. Turning to slide nine. As Carl mentioned, this was our best quarter to date. Net revenue increased by 15% to a record $8.9 million in Q3, from $7.7 million for the same quarter in 2022. In Canada, sales grew by 11% to $7.5 million, driven by increased sales velocities and the summer's marketing campaigns. U.S. sales grew by 38% to $1.4 million, mainly due to online sales optimization and stronger return on lower promotional spend in all channels. Gross profit increased to $4.5 million from $4.2 million in Q3 2022. Gross margin decreased to 51.2% in Q3 2023 from 54.8% for the same quarter last year. mainly due to higher cost of goods sold and more promotional activity in Canada due to the fiercer competitive environment. SG&E was $8.1 million for Q3 2023, compared to $11 million for the same quarter last year. Selling and marketing expenses decreased to $5.7 million from $8.5 million in Q3 2022. as we took on a more targeted approach to our investment in sales and marketing campaigns during the current fiscal year. General and administrative expenses decreased to $2.4 million from $2.5 million in Q3 2022. Net loss per the quarter decreased significantly to $3 million, or 9 cents per share, compared to a net loss of $6.5 million for the third quarter last year, or 20 cents per share. The improvement in our net loss position mainly reflects the decrease in costs associated with brand, field, and trade marketing activities. In Q3, adjusted EBITDA amounted to a loss of $3 million, a $3.5 million improvement from a loss of $6.5 million for the same period last year, mainly due to lower selling and marketing expenses. As of July 31, 2023, Guru had cash and cash equivalents of $38.7 million and unused credit facilities totaling about $10 million. Our prudent balance sheet management puts us in a strong financial position to continue self-funding our growth with the ability to deploy the right investments aimed at our return to generating sustained profitability. Carl, back to you for concluding remarks.

Thank you, Indy. Turning to slide 11. Last spring, we set things in motion in Canada with a successful product launch, amazing sponsorship, improved in-store execution, and creative and effective marketing campaigns, which resulted in the strong performance we have seen in the last two quarters. Our near-term goal is to pursue this positive momentum in the fall and winter months. New strategic initiatives will allow us to pursue our growth trend in the quarters ahead in Canada and in the U.S. These activities will include our social media challenge featuring Grady Dick, among other great influencers, our popular university campus program, and our US launch of Food Punch together with a new innovation, which will all be supported by a strong social media calendar and unique activations as selected retailers. As we pursue our expansion efforts in Canada and the US, We are confident that our evolving strategies, refined marketing plans, and current momentum with innovation and our strong financial position will allow us to increase sales and gain market share, while focusing on clear paths to return to our historical profitability. As we have been profitable in Quebec, our legacy market, We believe that our goal of being profitable across the entire company is attainable with the funds we have on hand. From a broader perspective, we remain focused on meeting our objective of cleaning up the energy drink industry. This industry needs a transformation for the better with healthier yet as effective products that contain natural caffeine, zero aspartame, and zero sucralose. As always, we are excited by our long-term growth plans with a great team, solid partners, incredible products, and innovations in the pipeline, all contributing to a strong differentiated brand. This concludes our formal remarks. I will now turn the call over to the operator for the Q&A.

We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Martin Landry. with Stifel. Please go ahead.

Hi, good morning Carl and NG. Good morning. My first question is on your market share. You show in your MD&E that your market share in Canada is 4.6% and it looks like it's been stable in the last four quarters. despite a big push in marketing and despite some new product introduction. Can you talk a little bit about that? What's the reason why you're not able to maybe grab a couple more market share points with the push that you've done?

Well, good question, Martin. The reality is it's a complex answer, but I'll try to make it easy. First, the industry is surprisingly strong. So in order to gain market share in this industry, you need to grow very fast. The industry is growing at 15%, as we mentioned. So the industry is surprisingly strong. Consumers love energy, and we think this is an opportunity. We have been gaining market share. We're growing faster than the industry in English Canada, mainly in Ontario and West, where we have seen steady progress on a smaller base. Then when we look in Quebec, as you know, we're a more established, much bigger brand. The industry is growing just as strong, but we're more subject to different dynamics. It's really a three-brand story in Quebec. We are around a 13%, 14% share a month, depending on the month. And we have two big competitors that are Red Bull and Monster. And we are seeing bigger swings. The reality is consumers are more price sensitive, and we're seeing bigger swings than we've historically seen from month to month. So if you recall, if I try to summarize the last year, when we spoke in March for our Q1 results, we had mentioned that we had seen a little bit of a decline in our scan performance, and that was mainly due to aggressive pricing activity on four-packs by Red Bull. So in that period, we did not gain share. In fact, we lost a little bit in that period. Then we spoke in June again for our Q2 results, and that was the early spring, and we were very strong on market share gains, and that was driven by our innovation, while Monster was also launching a successful innovation at the time. So that's kind of different. There's three times a little bit of a decline in Q1, huge growth in Q3. And then in the last few periods, last few months, then Red Bull has come back with a very successful summer edition. that drove market share for them. So a little bit of a recovery from the market share we had lost. And they even launched their winter edition in the middle of the summer. And that's also driving a little bit of market share gains while they came back with four-pack promotion. So a lot of dynamics at play. So if you look at an average, it's fair to say we haven't been gaining market share in Quebec, but there's bigger swings from month to month. And we're very optimistic about about the future with our stronger portfolio, the best execution we've ever had in this market. And we're also starting to be a little bit more aggressive to react to some of those pricing promotions. The long answer, because you can't look at it just in 52 weeks. There are different swings, bigger swings from month to month. So that's really the reality of this industry when you're a bigger established brand in the markets of Quebec.

Okay, so maybe a follow-up to that, because you did close up your opening remarks, Kyle, with saying that you see potential for market share gains. So, I mean, the industry is always going to be competitive. You've had a really successful product launch just now, which hasn't seemed to move your market share yet. So what's going to change in the coming year for you to be confident that there's potential for you guys to go and gain share?

Well, first, the innovation has moved share for us. I understand what your point is. You're looking at total, but then you could also look at, okay, what would have happened if we would not have launched? What's moving share right now in this industry is two things. This is focused on Quebec. Innovations are driving share. So expect more innovation from us in the future. And aggressive pricing on multi-pack formats is also driving market share. It's really the two dynamics that are at play here between Red Bull, Monster, and Guru. They're the three brands that are kind of exchanging shares month to month in this market that is growing very aggressively. Let's keep that in mind. So innovations are driving the growth. They're bringing new consumers to all the brands because all the brands are winning from innovation. So kind of what's driving growth right now will be what will drive growth in the future. And I would say what we will see moving forward is also more innovation, better execution, and more aggressive pricing when required.

Okay. Maybe switching gears, NG, your gross margins were down 360 bps this quarter. Would it be possible to do a bridge for us so that we can quantify the buckets that represent that erosion?

Yes, for sure, Martin. So like Carl mentioned, right, there was increased price competition. So that's part of the equation. That's half of it, actually. So if we're bridging, half of it is really due to this increased price competition that we're seeing and us responding to it. And the other half is our cost of goods sold to our input costs that are increasing as well, which, you know, that was normal with what we've seen since the COVID pandemic and everything and inflation.

So in terms of your increase cost of goods sold, is there a thinking about maybe putting a price increase to offset those increase in your input costs?

No, we're always right. Like you can see, we're not the leader in the market, right? Red Bull and Monster are much bigger than us. And like we've always done, we stay aligned to the pricing strategy of the industry. So we always look for opportunities, but at the same time, we remain competitive.

Okay, and then the last question for me, Cal, you're talking about a new innovation that you're going to launch, it looks like, in the US along with Tianin by year-end. If I recall past conversations, and Tianin was launched during the planogram resets in the spring, what's the thinking about, what's the reasoning why you would launch a new product in the fall when the planograms are already established?

Very good point. In fact, what I said in my remarks, maybe it was missed, we're going to be launching online search with independent retailers. So there are retailers that can bring us on board at the end of this year. But we are already in discussion with retailers to list this for the planogram season in the early spring. So you're absolutely right. The bigger distribution piece will come in the spring. But there are a portion of these, for example, on Amazon and other retailers that are more flexible with the recess of their planograms in the natural channel to bring these products earlier. That's the reason why. So T&E food punch will be coming. And there's another one as well. So just to complete a a food punch line. There obviously are Tropical Punch, Food Punch, and another one to be announced very soon. But we've seen, as you know, we've seen traction with these types of products, great flavors, lots of energy, but also great functionality. So we're going into that light direction because this is what consumers are telling us they want.

Okay. That's it for me. Thank you.

Thank you, Marte.

Thank you.

The next question comes from John Sampero with CIBC. Please go ahead.

Thank you. Good morning.

Good morning, John.

I want to start with a housekeeping question. Can you say what scan data growth was in Canada just for the quarter on a year-over-year basis?

Let me look. The quarter total. I would say I'm looking at month to month.

John, it's in the average of plus 16. Plus 16, plus 15. Okay.

Thank you.

And then I want to get into... both your recent flavors or new innovations and the success of them, but also distribution. And really what I'm trying to get a sense of is what the ACV is or what the availability is of these new products. And do you have a sense of what percent of stores these are in versus where you want it? Obviously, it's not going to happen immediately, but I'm trying to get a sense of if you can quantify the availability of these new products, given their success.

Yes, we know exactly this. We know exactly distribution, both from shipments, shipments information that we get from our distribution partner, PepsiCo, but also from a Nielsen scan point of view. So it obviously varies. It's extremely high in, for example, if we start with the Quebec market, it's extremely high. It's around like, 97%. So like the Guayusa tropical puncher, the T&E food puncher, pretty much everywhere. Grocery and drug is always more of a challenge because some of the discount banners, for example, don't list all the products. It's more in the range of 7%. And if you look at English Canada, it's also very strong. So pretty much the same distribution. I'd say our innovations are almost at the, almost at the same availability as the Guru original and light that have been there for a longer period of time. So more in the, I would say in the CNV, more in 75 to 80% range. Always a little bit lower in grocery drug mass, more in the 16 range, which is a bigger gap in Ontario. Ontario grocery drug mass had a little bit of a gap, but we're bridging that gap now with the Fresco and PepsiCo is working very hard to make sure we bridge those gaps and bring all the innovation. But Guru as a total brand, has a gap to close in some banners, but also closing the gap on the availability of those innovations. It's the priority for our Salesforce, priority for our distribution partner.

We know that these innovations have traction, but they need to be available in-store to maximize their success.

Okay, that's helpful. The comment you made about the start of FQ4, you mentioned there were some additional distribution wins in grocery. Is that doors you're referring to or shelf space of existing customers?

It's new doors.

Yeah, new doors that we're getting right now.

We expect to get more new doors again next spring because that's the main reset period. But we are getting some right now on a continuous basis. For example, Fresco is significant with over, I believe, 100 stores in Ontario.

It should deliver good volume.

Can you say how sales and marketing spend should trend over the coming quarters? I know there's always seasonality to this, and it's specific to certain programs you have, but we're always kind of wondering what the baseline level of spend is for sales and marketing.

Yeah, well, I don't want to give any forward-looking statements or anything of that kind, but just to give some color to it, I think, like you've seen what we've done recently, you know, with the signing of Grady and the Feel Good Energy Challenge, we are continuing to invest in Q4, You know, it started in Q3, you saw some activation and we're continuing in Q4. But like we said in our remarks, you know, we're very focused on making sure that we continue investment in what's working, like we've done in the beginning of 2023 and continue like that in the years to come to make sure that we come back to profitability with the funds we have on hand. And that's the mindset overall in the team. So like you'll see a gradual, you know, continuation to get to a return to profitability in the coming years.

Okay. And then a couple more. You gave some color on competitive behavior and promotional activity from your peers. I'm wondering, did that change throughout the quarter? Has it continued post-quarter? Any additional color there would be helpful.

Changes every month, John, right? So we find out pretty much at the same time as you can find out because it's not like our competitors are giving them their promotional calendar. It's not something that other banners are disclosing. This is something that PepsiCo is negotiating for us. Obviously, we have visibility on our own promotions, but we don't necessarily have forward looking on what they will be doing, right? So what we're seeing right now is still a very, like if you go in the market right now, we're still seeing a very competitive environment. All brands want to go market share. All brands are seeing that consumers are increasingly sensitive to price, and everybody wants to win their fair share of the price. It's always been, but I would say what's really new is probably Red Bull being a little bit more aggressive on price.

Understood.

And then last one's on the PBC relationship. We're coming up on two years and I wonder at this point, what are you most pleased with at the moment in that relationship and how it's evolved and where is there an opportunity to improve further?

Yeah, they're a fantastic partner.

The relationship was always great. As you know, we had hiccups in the transition in last year with some labor shortages, but they're really becoming best in class in many fronts. As you said, over the last few years, we've improved significantly the ways of working with them. We find the right balance on how we work well together. We're gaining cold facings every day with the help of our own reps, but also their own reps and extra positioning. We're gaining secondary positions. We're getting half pallets in the floors in grocery stores. in Quebec. We're building creative trade programs with them. They were awesome with the launch of Food Punch. We saw that those numbers that I gave you from a distribution point of view, it always takes a few months, obviously, to build distribution for new innovations, but they really brought it up to a point where we're very comfortable with the availability of these innovations.

And then lastly, I would say the

One big thing that we're seeing in Momentum is really a portfolio approach. They have this pep energy concept where they're merchandising all their energy portfolio together in some energy racks and some coolers and stuff, and that's really driving also availability but also visibility for the brand. So really we can't compare to last year. Compare what we're seeing in terms of execution now versus what we had last year. You just can't compare.

It's really, really good. All right, excellent. I'll leave it there. Thank you very much. Thank you.

Thank you.

Our next question comes from Sean McGowan with Roth. Please go ahead.

Thank you. Good morning, Carl and Angie.

Good morning, Sean. Good morning, Sean.

Good morning, Angie. Circle back to some of the operating expenses. questions. Was there anything that you would characterize as unusually favorable in either the sales and marketing line or the G&A line that would make those levels, you know, not kind of really indicative of actual spending?

No, not at all.

And, you know, I would imagine if your goal for the last couple of years has been eventually to return to the levels of historical profitability, you know, you raise money in the public markets you pour a lot of it onto marketing you adjust the marketing to improve the efficiency but at some point the spending as a percentage of revenue needs to come down so is that that improvement that we're seeing is this the kind of of improvement that you had expected or are you spending less than you had thought you know a couple years ago you would be at this point you know I'm just trying to get a sense of kind of where we are in that path towards sales and marketing as a percentage of revenue relative to your original plans.

Yes. Carl, you want to go ahead or you want me to start it off?

Well, you can start it off and I'll build on your point.

Okay, perfect. So, yeah, you brought in a good point, Sean. Yes, it is as a percentage of revenues, of course, right? So, like all the other players as well in the industry, and we are We need to get back to a certain percentage, to your point, to come back to our historical profitability. And that's exactly also what we're doing. But we also learn, right? And that's what we were saying is we tried many things, right? Last year, the first year with PepsiCo, we tried many things and we learned from them. And we're adopting a much more targeted approach as well, which we're redoing the things that worked and stopping the things that didn't work. And that's also helping us all in the mindset of coming back to profitability.

Okay. Thanks. Um, on your comments or did you want to add something, Carl?

No, I was well said fully agree. They can return on investment on marketing spend is a key thing for us. Obviously we're using benchmarks from many other players on what should be the right, what should be the right percentage of the marketing spend. The goal is obviously to keep investing because we strongly believe in the growth potential. but also really having this mindset of return on investment. We tried a lot of things in the past few years, which gave us a lot of learning, but we can make mistakes and we can spend on things once, but we don't want to redo those mistakes. There was a lot of learning, and that's what's improving our marketing spend. Right.

I think you said earlier in the call that you saw less promotional spending in the U.S. market. Did I hear that right? Yes. So how do you square that with what you're seeing as kind of persistent and maybe even intensifying competition in Canada?

It's more of a, you know, I'll take this one, Angie. It's more of a consequence of where we're focused, where we're focused and how much we invest. And we're looking, obviously, with the same type of thinking, we're looking at our business in the U.S. and we're looking at the amount of spend and, some promotions we decide to not compete in. We'll decide, for example, to run two for five even if some competitors are running two for four because we don't want to dig a hole that we will never make a business profitable out of this business. So we're building a sustainable brand that can be profitable eventually and we're picking the right retailers. So the U.S. strategy is a lot different. We're picking the retailers where we think we can have a return. We're investing in promotions that think we'll have a return. So Really, we're not saying that the U.S. environment is less competitive. We're just seeing we're a lot more methodical about where we play and how we play with each of those channels. For example, how we play online, how we want to play in the club channel, what's our play and how we grow in the natural channel, and then bringing innovations at the right price point and not trying to undercut the market. We're not going to build a better-for-you organic brand on pricing. We need to build it on the quality of our ingredients, the quality of our brand, but not trying to undersell everybody. This is not what this brand is about.

Now, I look at the Nielsen data for the U.S. We're seeing industry growth that's in the same ballpark as what you're seeing in Canada. It's kind of low to mid, double digits, low to mid-teens growth. But Red Bull and Monster are growing significantly more slowly. What are you seeing from those guys in Canada? Are they keeping pace in Canada, or are there other brands that are growing, that are taking some of their share?

No. So far, there's no other brands that are really growing significantly. There's a few new brands that are coming, but nothing worth noting at this point. They're all still very small. Um, we don't, we don't necessarily underestimate them and we're constantly looking for new entrants because I think they, they will come and they will have some success. Some brands will have success. This industry is right for disruption, but really the market dynamic right now is really in Ontario and West. It's that play again between monster and the Red Bull and in Quebec, it's a three brand play. Like I explained earlier on with the Red Bull monster and guru. If you look at the longer term, the brand that's winning in Canada, is Monster. Monster is growing faster than Red Bull on a longer term. They had a tougher year last year and they really recovered well this year. But there's no small players that are making any significant gains so far. Okay.

That's helpful. And last question for me. What's the nature of of the promotional arrangement with Grady Dick? Is he just getting paid cash? Does he have equity? Does he have some combination? Is it related to actual sales? I mean, no dollar figures, but can you give us a sense of what the structure of that deal is?

Yeah, it's a combination. I'll leave it at combination unless you feel you need to add more, but it's a combination of equity and cash.

Yeah.

And his equity would be optioned. You know, he hasn't made an investment in the company, right?

Yes, but I think it's a smaller one, right? So he's made some investments. Obviously, it's a publicly traded company, so he can buy. We don't know how much he invested, but the equity part is through stock options. Okay.

All right. Thank you very much. Thanks a lot.

Thank you.

Thank you. This concludes our question and answer session. I would now like to turn the conference back over to Carl Goyette for any closing remarks.

I just want to thank everyone for attending.

Thank you for being the analysts, for asking great questions, and thanks for everybody for supporting us.

Have a great fall.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.