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spk00: Evidently, we've been growing market share very consistently since about 2017. And we are the market leader in Canada by a very large margin. And at times when consumers are very concerned about product quality and want to make sure that they're finding a solution that works best, that plays very well to our brand. And so that acceleration in market share growth has picked up. That's helpful. Thanks. Just following up on an earlier question, can you maybe talk in terms of the potential for us to increase price? Maybe you can give us a sense of quantification to maybe account for the presumably higher inventory costs that we're building up here for next year. Did you say about increasing price, George? Your voice is a little bit soft on the phone. Yeah, sorry about that. I was just wondering if you could maybe give us a sense of order of magnitude of price we're going to have to take next year to account for the higher inventory that we're building up, higher price inventory. So I think, you know, the best way to think about this is our role in our track record is to continue to maintain margins despite changes in the circumstances of our business. And so from a modeling standpoint or from a future expectation standpoint, you can count on us to do that. The mechanics by which we approach price and deal with our retail partners, that we don't make public. That's between us. And, you know, and they wouldn't want that either. So from our standpoint, I think the best way to think about this is that we run this business quite well in our opinions. We have very forward-looking views on our cost structure. We take those into account and we work within the market and with our retail partners to make sure that we fairly maintain our margins despite changes in input costs. Okay. I've got a question for Chris. This is my last one. Can you talk a little bit about the free capital conversion profile. I think working capital has been kind of moving up here. How should we think of CapEx working capital for the rest of the year? Maybe directionally, how does conversion look like this next year, maybe compared to this year? So, I guess that's a good question. You saw in 2019 a significant right-sizing of our working capital, primarily related to an increase in our inventories. Now you've got another significant increase in demand, which requires us to hold more inventory. So, when we talked originally about an expectation to spend, you know, in the, you know, high single-digit investment in working capital in 2020, as a target. You might be a little bit higher than that in terms of, like, the teens, but that would be, I think, the maximum we would end the year at from an investment and working capital perspective. So we're targeting around $40 million in operating cash flow exiting 2020 for the fiscal year 2020. When you turn to 21, we would expect to probably... have about the same level of working capital investment just to be safe as we really deal with the shock and maintain higher inventory levels, just more from a safety perspective to ensure we can meet consumer demand versus what we would otherwise expect to carry from a normal or orderly operation. Okay. Thanks, guys. Good luck. Thanks.
spk01: We'll now take our next question from Matt Bank from CIBC. Please go ahead.
spk00: Hey, guys. I guess I have some questions on China. So this year, you know, it seems like the key metrics we were following, you know, was how many licenses you were winning and then just, you know, rolling out. What are the key sort of goalposts to look for next year? So one thing I would preface this with, Matt, and not in any way to be evasive to your question, but we're one of the only companies that, well, first of all, one of the only public companies that we compete with in China, which is a very competitive market. And the other companies we compete with, our competitors are divisions of companies that don't report directly on China. So we, in order to protect the integrity of our marketing plans and to allow us to have the best chance of success, we have to be pretty lean with what we publicly publish in terms of what we're doing in China. Because I can guarantee you that as soon as this call is done, our competitors are going to want to look and see exactly what we said about China. So we are not going to be extremely forthcoming, I would say, on the execution of of how we are doing what we're doing in China. I think the things that you need to think about from a Chinese strategy are that we approach it on a channel basis. So in cross-border e-commerce, which is where we are doing the bulk of our sales right now in China, we will continue to expand our product assortment. So these are the same products that you can buy right now in Canada, with a sticker on the back with Mandarin language for safety reasons. We'll continue to expand that range, continue to increase marketing as we build the brand. We had an extremely successful year on cross-border e-commerce, which was, of course, assisted by the pandemic in that our business is very immune-focused in China. Jameson, in some circles in China, is known as the vitamin C brand. And so we have seen a very large consumption increase because of that. The next channel is the domestic e-commerce and bricks-and-mortar channel, where we are deploying our licensed products in order to gain distribution and then begin marketing China-formulated products for the Chinese consumer, where our goal is to be the foreign brand that Chinese consumers recognize in the traditional channel. So that's where the licensed products come in, and our main goal there is building store distribution. So we have a very targeted plan with which stores in which cities we want to be in in what order. So there are several thousand retail outlets that are part of this plan. We are currently present in thousands of retail outlets in China, and we intend to grow that as well as growing our licensed product distribution at the same time. And so we are well on track for that. We did have experience a bit of a delay when COVID hit and travel was limited within China. Our cross-border e-commerce business more than compensated for that in terms of sales. And now we are back on track and have made up all ground with regards to the pace of distribution bill. And we'll continue to do that in 2021. I would not look at the absolute number of licenses as a an indicator of anything specific, nor can you link it numerically to any model. Licensed products that are published by the Chinese FDA are done in the order that they feel comfortable with releasing product standards for, and the order of which does not relate at all to demand for the product, more around the science of the product. So once we're in the position where we are now, We have over 20 products in our license portfolio. We have a very solid critical mass to approach the bricks and mortar and domestic e-commerce distribution. And so from now on, the number of licenses is not a big determining factor in our success. We will continue to grow that. The main factor for us is that we have many more licenses, as far as we know, compared to any other international competitor. That's our competitive advantage. We'll continue to leverage that and get as many licenses as we can and get those products into the market. But based from now on, really, then we're moving into distribution build and then direct consumer marketing in China of the portfolio to continue to build awareness and trial of the brand. And so that's what you're going to see as our main focus. I can just tell you strategically what the direction is. I can tell you it's going very well. You see it in our business results. But I would not be able to give you KPIs for benchmarks without giving our competitors too much information on what our execution is in China. So it's a long answer. I hope it wasn't too cryptic. That's kind of the best we can do at this moment. I think that's helpful. And then I guess on international more broadly, can you just put a bit more context here on that 10% growth number, which is obviously slower than the really strong case you've done year-to-date, and then do you see that reverting back to a higher level in the following quarters? So it's really about ensuring that we get that product into the shelf as the cough and cold season hits most of those countries. So it was really about making sure that the supply hit the shelf more than choosing what quarter it landed in. So it's primarily timing. When you look at, I think we've got about 70% year-to-date growth. When you add Q4 to that, that really, you know, ladders to that 50% year-to-date number. Um, you know, we would not expect to be... Um, you know, we would not expect to have any more than one quarter at the 10% growth level, but we have not provided guidance for 2021 and we'll validate that, obviously, when we announce our official guidance with our fiscal year end results in February. And just to follow up on 2021. I hear you that you haven't released guidance in this early, so I guess I'm not sure how much you can say here, but high level, how do you think about lapping the very strong growth that you've put up this year? Well, when you look at the fundamentals that drove the growth, so number one, we came into 2020 with a very strong level of momentum coming off a record-setting 2019. So coming into 2021, that's going to continue. The consumer focus on health and wellness is also going to continue into 2021, given that it's going to take a long time before that environment changes. And the longer we stay in an environment like that, the more permanent routine changes become with consumers who are now changing their health and wellness routines and, frankly, from what we understand, feeling a lot better for it. So you're going to see that changing. We will continue. We will continue our very strong pipeline of innovation, geographic expansion, as well as very strong marketing of our brand throughout all channels. We continue to build distribution, and we continue to build consumer awareness and trial, particularly in international markets. So the trajectory of business growth is very much on our side for 2021. The numerics of it, quarter by quarter, may be lumpy, as we saw panic buying in both at the end of Q1 and Q2. We'll address that when we go through our guidance for 2021. But broadly speaking, we are very optimistic about our business trajectory. Our brand has never been stronger, and our company and our people are have never been better or more committed. And so I think you can still expect pretty great things from us for many years to come. Thank you.
spk01: And as a reminder, it is Star 1 if you would like to ask a question. And we'll take our next question from Graham Cranmer from 8 Capital. Please go ahead.
spk00: Yeah, hi, good afternoon, and thank you for taking my question. I just wanted to follow up on one item, and that was the discussion surrounding the acceleration of fourth quarter cough and cold shipment. So I wanted to understand the dynamic there, appreciating that retail partners want to be prepared for the cold and flu season here. When we think about the demand for those products, are those accelerated shipments, is there expected to be continued demand coming behind that during the fourth quarter? Or is it generally the elevated demand across the entire portfolio that will help to continue to propel that growth in particular? Thank you. Yeah, I think it's really just about timing, right? We see good demand all the way through the initial COVID, I guess, pull, for lack of better words. You know, so it's really a combination of us and our partners wanting to make sure that we've got that inventory in place to maximize that velocity as the COVID situation continues to elevate in many of the markets that we participate. So it's really just about safety. There really wasn't anything else in terms of, us wanting to get that out any quicker just other than making sure that it was on shelf for the consumer when the cough and cold season hit rather than late. As you all also know transportation lanes are in high demand because of the amount of e-commerce and activity so those are harder to come by so it was really just about insurance for us to make sure that those partners had the product in hand Okay, thank you.
spk01: We will now take our last question from Tanya Gonzalez from Conaccord Genuity. Please go ahead.
spk02: Hi, gentlemen. Just a couple for me here. I think the last quarter you talked about some of your specialty sales had transitioned to e-commerce channels while the health and supplement stores were closed. Could you provide any color? Have these sales stayed within e-commerce, or are you seeing them transition back to brick-and-mortar stores?
spk00: Yeah. Do you want to get that, or do you want me to? Yeah. No, I got it. I got it. Yeah, thanks for that, Tanya. Kind of a couple things rolled in that question. One is specialty brands, and the second is e-commerce. We can talk about both of them. We did talk about in Q2 a shift to some sales into e-commerce and some of the other channels across specialty brands when we saw a temporary decline in sales. at stores that were closed during the height of the pandemic, most notably mall locations. As those stores reopened in provinces across the country through Q2, we saw those brands really start to bounce back to original expectations, and that momentum continued into Q3, and we have absolutely no reason to believe that it won't continue into Q4. And that momentum really has carried across all the channels as consumers continue to focus on foundational health, which our portfolio lines up. So we've been gaining distribution and seeing increased strength in all of the channels from the health food and specialty channel to food and drug and the e-com channel across multiple brands. From an e-commerce-specific perspective, we did see exceptional growth early on in the pandemic period. We continue to see exceptional growth in that channel across all of our brands and all of the digital platforms that we play in, be it our own e-commerce, third-party partners e-commerce. It continues to grow and continues to do quite well for us. We're going to continue to invest in all these platforms. We're going to grab these consumers short and long-term. and really, really continue to partner with all of the e-com partners out there to make sure we're a leader here for the long term. So, we've seen those brands come back everywhere and continue to build in the e-com channel.
spk02: Perfect. Thank you very much. And then just one more here. Could you comment maybe on sales in the U.S.? ? Earlier in the pandemic, you were a little bit lighter just because you had limited brand awareness in that geography. But I think you were starting to turn the task back on in terms of marketing and getting your brand known. What kind of track should be built over Q3?
spk00: Yeah, so our business in the U.S. continues to be very, very much in a test mode as we talked about coming into this year. And you are correct. We talked about how when COVID hit in the front half of the year, right as we were launching, we paused the investment in that test. We did turn that back on very late in Q3. So that is back. We've invested back into that test. And now we're waiting through Q4 to see what those results are. So we don't have any immediate results. It's really new spending to build the brand. As for our original plan, we did launch Iron Vegan in the U.S. in very, very late in Q3. So you'll see that in USA. It's actually a co-branded approach. So in the U.S., it's launched as Iron Vegan by Jameson because we want to expand our Jameson portfolio, which we can grow the brand presence and awareness. So, you know, we've added those to our lineups. We've invested back into the marketing. We're waiting to see some of the results and gather some of those learnings for the remainder of 2020. We do have more plans for 2021. We have a robust innovation pipeline that we're looking to distribute into our U.S. test model based on the learnings that we get through this quarter. So we feel good about it, but it's just a little too early to tell what kind of pickup we're seeing at this point.
spk02: Okay, that's fair and that's all from me. Thank you so much.
spk01: Thank you. We have no further questions. That does conclude today's question and answer session. I would now like to hand the call back over to Mr. Hornick for any additional or closing remarks.
spk00: All right. Thanks, Alex. So, thanks very much to everyone for joining us to discuss our third quarter 220 results. On behalf of the entire management team at Jameson Wellness, Chris and I would like to take a moment to extend our gratitude to our employees. This year has not been easy, to say the least, but we are so very proud of how the team has come together to support our customers, consumers, and each other. We're honored to be supported by such dedicated people who continue to focus on delivering health and wellness products to consumers around the world. We rely on the Jameson brand now more than ever. So thanks to the entire team, and thanks to everyone on the call today for your support of Jameson. Please stay healthy and safe. Thanks a lot.
spk01: And with that, that does conclude today's call. Thank you for your participation. You may now disconnect.
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