Q4 2019 Earnings Call
Hello and welcome to the Turning Point Brands fourth quarter 2019 earnings conference call participants will be in listen-only mode. Should you need assistance, please speak to a conference specialist, press the star key followed by zero after today's presentation. There will be an opportunity to ask questions to ask a question. You press star than one on your touchtone phone to withdraw your question, please press star. Please note. This event is being recorded. Oh now let's turn the conference over to your host today Bobby live in Chief Financial Officer. Just go ahead sir.
Thank you operator. Good morning everyone. I'm Bobby. Labony CFO Turning Point Brands joining me today or Turning Point Brands president CEO Larry wexler-grant party pack Operating Officer Jim Murray senior vice president of business planning and Louis refre Mina head of Business Development who is picking up the IR roll this morning. We issued a news release covering our fourth quarter 2019 results. This release is located in the investor relations section of our website where a replay of today's conference call will be available in this call. We will discuss our Consolidated and segment operating results and provide our perspective on our progress against our strategic plan as is customary. I direct your attention to the discussion of for looking and cautionary statements in today's press release in the risk factors in our filings with the Securities and Exchange Commission, the disclosure outlines various factors that could cause actual results to differ materially from objections or forward-looking statements and maybe site in today's discussion these phone number
looking statements and projections are
Not guarantees of future performance, and you should not Place undue Reliance upon them except as provided by federal Securities laws, and we undertake no obligation to publicly update or revise any forward-looking statements a call today. We were reference certain non-gaap Financial measures. These measures and reconciliations to Gap can be found in today's earnings release along with the reasons. Why management believes that they provide useful information, turn the call over to Larry Wexler our CEO. Thank you Bobby and good morning everyone. Thank you for joining the call.
Let me first address The Vape disruption or vape gate is we call ahead on we entered 2019 with strong momentum across the board in the third quarter call. We shared with you the rather dramatic impact that the late summer Vape controversy had on her results.
Impact is vaping disruption from last summer carried over to the fourth quarter was further compounded by the acceleration of the PMT a additional FDA flavor regulation. We moved swiftly month announced plans to restructure the business. We did this with speed and efficiency announcing a company-wide Workforce reduction of 10% in early November and implemented our consolidation plans to right-size the the forms in the fourth quarter. We completed the warehouse reorganization going from for where houses through a year ago to 1 we have eliminated low-margin platforms and consolidate their entire Hotel B2B business under vaporbeast our Premier platform. We shut stores that are now actively exiting certain leases And We Shrunk our exposure to The Vape down to a manageable size that affords us both B2B and b2c access for our quality products and brands or retain sufficient capacity to ensure that we come out of the pmk pathway.
They winning player.
Drag in a management distraction, but we move rapidly to restructure and rationalize the organization so we can get back to Growing the business as part of the right-sizing initiative in the quarter. We address all aspects of the business including writing off unsaleable inventories and writing down certain other Vape inventories. Do the accelerated PMT a time frame and the FDA flavor ban.
Well, the category wide reset affected our business in a material way. I'm pleased to say that we have addressed all known anticipated issues resulting from these external events.
Initial sales results for Vaping in 2020 or already exceeding our expectations while early the results of everybody platform. We are seeing a stronger than anticipated recovery. We have retained the flexibility to come out of the PMT a process as materially stronger player and believe we are well-positioned relative to other less prepared and less resource competitors with adding to that our new product Pipeline and the many white spaces we see available in the market. We are now better prepared to drive for Accelerated results.
I've seen several.
Your shifts and tobacco business over my 36 years in the industry.
Pmpa is one of those moments. We are confident that we will be on the right side of that process. We believe our scientific and Regulatory expertise will allow us to get a robust profolio a product of the PMT. I let me be clear this portfolio products pivots us from Simply being a distributor of third-party vaping products to marketing a suite of a prioritized Vapor brands.
Now, let me give you a quick snapshot of the performance of our to court tobacco business fundamentals and results continue to deliver strong compelling and sustained results.
Person smokeless net sales for the year increased double digits on the continued robust advances of Stoker's snuff partially offset by secular decline in chewing tobacco in 1/4 Stoker's moist snuff delivered another record share of one full SharePoint compared to a year ago. We both cans and tubs delivering significant games.
Baby gate was an earnings.
and smoking
Exact positioning delivered strong results in the quarter with both u.s. And Canadian rolling paper net sales up high single-digits growth is being delivered with new products including cones. We have already captured greater than 20% of the measured Market in Canada. The exact equities are even stronger with a brand commanding a 65% category share in the measured Universe. We contracted further Propel the grand forward with our new Canadian distribution contract and the recreation marketing partnership, which will help facilitate our entry into large and growing Universe of dispensaries.
Accord tobacco business is strong and we're especially focussed on accelerating growth both Stoker's and zigzag Remain the engines behind the continued Company games with total. Tobacco gross profits of 8.8% in the quarter.
Have you put the changes in the business behind us? We remain primarily focused on growing the court tobacco business while also delivering novel new products to Consumers who are searching for new forms and active via the new X umbrella products do CBD products or event were available in over 4,000 stores a year end 2020.
Do you have some?
In perspective on her path forward. Let me turn the call over to Grand Prairie Chief Operating Officer. Thank you Larry. Hello, everybody, as you know, I'm a freshly minted CEO and believe it or not. I'm fully energized about a situation. I'm inheriting like Larry many of us have lived through highly tumultuous times in the tobacco industry. Yeah from the price Wars of the eighties tomorrow Friday the MSA in the nineties as chip in the two thousands of these are challenging but not overwhelming times for the well-prepared and that's how I would characterize my team thoughtful well prepared and able to move swiftly and efficiently as we look to the future with the the purpose and energy allow me to summarize how we were prepared to meet and exceed the challenges before us starting with the cultural revolution. We have already kicked off your management team will win with Integrity accountability and responsibility. Let me tell you what that means to each member of the leadership team winning is a benchmark
Why we come to work why we fight so hard and punch above our weight in the industry. It means everything to everyone here at TPB accountability to each other into the company plan. We have full alignment with the company and with our shareholders active engagement and personal ownership by the leadership team as a Hallmark trade of the organization integrity and unwavering commitment to ethical and compassion behavior. That does not mean we don't think outside the box just went the bright lines of the box or drawn that we comply appropriately and completely
responsibility
Responsibility is somewhat different than accountability a team member may be responsible for dancing a new product or initiative. But the department head is accountable both are necessary components of any winning organization.
This is an organization committed to winning and everything that we do it includes new products new active new initiatives and new channel opportunities will be tenacious and outwork. Our competitors hard work is just as important as Talent intelligence when competing in the marketplace decision-making is fact-based and focusing focused on solving for Consumer wants and needs.
Our twenty-twenty strategies are clearly communicated with full line across the organization first maximize The Core Business. We are relentlessly focused on driving Stoker's MST growth and expanding iconic zig-zag portfolio across both the US and Canada next cost efficiency. We have successfully grown our gross profits and we are rapidly focused on capturing increased operating leverage through solid cost controls and spinning efficiencies. This will deliver a higher return on invested capital.
improving products
We'll use our rich and robust Data Tracking System to identify emerging product forms that consumers are increasingly gravitating to the evolution of consumer preferences is a given identifying and testing products Burley ensures a deep winning product Pipeline and finally strategic Acquisitions. We are deep dialogue and several potentially transformative Acquisitions. That does not mean we are certain of the outcome, but we'll most certainly continue to pursue a creative opportunities that can further Propel company growth. We have the access to Capital and we will officially deploy those resources to accelerate the out the company momentum.
Fourth quarter 2019 was certainly a challenge given the Dynamics of The Vaping industry despite those tests. We not only coordinated initiated a comprehensive restructuring plan, but also offered strong results in our court tobacco business.
Spoke with sales trajectory means exceptionally positive with high single-digit growth in the quarter and a record for the year in terms of both net sales and stokers MST market share up one full point two years ago with Sharon stores selling at 8.1% Perhaps most encouragingly sales advances are being driven by both same-store sales from a growing body of stoker enthusiasts and continued strong winds without Stoker's MST in stores representing 54% of Industry volumes, the runway for continued growth looks bright and encouraging
and smoking
Zig zags US Paper share in the measured Universe increased for a third sequential. To 35% up 2.9% 2 year ago on new products momentum and Remains. The number one premium roller paper Brand New Jersey exact paper cones Distribution Drive continues with a total of 22000 stores carrying at your end capturing a 25% share of the measured tones Market zig. Zag hemp rolling papers are now available in 35,000 retail outlets establishing zigzag is the number one hand brand with a 27% share of the hemp segment.
In late fourth-quarter, we initiated shipments of hemp cigar wraps to the US trade initial enthusiasm has been highly encouraging with wholesale take rates rapidly depleting. Our opening stocks replenishment is in transit and you Canada. We are eagerly looking forward to not only a zigzag paper cones expansion, but also the mid to late second-quarter opening of the swiftly growing dispensary Market zigzag expect and brand-building efforts are in place and will be carefully monitored to ensure progress against the plan and in Nugent. We are seeing positive really indicators on both a rebound in sales vitality and efficiencies gained from our methodically planned and implemented restructuring program. New Jin growth will also be fueled by exciting to CBD products and other actives in the product pipeline including gummies tinctures and shots just found a few.
The trust you can sense my enthusiasm for the challenges. I've inherited to Cielo in the optimism and confidence of the team. I'm surrounded by and with that I'll turn it to Bobby for review of our fourth quarter financial performance package.
Thank you Graham company results in the fourth quarter were turbulent as we move swiftly to address the vapor disruption with an orderly restructuring program designed to unlock increase competitiveness and efficiency as a consequence of the highly publicized A disruption total company net sales were off 15% to a year ago, despite the significant Vape disturbance the performance in our smokeless and smoking businesses were very encouraging with both segments up versus the year-ago.
I'm going to go a little off script here and start with New Gen a year ago. We started filing scheduled D which discloses adjusted segment operating profit when I look at the performance of a respected businesses off the model that uses the information disclosed there. I encourage you to do the same I point you to the New Gen build up that shows adjusted operating profit in new John swung from a positive three million in the fourth quarter 2018 to -2.5 million in the fourth quarter 2019. No one is more disappointed about five point five million dollar year-over-year swing than be segments going negative are not something we take lightly and we reacted but didn't get the benefits until the lower volume once in December 2nd was positive in January by a considerable margin.
So going back on script. Let me some.
Right some exciting new developments moving to the FDA and PMT a pathway TP be filed ingredient disclosures for the newly Dean products as required with the agency on February 12th additional missions are being readied for the next filing date of May 12th, 2020 with these filings in motion, including the social scientific and pharmacological testing regimes required total expenses on the app ta will be 15 to 18 million.
Yesterday the TV board of directors approved $50 a share repurchase authorization intended for opportunistic execution to strengthen shareholder returns and finally yesterday the board unanimously approved on 11% increase in a dividend to five cents per share which will be paid on April 10th to shareholders of record as of the close of business on March 20th. We are committed to Total shareholder returns home. And even with Vape gate 2019 was our strongest cash flow from operations a year as we continue to implement stricter working capital policies. We ended the year with ninety-five million of cash on the balance sheet and 148 of liquidity dedicated to Capital allocation turning now to the segment reviews.
in smokeless
Booker's brand continues the levers sustained growth momentum smokeless net sales increased 8% to twenty five million in the quarter net sales for the MST portfolio grew 21.7% in represented 54% of smokeless revenues in the quarter up from 48% a year earlier total smokeless volumes increased 6.5% with price mix advancing 1.5% Year-over-year industry. Thursday is from waste decline by approximately 2% with chewing tobacco eroding by 6% stoker shipments to retail outpaces smokeless industry in the quarter growing its share in books chewing tobacco and MST money in the quarter soakers MST shipments from wholesale to retail up approximately 25% with your end trade inventories at their lowest levels in the past few years.
Turning to the smoking product segment net sales in the quarter increased 1.9% to 27.6 million on high single-digit growth for both us and Canadian papers partially offset by birth year decline of $700,000 and non Focus cigar and pipe products. I can't wait for those businesses to stop being a negative comp cigar net sales were flat year to go despite a sequential of one and half weeks of trade inventories total smoking volume decreased 0.6% while price mix increased 2.5% According to Ms. AI fourth-quarter industry volumes for you to write papers increased by low to mid single-digits while cigar wraps shipments to retail contracted by the same amount moving to our new jet segment where vaping products sales were disrupted on significant media headlines and a generous line and consumer off take in trade inventory depletions. Largely as anticipated total Nugenix sales decreased 37% to 27.6 million, including a one point five million dollar contracts renew birth.
for Riptide returning
Good for the quarter huge and gross profit was -15.8 Million reflecting 23.2 million and write off and reserves as a consequence of the FDA flavor ban accelerated PMT a wage even in the consolidate your business adjusted ebitda for the quarter was 14.2 million as compared to Seventeen Point 1 million in the prior year in this morning's earnings release. We also provided are twenty twenty years which included projected twenty-twenty total net sales of 338 to 353 million. This includes $100 from vaping sales with no PMT a upside assumed dead.
Adjusted ebitda of $69 to 75 million the company expects 15 to 18 million total FDA PMT expenses, which includes two million spent in 2019. Banks have agreed to a carve-out a PMT expenses in the adjusted ebitda calculation. And for the first quarter, we expect sales to be 286 million m&a discussions continue as we evaluate potential Partners in targets more to come, but I'm very excited about the opportunities there and with that. I'll turn the call back to Larry for closing comments. Thank you, Bobby.
Well temporary.
It back to never welcome. I've always chosen to see the world as it is and not as I hoped it would be reality is often a great motivator. It helps us focus on the tasks at hand first month to grow the tobacco business do we did exceptionally well in 2019 in both smokers and smoking core products second to contain and control costs which are embedded in our 2026 and and psyche this priority objective. Will Aid in delivering improved operating leverage next to identify New Market opportunities, like paper cones, for example, where we can get our existing equities to secure a meaningful strong new Revenue stream. And finally we remain very committed engaged to identify high-quality acquisition candidates that can accelerate the growth in shareholder value.
A company remains solid and results are people remain committed to the journey. Thank you for participating in the call today without it. I'd like to open the call to questions operator. Yes. Yes. Thank you. We will now begin the question-and-answer session to ask a question. You may press the star them one on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the keys off your question, please press start to this time will pause momentarily to assemble the roster.
and the first question comes from a Vivian is
there with account
Hi morning pitching in for Vivian today. How's it going doing Steve? How are you? Great. Let's start on Vapor. The Nielsen. I you know we've seen so far with not suggest an improvement in the category. So can you please expand on your comment that certain portions of the vapor Market are exceeding your early 2020 expectations. And in addition can you offer perspective on your expectations by Vapor system types o Open closed and disposables. Thank you. So so see it as you know, so vaping from that perspective is almost entirely open systems, which doesn't really show up as much in Nielsen. There was a dramatic pull back in September October November the market is still off and we we have our own retail so we can kind of see that but the nice thing that's happened is all the dead.
Small guys that kind of work nipping at our heels.
Had fallen out of the market like we we I'm not happy. We went negative in the fourth quarter, but we have the balance sheet and flexibility to maintain that there are other guys who had to go to work for cash and those guys are effectively out of business. So we're just taking market share at this point.
Okay, great. So if we think about the run-rate guide for a hundred million sales when you finish the quarter with 27.6 inclusive of the icons for for Riptide. Where should we think of you know in in place of the head the recovery that you're seeing where the further head ones coming from? Yeah. So you've got the PMT a process that's going to play out in May and there's going to be sort of a a just a lot of noise that we're expecting in the market in the second and third quarter. So we're sort of expecting a little bit of a Slowdown in the second and third quarter and that kind of bounced back up in the fourth quarter. Now, we're not giving ourselves any credit for PMT a which has significant upside. So right now we're just kind of walk with Vapor were we are being conservative just cuz our our investors are employees like they want that business to maintain its optionality with PMT a where we come in.
out in the end being wanted
Manufacturers that's participating in but we also needed to bring the noise down. So we we are being conservative. We're not looking to grab every dollar at every at all costs. So, it's just right now. We aren't kind of expecting a Slowdown in the second and third quarter. All right. Thanks Bobby within the new X sales. Sorry within new sales. How much was New York specifically and and how he progressed on CBD after being short on some inventory in that last. Imagine. You probably put up it or you still selling out.
Yeah, so we are selling out so new exhales. We're going to stop disclosing. We're going to keep it as part of New Gen just because it's gotten to a size that it's it's sort of proprietary to us and its deadly was confusing investors. So we are very excited about it. It's also integrating into the rest of our business, but it was it was up year-over-year. It's strong business. It's going down significantly in twenty-twenty on the CBD side or in four thousand plus stores. I think $42 at the end of 2019 that's pushing forward off pretty excited about the opportunity there. I mean, I I went through the airport the other day and saw CBD in Hudson News like so it is becoming more ubiquitous at as we've sort of discussed in previous calls the input on CBD the input cost is down eighty plus percent so over the past year which creates a huge Tailwind from cost but also allows us to age
grab this 499 in
999 price point so we're really excited about and it's it's it's a slog. I mean we have a the lineup of meetings over the next month is is massive with chains and so change really starting to accept it. And so we're we're we're we're pretty pumped about the opportunity this year. It's all about execution at this point. Great. Let's say that took it to smokeless gross profit was down a hundred forty bits. What was the major change in the promotional Cadence during the quarter? And is this something that we should expect to continue age? 20 20
Hey Steve, this is Graham. The answer that question is pretty simple. We anticipated nice growth out of some of the the Big Chain ones that we had last year. We just didn't anticipate the the the massive growth that we got out of those chain accounts. And then you have some programs that are embedded into those those chain accounts that you had kickers at the end of the year that essentially, you know wage laws that that that took down. Yeah, we see we we were we found ourselves about a million dollars off sides on annual promotions. Just cuz we we like we we did not expect to be a 5 or 6 share in Speedway. Like we didn't we just didn't expect that to happen. And so at the end of the year, there are sort of kickers that come in and so they're they're things that would be it's it's not really fourth-quarter. It's more of a annual program. And so you're seeing margins that are a little artificially depressed cuz we had to catch up those allowances. Those allowances will be spread out throughout the year 2012.
You know, I I got in here.
And I I think you know there was we were not set up to have a business that was growing as fast as it was from a systems perspective. We now put those systems in place allowances order sort of reviewed less from an accounting perspective and now very few from an operational perspective. And so it just really was a catch up. It wasn't some sort of fourth-quarter promotion.
Diet that makes sense. And last one for me Bobby on the buyback. I know she used the term opportunistically, but how long is the duration of the buyback program would seem to be doing it all in one year would be a lock you certain that would be about 10% of your shares outstanding because I'm yesterday's clothes. Yeah, we're going to be opportunistic. I mean at the end of the day, we feel really good about the business today. We feel like this PMT a provides this optionality that you know is is is dramatic we think moist is doing I'm really excited about what's going on in Canada with zigzag or you know, we've got this massive alternative strategy on zig zag. And so you don't that's at the end of the day we're going to page you ate the stock on a monthly basis and kind of just see is there a better use of our Capital investing in our business or is there a better use of capital buying our stock? And so that's sort of wage
Way that we look at it. You know, it's
It's there is an element of we need to improve liquidity in the stock. And so there are things that we're doing to do that. And so ultimately the buyback is just another bolt lever in our tool box to drive shareholder return.
Thank you.
Thank you. And the next question comes from Susan Anderson would be Riley FBR.
Hi, good morning. I guess just to follow up on new Jin as we look out to 2020 with all the restructuring activities that you guys have now undertaken. Should we look at I mean its fourth-quarter kind of Benchmark for margins say gross and operating or should we think about it different long as we look out to 2020 with the restructuring that you've done?
Yeah, I mean there's at the end of the day we want to get that gross margin up. And so that's that's where I I will say twenty twenties sort of a name is an investment Year from our perspective. And so it's it's I think fourth quarter should be viewed as as a low. That's M A I would I would look at it, but there will be a little bit of depression in second and third quarter as we go through and and there's a little bit of just volatility in the market as we have competitors are going to liquidate and so we're not I would tell you a year ago. Our mentality was to chase that we're not going to chase that so we're very focused on Iraq holding 30% plus margins and moving that up. So that that's it's a transformational change from the business perspective.
Okay, great.
It's helpful. And then nice growth again on Stoker's MST. I guess can you remind us sounds like market share grew again. I think you said 6 years 7% Speedway like overall. Where's your share versus competitors and then the opportunity and or expansion and I guess have your goals for the brand change given the successful you're seeing their longer-term in terms of market share.
It's on the cones which continue to grow robustly. Are you seeing any cannibalization at all in the papers from the cones?
Yes, who's now be natural? I think there are there are so much substituting for each other. But the fact is that the cones are reaching additional people. So it is it is not positive for creativity to the brand and sporting occasions where people just want to have a prepared rolls. Yeah, when I got in here soon, as you know, Larry off very widely told me that like, you know Americans are really lazy and so in the phones are from from our perspective, we sell a French orange booklet that's got 32 leaves in English and versus we sell for the same price a phone box that has six cones in it. And so, you know, the gorilla mass is by converting from French Orange Papers to
Cones, there's literally a 5x multiplier or on the opportunity. So that that's just massive from our perspective and it's more convenient to the consumer. Yeah. It's just just to give you an indication as we've introduced cones. Our share has gone up for three quarters in a row. So it's it's working. Yep. Yep. Great. Okay. Well great. Thanks so much you guys nice job nice to see the The Core Business strength and rebalancing new Jin. Good luck for the fear. Thank you. Thanks Susan.
Thank you. And the next question comes in Jamie, with Buckingham gentleman. Good morning. Hey, good morning, Jamie. Hey Bobby just to be clear the the share repurchase authorization. That didn't no way signals any relative lack of enthusiasm in the deal pipeline does it and and and and I think Jamie at the end of the day like I think you guys all are aware of like they've gate was extremely disruptive. We terminated 60 people right and and, you know, we run a tight ship and so we have Real Deals in the pipeline, but they require
Management to push them through and if it wasn't for Vape gate, we would add deals down in the fourth quarter. So so we the the pipeline is frankly stronger. We did move management around where we've dedicated some resources solely to getting deals done. And those are moving forward, you know, but deals you never want to be forced to do deals pipeline is strong the frankly it's it's there are a bunch of companies that I bid for in sort of late summer that have come back and said is that offer still on the team which is an interesting Dynamic and so we are sort of evaluating that I will tell you there is Carnage in the street blood everywhere when it comes to age is cannabis in CBD companies. It's it's it is the opportunity to set is is massive. We're just it's it's just a capacity issue. So we've got this quarter through we cleaned up our books dead.
Reset the business, you know, we move Jim Murray straight to deal-making which is awesome. And it's it's it's we're going to get stuff done. Okay, great if Graham if I could turn to you. I know you rattle off a couple of things. We can you talk a little bit about new product pipeline both CBD as well as just, you know, other non-cbd activists. Yeah. So we we we bent around the the back half of of 2019 with a focus on sort of going to smaller price points for consumers, you know, it's our belief that that CD products will arrive in the main line Channel when the price points are acceptable for consumers in that channel. And so we spend a lot of time in the back half of the Year developing products that made sense month or down the street at the same time, you know, you see these large swaths of of active ingredients that are sold another form factors like take coffee for instance, you know, caffeine is he's probably
On the largest active ingredients in the marketplace and so we've we've introduced a caffeine inhaler. So we've we've taken a known active ingredient and put it into a form factor that that makes sense in you know with them or competencies. So you're going to see some some development around around caffeine and you're also going to see sort of the introduction of of additional uhh cannibal cam profiles like G and CBN. So if you go onto our website the new X website, you'll see that we've got two products on there. Now that that sort of cross away from CBD and get into the other wage cannabinoids. So, you know, it's just the first step in terms of looking at these alternative actives and putting them in form factors and price points that it makes sense for sort of our down the stream, you know, you know trench warfare. Okay, and then just on on on CBD and hemp in general. I read a couple of articles that some Farmers, you know, we're home.
The problems and have space is that you know, is that is that actually kind of a good thing for you guys? Is there anything to be worried about in terms of supply chain? I think you know what I'm talking about right back. Okay. So supply chain is fine the Mark at the end of the day you can buy all the Hem you want and more, you know, Larry and I personally went down a farm a few weeks ago from the only real negative. Jamie on that is no one likes to see farmers get hurt right politicians like it like it off. But but and so that you know, and so the farmers were big part of the farm bill and so a world where like they're getting hurt. They stopped having a champion Congress and in the FDA takes its time on sort of creating these these regulatory walls that we ultimately flourish on so that's the really only the side negative. I would tell you. There's more help out there than praj.
Think of a city so Supply chains fine, frankly, you know, we people were underwriting $6,000.
A leader on CD a year ago right now. I can go buy CBD at 752 12:50 liter right now. So it's it's and and there's unlimited capacity it start there is a long amount of CBD out there. So it's we're we're not seeing any issues on that side. Really. The only thing that we're concerned about that. We are building up a coalition to work on is you just got a farmers who who got really hurt and it's it's that's that's ugly. That's never great. So, so other than that issue we feel great about the supply chain. Okay. Thanks very much of your time. I appreciate.
Thank you. Thanks. Jamie Chevy. See you in Dresden. Yes. Yes.
Thank you, and the question and answer session. I would like to return to 4 to 11 for any closing comments. Thanks everyone. We are going to be aggressively on the road meeting with investors over the next few months. So I encourage you to go to our website and come and see us. Talk to you soon.
Thank you.
The conference has now concluded.