Q1 2020 Earnings Call
Ladies and gentlemen, thank you for your paycheck. Please remain on the line, while we gather additional participants I can't be do appreciate your patience. Please are made on the line. Your conference will begin momentarily. Thank you.
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Welcome to the <unk> first quarter Twentytwenty financial results Conference call. This call is being web cast alive on the events page of the investors section <unk> website at our last Dot com.
This call is poverty of unrest and any recording reproduction our transmission of this call without the express written consent of Amrisc is strictly prohibited.
As a reminder, today's call is being recorded you may have listened to a web cast replay of those called by going to the investors section of Amherst as website I would now like to turn the <unk> Oh bird to Peter Dinardo Senior director of Investor Relations and corporate Communications. Please go ahead.
Thank you Chris <unk>, good morning, <unk> today, what needs to their John Mellow, President and Chief Executive Officer, <unk>, Chief Financial Officer, and Eduardo <unk> Chief operating officer.
Please note that we'd like to the other true like two and our web Cam and.
Please note on this call you will hear discussions of Nongaap natural measures, including cross bargain failures reconciliation of these non <unk> measures to most directly comparable yeah. My natural measures is contained in the summary financial information slides or the company presentation on the news release distributed today, which is a <unk>.
<unk> Dot <unk> dot com.
The current report on 0.8 K. furnished with respect her press release is also available on the website as well as on the F.P.C.'s website F.D.C. Dot Gov.
This call we will make forward looking statements about events in circumstances that have not yet occurred including projections Emirates is all pretty activities and they're anticipating financial impact on our business and financial results for 2020 and beyond.
These statements are based on management hurt expectation and actual results in future events may differ materially due to rescind uncertainties, including those details from time to time. It finally Emirates make the Securities Exchange Commission, including annual report some form and pay all the reports important 10, Q. and current reports.
Form eight k. Amherst his name any obligation upbeat information contained in these forward looking statements whether as a result of new information future events or otherwise please refer to the M.F.C.C. falling for detailed discussion other roles that risk than uncertainties.
I'd like to note that the Oppenheimer fifth annual merchant grow up one on one conference previously to be held New York next with a mate 12, that's been changed to a virtual but from the same day to to cope with 19 considerations Amherst will hold schedule one on one meaningful investors by individual phone calls throughout the day.
Before we begin today again.
Included on our web cast the slide presentation, we were referred to in today's presentation.
Oh now turn the call over to John Mellow John.
Thank you Peter [noise].
Wanting everyone in thank you for joining us today.
I'm going to give you some indication as to the slides I'm turning to to help you follow the slides through the presentation, So where I'm on slide three now would be today hardwired welfare as our Chief operating officer, who will share operational performance highlights and the key steps, we've taken to reduce our cost of goods. So.
Oh, and then Hon. Keeping belts are you CFPO who's been whether since March Oh, Hi, We'll review our financial results as well as her outlook for the four year.
2020, welcome aboard had great to have you wear this today.
Well I'm going to move to slide three started a slide for for me.
Before it continue I'd like to take a moment to thank our employees customers and suppliers for their strong commitment toward keeping everyone safe during the covert crisis.
Two hour and that are bar supply chain partners extraordinary efforts, we've been able to maintain our mission or providing safe and clean products, while continuing to meet elevated demand.
Our thoughts are with all of you and we hope that help and economic hardships of Kobe will quickly pass and bring released through financial and scientific support to help the economy and to help therapies to find therapies and a cure for this virus.
We've supported many first line workers.
By supplying over 20000 units of our hand, sanitizer, we're working hard to scale and make available R. square Lane vaccine the the.
The square Catalina vaccine add your bed with several leading candidate vaccines and where you are working through early trials therapies for covert 19, the vaccine adjutant has now been validated.
By one of the leading pharma companies in the world and could be a solution to help scale. Certain vaccines are came here is to partner with pharma companies, who have vaccines and trial and play a role in helping them rapidly scale. These vaccines once they have been successful through trial. These are a few of the activities were working aren't.
To play our role in applying our synthetic biology platform and product portfolio to making a difference and helping us through this pandemic.
I think this is where are.
Platform and the real science is really at its best are are true core skill is being able to better than anyone in the world develop and scale complex chemistry fast and delivery and unlimited volume. So we could meet the needs of a global marketplace for.
These kind of treatments and vaccines, let me move on to slide spot.
Near the end of March.
Realized there was a very strong need for a healthy sanitizer in the market. We saw many 10 sanitizer sold with formulations focused on clean, but not focused on keeping our hands healthy we decided to help meet the need a front line workers and keep them healthy and safe and develop the unique formula.
Based on pharmaceutical grade alcohol, and our award winning square Elaine Moisturizer. This <unk> branded products has seen significant uptake with consumers. We sold over 1 million units and are working hard to increase production capacity to deliver on these sales and to meet the strong demand and the critical needs.
Healthy sanitizer as the world's starts to reopen.
We we think this is a great Testament to the innovation in collaboration amongst our teams and partners and the power of the technology platform. We have built we developed and launched a winning product through the high Tech Baby Brad.
Less than two weeks from idea to first production. We are in process of increasing production capacity to meet one and a half million units of monthly sales and expect to reach this level by the end of June at this sales raid, we could generate about $10 million monthly revenue from Arkansas.
Schumer brands, starting in June and we have the opportunity to maintain and grow our monthly revenue from this level. It did. This. This this is also important to know what it's a good margin product a strong cash generator, where the cash cycle that is less than 30 days due to the fact that a significant portion of sales her online at all.
I'll remind you that since we started with this particular product we've already triple R. ability.
To produce volume every week and we've doubled our warehouse capacity in a really working very hard with our partners to increase throughput as they have to social distance.
Managed shelter in place orders to route our supply chain.
We we started the year with more than doubling our revenue from the first quarter of 2019, we are seeing this growth both from our product sales in our collaboration revenue from our developing programs with our long term partners, which is really the foundation of our business strong partnerships strong relationships that invest.
Than deliver disruptive products to market. We are pleased with our earnings growth, which was driven by year over year sales growth improve sales mixed you to consumer brands and lower unit costs.
We also made significant progress during the quarter to reducing simplify our debt and we are actively working to further improve our balance sheet throughout the year, we expect to in the year with about half the debts half the level of debt that we started the year with.
Let's move on to slide seven.
Are rather than you for the quarter was 76% from product sales and 24% from collaboration.
Expect this mix to continue and are experiencing significant acceleration and demand for our ingredients and our consumer branded products.
Based on what we are experiencing since the start of the second quarter. We believe the consumer business has the potential to reach over $90 million in revenue for 2020 compared to around $17 million in 2019.
Are ingredients business delivered around $47 million in revenue for 2019 and occurred performance can result in about $90 million revenue for 2020, we're very pleased with our consistent growth rate from our ingredients business and with the significant acceleration of growth from our.
Consumer activity specially as we have been sort of phase where most consumers are now working in shopping from home.
Positive movement is that the mix of revenue from the consumer business is fairly well split between our Biossance brand and our type pet Brad which are both having an excellent year.
For ingredient sales square Lane was the largest rubbing your contributor in the first quarter and is expected to be about one third of our ingredient revenue for the year, our biggest rubbing your contributor for the year is expected to be.
Our second biggest sorry about that our second biggest revenue contributor for the year is expected to be R. zero calorie natural sweetener from sugar cane. The read them molecule made from King and then Farnesene unclear way with about the same level of contribution and the rest of the ingredients following with.
Fairly equal contribution to revenue a way to think about this we have two new ingredients into portfolio, where 2020 years. There first full year of commercialization each one of those will generate $10 million or around $10 million a a revenue and that gives you a sense of the power we've now.
Built into the ingredient portfolio and the skill, but that's generating force our ingredient business says also delivered very strong unit margin improvements in the first quarter and we expect full year for the ingredient business to deliver an estimated 20% adjusted EBITDA when you consider the direct.
Selling and support costs to to take those products to market.
How about 96% of our product sales are in clean skin care sustainable help flavors and personal pier and how so cleaning each of these segments are benefiting from the current covert 19 environment.
24% of our business isn't aroma ingredients for use in perfumes and this activity has seen a significant drop and demand during this period.
The consumer side of our business delivered a very strong first quarter and finished April would they record month by a factor of more than two x.
Two extra storage levels I couldn't consumers are shifting they're buying online and our direct to consumer business is benefiting through our biossance dot com pipe pet baby Dot com Biossance dot com dot B.R. and stuff for a dot com business. We are also <unk>.
<unk> very strong sales performance for the pipe that Brad through Amazon Dot com target Dot com and Walmart Dot com.
A couple of points there.
This on target and Walmart, we've not yet started selling the hand sanitizer, we expect to start <unk> Amazon over the next week or so and then following on with target very quickly thereafter, and we're seeing again very strong demand in those channels for online purchasing not including the.
Parties sites that we sell through we had over 1 million consumers visit our directly on what's the worst in the month of April alone.
That compares to 160000 consumers visiting April of last year. This momentum has continued in may we had over $1 million a sales from our consumer brands and the first four days of May.
You know turn to slide eight.
It's been.
The most intense period in our history, we I've had many of our teams sheltering at home. We are in a central business and have kept are critical operations working while implementing social distancing and all other practices to ensure the safety and health of our people than partners that remains our number one priority. We are doing this at a time where.
Demands for our products as well beyond our expectations, we've been able to deliver this performance, while managing our costs and keeping our unit margins would then expectations I have a huge amount of appreciation for each of our teams and our partners for all that they are doing.
The start of 2020, we set out for strategic priorities to focus our execution on accelerated growth and a clear path to profitability and sustained cash generation.
These include.
Four or a strong alignment around these items high growth consumer grants.
Scientific and commercial collaboration is worth that are capable of delivering three to four new molecules a year supply chain optimization that continues to contribute to expanding unit or expanding gross margin in board unit cost and then improve balance sheet that is delivering.
Growth in earnings and positive operating cash flow <unk>.
Let me close out my remarks from this a few key points before turning Tweed <unk> cool provided operations update forced this morning.
First we deliver a strong first quarter, where we more than doubled revenue, while improving our costs and have significant traction to maintain a 776% product revenue to 24% collaboration revenue mix for our business in other words products are now starting to underpinned.
Business and collaboration are becoming a lower part of our overall portfolio. This is a sustainable chef and a great way to underpin our business for sustainable cash flow into the future at the current level of performance and with this sales mix, we could deliver a 30% positive.
Adjusted EBITDA as we exit the year and we can do that consistently based on the mix the portfolio and the momentum in our business.
Secondly, 96% of our products are sold to N. markets that are experiencing strong consumer demand during the covert 19 crisis. We believe this can't deliver upside to our revenue guidance for the year. It's early and there are many uncertainties uncertainties ahead of us, making it very hard to predict the future at this point.
Our consumer brands are experiencing much stronger demand than we expected and we are benefiting from a very strong consumer shift to shopping and buying online. We have launched a category, leading hand, sanitizer and are expanding our product line for hand, and body wash and hand moisturising products.
To keep the hands in body safe and healthy at a point in time, where consumers have shifted we expect this consumer shifts to health and safety and buying online from brands. They trust to deliver clean and sustainable ingredients is here for at least the next 12 to 18 months or until we have a working vaccine for cope.
19 consumers have shifted fast away from makeup and fast fashion and are focused on keeping their skin healthy and we are benefiting beneficiaries of this shift the world's leading moisturizer in our sugar cane <unk>.
Our first quarter is a very good star to the year and our second quarter is accelerating to deliver our best consumer sales quarter in our history, Let me I'll turn over to weed wired.
Thank you John and good morning, everyone, a piece turn to slide nine.
Let me start with an update to write operations and sculpted 19 started.
<unk> on March 9th.
We launched a task force that helped us a knack <unk> all our site.
Protect the safety and health of our employees active preventive virus from sprite.
Thankfully all her from employees are safe unhealthy.
I know our production activities in Brazil.
Europe and North America have continued.
As we are an essential business in all of these jurisdictions.
We did experience a small slow down in a couple of production activities that we thank our partners unemployed for their efforts are <unk> have largely to remain on affected.
During the first quarter, we shape 637 metric <unk> product, which corresponds to a product grabbing you off 23 million, albeit 29 million total revenue.
<unk> Jonathan report.
These 23 million in product for Avenue is 92% higher than the revenue for the first quarter of 2019.
As we reported in their Fourthquarter review, we continue to see the benefits of shifting production to our lower costs locations in Brazil.
And also from continued process and technical improvements.
For the first quarter, we achieve lower unit costs five.
Of the seven.
Sorry, I don't the eight products that we deliver.
As a result, we have completed five quarters in a row with improvements in production volume unit costs.
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Let me offer now some color and detail.
Oh, Hi, we have delivered these results.
First let me talk about improvements in scale.
I will use squealing as an example, we have continued to the bottleneck are squealing production plant in North Carolina.
And for the first quarter, we produce port hundred and 75 metric tons of squealing.
<unk>, another quarter and quarter improvement.
We expect that improvement seem production and scale will continue into the second quarter and for the rest of the year.
Will remain on track to produce around 2000, 2000 metric tons of squealing in 2020.
In addition, we have seen a reason 10% to 15% decreasing the purchase price of why don't the highest costs raw materials for squinting palladium.
We are taking necessary steps to ensure we continued to benefit from this type of source opportunities into future.
<unk> our production campaigns remain on targets.
The member for example, we are in the middle of our next production campaign for a sweeping or product.
And our fermentation result, both for yield and productivity are better than class.
We also deploying a new purification process.
Product that he's <unk> three times, the higher throughput than the campaigns, we run in 2019.
And from the quality perspective are pure came products have been doing very well.
For example are cop for cop culinary products.
Which is used for baking and cooking applications.
I've been on top on the top spot for the natural sugar reduction product category on Amazon for eight straight weeks.
The great feedback from consumers.
Firms that are sweetener from fermented sugar cane is the best tasting natural sweetener in the market.
Third.
We have continued to expand our production capabilities to sustain our girl and performance.
As John mention we'd <unk> launched the hand sanitizers product in two weeks.
Let me offer some examples about what that too.
By the end of that first week, we were already producing 40000 units per week.
Right now we are operating out of 700000 units and mom.
And as John mention will be one and a half million units and <unk>.
Just another few weeks.
Thanks to the extraordinary efforts from our clean beauty teams and our supply chain efforts, we are delivering a tenfold production increase for these new product in less than two months.
We have also secure production capacity for our first two cannot be no products for 2000 tank.
Finally, let me expand on our progress for a new specialty products plant in Brazil.
Our current work is focused on civil construction.
Detail engineering design, and specifying an ordering equipping equipment with long lead pipes.
It is important to know that Kobe 19 related permits longer logistics from vendors have cost as a one to a two month delay in this case.
We are on track to start operations early in the third quarter of 2021.
One additional point is that we have taken this time to optimize our budget and to reflect the advantages in reviews material costs as well as improvement in exchange rate of the dollar to to Brazil.
As a result, we believe that our capital expanse budget can be about 15% longer lower than we originally expected.
Hi, I'm very proud of our teams.
Thankful for the great support from our suppliers and partners.
Remain very hopeful about what we wouldn't do it next for the rest of this year.
Now, let me turn to call over it could have had.
Thank you into I do and good morning, everyone.
Let me start by saying that I'm very pleased to be part of the team here Demaris join to team seven weeks ago, and I'm looking forward to partnering with John Eduardo and abroad, a team to deliver on I'm or is this promising growth trajectory and set out a path to profitability and cash generation.
Before I review the details about you one financial performance I would like to note key financial highlights put a quarter.
First Q1 revenue off 29 million was in line with expectations and doubled first is the same quota last year.
Gross margin was 63% sales significant improvement year over year due to a combination of sales mix from growing consumer sales and supply chain efficiencies, resulting in lower cost of goods.
This <unk> two minus 33% for Q1, 2019, and 56% for the full year 2019.
But just city, but also in line with expectations was a 41% year over year and improved by 19 million to mind is 27 million.
Improvement was mostly driven by favorable sales volume growth and lower unit cost.
We improved no balanchine by reducing our overall debt by 30% during the quarter.
These actions along with actions taken during the early part of the second quarter.
Reduce our cash debt servicing obligations 95 million 245 million for full year 2020.
Now, let's turn to slide tend to take a closer look at the court of details.
We are providing is somewhat different presentation 12 sales revenue to provide more meaningful insight into the market research.
Oh sure well actually went away without products, we serve our direct to consumer brands Biossance for pets, and <unk> as well as well as our business to business ingredients business, but our strategic partners into health and wellness and flavors and fragrance and markets.
Oh, the revenue is there for broken down between consumer and ingredients and collaboration and grants.
The latter repossessions revenue from our R. and D. partnership programs.
I see we'll see film the Donuts, 76% about revenue comes from consumer and ingredients broken down in 40% from consumer and 36% from ingredients respectively.
The remaining 24% of total sales comes from collaboration and grants.
Consumers and ingredients revenue or 23 million was up 90% and collaboration and grants or 6 million was up 158%.
No tuning to slide 11.
Total revenue of 29 million was up 50 million or 103% year over year.
She to table for an analysis on the variances.
Key drivers 40 improvement in sales were volume and makes for a total of 11 million or 75%.
<unk> improvement 6 million no, 43% was related to growth in consumer brands.
Most notably hour clean beauty bio sounds bread.
Setting prices were principally flock year over year and collaboration in grants contributed 4 million through the quarters growth.
Consumer right ingredients Hills was 23 million were up 92% year over year, which price was plus 3% and volume mixed contribute to the plus 89%.
Moving onto key financials on slides 12.
I already discussed revenue and gross margin of previous slides and move focus my Coleman's here only adjusted EBITDA approach.
Before doing so let me comments that improvements in net income adjusted net income and adjust to dilute of the P.S., we're old principally driven by combinational sales growth and operational improvements.
Two one twentytwenty adjusted <unk> 27 million represented an improvement of 19 million or 41% first is the same quarter last here.
Significant progress was made over recently of the gross margin level, but 11 million from volume and mix 3 million from consumer in grants revenue and a 5 million improvement in cost of goods sold resulting in lower average unit cost.
These improvements were all set to a smaller extent by a 2 million increase it operating expense due to investments in marketing and sales to support growth per hour consumer brands, partly offset by lower R. and D. expense.
That's now tuned to slide 13 to review or more detail Bridgeville key earnings metrics.
Net income of mine is 87 million was adversely impacted by known cash accounting for changes to debt and derivative instruments for a total of 37 million in the core.
So that income of minus 44 million, which excludes these definitely data account again trees as well a stock based compensation improve 50 million or 25% year over year, which is a closer reflection of the improvements we see in the business.
Or just the B.B.S. of minus 20 cents per share improved 47 cents foods as the prior.
Again, these improvements would driven by margin enhancement poor total of 12 cents per share and a year over year change and cheer count contributing 35 cents per share.
I previously discussed the key items contributing to the 19 million or 41% improvement off adjusted EBITDA.
No tuning to slide 14.
In the first quarter, we reduced our overall deaths by 30% from 297 million two 200, a 9 million.
This was a result of scheduled them a physician payments as well a specific actions taken by management to reduce and simplified debt.
60 million off the principal reduction was previously reported in the current report on form H.K. fault on February 620 20.
Further actions that'd be taken since the end of the quarter and accompany publish them eight k. on Monday may 4th to announce an important amendments to the 2022 convertible note.
The company senior convertible notes, we didn't outstanding principal amount of approximately 45 million as of April Foodie Twentytwenty, We're Amanda to provide for normalization payment. It may 2020 to reduce the outstanding principle by 15 million 230 million.
Also know Frodo scheduled on my position payments will be do prior to the maturity date.
Interest payments accruing at 5% Brennan I'd been changed from monthly two quarterly with the first payment due on August 120 20.
And importantly, all equity three goes been removed.
That interest expense off 15 million was up by 2 million due to higher average deposition compared to the same quota last year and finally capital expenditures are 4 million and a quarter 1 million higher than probably a year.
Increase was mostly due to investments in our new flavors and Freegans plant in Brazil.
No turning to our outlook on slide 15.
We are affirming the year over year girl sales revenue guidance, we have provided previously.
<unk>, let me point out that the current covert 19 situation does present, uncertainties to which we do not have food visibility Oh guidance and coleman's should be seen would that important context in mind.
Full year sales revenue are expected to grow around 44% poses 2019 gap revenue of 153 million.
2019 for your sales included 49 million off known recording items.
We expect full year Twentytwenty revenue to include an estimated 35 million off known recording items.
Well Daddy minds, we expect Twentytwenty revenue on the recording basis to go a buck somebody 80% on recording 2900 sales of 104 million.
We expect goes margin to operate a raid greater than 60% sales.
Let me also explain our expectations regarding revenue phasing I set out in the bottom right and table only slight.
This is critical.
Continue to scale, Oh sales and does improve our operational leverage on our journey to being <unk> <unk> generative.
We expect age one sales to be 30% of total annual revenue and the second half to repossess, 70% off Twentytwenty sales.
Does expect a grocery directory skew sales and earnings in cash flow from operations to up the second half off 2020.
Were dirty minds, we expect adjusted EBITDA tutoring positive during the fourth quarter off this year, which will be historically important for <unk>.
With that I'll tune, the cold back over to Joan Joan.
Thanks Hon [noise]. Thanks on before we open to call up for questions. Please turn to slide 16, as I highlight a few key points.
We have built the leading synthetic biology platform and we are realizing the real power of the platform to our distinctive product portfolio in business model. We are in the process of a breakout year and revenue growth significantly improved product gross margin lower overall operating costs and we are crossing into.
Insistent positive you bet that territory in the fourth quarter.
Our leadership and clean beauty and the natural sustainable ingredients could not be better position for the current time.
Tumors are moving aggressively clean and safe products from the branch. They trust we supply many of these brands and we have to have the leading brands to help consumers in this time of need and beyond.
Hon into team have made great progress on our balance sheet and I expect more as we go through the year and continue to improve our liquidity.
The combination of our operating performance improve mix to high margin consumer products and the support of our long term shareholders provides this confidence in building on the momentum we are gaining through covert 19.
A few investors have asked me so what's different going forward and I I'd highlights for key points first a portfolio that is now scale and is reaching a performance level that can cover are fixed space and deliver some of the strongest adjusted EBITDA in our industry.
Secondly, we are d. leveraging at a fast rate to ensure that we've got a stable <unk>.
Balance sheet to support our future thirdly with <unk>.
Into the company and having.
Deep experience at scale, both as a public company C.F.O.'s and there's an operating leader. We now believe we have all the leadership.
<unk> in place to really scale with us and execute on our business.
And this really includes he'd waters role as Chief operating officer, and Catherine and Caroline, which each are leading our brands and doing an amazing job.
Leadership position and the respect to market spaces for those brands and last but not least a significant reduction in the fixed cost base and more movement towards a lower base as we go through this year. When you combine those four things we are really going to place to sustain significant growth.
And do it profitably as we go forward, we've had a very intense eight weeks with many uncertainties ahead of US I know all of you are in the same places we all work hard to keep our people safe and healthy.
You want a thank you all for the continued support and I'll look forward to the second quarter being a fantastic quarter for US building on a great starts at the year and what we are expecting to be a solid year for US. Let me know turned to questions. Christy can you help us with questions.
Oh, Yeah. That's right is now hope in fact question have you would like to ask a question. Please pass starvation and your telephone keypad <unk>.
Using a speaker phone please pick up your handset keeping by the best sound quality.
Again, ladies and gentlemen, if you have a questionnaire comment please press star one and your telephone keypad.
And we'll go first to call in <unk> Oppenheimer. Please go ahead.
Thanks, So much guys and so I just want to make sure I understand some of the the product.
Dynamic correctly, because it you you guys actually talked about 30% more on our side than we expected to the first quarter, you know <unk> can't talk a little bit about the seasonal dynamics as we go through this first quarter. After the second quarter on both the ingredients to conserve our side and then how we should think about next between those those too.
Of course, as we get get through the rest of this year.
Yeah.
Oh I'll give it a stabbing in hot you can back up with what I've missed okay Hot.
So <unk> by the way column, thanks for being on board with US today and appreciate your taking all the time to ensure that you had a good sense of where business was what's the businesses changing dramatically and happening very fast I would tell you that almost on a weekly.
Since we're looking at the portfolio and we're assessing you know what's what's actually moving you know you saw already a move in the consumer piece now being equal to if not slightly bigger.
Vandy ingredients peace and I would tell you as we go into the second quarter that the consumer business will become significantly bigger than the ingredients piece I think for the year it'll be well balanced I I I you know I think we've said about 90 million each for the brands.
Meaning 90 million and total for the brand revenue and 90 million for the ingredient ingredient revenue one clarification I'll make is in the past we've used clean beauty as the way we've described their activity and beauty, which included the squealing supply business to the cosmetics and this.
Street now when we actually say.
Brands. It is really surely brand revenue and that's really a result of scale are are brands now are delivering enough scale that we really want to <unk>, we want to illustrate the revenue of the brand separately from the ingredients. So when we say ingredients. It's all of our ingredients when we say brand it's pure brands.
Sales through through all of our channel. So I I think again back to answering your question call and I expect in the second quarter the brands to to do quite a bit more than ingredients I expect for the full year for it to be fairly well balanced about 90 million each a war about 180 million in tow.
Model as we approach the end of the year in product revenue, which is really a significant shifted <unk> significantly more than we expected to start the year and again, that's just been a result of great progress on the brands and you know a lot of luck in having the right portfolio at the right time on the.
Reading inside to have Ninee, 6% of our ingredients go into personal care and cleaning products has really been a blessing at this point in time.
Again in both cases, because the significant contribution from the brands, where where we are well you realize a higher gross margin and then obviously with the ingredients, where we do realize a higher bit that contribution in balance the portfolio really gives us you're very strong Ernie.
Power as we go through the year.
Last thing I'll say is the fact that a lot of our growth. This year on the brands is happening online has also significantly improved our cash cycle. The great thing about online is in many cases will get a customer payment before we're actually paying for the cost of goods in the inputs to make the products we.
So to the consumers our biggest challenge you're making all this happened is really getting supply up fast enough to meet the man and I'll tell you, that's where we are scrambling and spending a lot of time bring it on additional supply chain capacity as we deal with the demand that we're working on time would you is there anything.
Like to add.
Nothing Joan you coveted well, maybe two data points colon for your benefit is if we think about the consumer angry ends category and looking at the two components you saw the the relatively evenly spread.
In terms of making up three quarters of all business. If you look at the consumer brands that growth in year over year in the first quarter was actually north of 200% two and a 30% and then only agree inside that equally grew nicely <unk>, 50% in the corridor again year over year.
So we saw we cell growth on both sides of the equation within that.
Category, if you will but clearly more accelerated girls on the consumer broadside as Joan just described.
The guys. So so looking at the the molecule does all that yeah. We had models you guys that <unk>. This year it sounds like you're already just about done with the liquor in those molecules can you talk about you know your ability to to collect on delivering those modules and and what we can expect in terms of that development business.
You know through the the balance a year.
Well I mean, it it really depends.
On on the partners right. The two that I referenced this year, we're actually delivered last year, but really scaling up this year from a commercialization perspective right. So they they really don't count, although I'd love to take the credit towards the three to four the three to four are on track we <unk>.
<unk> three to be scaled this year and the way I would describe it regarding the the other part of your question call. It is you know our ability to get paid you know the ones that are scale than commercially successful are with significant long term partners to our market leaders and we have no question about the market.
Leaders, and our and our relationship and quality relationship where those partners delivering and paying as I said those those two products. This year will reach a result in about 10 million of revenue force and and that's exactly the kind of partnerships, we like and we and we and we are big believers that I think into three new products were watching this year.
Again, we we expect to scale them successfully manufacturer and then you know like like this year, where you know that's true products that are generating you know 10 million each of new growth to the ingredient portfolio I think that that kind of profile is what you should explain.
Which is the year, we introduce since scale a product yeah. I can tell you we don't actually have any revenue in our plan from those products and then the following year. After we actually have them in the market. We've seen the adoption we didn't start to actually layer n., what we think the growth and revenue contribution.
From those products will be so again I just want to emphasize the two that we spoke about we're products, we actually scale last year and are having great commercial success. This year.
Three to four that we've guided are about new molecules that were scaling. This year. We don't have revenue in the plan from the production of those molecules. This year, we don't have anything at our outlook as we scale them. This year and we're on track to scale them. We will then look at how we think about adding that and guiding for that revenue as we go.
Next year.
That's incredibly helpful. Thank you and then turns the balance sheet. You know appreciate that you guys are simplifying and and <unk>. The balance you, then and giving yourself a bit more flexibility on <unk> had a chance to to evaluate what's going on you know do you have thoughts on the cable.
Or continuing to optimize your your costs of capital and and provide the company with the appropriate flexibility instability Ah forgot that you're looking at.
Yeah, no absolutely colon and you know that's why we highlighted this specific point.
Oh, where we were at the start of the quota where we are at the end of the corridor, which is an 89 million dollar improvement.
And I was kind of Joan alluded to this will be an ongoing efforts. We have oh is he made the announcement regarding the significant reduction and simplification of the convertible mode, which is which is an important milestone for the company and that'd be had announced in the need to keep this past Monday, so that that is already a food or reduction too.
Did you see on the page here and then we have a number of other actions that we're contemplating and discussing to to further reduce that poli by one more step probably by the end of this quarter and then definitely as we look to 12 31. So too is the end of this year, you know photos steps to be <unk>.
So you know overall goal is and and again to think about is that we started the year at around 300 million to bring this down to low one hundreds and we want an open they do it in a very deliberate fashion that make sense for the company makes sense for you know the holders and but.
Clearly an objective we have because it's being important to lower our you know debt servicing needs going forward.
<unk>.
Thanks High and I I, just want to emphasize hunts point, we wouldn't be indicating further reduction in debt. If we have not if we had not been active and discussions and had visibility as to how we're going to get there and it yeah. We've been very fortunate with the support of long term shareholders, where our focus is not you know what we've.
Here or not it's actually how do we take advantage of the scroll. We think this is a moment in time and we think there's gonna be and there is <unk>.
<unk>, we're living this real time, a significant bifurcation of brands and businesses the people who could make it through this period are going to be stronger on the other end and there's no question. We're seeing it would brands we're seeing it with products supply we're seeing it with partners right. There is a there is a light for.
For those who can deliver there is a flights for those who have product available and that is all occurring at a time when supply chains are breaking all over the place. We are again. We are we are in a in a shit storm to kind of make it really simple and I'm very very clear that bifurcation is taking place.
And our focus on the focus of our shareholders is to ensure that we're on the other end and we're actually benefiting from this dramatic shifts that's taking place across industries in what consumers and I don't think we'd get back to normal I think there will be a new normal specially in retailing consumer behavior, and I think that new normal.
We'll be where this for some time hard to predict how long hard to predict what it looks like in the future, but we are definitely not going to be into or back to what we were.
Right. Thanks. Thanks.
Thanks call.
Excellent.
And next to the most too I met Diana with H.C. Rain light. Please go ahead.
Oh, Thank you the morning gaze.
I see the execution gone through and is you know Daremblum thing.
So you know you meant to any of these are the new guidance your own for <unk> any color on the 20 to 40 million I'm, saying you have to talk to more than the previous call and that's good engineer for us.
Yeah look by the way a minute. Thank you for being odd and you know we we we probably will spend time with you because I I think you've got your four year, where this probably around where it needs to be but the phasing over a quarter in the mix in our business. Obviously is is different in as a.
I've been choppy as as always but we'd love to work with you in in a line you that and I know the team will work with you on that.
I think the.
<unk>, if if you take our comments what would you could take away. It's just on the product side, we're already delivering based on current track a significant upside that more than covers what we had guided the reason why we're sort of staying focused on the 220 is as much as today.
I could see that upside coming through we see you're playing through I think hide spot on like where the world is changing dramatically every day and we don't want to sit here in light of further changes ahead uncertainties as to you know what things look like on the other end of rubber reopening of the economy and what consumer behavior is.
And then you know be stuck with that with that you know where that message. So we're very clear that the 220 is attainable based on where we are we're very clear that were already realizing the track to the upside we'd indicated we're also very clear that what happens a month from now it's completely unpredictable. So I think it's prudent that we <unk>.
They here and reinforced that you know we're already well on our weight to what we thought the upside could be but it's a perfect example, we didn't think the upside was in products and here. We are headed for a year were product based on the current track is capable of delivering about $190 million right. So that kinda tells you how fast things are <unk>.
Changing into business Hon anything you want to add to that.
Yeah, what I would out as a little bit of color. You know I spent the last two decades, plus N.D. specialty ingredients industry and with with a number of and markers into food beverage nutrition personal care and so forth and to be honest you know one other reasons I'm gonna downloads is clearly for the tremendous portfolio and and the growth.
<unk>, what I would say is looking at this in context, I mean, we've always need guidance on calling the 44% kind of year over year growth and on the recording basis, 80%. I mean, these are very significant numbers by any measure I would say and therefore, you know we're doing well just said.
In the context of a cold it 19 wishes a truly unprecedented situation. You know we are working hard towards achieving a one week I don't and we we will continue to do so throughout the year, but I think he's already percentages that are very significant by any industry standard.
<unk> things you click on or.
And then as you are seeing some of this migration towards online too it's going to talk about any initiative humor undertaking to Florida for your digital <unk> you know when faced with the current environment.
I, absolutely I mean, I'll give you I'll give you a few examples I could probably spend the rest of the dark or call with the examples of how the teams up pivoted, but a few examples our our field sales force because we we had a feel sales force that supported.
So for a physical stores and as as you all are probably aware of Ah. So four stores have been close since about the third week in March and that team has pivoted to providing online life chat and advice to consumers they pivoted to doing.
Online classes on Instagram light, we're doing you tube content than we are [laughter], we are aggressively online through social focused on.
Really engaging and getting our influencers to work with us in supporting the consumer me. This is a point in time, it's a really interesting point in time, where the consumer has gotten digital and the thing that's missing most of the consumers life is a human touch so our focus is bad let's spring human to that.
Little World and let's bring you went to the digital world by read the plane all of our talent as they work from home in a way, where we can give the consumer what they need and you can imagine at this point in time.
Humor at home, especially with a what happens inside of a house is experiencing dry skin add to that the anxiety stress, they're feeling and you've got the most unhealthy mix of what a curse the skin that any of us could imagine and so being able to counsel Hell advice and Guy and then.
Last but not least you know, we've we've done quite a bit and making sure. The supply chain is able to deliver because one of the things, we're seeing where the consumer is as much as they're looking for products to keep them healthy they're not able to get them in many places today. So we are that's really what we're focused on human touch through.
Juggle by redeploying all of our challenge and whatever that means more people on service lines more people on life <unk> more people answering comments on Instagram, our team's doing Instagram wife classes, and really making education to bigger and bigger part of the bread and door fulfillment being able to really deliver on.
When their place to our Biossance brands and catching up on the supply side with with with a pet ran I mean I'll tell you.
We have several weeks, where we couldn't get enough enough wipes baby wipes in stock at either our Amazon Dot com fulfillment or our own website right. So it's those things we've had to redeploy and focus to make sure. We can give the consumer a positive experience during this time.
Understood junk and.
And then this hand sanitizer business that you have you don't know being opportunistic around do you think this is here to steal this be sort of a short them benefit and then maybe you know if it really.
You know I I I think the short term aspect of it we definitely see stay in for a while how long that while it is and what happens with behaviors long term again, I really don't want to guess that right. The data is pretty interesting hand, sanitizer sales are up about 800 per cent when I didn't go.
He was color estimate.
No.
How big of a footprint and where are we expect to be as I said, okay hundred percent I expect the long term impact is for the industry to remain up about 400 per cent from what it was prior to entering this period and I see that because we're things are opening up everybody is required to have standard.
Ties are available for the consumer so we're we're we're we're dealing with 50000 hundred thousand in some cases 1 million unit orders from wholesale partners all over the place whether it's the folks at grocery outlet, whether it's convenient store chains across the country and as I said during the call we have.
And even started on Amazon right, we start on Amazon and about a week or so selling to hand sanitizer. So I see today, just a broad a range of demand from our online to wholesale to retail that you know again easily supports how to the volume that were ramping up too.
And then we're also doing it across continents. We're obviously in the U.S. my expectation in the U.S.'s, we end up with about a 10 per cent market share of the hand sanitizer market in the U.S. long term, we're launching production in sales in Brazil, and we have already sold somewhere near 80000 units in Portugal. So this is not a.
And the Portuguese business is expected to support the European market in in Europe, Although you case no longer part of Europe. The U.K. is sitting there with amazing constraints in getting hand, sanitizer. So I always think of this as the moment where.
Being able to scale up and deliver and do it with a very differentiated products that has the opportunity to be a market winter enables us to win the consumer at a point, where they're going to be using sanitizer for quite some time in their life I mean, my personal experiences I'm sure. Many of you I have also had is there is a great exam.
Oh I didn't use hand sanitizer before the last month now I have one in my car I have one in my office here and I have one in the house as I entered the house and I'm basically wiping my hand, sanitizer eight to 10 times, a day and I see that with my neighbors I mean, I just see that everywhere today.
I think we can be a big part of that solution and again, how how big the business remains and how long it stays with this kinda demand I think it's to be seen it I. This is part of a white hot and I have taken a very conservative view and how we think about a year and how we think about guidance.
<unk>, you know with respect to the balance sheet the <unk>.
Do you have an opportunity to potentially refinance the the you know the lower interest rates given the current environment.
Well, we will <unk>.
<unk> no no hot you're all yours, you're on this.
<unk> what was going to be looking at at every opportunity. We have as I said you know in one of my opening coalmines or being being with the company seven weeks. We've already made some some very good steps forward I think in terms of simplifying the data that schedule, but but surely we look we'll we'll look at on the market dynamics and see you know and that's when someone does.
Coleman's that I made but also joined with a follow up that you know we all working we are looking at this actively and simplifying and improving the economics is clearly a priority I will continue to be a priority and so you should expect to see a reduction as well as you know simplification and and the redux.
In the in the cost of <unk> two two shows the debt.
Understood.
<unk> appreciated.
I'm going back and <unk>.
Good thank you.
Oh, <unk>, Randy bearing pinnacle S.S. yet. Please go ahead.
Morning.
I I think that's great, but your system or break the or the brand kind of <unk>.
Easier for modeling.
<unk> the segment or consumer how much of the 11 and a half million and a quarter was hi, Pat how much was biossance <unk>.
Very good Randy good good morning to you I will tell you that the majority of the first quarter was biossance.
I I can tell you that pure Kane and pipe pets in the first quarter, we're probably less than half a million hi, and you probably have that number top of mind that is correct yeah.
Yeah, So it's a and again in the second quarter.
That is becoming much more balanced I I'll tell you. The month of April was almost 50 50 between pipe pet sales and Biossance sales.
Okay, and then given that hand, sanitizers seems to be an increasing part of the conversation what are the gross margins in hand sanitizer.
You know we the first production.
Was around the 40 per cent level and we now have this ability to get close to 60% as we start implementing a much more efficient supply chain approaches to the hand sanitizer.
And is that kind of the same with the Biossance dot com that when someone orders it directly through type pet dot com versus an Amazon when that comes on line. The margins are I mean, I just member Biossance, it's what 93% if they order their versus others like is that the same kind of direction.
It it it it is a it's not you know that big of a variable because of the demand profile of the sanitizer, but it is there is more margin in the online sales.
The other thing maybe to to to to to the thought is is an obviously important to the company is is kind of think about the cash cycle right. So the the the the Jason benefit from the increased online purchases his shoulder cast cycle and actually in some in some instances a negative 'cause cycle.
Goes we collect moneys from the consumer pretty much up on pushes whereas you know working with with with those flights inside you know typically 30 days kind of net so so all in all its its a margin play as well as a capital play.
No that that makes sense and then I want to follow up on the the outlook question that the person two colors mentioned you know in in a world of uncertainty when many companies are occurring guide them.
<unk> remember occur.
Ruder than yours I also think it's great they're going to work with M.S. to help him <unk>, let's quarterly numbers since you know.
According to what I model. According to call and you guys had a quarterly beat I think that really should be stressed.
And while it's prudent in the world when you're kind of waiting to Colorado Springs. My question is in any other normal year like X. code. It would we be able to say today that revenue for 2020 would be in excess of 250 million.
Very simple yes.
Excellent.
And then my last question relates to the eight K. Honda you mentioned that was filed on Monday, one thing that jumped out of neat.
Regarding the language of raising at least $50 million I. The end of May can you <unk> I know you kind of touched around it.
Elaborate on what you guys have planned and then the degree of confidence that your team has and getting it done whatever it's going to be fine may 31st.
Sure I can make a few coleman's I mean, we're obviously and I think we said this previously even before arrived we're always looking opportunistically and also looking at you know the financing needs. The funding needs of the company and this is what we will continue to do right and I'm looking at the real World markets.
You know as much as the question that was just asked around debt.
You know how do you guys think about well the same for the funding open company.
In the context, so that's what I would say.
Okay under understanding map or whatever to convert.
<unk> <unk> <unk> <unk> to that or.
I remember related to that.
The last kind of potential rays of magnitude.
I think what I will say is that we're strategically and since I've come on board, which again is only just being the seven showed weeks I'll be working closely with Joan and all those on the team two strategically you think about our needs going forward and that's what we're doing that's what we're evaluating and that's what what.
Thank you.
Oh, yes, I know questions how come from Grand cannot call it to knock on Canada. Please go ahead.
Congratulations and local board Han I.
I I just wanted it kind of maybe start off with.
And how much the mix.
Changes the on line to so what percent of your revenues might be online and the second quarter versus first quarter and then maybe for the year.
Yeah, Hey, Graham. Thank you for the you know the call with this look this is again another part of the uncertainty that creates a lot of variability I'll in right now.
All of our consumer sales online right. So and the assumption were making is that's going to be the case true that second quarter now I will tell you that the <unk> support stores have been looking at a restart.
True the month of June how that goes how it happens by geography, how consumers respond to that is all uncertain. So I think I think our best assumption is really what we're working towards right now which is that everything happens online through the quarter and then at the end of the quarter will look and see Where's consumer.
Behavior, and what's happening in physical retail.
Right.
Okay and by the way I I'd like to clarify when I say online.
Not all through our online properties right. We have three online properties four actually three that are that are that are very material biossance, Brazil Biossance U.S.
So for a dot com and then we have quite a few third party online assets through Amazon to target and to Walmart for the pipe pet brands. So I just want to make sure when I say online it's not just our on line, it's online across both us in our partners that the business.
<unk> completely too.
And then in terms of margins and profitability is similar March gross margin for the third party online versus the company online.
No the company online obviously, we we realize very strong gross margins as Randy highlighted earlier.
But in the third party online, it's actually more of a wholesale margins structure and not the same kind of structure. We have in our direct online sales all of that said I I want to emphasize that our own online has realized a significant shift in gross right. So.
<unk> well, we're seeing that in our in our overall weighted gross margin for the brands right Oh really going up you know in in in in all probably somewhere around three to 500 basis points as the shift or the mix sets shifted to our online, but it's not it's not.
Going from 60 65 to 90, because it's not all our online it's actually a mixed up our online and our partners online sales.
One of the other things that.
Interesting is your cost reduction program <unk> Eduardo is going I'm just wondering in this environment.
You can anticipate further improvement in costs it costs that you've referred to.
Margins.
If you could maybe try to quantify what that implement it might be in the course of the next 12 month.
<unk> emphasize right, we we have shifted our our production and expect.
You know they continue to benefit from scale and from take me cut 'em process improvements.
Those are already being sort of part of what we expect in one hand has a mention and we will continue to Luke additional two additional improvements as I mentioned when I did a little bit of a deep dive on this squealing and you know there are some market D.V.D.'s and improvements that we we have noticed will continue and we will continue to capital.
On those.
By and large we have already you know given <unk> quartering a role where we've seen these improvements we already have a good <unk> set of expectations around where to scale and and and operation on improvements will be for the rest of the year.
As I mentioned it in John mentioned all of their products are making we've made before so we really feel very confident than where we are going from a you know brought a gross margin and volume perspective.
Right. So I'm just for another 10 is or further improvement in say, the third and fourth quarter coming up or are you, reaching a higher plateau already.
No. We we are going to see further improvement not it's already baked into some of the expectations that we discussed.
Okay, great terrific.
<unk> last born Gram or is important because as you think about how why mentioned to phasing of the year with you know important part of the revenue skewed to the second half, but also emphasizing and Joan mentioned it to that we're going to be either the positive into fourth quarter boost considering.
<unk> have continued improvement on the abrasion side have been considered into that a into that assumption that expectation.
That's terrific improvement of the <unk>.
The scale. This is maybe a bit of a tricky or question, but.
Do have upside.
In terms of products, whether it's pipe at hand sanitizer or.
The the sweetener sweetener or or other products that are going to be growing rapidly.
It kind of incremental margins might you expect either in terms of incremental incrementally higher gross margin or operating margin.
Made more revenues and then you can take it.
Let me maybe.
Give you a couple of key points on on that one Gram right look the biggest swing.
That you know, we're we're cautiously optimistic on is what's happening in the consumer business and if the momentum continues will actually be at a point, where you know we were going to be quite a bit better than we've guided too and we'll have a strong gross margin profile I think.
The ingredients side it I'll I'll pick the sweetener as an example, I mean, I I think you'd wire to spot <unk>. We we know the sweetener production, there's quite a bit of expansion in margin happening in sweetener because of improve cost of goods to each of our campaigns. We know how much volume we're gonna make we're on track to doing that and the volume we can make this year.
At the cost we know we could make it has the sweetener that we can produce this year sold out and that's the way we kinda think about it. So we know sitting here there isn't there isn't a dramatic upside on some of our core ingredients. We do see some swing volume on <unk>, we're seeing that demand come through because we're not the.
You only skin care brand, that's doing well during this period, others are and we're seeing the demand persuade link come through a as a result of that right. So it depends where in the mix. We've got a good handle on the ingredients side and we know what the Outlasts. The city is and the big driver of a a really upset than the product side is what's happening.
Consumer and I would say that again, if everything we're seeing now is realized and there's a lot here that has to happen for instance, we said earlier, we really need to get to about a million and a half units a month runrate production of the sanitizer during the month of June we've got we've got the opportune.
That he set up to do that if we can execute on that and maintain that and the thing I didn't highlight is as a result of the sanitizer all the other products inside the pipe that Brad are up about 40%. This year right. So it's it's a it's a customer acquisition strategy that sticky.
Consumers love it and it's driving demand for all the other products in the portfolio as consumers come and visit our site. If we can retain that and we can get the production up and maintain the cost of goods profile that we have then you know the upside is we actually deliver a 30% he bit in the four core but that's the kind of range.
We're dealing with right. So we want to be careful that we we keep guidance where it is we'd give your transparency on what the upsides are and what we're managing too and and we focus on really executing right. That's that's when they use the number one priority right now is execute execute execute and ensure that we actually win.
Coming out of this so that we do in fact have a transformed business because we're there for the consumer were and others aren't able to me.
No no this is <unk>.
Other interesting the pet brand I was introduced and it you said earlier last quarter that launching fashion expect <unk> and it looks like all this the this is a brand almost ago category.
Killer in a way because you're taking shares that you're talking about possibly I mean, 10%, which is amazing in that market.
How big this.
<unk> line because you you I think you referred to.
Body wash or something which I'd not known about so so what what.
<unk> estimates for a pipe pet expectations for this year, what percent would be the and sanitizer and what percent might be additional product.
Okay, Here's the way to think about it we we came into the year thinking from a rubbing your perspective pipe that could do somewhere around $6 million, where we are now says pipe pet and the product pipeline or the product mix and pipette that was there like for like a is now looking more like 10 million or more.
And then you look at what's happening in though in the wash the clean and the sanitizer kind of market, which are all new excuse for us that that group of new skews is likely to generate north of 30 million and revenue. This year. So that kind of gives you a scale of what's what's happening here and it's all happening.
Very very fast and again I I would give you a a same kind of profile for biossance, except bio sciences much more mature and therefore the growth. We're seeing there is just around the base portfolio products in Biossance also doing a better than we expected for the year in this shift.
To to online.
Oh, that's great no sorry.
But ads event that you were speaking about ingredient side or possibly for vaccines could you explain a bit more about that because I don't think there's.
Asian for.
Actually whether it's just.
Area or an active ingredient for these farmers.
<unk>.
I I'll do that and then.
We'll we'll have to end with this question Grand because I'm I'm getting.
<unk> cut it so [laughter], but I, let me describe it in a very simple way Ah.
Think about the advantage as the thing as the turbo charger that could increase the advocacy of a vaccine today, it's predominantly use and children's vaccine for the flu and elderly peoples vaccines for the flu, that's where square lean as an AD you been is huge.
Mostly around the world. So it varies in its impact by type of vaccine. That's the other point to keep in mind.
And the other way to think about it is that the AD you been itself is about one third of the volume for a vaccine. So you can think of a vaccine as one third the active molecule one third the ads you event and one third a derivative of vitamin E. as a way to think about a traditional flew back.
Scene and again, there's a lot happening with vaccines for covert 19, everything from our in a vaccines to D.N.A. vaccines traditional protein vaccines and today. We are currently using our AD you event in his in in in one of the R. and eight.
Potentials, and and and then and another alternative potential vaccine and our focus here and we we need to actually not disclose much but our focus areas. We've got a few pharmaceutical partners that were in discussions with a night expect in the short term to be a in a place to have a pharmaceutical partner.
Which actually enables us to play into the vaccine space because that's not that's not our expertise we're not doing discovery or develop the of the vaccine. We are one of the components one of the ingredients in the vaccine that represents about a third of the volume and a critical part of scaling it and making it.
Or increasing the efficacy I hope that helps.
You want to understand if if you're just going to be a line with one or two or three partners and that's it if there's the vaccine doesn't work you are not involved or can you be involved whoever.
The vaccine.
Yeah, it's a hard to say at this point right again, we're in the middle up discussions you know I I can tell you. The the global health community is collaborating very strongly together. So what I would expect is if we have leading edge event, which we believe we do and the leading vaccine needs an agile then.
Then I think we're going to end up playing that's the way I would look at it but there's no it's hard to sit or today, and say whether or not an agile bench is going to be part of the winning vaccine. It. It's it's hard enough to know what is going to be the winning vaccine, but we're trying to understand that landscape and we're really meaning on a pharmaceutical partners as a way to understand and play.
That role.
Terrific good luck.
Thank you very much Brian book I'd like to thank everybody for your time today in closing I want to really think the Amherst team in our partners for keeping everyone's safe and healthy we've been very fortunate across the amorous family not to have any covert 19 cases, and that's really for the health up a tremendous amount of war.
Happening around our task forces to ensure that we keep our people safe and our environment safe I liked that we're all of you a good rest of the day and a good weekend and please keep your families safe and healthy and if you do watch a very different experience for a hand sanitizer for you and the whole.
Family one of the things we've seen with our hand sanitizer is that it's safe for children, it's safer expecting mothers, it's safer the whole family and you can do what many other consumers are doing what you're buying five to eight units at a time at type pets baby Dot com and if you like to buy from Amazon.
And the next five to 10 days, you'll be able to buy and get it from Amazon and that excites just because that will be another channel that we could leverage capacity for delivery. Thanks again have a good rest of the day.
Oh that that's concluded today's conference call you may now disconnect Caroline's and have a wonderful day. Thank you.
Yeah.
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