Q2 2020 Calavo Growers Inc Earnings Call
Hello, and welcome to Calavo growers second quarter 2020 earnings conference call.
All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions.
Please note that today's event is being recorded.
I'd now like to turn the conference over to Lisa Mueller Investor Relations for Calavo growers. Please go ahead.
Thank you operator, thank you all for joining us today to discuss Calavo growers second quarter 2020 financial results.
Good afternoon, we issued our earnings release and this document is available in the Investor Relations section of our website at <unk> IR talk Calavo Dotcom I'm here today with Jim Gibson, Chief Executive Officer, Calavo, and Kevin Danion, Chief Financial Officer.
Today's call management will provide prepared remark and then when we we will open the call up for your question.
Order to maximize participation, while keeping our call to an hour we will be observing at your question limit during the Q and a portion of the call participants can then reenter the queue. If you have follow up questions.
Before we begin I would like to remind you that today's call. That's will include forward looking statements under the federal Securities laws.
Forward looking statements are identified by words, such as will be intend believe expect anticipate or other comparable words and phrases statements that are not historical facts such as statements about our outlook and adjusted EBITDA are also forward looking statements.
Our actual financial condition and results of operations may vary materially from those contemplated by such forward looking statements discussion of the factors that could cause our results to differ materially from these forward looking statements are contained in our FCC filings, including our reports on form 10-K and 10-Q.
With that I would now like to turn the call over to Jim Gibson Jim. Please go ahead.
Thank you Lisa good afternoon, and welcome to Calavo its first ever earnings call.
Hope everyone is staying safe and healthy as we navigate through these challenging times in our nation.
During times of uncertainty, we think it is especially important to keep allot communications open an increase transparency with our investors.
Before discussing results I'd like to spend some time reviewing the unique aspects.
Calavo story as you May know we've been around for nearly 100 years. So that alone is a testament to our staying power.
Earlier this year I was honored to assumed the CEO role of this outstanding company as Lee coal step down as chairman President and CEO I.
I have had the good fortune of working alongside leap for 10 years as president of Red Dog Food Group a company that I co founded and was acquired by Calavo well Lee has left us proud legacy I'm, even more excited about our future.
First we're the leading U.S. publicly traded avocado company with global operations and longstanding blue chip customers bounded by farmers and over the course of our long history. We have successfully evolved the business and protected aircraft to meet growing consumer demand for all because those another healthy fresh.
Today Calavo through its three complimentary business segments fresh run about food group, where our of GE and Calavo food is a leading supplier of avocados as well as other prepared foods and refrigerated prepared fruits and vegetables.
Furthermore, we have a long track record of delivering real returns to our shareholders, including 18 consecutive years of annual dividend payout since our IPO.
Second.
The avocado market opportunity continues to be robust over the past decade, all because those aren't the name of green gold as U.S. demand more than doubled to 2.6 billion pounds. During that time period. This translates per capita.
Annual consumption of about eight pounds of fruit today compared to about three pounds 10 years ago abroad demand for the fruit is also trending upward, especially in Asia, well Cobot 19 will certainly disrupt some near term growth. We believe the long term potential for the avocado market remains strong.
Third our best in class operating platform is well positioned to capture growth opportunities ahead in recent years, we've reinvested nearly $80 million.
In capital to strengthen our supply chain. This includes expanding distribution and processing capacity and improving manufacturing efficiencies just as important the expansion of our own production facilities has reduced the reliance on co Packers, which I'll expand on later.
Our strong operating platform also reinforces our ability to develop our new hospitality market, which we entered through the acquisition is simply fresh fruit. We closed the acquisition this quarter and the new line of fresh cut fruit with longer shelf life, it's highly complimentary to our of keys retail grocery expertise through this.
Acquisition, not only do we expect to establish a strong foothold in the large and diverse hospitality market, but we also expect to boost margins by using club on facilities rather than relying on co Packers.
Calavo indeed.
It is ready and prime for growth.
Market conditions normalize.
As many aspects that make a wobbles store unique can be attributed to the decades long leadership of Lee coal, we're very crave grateful to lead for his many contributions and I'm honored to leave Clabo.
Through the next chapter of growth.
He left big shoes to fill the we have strong leadership team in place our operations here in the U.S. and Mexico, our led by a senior team with more than 200 years of collective industry knowledge and experience. Furthermore, many of them have had long careers with the Calavo family.
We also recently appointed Kevin Mannion to our Chief Financial Officer and promoted.
Joel fill but to our corporate controller and Chief Accounting Officer, Kevin strong background includes leadership role at several major food companies. He has deep experience in corporate finance operations in capital markets plus the history of building and leading high performing teams Joe was previously or division controller for the fresh and.
Food segments and now has assumed.
Greater responsibility at the corporate level, both have hit the ground running under some very challenging circumstances.
With the guidance of our experience board of directors, which is chaired by longtime director link Lebanon's our mutual goal is to build upon our strong foundation to drive continued success over the long term.
Now turning to covert 19.
We have been closely monitoring the situation is strictly following CDC guidelines to ensure a safe working environment for more for our more than 33500 employees across 13 facilities and operations.
We did experience a minor disruption in our Santa Paula, California packing house in mid May and several of our employees tested positive for Coven 19, we quickly close the plant for four days to have a third party sanitation company conduct a deep cleaning up the entire facility and added a variety of other enhancements to our safety protocols Fortunately.
We were able to reopen the packinghouse shortly thereafter and employees, who passed mandatory health screenings are back to work.
Since then we've had no new incidence of up covert 19, our proactive efforts have allowed us to minimize supply chain disruptions and continue to face we serve our customers as of today, our facilities are open and operating and I want to thank the team for their dedication and commitment during these challenging times.
Shifting to our result, despite significant impacts associated with cobot 19 in our RF GE and foods segments total revenue for the second quarter was comparable to the same period last year totaling $281 million.
Net loss was 3.3 million or a loss of 19 cents per share and the adjusted income was 7 million or 40 cents per share.
Evan will provide the detailed in his remarks, but I'll turn to an update on each of three business segments.
First our fresh segment, which procures and distribute topic, how does another fresh produce while overall second quarter revenues increased 13% year over year growth was constrained by cobot 19 sales fell sharply in mid March with the stay at home orders that affected retail store traffic.
And our foodservice customers gross profit also declined due to canceled orders being resold on consignment at discounted prices.
Costs associated with product returns and the rapid devaluation of the Mexican peso, which Kevin will discuss later. However, we were first fortunate that are complimentary foods business segment helped absorb some of the impact we redirected some of the unsold inventory and re purpose deeper guacamole, which can be frozen too.
Extend shelf life. We also donated a portion of the unsold inventory to local food banks.
The press segment began to recover in in April and May as consumer shifted back to normal buying patterns at retail grocery outlet.
And the foodservice industry began to open for takeout and delivery. In addition to higher volumes profit per carton returned to our historical average range as the quality of avocados improved compared to the first quarter.
Looking ahead, we expect gross profit per carton to be more consistent with our historic average we have higher volumes. This year due to an earlier crop season in California, and peruse harvest coming on the summer. Moreover.
The overall food quality has been improving since the first quarter of 2020.
Turning to our RF GE business segment, which creates markets and distribute the portfolio of convenient fresh prepared foods, including fresh cut fruit and vegetables.
Net sales for the quarter decreased 18% due to lower consumer demand for grab and go items and the closure of our Midwest co packing partner in March Kogan 19 concerns also put a damper on any hospitality revenue from simply fresh in March and April. So are you did not get any lift in revenue from the ACA.
Position.
As noted over the last three quarters, our Midwest co packing partner has had a series the plant closures that weighed on our result, this quarter. The co Packer finally closed its last plant and while we have strong national customer relationships, we were no longer able to service our customers not specific region.
Well. This will result in near term lost revenue, we had been working hard on transitioning out of this third party relationship into a company owned asset model, becoming more vertically integrated will allow us to have better control over our supply chain, while improving margins in the long run.
In fact, we're already seeing this begin to play out Archie as gross profit held for the quarter as the manufacturing margins for our own facilities improved over last year the margins of our newer production facilities in Georgia and the Pacific Northwest are continuing to improve both year over year end in on a sequential base.
Basis.
Net sales from our food segment declined 19% in the second quarter, largely due to lower volume as a result canceled orders and shipment delays from our foodservice customers that said we saw recovery in this segment in volume and gross profit following the most severe months of Coven 19, we also resumed product shipments to Asia.
In April, including our first shipment of guacamole products to Japan in late May in summary, while Kobin 19 had a meaningful impact on the second quarter results all of our business segments are on the path to recovery with visible opportunities ahead to expand sales identify and execute cost save.
Earnings opportunities and improved profitability.
With that I will turn the call over to Kevin.
Thank you Jim and good afternoon, everyone on the call I'm thrilled to be part of Calavo and I'm excited by what have seen in my initial weeks here the fringe benefits of fresh avocado its prepared meals to take home enhanced by data at my own home quite substantially.
Today I'll start by discussing our financial results for the second quarter, ending April Thirtyth, followed by our balance sheet and outlook.
Please note that all comparisons are year over year, unless otherwise noted we will also be discussing non-GAAP results and a reconciliation of non-GAAP financial measures is included in our earnings release.
On a consolidated basis second quarter sales were essentially flat year over year. The quarter began strong as we saw year over year growth in February and into the first few weeks of March However, as Jim mentioned, which helped in place restriction due to cope with 19.
We saw a significant negative impact on our business.
Foodservice sales fell sharply and retail sales declined as consumers shifted purchasing two non perishable goods.
The impact of the pandemic resulted in $6 million and canceled orders and an additional 9 million dollar reduction in sales run rate related to changing customer buying patterns from mid March through the end of April the simply fresh business acquired in February 2020, also generated $3 million.
Revenue from the same period in the prior year.
Well, we saw these negative impacts we did see improving sales to the retail channel as the month of April progressed. In addition sale to foodservice also improved as restaurants reoriented their businesses for curbside pickup and take out service, but still remain well below year ago levels.
Our gross profit declined 40%.
Year over year to 22.1 million from 36.8 million in the second quarter 2019.
In addition to lower sales volume gross margin in the price segment was lower due to a 3.4 million dollar foreign currency Remeasurement impact.
To provide clarity we have a V.A.T. receivable from the Mexican government.
The decline in the value of the peso from 18.91 to 23.93 Mexican pesos per U.S. dollar during the quarter led to did the decrease in the value of the D.A.T. receivable when converted into us dollars.
Well normally we benefit from a stronger dollar, which typically results in lower labor and material costs and this situation it worked against us.
As an update the peso was at 22.18 at the end of May So the 3.4 million dollar impact would have only been 2.2 at the end of May.
Furthermore, gross profit was directly negatively impacted by cost incurred due to canceled orders product sold on consignment and the closure of the simply fresh facility. These costs totaled an additional $1.8 million for the quarter.
Most importantly, excluding the impact of this currency issue and cope with 19 items gross margins were ahead of historical averages.
In addition, the uptrend in gross margins continued into May.
As generic expenses declined 7.4% to $14.5 million from $15.7 million into year ago quarter.
As a percentage of sales as teenage declined 30 basis points to 5.2% of sales in the second quarter 2020 from 5.5% one year ago, primarily due to lower performance based compensation.
Operating profit fell to 7.6 million in the second quarter down 67% from $23.1 million in the same quarter last year.
This decline in operating profit was largely the result of the lower sales volumes grading lower gross profit in the fresh segment.
Our income statement also reflects $10.3 million of unrealized loss on the value of our Limoneira stock based on a 32% decline in luminaries share price during the quarter. As a reminder, we filed a tenbfive one last year, but the current prices below our threshold.
We incurred a pre tax loss of $2.4 million prior to the impact of losses from unconsolidated entities.
Down from 25 million, a pre tax earnings and the second quarter of 2019.
Losses from unconsolidated entities improved too.
2.2 million loss in the second quarter 2020 down from a $3.1 million lost in the second quarter of 2019.
Net loss in the second quarter was 3.3 million or lots of 19 cents per share adjusted net income was $7 million or 40 cents a share.
In the earnings release, we provided a reconciliation of EBITDA and adjusted EBITDA, which accounts for adjustment for unconsolidated entities and onetime items.
We believe adjusted EBITDA provides a good representation of our business results. We plan on continue reporting Henry providing this reconciliation moving forward.
That said adjusted EBITDA for the second quarter, 2020 was $14.4 million down 46% from $26.7 million in the second quarter of 2019.
Now moving onto our three business segments.
Sales in the fresh segment increased 13% year over year to $170.9 million from $151.2 million and the second quarter of 2019.
However, that 13% increase mass the trends during the quarter as sales grew strongly in February and early March slowed sharply in mid March has shelter in place restrictions were enacted and rebounded in April and into May.
However, despite the higher sales gross profit in the fresh segment declined to $14.4 million or 8% of revenue.
Down from $27.8 million or 18% of revenue in the second quarter of 2019.
The lower gross profit resulted from lower profit per carton relative to a year ago and profitability was especially favorable.
However, as retail volumes rebounded in April and May gross margins improved and were above historical average levels in both month.
As I mentioned at the start of my comments the impact of the foreign currency Remeasurement reduced gross profit by $33.4 million in this segment.
Retail sales have now rebounded to exceed the pre covered level, whereas foodservice sales remain well below pre cope with levels.
In our upkeep sales declined $93.9 million in the second quarter up 2020 from $114 million in the second quarter of 2019.
The decrease primarily resulted from revenue losses.
The ending of our co pack a relationship in the Midwest as Jim had mentioned as well as gaining only limited sales from the simply fresh acquisition as the hospitality business pause due to the covert 19.
Gross profit increased slightly to $2.7 million or 2.9% of sales up from 2.5 million or 2.2% of sales from the same period last year.
The upward trend in gross margin is a function of the benefit of our shifting production to our company owned production facilities and we expect to see these favorable trends continue.
In addition at the ended the quarter, we took steps to reduce as gene a overhead costs, which will result in savings and the second half of 2020 and into 2021.
On the sales front, we've been pleased to see grocers and retailers, bringing back the fresh healthy food options that had temporarily been just located to make space for more shelf stable items.
In addition, we have focused on new product development with grab and go options for we both retail and new foodservice and hospitality customers.
For the food segment sales were impacted by the curtailed orders to the foodservice channel starting in mid March.
For the quarter sales declined to $17.9 million from $22 million in the year ago quarter.
Gross profit moderated to 4.9 million or 28% of sales from 6.5 million or 30% of sales in the second quarter of 2019.
Retail sales.
Trended favorably as the quarter progressed, and then again into May we also ship, our first guacamole dip and go Cubs to Japan during the quarter.
Turning to our balance sheet, we ended the quarter with $110 million of cash liquid investments and available debt capacity.
Our $50 million a total debt at the ended the quarter included 19 million related to our acquisition of simply fresh in February.
Our leverage is very low enabling us to continue looking for accretive opportunities.
As for the remainder of 2020, we would do our guidance based on the lack of clarity around the economic reopening and recovery.
Especially in foodservice.
We're pleased with the sequential trends as we progress into the third quarter with demand increasing in all of our businesses. However, we remain mindful of the uncertainties of the pace of the economic recovery.
That said, we're in frequent communication with our customers to enable us to understand end market demand and to recalibrate our business.
Maze results give us confidence as we expect adjusted EBITDA to improve sequentially next quarter from a combination of higher sales volume and seasonally lower input costs.
Since this is our first earnings call, which also make it makes it the best one yet I just want to repeat Jim's comments about maintaining an open dialogue with current investors our objective to attract new investors, while providing transparent communications on a regular basis.
I'll now turn it back to Jim.
Thanks, Kevin before we take questions I want to reiterate that Calavo as a company with strong roots and a long successful operating history, our robust operating platform as well positioned to capture the rising global demand for avocados and emerging trends in fresh and prepared foods. We also have a strong balance sheet.
The not only provides additional comfort during these uncertain times, but will also support future growth and finally, we have a very experienced leadership team and a board of directors focused on delivering profitable growth and returns to our shareholders as a leader in the injured in the industry.
We remain committed to being good corporate citizens and building, an even stronger legacy going forward I want to thank our shareholders for your continued support and I look forward to updating you on our progress next quarter's earnings call.
Until then stay healthy in say operator, we're now ready to take questions.
Thank you we will now begin the question and answer session. At this time, we'll pause momentarily to assemble our while roster if you'd like to ask a question. Please press star one on your telephone keypad confirmation Tony will indicate your line is in the question Q you made fresh start to if you'd like to remove your.
Question from the Q for participants using speaker equipment, it may be necessary to pick up your handset for four pressing the star.
Our first question comes from line of Robert Dickerson with Jefferies. Please proceed with your question.
Great. Thank you so much.
And thank you.
Having probably every conference call.
Yes, so look just a couple of questions or try to just keep it simple you know obviously, there's some pressure on the quarter given everything that's a play but then you know in the prepared remarks, you Mart and then there in the press release, you pointed to EBITDA hopefully be better sequentially in Q3.
So I'm just curious you know now I guess, you know given where through the Mark may which is the first quarter of that third quarter or started first of all of that third quarter. Just you know, but all of your commentary around.
Maybe a little bit of positive progression and foodservice and away from home, given increasing curbside et cetera.
Got it how how how you kind of more broadly CEO.
Yes around that demand recovery as you know as you are now in Q3.
Really more from a sales.
Sales perspective than an EBITDA perspective, where do my first question.
Hi, Rob this is Jim so yeah I.
I think the what we're seeing is.
After a very difficult March.
Which really saw us a feel the impact of the of the stay order and then kind of sequentially. The the weight of the of unemployment coming through.
It's kind of really put a damper on on consumer demand. Obviously, what we were really focusing on that time was a was really orienting on our supply chain and as I mentioned in the remarks about the about the impacts of coal that we we've got.
Six food plants in the United States then.
The one in Mexico, three packing houses a three value added distribution centers, so really focusing on maintaining a the supply chain company, United States and doing what we have to do at the factories to make our employees literally feel safe to come to work and operate and I think we've done a really good job of maintaining.
Matt and then as we the as we've kind of rolled through.
Marching into April we have felt a little bit more of a stabilization of the of demand meaning that.
Well, we're not feeling the the acceleration of a normal summer period, we are feeling.
Recovery from March through April and as we arrive in May.
We're pretty satisfied with the with demand and and with our ability to to convert into a into returns.
Okay that makes sense.
All right what a great you have done a great job keeping the supply chain moving.
In terms of just you know with that demand.
Yeah, obviously right.
Anyone's guess how quickly it comes back into what form what have you.
Yeah, we look at kind of just pricing dynamics from the U.S.J. weekly prices that we can all see.
Pricing in the past few weeks.
Over the last few weeks some may see looked down like fairly materially. It is I would assume that will be driven more by the kind of the demand the volume dynamic you know.
Obviously, the price volatility isn't always after announced.
But it seems to be now is that is that something that you would hope and expect to hope to recover fairly quickly.
Along with demand again, I kind of asked because.
Q3 that higher seasonal quarter.
I'm sorry.
Pricing is down but volume comes back it would seem as if there could still be some profitability pressure, but I'm, hoping that that pricing dynamic recovers quickly.
As as we get through the summer and demand increases hopefully that makes such.
Thanks.
Absent there there are a lot of there are a lot of variables at play right now so.
For sure I think I think we can say that that pricing is going to be impacted in the third quarters to some degree.
As we get other markets coming into the into United States for sure.
Theres, a very strong, California crop in place as well.
I will say, though that as the as that is occurring and we're feeling a bill our own consumer demand beginning to increase into the summer.
With really good control and I will say as well that.
Pretty much the quality I would say of the of the Pic is is getting better and better and as you know that allows us to dedicate a certain sizes in grades into certain customers and as long as we have control of that we can say, we can maintain a margin in that kind of environment very successfully.
Okay, great to hear all right I'll Oh pass it on from there. Thanks, so much.
Your next question comes from line of Mark Smith with Lake Street Capital Markets. Please proceed with your question.
Hi, guys first off I just wanted to hit on the SGN a cuts can you give us any more quantification on that and what we should look out for us geneight levels as we go forward.
I think probably one of the big things for me is that as I'm stepping into this role I'm really.
And for those of you don't that don't know me that well I came out of.
The RASM Renaissance food group environment, So now that I'm sitting in Calavo.
I'm able to see kind of the way that the weekend.
Synergize and use our SGN, a more and more effectively and so there will be opportunities as we go forward to two probably reduce cost as a as a part of that and also improve maybe the way that we structure and go forward.
Okay.
Perfect and then Jim I think you talked a little bit about the avocado quality you can see an improvement on a year over year basis and it it sounds like maybe if you wanted just reiterate it sounds like margin potential share that you feel like you're kind of back at historical averages are we looking in that correctly.
I would say, that's that's very fair and I really what I was referencing.
As in our conversations in the first quarter, we had just a very difficult.
Quarter with quality of raw materials on avocados, and so as we progressed into the second quarter and certainly a into the third it's coming back into more expected stable environment and in that environment. We can expect that we're we're running at our normal good.
Averages on the on margin.
Okay excellent. Thank you.
Your next question comes from line of Mitchell Pinheiro with certain didn't and company. Please proceed with your question.
Hi, good afternoon, and thanks to the for having a <unk> earnings call I didn't think I'm, a calavo earnings call would be part of the new normal, but I'm happy it is.
The I guess I. Just first question is can you help us.
Maybe frame how much.
Hi, how big student services as a percentage of your your sales either totally or for for the for the fresh segment.
Yeah, Yeah, I think yeah, sometimes you think about in a variety of different ways. So in our three segments.
I'll start with Renaissance as we as we're coming into the simply fresh acquisition that is adding foodservice. So that's an environment, where historically, we have not done much with foodservice at all.
And then the food section, which is a you know the the fresh guacamole side of things, we're a kind of at a 50 50 range as far as like retail versus the food service environment and then lastly, as we go into.
Well into the press side, then we're kinda in that.
That 15% to 20% range for foodservice.
Okay, that's very helpful.
Does it.
Is there any discernible difference in gross profit.
On the fresh side that is between foodservice and retail volume.
No I would say probably overall not but remember we are talking.
Sizes and grades and one of the great things about foodservice is that.
Services is happy to take the number two grade and so it helps overall in the kind of the the overall average gross margin of the avocado side of things that make sense.
It does.
Thank you and then and then.
You also talked about I mean, obviously you had the ability to freeze all muqtada goes for the guacamole I mean, some flexibility there I was just looking at your inventory levels.
Year over year and Directionally Danielle.
Obviously, there's a lot of parts there but.
How much can you commit.
The inventory.
In this time for like Foods business.
Is it is it not obviously unlimited, but do you have a lot of flexibility this take to take product and see if these favorable pricing.
Well and we have been doing that yes, I guess the the short answer to your question is yes, we can.
I will mention that as we've talked about capital investment in that area. We are adding more freezer space. So that's an opportunity for us going forward and when the environment is correct or right for us to take advantage of that.
And just one last question on or if she has.
Based on your your mix free code bid.
And now post coded.
Do you anticipate any any long term changes to your product mix as the result of maybe the way grocers will be.
I'd be redesigning stores and if so does it has any impact on margins as it has any does it give you an advantage during a disadvantage as you're looking forward in that segment.
Yeah I think.
So we go back of one more step I think Renaissance historically has been a solutions provider to our retail customers and so in this environment.
Now ill give the quick example, when.
When the stay at home orders kind of began to hit and you know unemployment.
Numbers kind of started cranking up a bit.
The concept of the grab and go sandwich at retail.
Took a back seat and so you know immediately our group is working with.
Our deli customers to begin to revamp items. So that they are more user friendly for the customers that are going through there and so that that is kind of the the environment that Renaissance operates in and it would not I mean, we would expect that we would be able to benefit from the March.
Tons that we get as a result.
Okay. Thank you all I'll.
Jump off thank you.
Your final question comes from line of Ben Bienvenu with Stephens. Please proceed with your question.
Hi, good evening, everyone and I'll Echo my appreciation for the same conference call.
I want to start on the Archie business I think you made some comments.
While the mid mid West attacker facility. It closed in March you might be on the top to identifying a new facility or new partnership could you elaborate on that a little bit if that is the case.
And then as you think longer term your mix of.
Company operated versus co packer facilities.
What do you think that looks like over the next several years.
Yeah, I think probably on the on the first piece of that what we really oriented on as we've begun to as we began to have problems in that region is to begin to kind of expand our our footprint in other areas to absorb maybe expected loss from from that region and so thats.
Part of that conversation with the new facility in Atlanta, and the new facility in the Pacific Northwest.
We still and then the second part of that as we still value.
Oh Packer relations.
But we also recognize that.
Where we have the capability and we can go into a region.
In the region makes sense for us to be there than we'd like to invest at this point our own assets to make that work.
The Midwest is definitely a location that we eventually want to be back into but it's exploratory at this point.
Okay. That's real helpful. Thanks.
My second question is related to crush realm Im Wonder how does the impact is posted in the transition of.
Who demands to retail or potentially meal kits as well at retail what extent has that positively impacted threshold.
What do you think can you just elaborate on.
What you're saying and that business on but the topline and bottom line.
Yes, I think I think the overall answer to that is is yes is that as a result of ER.
Of the kind of the heat the eat at home environment in this in this situation that we're in.
The direct to consumer kind of delivery concepts.
Fresh from is definitely in place to kind of take advantage of that they're developing and have.
A product set that is all the way from.
How the the meal kit that comes in a component a scenario.
That can be put together at home with recipe in like a 45 minutes to an hour scenario or all the way down to kind of like the quick serve that that can be handled in the in a microwave in a two to three minute area and then the inventory the in between the.
Crock pot kits and.
She pan dinners and things like that and so yes, I think in this environment, we're seeing a definite lift with a with fresh Raman their sales are up year over year about 55% I think we remain training and their losses are starting to come in line to in there and they're working towards the breakeven.
Point and so if we can continue to gain that acceleration in this environment.
They have got a bright future for us.
Okay, that's great Thanks, and best of luck.
Thank you.
Okay.
This concludes our question and answer session. The conference has now concluded. Thank you for attending you may now disconnect.
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