Q2 2022 Calavo Growers Inc Earnings Call
[music].
Good afternoon, and welcome to the second quarter 2022 collateral growers earnings conference call and webcast all participants will be in listen only mode.
Should you need assistance. Please signal a conference specialist by pressing to Starkey followed by zero.
I'll now turn the conference over to your host Julie Kelly head of Investor Relations for collateral you may begin.
Good afternoon, and thank you for joining us today to discuss collateral growers financial results for the second quarter of 2022.
This afternoon, we issued our earnings release and it is available in the Investor Relations section of our website at IR Dot, Colorado Dot com.
With me on today's call is Brian Cook, our President and Chief Executive Officer of clot, though we will begin with his prepared remarks, and then open up the call for your questions.
Before we begin I would like to remind you that today's comments will include forward looking statements under 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 expected improvements in revenue and operating profit are also forward looking statements. Our actual results may vary materially from those contemplated by such forward looking statements.
Discussions of the factors that could cause a material difference in our results compared to these forward looking statements are contained in our SEC filings, including reports on Form 10-K and 10-Q.
With that I will now turn the call over to Brian Cooker.
Thank you Julie and good afternoon, everyone. We appreciate you joining us today.
Let me start off right away with how proud I am of the progress we made in the sequential quarter over quarter improvement. We delivered in Q2, we are focused on the right initiatives and making the necessary changes in our organization to deliver results. In fact, the quarter has been very busy in terms of improving our business and our future.
I'd like to highlight for the most significant accomplishments.
In April we announced plans to reorganize our leadership and business segments to clarify roles authorities and Accountabilities.
As a result, we believe we have strengthened our ability to execute project Uno and to realize resulting customer service and efficiency improvements we streamline the organization into two reporting segments grown and prepared the ground segment will consist of fresh avocados Tomatoes and papyrus.
The prepared segment is the combination of our previously disclosed RFG segment and foods segment aggregated together.
We expect to report under the new segment structure, beginning with our third quarter results.
Secondly, we launched a brand refresh of the company logo tagline brand personality and website to support Colombo's One company vision.
The new branding reinforces our core values, which can be found on our careers page of club O Dot com and allows us to consistently present, our broad portfolio to the market under one name.
Now and into the future we will have connected the dots for our customers and the trade. So they can clearly see the power of our consolidated business brings to the produce aisle.
Thirdly.
We continue to advance project, who know with initiatives, such as product and ingredient optimization procurement and labor effectiveness freight consolidation and administrative synergies across the business.
We made progress up and down the P&L by driving efficiencies improving controls.
Managing inflation and importantly, raising prices at a continuously increasing pace.
Finally, and the most important accomplishment in the eyes of our team we translated the initiatives and projects to the P&L and are reporting tangible visible progress in our financial results.
We have delivered continued sequential improvement for the third quarter in a row.
As a highlight from the first quarter to the second quarter of this year gross profit improved by $8 5 million net loss improved by $3 7 million or 21 cents per diluted share and adjusted EBITDA improved by $7 $9 million.
Let's dig a little bit deeper into our segment results.
In the fresh segment for almost the entire quarter supply was constrained and the cost of fruit was historically high.
We serviced accounts and kept our customers supplied by leveraging our sourcing expertise and our inventory management processes to meet the needs of our market.
The fruit costs were high given extremely constrained supply coming out of Mexico, our price increase covered these higher food cost inflation of other input costs and modest negative currency effects, leading to a higher gross profit per case compared to both Q1 of this year and Q2 of last year.
For context, even considering the headwinds in supply cost and currency, we improved our average gross profit per case of avocados compared to Q1 'twenty two.
Q2 of last year by a $1 50 per case and $1 30 per case, respectively.
As a result total gross margin dollars more than offset the 13% volume decrease caused by lower available export volume from Mexico.
As a note our market share was flat year over year and versus Q1 'twenty two.
And our decrease in volume sold was consistent with the decrease in total exports from Mexico.
Turning to our GE business I'm proud of our team's daily focus on execution.
We have seen improvement in nearly every one of our key performance indicators.
We increased pricing by 3% compared to Q1 of this year and by 6% compared to Q2 of last year.
Our customer fill rate continued its upward trend, reaching an industry, leading 99% by the end of the quarter up from a very solid 96% in the first quarter of 2022.
Simultaneously with improving order fill rate, we decreased customer and consumer complaints by over 17% compared to Q2 last year and by 8% versus Q1 this year.
Our materials cost, we managed to temporary inflation through E sourcing strategies and production yield programs as part of project tuna.
Labor has also improved through employee engagement plans, we improved production staffing levels to 96% of required positions.
Now that our facilities are fully staffed.
Our training and efficiency initiatives resulted in labor productivity gains of 9% sequentially from Q1.
In terms of resource allocation, we eliminated more than 30 inefficient new product development projects and repurpose those resources to our product and ingredient optimization teams.
The some of our accomplishments and initiatives positively impact rfg's performance in the quarter.
Our segment gross profit percentage improved sequentially from negative 1% to positive, 2% and our margins have continued to improve as we progress through the third quarter.
Transitioning to our foods business, we are experiencing some challenges.
The same constrained supply situation that pushed fresh avocados to historically high prices has had an adverse impact on our processed avocado and guacamole operations.
The price of fruit used for processing nearly doubled versus the same time last year.
Our team raised prices with contract customers on three separate occasions during the quarter.
We couldnt keep up with the increasing cost of fruit.
As a result gross margins for our food segment, even after our series of price increases decreased sequentially Q1 to Q2 of 2022 from $2 2 million to $1 $3 million.
Yes.
We do see some light at the end of the tunnel for a whack, a mole and processed avocado products.
During the quarter, we expanded our sourcing operations for processed fruit and acquired some volume from new sources that have helped slow the inflationary pressures immediately we have incorporated these new options into our everyday supply chain. Additionally.
Additionally, <unk>.
Customers and consumers have been receptive to price increases and we are seeing retail prices on the shelf continuing to increase with little impact on sales velocities at present.
[noise] proactively we eliminated products that either no longer made sense for us to produce or for the customer to sell.
And even looking internally, we continue to evaluate our own processes to improve labor and throughput and efficiencies at our foods facilities.
Finally, and potentially the biggest impact to the cost of our fruit and margin headwinds in our foods business.
The summer avocado crop in Mexico should arrive in mid July .
We expect the new supply will provide some relief to overall prices, which should also flow through to our margins in the food segment.
Our food segment remains an important piece of our overall business and strategy.
No pressure. This segment is still gross profit positive we continue to see strong demand for both processed avocado and prepared whack a mole at retail and in foodservice due to the ongoing consumer trends for healthy flavorful foods.
Additionally, the business provides a strategic advantage to our avocado portfolio as it allows us to buy the full crop from growers for.
For example, when we take an acre of fruit, we allocate retail great quality fruit to our fresh segment and other grades to our food business theyre, providing an outlet for the entire harvest.
In summary regarding.
Regarding the foods business, we will continue working every line in this segment's P&L to drive a fair return on sales.
That wraps up our segment discussion now, let's move on to the balance sheet.
We continue to maintain a healthy balance sheet, we paid down over 22 million in debt in the quarter and ended April with $48 $1 million of total debt, which included $41 9 million of borrowings under our line of credit and $6 $2 million of long term obligations and finance leases.
Unrestricted cash and cash equivalents totaled $2 3 million as of April 32022.
Total available liquidity at quarter end was $15 $9 million, including unrestricted cash investments and available borrowings under the facility.
We believe our existing liquidity position is sufficient for our working capital needs and investment plans.
As we continue to implement project, who know and drive performance improvements across the business.
Capital expenditures for the year are projected to total approximately $15 million, which is consistent with fiscal 'twenty. One. However, we are being judicious in our capital allocation. We're prioritizing those projects, which have an extremely quick payback or provide a significant structural advantage.
In the future, we will not spend the capital unless we are satisfied that the return is right in.
And projects can be executed crisply and cleanly.
For a moment.
I would like to look ahead to the next several quarters.
We expect to see continued sequential improvement in our operating results, while generating positive cash flow from operations.
In modeling our business our investors should remember several things.
With respect to project Tuna, we announced project, who know in the third quarter of 2021 and targeted approximately $70 million of annualized EBITDA improvement within two years.
As of the end of Q2, we achieved approximately $13 million in positive impact.
Last quarter, we further indicated that investors should think about project do no benefits in terms of sequential gradual improvement over the next seven or so fiscal quarters.
While inflation headwinds have been more significant than we originally anticipated.
We expect steady progress will continue subject to seasonality.
And that the project do no benefits will be predominantly recognized in our RFG business.
Yeah.
As it relates to RFG and we start thinking about the next fiscal year, our RFG business is progressing toward our target gross margin range of 10% to 12% by the end of 2023. However, also remember RFG has some seasonality and profits in the back half of the year.
<unk>, usually outperformed the front half of the fiscal year.
In relation to avocados demand continues and the cost of avocados from Mexico are historically high.
As supply normalizes, we fully expect avocado prices in the market to decrease.
Even as we anticipate supply and prices to return to normalized levels, we expect our sourcing initiatives and the breadth of our customers across all distribution channels and all product sizes will allow us to maintain gross margin per case within the historical range of three to $4.
Yes.
Specifically for our foods business, we are still seeing cost pressure for fruit used as ingredients in our walk of moly and other prepared foods.
We will continue to increase prices across our customer portfolio and our food segment.
However, we believe the high prices of raw materials will continue well into the third quarter and therefore food segment margins will remain compressed.
And lastly.
As an overall outlook on our business, we expect inflation to continue.
And we plan to combat higher cost with all the tools at our disposal, including pricing actions across our portfolio throughput and labor productivity initiatives and sourcing programs to leverage our scale.
Now finally, as one more update item before I conclude my prepared remarks, Colorado is conducting a search for a new chief financial officer, and we're working with an outside search firm as well as within our own professional networks to identify candidates.
Interviews are already underway.
While not one single initiative project or program has been postponed slowed or halted while the CFO chair is open.
We are moving with great speed to place a successor.
However, finding the right person not speed is our primary goal and I'm confident we'll do that given the strong slate of candidates we're interviewing.
In summary, I'm proud that we are controlling what we can control and our initiatives and efforts are showing up as sequential improvements in our operating results.
I'm happy that our team has embraced change and is driving our performance improvement within everyday relentlessness.
However, while happy and proud.
I am not and our team is not yet satisfied with our progress.
We expect and hold each other accountable for continuous sequential improvement and we will not rest we strive to be better today than we were yesterday and better tomorrow than we are today.
We also know that while we have several metrics that are important to the health of our business.
<unk> in our minds.
As measured by what shows up in the financial statements and how fast we are driving cash flow in our business.
That concludes my prepared remarks, now I'd like to turn the call back to the operator for questions.
And at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Confirmation tone will indicate your line is in the question queue you.
You May press star two if he would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions.
And our first question comes from the line of Eric Larson with Seaport research.
Please proceed with your question.
Hello, guys.
Everybody says that.
Eric we're doing well. Thank you how are you.
I'm well. Thank you. So my first question is.
We don't have I don't have the Q yet is this all it I haven't seen it.
You when you look at your avocado when you look at your fresh you fresh margins in the quarter.
Were they were they below your three to four dollar number or.
Where are you within that range.
So it's a great question and you know Eric you've been around this long enough and you know when you're in a commodity business. Almost every quarter is unique and this was a unique quarter, we had very strong demand by.
Combined with was actually a lot less available product to sell.
And I think our organization did a really nice job of really nice job in managing our gross margin per case in fact.
Comparative to our historical range it would be much higher than our gross margin per case now we were higher than our range. Our gross our gross margin in the second quarter was higher now I think we were priced right in the market.
The market moved up we were priced right in the market, we satisfied our customers we serviced our customers, but it was really some of our sourcing initiatives that allowed us to generate that gross margin improvement, but it was above the historic norm.
Again, I would expect that it would normalize back to that historic norm.
But I think it was it was a really unique quarter in that our gross margin increase and expansion for the quarter was able to offset a 13% volume decline and still show improvement quarter over quarter.
Okay, Yeah got it so yeah.
Are we starting to see other supplies coming out of Mexico, how how long.
Or would you expect to see sort of these really really elevated we're talking out some or a 70 to $80 a case a carton.
Really high costs are really high prices when might that start.
Going back down.
We kind of are seeing the summer bloom and the rest of.
The initial estimates on the summer Bloom say that there'll be some relief in available product and that would usually start mid July .
But.
We're just trying to manage our category is that as its presented with high prices. We're trying to keep our inventory really tight I think one of the advantages of being a marketer of of fruit is that we're buying and selling at daily pricing each and every day.
And we're carrying a week a week and a half inventory so.
As the market moves up and down.
We're able to kind of move along with it very quickly I mean, it doesn't mean that we'll never get caught.
In our situation, but I think over the long term, having that ability to move up and down with the market buy and sell every day at a quoted price really is an advantage is as you see it come to this high market prices.
Got it.
My final question before I go back into queue.
The pricing at RFG.
On an issue for some time.
It looks like it's starting to get better.
Do you need more pricing where did your costs continue to increase again this quarter like we're seeing at other companies.
And where do you think you are on sort of price recognition benefits.
You know I would assume that's going to continue to improve over the next few quarters, but.
My sense is was a 2% gross margin.
Gross profit margin I'm, assuming you are not giving full pricing benefits yet.
It's a great question, Eric but let me also put some context to that first and foremost we're we're kind of getting improvement. If you look at our P&L we're getting.
Improvement from top to bottom in the P&L now we've talked about it's going to be gradual we cannot hit a 10 run homerun right. So it's going to be gradual but if you look at our overall price increase I think we were a 6% price increase year over year year over year.
3% quarter over quarter now some of that is price increases that went into effect during the quarter. So we don't have a full impact of that but it's not just price increase.
We were able to experience really only 4%.
No I'm talking sequentially quarter over quarter material cost improvement, but we offset half of that with yield improvement on our manufacturing processes on our on our fresh cut processes, our labor productivity increased 9% from the first quarter alone. So we've got the roles built when you have the roles.
Filled you can train you can work on efficiency initiatives and that's starting to pay off too. So I think the very positive thing for me to think about in in RFG is remember we've kind of talked about a two year plan with RFG getting getting to those target market Mark.
<unk> of sort of 10% to 12%.
But each month, we're making progress I mentioned during the first quarter earnings release that January was the best month out of the quarter well guess what February was better than January March was better than February and April was better than Denmark. So we're even in during the quarter during a quarter, where overall we saw two.
Percent gross margin.
April was the best month of that quarter.
Okay. Thank you.
Yeah.
And our next question comes from the line of Mitch Pinheiro with Sturdivant and company. Please proceed with your question.
Yeah, Hi, good afternoon.
Hi, Matt how are you.
Oh well.
We did avocado last night, so that was good.
<unk>.
I'm trying.
Hey, so so staying on Eric's question is last question RFG.
Could you talk about.
To some detail like within your cost of goods in RFG.
What's the percentage of labor.
Fixed cost in materials, or you know or and where where has that gone it's everything up directionally.
So let's I.
I want to protect.
Our our competitive information.
Information, but let me give you a general.
Feedback.
And then these are all comparisons to the first quarter, because remember RFG is really a story about sequential improvement quarter over quarter not versus last year. So much has changed that so I'm really talking to you about changed from the first quarter.
From the first quarter labor productivity is up 9%, so labor as a percentage of overall sales is down.
Material costs is up only 2%.
So we put in some E sourcing initiatives, we put in some RF.
RFP initiatives.
Helped temper overall cost inflation on the buy side, but then an important part of that was the processes, we were able to drive in on the actual shop floor, and we offset 4% cost inflation with our yield improvement.
We had actually one 1% material yield during the quarter. So we were able to offset a lot of that cost so really only 2%. So.
Materials as a percentage of overall sales I'd say, we're about saying even in a.
Period, where.
Transportation costs have been increasing we mentioned during our last call that we put in a nationwide RFP and we're going to yield some cost benefits out of that that went into effect in the second quarter, we actually saw transportation as a percentage of revenue decline in RFG.
Got it.
And then pricing went up so again.
I wanted to be.
I want to be.
Complete and robust and our answer RFT will not hit a 10 round homerun, we're going to need time, but we are getting gradual sequential improvement and he's coming throughout the entire P&L.
Not just pricing.
And I guess.
So then that was very helpful. Bryan Thank you for that answer.
But I guess there was important thing is ultimately have to grow volume need revenue growth and particularly volume growth.
Where how do you see that coming is this is this.
I know you've cut back on Skus and underperform excuse certainly but is this coming from new products are you going to are there new customers. You know that that that you know about that are coming are where I'm.
Just is it gonna be mark taking market share from other vendors can you talk about how you see the components of the revenue.
Yeah, I can and I'm going to describe it in broad terms.
Mitch I think it's really important to remember that during this quarter, we improved pricing.
We improved our cost of goods sold efficiency, but the fact of the matter is we improved two really critical coal customer service metrics fill rate, which is in the last month of the quarter was almost 99 over 99% so over 99% of what a customer ordered we delivered on time.
That is really special and our produce and fresh cut operation and then secondly.
We decreased customer and consumer complaints during the quarter.
Simultaneously with increasing fill rate we decreased customer complaints.
That is one of the ways that we win service that we win customers as we demonstrate our service levels. So if I was.
Just didn't want to lose that in the in the context of the script. It is a really important sales strategy.
There is the growth going to come from first and foremost the category is still growing grabbing growth grab and go fresh cut produce is still growing it's growing on a on a dollars basis, because obviously, there's some price increases, but it's growing on a unit basis too. So we see some growth from the category also.
Together, we also have.
Certain customers that were looking to expand with either we currently do their business and are looking to grow in terms of another distribution center to cover or another region to cover or potentially another segment.
We do fruit with them only but now we can do fruit and veg. So theres a block of course, a block of existing customers that we want to grow with and then lastly, there is new customers that we want to grow with.
And you can say that that's okay that might be share.
That is just trading between competitors and I would agree with you there, but we're not interested in in gaining share by buying customers. We're working too hard on price increases, we're working too hard on efficiencies.
Not what we're interested in we're working we're interested in winning customers on service on availability on.
The completeness of our offerings and just being relentless in that every day. So I think those are some of the areas that you'll see growth on the customer side with us.
And then.
You know you mentioned grab and go still growing.
You know just in light of the.
You know inflationary pressure on the average consumers.
Spending.
Spending budget for food do you think.
You know you know.
The fresh cut fruit, even fresh cut vegetable would be at risk at all.
Some trade down effect.
It should inflation remains stubbornly high.
It's a great question.
And here's a perspective on that.
Even though.
The price of these products at retail are increasing the fresh cut category continues to grow on a volume basis.
Okay, so even though the prices higher it's growing on a volume basis and I think that's that's.
For two reasons one is.
The lure of convenience and grab and go right now is still very strong.
People have less time and people have less time to prepare products and the idea at home meals at home and the idea that they can grab something quickly is still strong so the growth and grab and go convenience is still strong and I think helping the overall fresh cut produce.
Category consumer trends in health and wellness are still strong. So again there is some support there.
And then lastly, and this is probably another area of growth.
We also see grab and go and fresh produce items.
More and more prevalent in the convenience channel.
So we're a category five or seven years ago might only be a traditional retail now you see it a traditional retail now you see it a convenience 19 at airports.
Now you see it at at other.
Non traditional retail outlets and I think that all continues to help the category grow so while higher prices.
I'd say are putting some pressure on the category overall, there's a lot of tailwind that that are.
Let's say covering or exceeding that that downward pressure by price at least what we've seen today.
Okay.
Just one last question if I can get it in here is just on the avocado.
That business can you talk to any differences in in in growth revenue volume between your retail and foodservice.
Channels.
Well.
Unfortunately, it's tough to talk about growth in a quarter, where supply is constrained. So overall, our volume was down 13% in avocados, and thats down a little less than than the.
The imports from Mexico, and we were able to soften some of that impact with sourcing from other regions. So.
I'd say the supply constraints make that comparison really difficult overall, our foodservice volume is down.
Versus the year before versus Q2 of 'twenty, one not unlike our overall volume is down versus Q2 of 'twenty. One so it's really hard to kind of say one segment was was.
More affected than the other win when both were dealing with supply constraints I am excited that overall our market share stayed about the same.
So again, we're dealing with a very unique market extremely high prices.
Constrained fruit and yet somehow we managed to service our customers find enough fruit in the market that we could.
Managed to keep our market share the same and Oh by the way do that while at least temporarily I would say doing a hell of a job expanding our gross margin per case.
Okay, well, thank you for taking the questions.
Yes, no problem. Thanks Mitch.
Yeah.
And again as a reminder, if anyone has any questions you May press star one on your telephone keypad to join the queue. Our next question comes from the line of Ben <unk>.
<unk> with Lake Street Capital markets. Please proceed with your question.
Hi, Thanks for taking my questions. Just a couple for me here first of all just a point of clarification you talked about the targeted gross margin structure the RFG business.
And coming out of next year at 10%, but noted the seasonality.
The seasonality of that business.
Is your is your target kind of full year, 10% plus gross margins for fiscal 'twenty four out of out of that business is that correct.
Likes to be at that run rate.
Going into the fiscal accounting for it we'd like to be at that run rate.
Got it got it that's what I thought just wanted to make sure I heard that right.
Then one other thing.
Then sorry, I'm almost obligated to say this too.
Look our in our entire process on our entire culture is based on continuous improvement. So when we reached the goal. We've just got a drive for something better.
Got it.
That's.
Aspirational okay.
Got it got it fair enough.
And then one other just kind of Big picture question from me I mean with the turnover in the C suite over the last couple of years I'm wondering if you can talk about any ripple effects seen throughout the rest of the organization and the extent to which you've seen.
Turnover.
At lower levels, perhaps attributable to.
Two lots of of.
Of folks in the C suite over the last few years has it been pretty stable below that level or have you guys had to deal with challenges in turnover maybe.
It maybe that we don't see.
There will be a press releases.
I think overall I would say it's stable now that doesn't mean, we haven't had a loss or two here or there.
But what's been really important and so over the course of the last.
A couple of years and particularly over the course of the last six months, we've added both talent and structure to help our operation be more sustainable so and I'll use. The example of our recent.
A departure of our CFO there isn't one project not one not one initiative not one program that slowdown was canceled was stopped or or deferred.
Cause of that of that resignation, we now have people in place an infrastructure in place to keep that going and in fact I, even like at some point to not even ever talk about project to know again ideally I'd like that every one of those projects to be embedded in our everyday life.
For instance, now I'm, 100% confident.
Our our employees and our sales employees have pricing and pricing for inflationary cost pressure embedded everyday in their life. We don't go a day without thinking about pricing I'd like to think that labor productivity is embedded in our operations every single day, we measure it every day we.
Measure it every hour of every shift and we can compare that so again I think part of what we've been able to do over the course of the last six months, but even the last couple of years.
Is put infrastructure and talent in place so that our operational improvements are sustainable and our processes are sustainable.
And that's really critical to help manage when you do have some some turnover.
But to specifically answer your question.
We are our head count our resources beneath the sea suite have been relatively stable.
Okay great.
Good to know and helpful context, I think last couple of years that made everybody rethink how they how they operate on a daily basis. So good to hear that you guys are spreading that throughout the organization.
That does it for me congratulations on a really good quarter getting some progress here flowing into the P&L. It's great to see you looking forward to continued progress here in coming quarters. So thanks for taking my thank you. So much. Thanks a lot appreciate it.
And we have reached the end of the question and answer session I will now turn the call back over to Brian Cooper for closing remarks.
Okay, well, thanks again for joining us for listening in on the.
Prepared remarks, and then the Q&A as well, there's a couple of things before I close that I'd really like everyone to remember first and foremost we're really proud of this quarter, we're proud of the quarter, but not satisfied we know we have more work to do across our business and we've got the projects and plans in place to do it.
I've been really excited about our fresh business this quarter not only in the avocados, but our tomato program did really well and I think we took advantage of some unique.
The market circumstances, and eventually those will normalize and our returns will normalize to regular levels, but but we were able to take advantage of that I am excited about the RFG progress.
Again.
We're going to do this kind of one base hit at a time and slow and gradual but going from minus 1% to 2% positive gross margin and then having the third month of the quarter be your best month out of the quarter.
It is a really positive sign for our organization and I'm really excited that in the Grand scheme of all of this we've worked our balance sheet too we've worked receivables we've worked.
Collections, we've worked our accounts payable and we managed to pay down $22 million of debt in the quarter.
It was really good for the EBITDA, we were generating so a lot of good things are happening.
We continue to press forward, we continue to work for sequential improvement sequential month over month quarter over quarter improvement and we're going to do that every single debt. So again. Thanks for your time I want to I'd also be remiss, if I didn't thank the employees and and the supporters of Carlyle.
<unk>, who are out there trying to do something better today than than they were yesterday and we appreciate everybody tuning in and hope you have a great summer and look forward to talking to you. When we can thank you.
And this concludes today's conference and you may disconnect your lines at this time.
You for your participation.
[music].
Yeah.
Okay.
Yes.
[music].