Q3 2022 SPAR Group Inc Earnings Call
Yeah.
Good morning, and welcome to the Spar group third quarter 2000.
Turning to financial results conference call.
All participants will be in listen only mode.
Okay.
My second like conference specialist by pressing the star followed by zero.
After todays presentation, there will be an opportunity to ask questions.
I ask a question you May press star one on your telephone keypad.
Your question. Please press Star then two.
Please note this event is being recorded.
I would now like to turn the conference over to Philip Coover with three part advisors. Please go ahead.
Thank you operator, and good morning, everyone. We appreciate you joining us for the Spar Group, Inc Conference call to review third quarter results for 2022.
Joining me opposite.
On the call today are Sparks, Chief Executive Officer, Mike Makinen, and the company's Chief Finance Officer database.
This call is also being webcast and can be accessed through the audio link on the events and presentations page of the Investor Relations section at Investor stopped Spartan stockpiled.
Rachel recorded on this call speaks only as of today November 14th 2022. So please be advised.
Any time sensitive information may no longer be accurate as of the day.
Any replay or transcript reading.
I would also like to remind you that the statements made in today's discussion that are not historical facts, including statements or expectations or future events or future financial performance are forward looking statements made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Forward looking statements by their nature are uncertain and outside of the company's control actual results may differ materially from those expressed or implied please refer to the earnings press release.
Please refer to the earnings press release that was issued today for our disclosures on forward looking statements. These factors and other risks and uncertainties.
Tribe in detail in the company's filing with the Securities and Exchange Commission management May also refer to non-GAAP financial measures and reconciliations to the nearest GAAP measures can be found at the end of our earnings release, our group assumes no obligation to publicly update or revise any forward looking statements filed either earnings press release, we issued.
Earlier today, we're supposed to talk on the Investor Relations section of our website, that's far in Dot com.
A copy of the release has also been included in an 8-K submitted to the FCC.
And now I would like to turn the call over to the company's CEO , Mike radicals like.
Thank you Philip and good morning, everyone.
I am pleased to share our third quarter results and comment on our progress on a number of initiatives.
But at the end of our prepared remarks today, we will open the line for questions from analysts and institutional investors.
Total revenue for the third quarter was $70 million. This reflects a 4% increase year over year on a reported basis on a constant currency basis total revenue grew by 7% over the year ago quarter as.
As a reminder, we report in three segments the Americas.
In Asia Pacific or APAC, I will comment on each one first on a reported basis.
On a constant currency basis war on an organic basis, which excludes the impact of foreign exchange.
Our Americas segment reported record revenue of $53 $7 million, an increase of seven 8% in.
In the Americas grew organically on a constant currency basis by eight 1% during the third quarter.
Additionally, the United States, The Americas Division includes Brazil, Mexico and Canada.
Within the Americas. The U S grew by 13% and delivered a record 32 and a half million dollars rebate.
Our core merchandising services business grew by 15, 5% in the third quarter with the addition of new clients and expansion in our current client agreements.
This is on top of six 1% growth in 2021 to comprise a 21, 6% two year stacked growth in our domestic business.
Our reset some remodels business continued to expand in the third quarter and grew by a strong 62% over prior year momentum continues as we are working with more than 20 of the largest retailers in the country often as a preferred partner to help them reset categories open stores remodeled locations and renovate.
Main bullish on the growth of our remodel business as the industry continues to invest in reinventing physical stores across key segments, such as big box discount drug and convenience.
Our Brazil joint venture reported record revenue growth of 13, 3% in the third quarter essentially the same as a 13.5% organic expansion.
This strength is based on winning new business and expanding current client agreements in.
In addition, we grew EBIT for our Brazil venture by 15, 3% the Brazilian AI has been relatively stable over the last several months. Therefore these numbers are largely the same in constant currency.
Our EMEA segment, representing our joint venture in South Africa reported revenue of $8 $9 million down seven 3% and on a constant currency basis expanded by eight 3% over the prior year quarter. We've won new clients renewed large multiyear agreements and increased EMEA EBIT on a reported basis.
14.7% organically EBIT for EMEA grew by a strong 41% over last year's quarter.
Asia Pacific segment reported revenue of 7.1 billion, which represents a decline of approximately 774000 or nine 8% on a constant currency basis total revenue improved by <unk>, 4%.
Based on the mix of China revenue decline of 1.8.
Japan declined 7.5% offset by organic growth in Q3 up one 5% in India, and a strong 134% increase in Australia.
Small numbers for this joint venture.
We continue to watch the APAC market. It makes up approximately 10% of our overall revenue, but it's immaterial to our bottom line and therefore, we are exploring alternative approaches to improve the leverage of these businesses and ensure we are focused on delivering value for our clients and shareholders.
With a solid organic revenue performance in the quarter up over 7% lets turn our attention to gross margin.
Our third quarter gross margin was 18, 4% compared to 18, 7% last year.
Our Americas segment, which represented 77% of the total business in the quarter compared to 74% last year maintain gross margin at 17, 2% same as last year.
We continue to focus on pricing productivity and leverage of technology during the quarter.
Our EMEA segment reported a strong 23, 4% gross margin an improvement of 370 basis points.
We worked hard in merchandize their productivity and margin enhancement initiatives. This year I am pleased this is reflected in our third quarter numbers.
The countries that make up APAC for Us, China, Japan, India, and Australia combined delivered a gross margin of 21, 2% down 590 basis points from the prior year same period.
While a small dollar part of our gross profit by 29 percentage drop year over year and gross margin dollars from APAC lowered the consolidated gross margin percent.
As I've noted several times, we will continue to focus on gross profit and I'm pleased with the results to date I believe there's more opportunity to improve margins and we'll continue our pursuit of this.
Relative to operating income we reported consolidated operating income of $1 7 million.
A number of onetime expenses related to our strategic alternatives announcement, including accounting consulting investment banking and other expenses that impacted our operating income for the quarter.
Combined with negative operating income from our APAC business. Our operating income is down 35% from last year's same period.
As I noted in the press release I expect these expenses and effects to be temporary in nature, while we stay focused on growing the topline improving gross profits and creating more operating leverage.
After Feight covers the detailed financial results for third quarter and first nine months of 2022, I will come back and share additional thoughts on our business progress with that I would like to turn the call over to stay degrees, our Chief Financial Officer to review our results.
Thank you, Mike and good morning, everyone.
<unk> operates under three sadness America, APAC and EMEA and Mary cause is comprised of the United States, Canada, Mexico, and Brazil, APAC is comprised of China, Japan, Australia, India and finally EMEA is comprised of South Africa, we have <unk>.
Call It a new shipment table in our press release that includes revenues and operating income for each of our segments.
Third quarter 2022, net revenues totaled $69 $8 million, an increase of three 6%, which includes $53 $7 million of revenues from the Americas $8 $9 million from India, and $7 $1 million from APAC.
As the U S dollar strengthened against other currencies this quarter and year, a number of our international businesses, particularly in Japan, and South Africa suffer some significant foreign exchange adjustments.
Excluding the foreign exchange impact our third quarter revenues improved by seven 2% a constant currency basis by segment for Q3, Yeah, Americas' revenue increase over the year ago quarter by seven 8% or 821% on constant currency basis.
EMEA Q3 revenues decreased by seven 3%, but increased eight 3% on a constant currency basis.
In APAC Q3 revenues decreased by nine 8% and it was up four four.
4% constant currency basis.
As Mike has mentioned earlier.
Americas segment revenue increase was primarily driven by positive momentum from our lease model work in the U S and Brazil.
Revenues decreased in EMEA was due solely to negative foreign exchange impacts for our South African business.
In constant currency EMEA revenues would have been up eight 3% compared to Q3 last year.
Headwinds in APAC for the quarter was due to pandemic related lockdowns in both China, and Japan, along with foreign foreign currency pressures impacting Japan.
Australia revenues were strong, but then that most of our small and did not offset pressure resolves for other countries for APAC.
Third quarter gross profit was $12 $8 million or 18, 4% of revenues compared to $12 $6 million or 18, 7% of revenues in the prior year quarter.
Selling general and administrative expenses for the quarter totaled $10 $6 million or 15, 2% of revenues compared to $9 $4 million or 14% of revenues in the prior year quarter.
SG&A increases were primarily due to increased marketing and non capital investment as well as consulting and port related fees.
Third quarter operating income was $1 $7 million versus operating income of $2 $7 million in the prior year quarter.
Net loss attributable to Spark Group, Inc. For Q3 was $32000 compared to a net income of $1 $2 million or six cents per share in the year ago quarter.
Adjusted net income attributable to Spar group, Inc. In the quarter was $212000 or one cents per share compared to $1 $4 million or seven cents per share in the year ago quarter.
Consolidated adjusted EBITDA in the 2022 third quarter was $2 $5 million compared to $3 5 million in the prior year quarter Q3, adjusted EBITDA attributable to Spar Group, Inc, with $1.2 million compared to $2 $4 million in the prior year.
You can find the GAAP to non-GAAP reconciliation of management's financial measures at the end of today's press release.
The first nine months of 2022 net revenues were $196 $6 million.
5% from the year ago period.
The segment's year to date revenues were $150 million for the Americas represented 76% of total revenues EMEA was $27 $3 million or 14% of total revenues in APAC with $19 $4 million or 10% of revenues.
Gross profit for the first nine months was $37 $6 million or 19, 1% of revenues compared favorably to $36 $8 million or 18, 8% of revenues in the prior year period.
Margin increased 30 basis points the improvement was due to strength in the Americas up 80 basis points and EMEA gross margin was up 250 basis points due to a successful improvement actions and favorable mix shifts in certain markets.
Despite strained in the other two segments APAC negatively impacted margin by 460 basis points due to pandemic, we'll have down throughout the period.
SG&A expenses were $30 million or 15, 2% of revenue.
Year to $28 million or 14, 3% of revenues in the prior year nine months, primarily due to a rebound of business found opinion.
Year to date through Q3, operating income was $6 $1 million or three 1% versus $7 $3 million or three 7% in the year ago period.
The first nine months net income attributable to spar group, Inc, with $1.8 million or eight cents per share compared to $2 $6 million or 12 cents per share in the year ago period.
Excluding the non controlling interest adjusted net income attributable to Spar Group, Inc was $2 million or nine cents per share compared to $3 $2 million or 50 cents per share in the year ago period.
Consolidated adjusted EBITDA for the first nine months was $7 $9 million compared to $9 7 million in the prior year.
Excluding the non controlling interest adjusted EBITDA attributable to Spar Group, Inc was $4 $9 million compared to $6 5 million in the prior year you can find the GAAP to non-GAAP reconciliation of management's financial measures at the end of today's press release.
Now turning to the company's financial position as of September 32022.
The company balance sheet remains strong and total world wide liquidity at the end of third quarter was $15 $3 million with $12 1 million in cash cash equivalents and restricted cash and $3 2 million Dallas up and use of availability as of September 30th 2020.
Yes.
The company's working capital as of September 30th was $24 $7 million in the accounts receivable balance was $66 million.
Finally for the three months period ended September 32022, we repurchased 74000 shares of S. T. R. P common stock under our board authorized share repurchase program.
With that I would like to turn it back to Mike.
Thank you. Thank you.
Timber eight we announced that the board had initiated a process to evaluate potential strategic alternatives to maximize shareholder value.
Process includes a full range of options, including a sale merger divestiture going private as well as other potential value creation opportunities to accelerate our growth and return profile as a publicly traded company. The management team is fully engaged with the board on exploring ways to unlock value for the shareholders spar.
We have not set a timetable for the conclusion of distribute and I do not have an update today. So it will not be answering questions related to the company's strategic alternatives process. After our remarks.
As always we remain optimistic about our business prospects, especially given the macro environment going into the holidays.
Business has not slowed our pipeline is robust and we have been successfully taking share from our competitors. While we recognize consumer confidence is low in the U S market and interest rates are rising globally. We do not expect this to have a meaningful impact on our plants.
We work with brands and retailers in segments that are needed in any economic environment. The list of our largest 10 clients includes those discount retailing market large box retailers were opening stores today branded consumable products that people need every day food products pharmacies and more <unk>.
Are these companies have been announcing comparable sales growth and expansion.
At the same time, we've begun discussions with a number of clients or prospects that are under commodity price pressures and margin challenges I would like to explore how spark can provide them leverage for.
For those with large field organizations. They were asking you ask about syndicated models, but share expenses.
Better use of technology to capture insights to make targeted visits and multi country agreements that can create leverage for them.
For our retail clients that are expanding we are talking with them about regional and national capabilities. They can accelerate their plans to capture more market share.
Our growth in our resets remodel business year over year as an example of this is part of our U S business grew 62% compared to the same period last year.
We are working with large retailers in the U S and Canada to help them prepare new stores and renovate current stores.
Like to give you more insight into this but just to give you a sense of the opportunity.
In May the National Retail Federation public published an article titled U S retailers announced nearly seven times as many store openings closings in the first quarter of 2022. They noted that consumers are returning to stores as the pandemic eases.
They also noted that the openings are concentrated in discount dollar auto parts in off price sectors. In short. These are our clients for spar. This presents a continued opportunity when a retailer plans to build or open a store they do not have any staff in.
In fact, most retailers don't hire the staff to work in the store until a few weeks before the Grand opening.
The fixtures signage and product begin arriving sooner than this so you need people, who know how to set up fixtures preparer store and merchandising.
Now most large retailers, who are growing have key resources and select teams who travelled to do this however, it doesn't make any sense for retail to hire people all over the country.
They are opening stores in specific locations. It will keep a small concentration of resources, but they look for experience Merchandizing partners to scale.
The result, they have been turning to spar for help with our decades of experience working in stores to merchandize categories. Your promotions.
Mind with our national reach we are perfectly positioned to support new store openings.
Well that is more than enough work to scale a large business. There is a constant flow of store renovation work going on at the same time.
Retailers are constantly renovating.
Let me frame this as an experienced retail executive there as a general rule of thumb in retail that you should touch the store every five to seven years.
You've all seen stories that have gone too long without care. When you allow the store to get run down customers stopped coming becomes self fulfilling.
As a result, you need to be constantly carrying forward investing in your stores within this five to seven year window, you typically have three tiers of renovation.
First tiers moving categories around painting, replacing carpet tiles, perhaps changing out some lighting I'm confident you walked into the store and noticed this type of activity.
We provide the resources to move categories of product in the store set new end caps and promotional fixtures, sometimes move product at night for the general contractor and then move it back before the store opens in the morning.
The second tier is a little more significant you might close the store for a few weeks why you would still new fixtures polished concrete floor at coolers change out the HVAC unit et cetera, you've seen this with signs in the windows at say, we'll be back soon or visit us at our store down the street signs.
Again more opportunities for spar with our ability to provide teams of resources with experience to ensure the store closure is as brief as possible.
The third tiers when the retailer wants to move the store remodel at bottom to top.
While this seems extreme for most retailers are fully renovated store, even if it has a mood dress positive comparable sales within the first few months.
The return on investment is generally strong.
This example, we provide teams of people for several weeks at a time in all parts of the country.
Get the dates and help our clients open the most compelling and successful store parcel.
But sitting fixtures signage product displays and preparing most anything that is not screwed up.
I noted in my second quarter comments that we also excel.
We launched this capability in Canada in 2022, and the first six months of launching this service in Canada. We've been awarded several millions of dollars of new work began working with two new large clients.
Our only constraint to grow this piece of business is access to labor.
Because the teams traveled sites stay for periods of time and this requires time to develop skills. We've invested in recruiting resources dedicated to identifying as future spar team member.
Our track record to date has been quite good and we are tracking our contact tier conversion rate weekly to ensure we are attracting the right talent and leveraging all of the appropriate technology.
As an experienced retail executive I am pleased to see the consumer returning to the stores, but as you know supporting online is also important and this is part of our work it's for.
We announced our intent to provide resources to support distribution centers last year. The attempt was twofold.
First they would provide demand for spar resources during the fourth quarter, which is typically slower in stores and the rest of the year.
Second it would engage for more deeply based on our strengths and the growth of online retail.
As I shared last quarter. This has begun to bear fruit I'm pleased to say that we now have more than 200 people working in distribution centers to help fulfill online orders.
Sales for this holiday season.
In addition to providing resources and distribution center to support online order picking we continue to test access to crowdsource, the images and artificial intelligence with our clients.
We believe our role is to innovate test and learn and stay ahead of the marketplace, which is deep rooted in our culture.
Now, let me make a few comments about our pipeline and opportunities.
As I noted earlier, we are not seeing a softening of the business. We closed eight multibillion dollar deals in the third quarter. In addition to many other $1 billion were smaller contracts, but.
A typical profile for one of these large agreements either replacing a competitor and providing in store merchandising across the geography, we're assuming responsibilities for a number of store remodels.
Beyond the third quarter results, we have several active multimillion dollar opportunities in our pipeline across the U S, Brazil, South Africa and Mexico.
The health of our pipeline also reflects our improved ability to expand client relationships across borders this is <unk>.
Something that is unique to spar.
Our marketplace.
We closed more than $10 million of new business in the third quarter is a direct result of our quality of service and relationship in one country.
Ceded the opportunity in another.
One example, we traveled the team to a second country to train and develop the capabilities and earn the right to perform more work going forward.
This type of global engagement is a differentiator for us I.
I traveled in the third quarter to Japan, Canada, and South Africa in every country executives want to learn best practices and capture ideas from other parts of the world. This is inside spark and bring to prospects and clients. Unlike any other business.
As you May know I have held international retail roles built the international services business and I'm constantly learning from global markets, the technology and ideas in Japan are different than those in the U S. The multilayered ecosystem, but retail in South Africa forces you to rethink about merchandising differently.
These learnings and insights we glean from our global footprint gives us an advantage in the market.
While we experienced fluctuations in our financials from extreme exchange rate variances.
My view is this is a small price to pay for access to new ideas insights and processes that can help spur win on behalf of all of our shareholders constituents.
An area, where we have aggressively leaned into this is retail analytics we've.
We've invested in resources offshore.
India business to expand our business insights and analytics offering.
Taking lessons learned from the best brand and retailers in the World. We're capturing data from every visit to provide insights to opportunities and performance challenges for our clients.
These resources support our business and clients in multiple countries.
We also believe that application of artificial intelligence over the 14 million pictures, we capture each year is important for <unk> previously impossible insights.
Began with our partner parallel data earlier this year to apply image recognition and we now have expanded this by applying AI tools on top of our spar view images to sell a broader business challenges.
It is just the beginning of our expanded analytics and insights work, we have much more to come.
I've said before that our business is business isn't recession proof, but when retail and consumer goods brand manufacturers are under pressure, we are potentially relief valve.
They can reduce the full time expense in the P&L. It looked for a partner like spore for leverage while maintaining a high level of service and excellent execution.
We are privileged to work with some of the best companies in the world such as dollar tree, Walmart Reckitt, Benckiser, Motorola Cargill, Mckesson advanced auto P&G and many many more.
We aspire to earn more of their business, we are winning new clients and pursuing our long term vision to be the most creative energizing and effective merchandising marketing distributing distribution services business on the planet.
Let me wrap up my comments by thanking our team and recognize their dedication and commitment each day.
I'm grateful that I get to work with this incredible group of people they know forward to a bright future together.
With that I'd like to open the lineup for questions operator.
We will now begin the question.
Asia.
To ask a question you May press Star then one.
On your telephone keypad.
If you are using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question please.
Sorry, then too.
At this time, we will pause momentarily to assemble the roster.
And our first question will come from Theodore O'neill.
Felt hills research. Please go ahead.
Thank you very much.
My first question is about our revenue in the Americas the at it it looks like it's accelerating a little bit your your year over year comparisons in Q1 was it was down four 9% and it was up three 9% in second quarter now it's up seven 8% in the third quarter is there are there market share.
Games going on there or is this just.
Comparisons to Covid periods that were artificially lower.
First of all good morning. Thank you for the question, it's a little bit of both so as you would expect early in 2020. One we were still coming out of some of the COVID-19 impact that slowed I think fundamentally every one in our space in 2020, and then extended into the early 2021 period. However.
We really feel quite bullish about the new contracts, we're winning and extensions to client agreements.
We already have.
My sense is particularly in Brazil, the U S and Canada in the last six months, we've begun to take share from competitors and are winning some deals that are really exciting for us.
And I hope to see that continue for another several quarters.
Okay.
Next question is.
On the input side are you seeing any inflationary impacts or or.
Covid Lockdowns in China that are having an impact on the day to day business.
We've continued to see in this third quarter impact from Covid Lockdowns in China and continued impact in worse than expected excellent third quarter, Japan again. These are not large bottom line contributors.
Fundamentally to the business, but Japan as you look in the country data was off on revenue before you deal with the exchange rate, 27% I think it was down.
There is sort of restrictions to meetings, you can have and restrictions about people going into stores doing merchandising work in Japan, and all and throughout the country.
China's continue to maintain a zero tolerance policy and it is had a impact on our bottom or EBIT. So if you look at the consolidated operating income for the impact of EBIT from China was about three and 4000, so well.
Still looking at that carefully the potential long term impact of that over our business to make sure that we're doing everything we can for the merchandisers as well as the business and shareholders.
I don't think we're through all of that yet deal I think China's policy remains the same.
The highlight for US, though is that it's a small immaterial piece of the bottom line.
Okay and then my last question is about the SG&A increases that were primarily due to increased marketing and non capital investments as.
As well as consulting and board related fees.
Here in your prepared remarks is that going to continue into Q4.
Yeah. Thank you for bringing that up they're probably could've been stated in reverse order the the fees related to the strategic alternative process.
<unk> been involved as I mentioned consulting and accounting and a number of other things.
Frankly, we were a significant impact on our SG&A.
In the third quarter.
I expect some of those to continue into fourth quarter, but it was more material in the third quarter that I think we'll see enforced.
Okay. Thanks very much.
Thanks Neil.
The next question comes from Michael Kay of Kay Associates. Please go ahead, yes. Thank you unless I'm mistaken, it's when I looked at your balance sheet. It seems to me current assets and current liabilities about are about the same.
Doesn't that put the company into a precarious position financially maybe you could elaborate.
Michael Good morning.
I'm not sure I'm clear on your question.
You on your balance sheet, that's it's as current liabilities and current assets they seem to be more or less the same but I would think that would put the company.
Company in a precarious position financially or somewhat.
Hum.
I'll I'll comment for a moment and say maybe I could ask you to.
And more specifically to Michael's point Oh.
I'm I feel quite comfortable with the company's financial position at the moment, we run on a revolver on an ABL with a receivable and the more we grow it.
The more it may appear that way in the balance sheet, but that's actually healthy for us over time, but they can you comment maybe.
It makes sure Michael's question at least the best we can is answered.
Yeah of course, so on the prepay Si.
The increase is driven by Brazil.
Brazil tax provision as you can see in the income as well as Mike mentioned that Brazil has been very profitable. So the tax provision is higher than what we were seeing and that got holistic into the asset now I'll be a cool liability side, it's actually it's a fund.
Hum.
Accounting changes as you recall last year, we have booked a $4 $5 million is that a change in control agreements and it re class got down to the hung up at the painting capital. So it's more of a non cash.
Balance sheet movement, then the cash itself and you know kind of to Mike's point, we're not concerning over the cash position that we're in today.
Okay. That's helpful. Thank you. The other question is it seems that there.
There's not that much competition in terms of what's part does and.
All over the World you got tremendous expertise and good insights into the retailing a market situation.
Are you doing anything to make the company and what it's doing more known to the Wall Street community.
To Michael's children to the Wall Street community beginning on after we resolve their issues.
So you just referred to the CIC in January 25th we put out an 8-K to explain that resolution.
I would say have been very active with our Investor relations partner I'm talking one on one with investors, we've been to investor conferences, and they've been doing as.
As much as we can to get continued visibility of the company to Wall Street, and we'll continue to do that.
Okay, maybe one of the numbers improve further.
That'll be helpful too.
Thank you yeah. Thank you.
Bye.
The next question comes from Marsh sedan of G O investing dot com.
Please go ahead.
Hi, guys. Thanks for taking my question here I have one quick question you talked about signing up some multiple deal multiple multimillion dollar deals and be up in the quarter I'd like to understand how that relationship works over time do you book revenue right away. It is it does that revenue come in in future quarters. So maybe you could help maybe shed some color on how that.
How that works [noise].
Yeah absolutely.
It's thanks for your question. Good morning. It is the agreements are signed such a commitment.
More typically one two or occasionally three years' time.
Which allows us to.
Engage or higher if we don't already have them, we'll share them in a syndicated waste of resources, we have but then the revenue comes quarter after quarter from there.
So we earn it each quarter and occasionally it can.
Grow in size, but.
But typically the contracts are nevertheless than what we originally agreed to and the revenue we generate great. Thanks, Joe. So the contract you signed this quarter having to hit that haven't hit the income statement, yet but are you coming in if that's correct. Yes. That's correct. Thank you.
Youre welcome.
And let me I'll add something to that too, but it was some of the agreements. We've been signing recently are actually will begin to really.
Yeah materialized in 2023.
Okay. So go to come yeah.
Okay. That's it thanks for answering.
Youre welcome good morning again.
This concludes our call.
A question answer session I would like to turn the conference back in front of mind.
That's for any closing remarks.
Operator, Thank you again for.
But that's not slaughtering my last name that's most people do.
At the conclusion I just want to thank everybody for your interest in the company and listening to earnings conference call. Today, I look forward to providing an update of our progress when we report fourth quarter results.
After the first of the year. Thank you again.
Yeah.
The conference has now concluded. Thank you for attending today's presentation you may now.
Disconnect.
[music].
Okay.
[music].