cbdMD Inc. Q2 2023 Earnings Call
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Good afternoon.
Welcome to C. B D M D S Inc.
March 31st 2023 second quarter of fiscal 'twenty three earnings call and update this afternoon. The company issued a press release that provided an overview of its first quarter results and subsequent filing of its quarterly report on Form 10-Q Today's conference call is being recorded.
Good.
And will be available online along with our earnings press release, covering our financial results and non-GAAP presentation at C. B M D dotcom.
In accordance with the C V D. M D retention policies all participants on this call are in listen only mode. The call will be followed by a question and answer session. At this time I would like to turn the conference over to Brad Whitford, The company's VP of Finance Brad. Please go ahead.
Thank you Ariel and thank you all for joining C. D. D. M D. As of March 31, 2023 second quarter of fiscal 2023 earnings call and update on.
On the call today, we also have Ronan Kennedy, our interim CEO and Chief Financial Officer, and Dr. Civil Sweat Civil Swift, our Chief Science officer, we'd like to remind everyone that various remarks about future expectations plans and prospects constitute forward looking statements for purposes of the safe Harbor provisions under the private Securities Litigation Reform.
With 1995.
D V D. M. D cautions that these forward looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated including risks described in the company's quarterly report on Form 10-Q for the quarter ended March 31, 2023, and our other filings with the SEC all of which can be reviewed.
On the company's website at Www Dot CBD M D dot com or on the SEC's website at Www Dot FCC Dot Gov.
Any forward looking statements made on this conference call speak only as of today's date Monday May 15, 2023 D. V. D. M. D does not intend to update any of these forward looking statements to reflect events or circumstances that would occur. After today's date, except as may be required by federal securities laws.
With that I'd like to turn the call over to Brendan.
Thank you, Brad good afternoon, everyone, and especially to our shareholders.
Our results in the second quarter show that we are building.
Right strategic plan and the right team to deliver on results make no mistake operating our industry remains challenging we continue to have work left in order to deliver acceptable results, but we have proven that we are consistently delivering improvements and getting ever so close to a profitable quarter.
22 was a busy year of change for the company, we moved to an asset light model shutting our manufacturing overhead we made hard decisions to say goodbye to many of our colleagues and friends and significantly reduced our staff. We made leadership changes shed unproductive contracts in repositioning our product portfolio to a higher strike the offer.
In 2023, we continue to operate with conviction to implement further cost controls and are now operating with a sense of urgency across the entire business. During the second quarter, we changed out our entire marketing team our agency partners and revamped our marketing spend.
As a result, we stabilize the direct to consumer revenue on significantly lower spend.
Well year over year results were down we generated positive sequential revenue growth for the quarter, Despite significant changes to our organization and spend levels.
Year over year, we reduced SG&A spend by $6 million for the March quarter.
The annualized rate of 24 million versus last year.
SG&A costs are the lowest they've been since <unk> was acquired by the public company.
As Brad will explain our adjusted EBITDA for the quarter was just a tad under $800000 loss, resulting in an approximate 3 million improvement over prior year, and one 8 million improvement versus the December quarter.
This represents one of the best performing quarters, we've had as a public brand.
Difficultly lower revenues the prior better quarters.
We are not satisfied are done that are moving with haste, we have a fantastic based platform or this is just a little growth expect to have a positive EBITDA business during.
During the quarter, we successfully.
Marketed on meta after struggling during 2022, we continue to optimize our spend across channels and are carefully ramping based on performance as our new team worked on the direct to consumer business and started to drive traffic. We saw a number of areas, where we can improve our customer experience conversion rates and become more nimble.
We're working to address these items and expect positive changes to our consumer experience with our online store in the coming months.
We were excited to recently announce our launch on Amazon U K, we are invited into their U K DB programming quickly reacted to comply with the on boarding process.
There was a limited brands set in the CBD program in the U K and Amazon requires validated FSA product.
Well it did not have a significant impact in the second quarter. We believe we are partnering with experienced resources and expect meaningful growth out of the U K in the coming quarters. We believe Amazon is a critical channel to ensure our products are part of the go to marketplace for consumers worldwide.
Our civil will speak to you more we complete a.
Clinical study and are excited about the credibility it brings to our products.
While others may have.
Small survey based Clinical's redesigned ours was statistically significant participants were double blind placebo and we confirm our surveys with biological data.
We continued to elevate the bar and believe these studies can support its structure function claims submission for a typical supplement.
We are actively working to convert this investment into Robyn.
Our team is also continuing to expand our NSF, our sport offering not only will be the first to commercialize NSF for sport product in our industry. We were the first brand to certify had done we now have three skus and high strength products available under the certification, we continued to see significant and growing inbound interest from athletes trainers.
Multiple professional leagues, if they come to us to purchase NSF for sport product.
We see this designation critical to consumers outside of professional athletes and believe the designation continues to enhance the credibility of the CBD and debris.
During the last six months, we focused on our business fundamentals and metrics new product development is slow.
Product development team has continued to work in the background on newer products that we believe will still gaps many of our customers need but also a new and innovative products that we believe will span addressable market opening both new customers and new channels.
Should start in June and continued throughout the summer.
Our goal is to work with and our balance sheet and the end user business improvements to provide enough liquidity for what the company needs.
So you can see we've made very strong strides to operate much leaner and disciplined organization. The margin of error became too small we worked to set up an equity line of credit to be able to provide extra liquidity as needed in a smart and judicious way.
Unfortunately, our stock came under strong pressure and needed to implement the reverse split to maintain compliance with NYSE American.
Post split pressure continue effectively eliminate the capital cushion available directly.
We ultimately made the difficult decision to raise capital under our existing shelf registration to bolster our balance sheet and provide comfort that we have capital to provide a long enough runway to profitability.
The capital markets are incredibly challenging at the moment, especially after the April banking crisis.
In closing the all common deal was an important factor as we looked at the capital markets Maxim did a solid job in very difficult market.
We remain very focused on our capital structure and are exploring strategic options that we believe could have benefit to the company.
On a final note before I turn it over to civil.
I'm very encouraged by some of the industry activity we're seeing.
While we believe the FDA continues to ignore safety and selling its available to them.
We are seeing many conversations underway between our peers industry organizations and elected officials on delivering our response to the FDA.
We've seen the Fda's posture, havent real commercial impact and impede the growth of an industry that we believe provides real value to its customer base.
Never ever been more encouraged about the resources coming together to put forward a strong response to the Fda's statements earlier in the year.
Many of our CBD industry peers operate legitimate businesses sure about safety of consumers and understand that the industry is poised for significant growth with regulatory clearance.
Like a tidal wave sometimes it can be hard to understand the inertia behind the wave until it gets to shore. We believe there was an industry swell building.
With that I'd like to turn things over to Sue.
Thank you Ronan.
My comments will be focused in two areas first I will update you on the science behind our dietary supplement products and second I will update on our current efforts to obtain fair and sensible regulations at both the state and federal levels.
In the past we have discussed our approach to science and laid the foundation for CVD M D to deliver superior everyday wellness products.
There are formulated to specifically address the needs of our customers.
I will now update you on our two recently completed clinical studies.
The data from our clinical study performed at the University of South Carolina to assess the efficacy of our core broad spectrum blend in healthy human subjects are still on track for publication.
Based on the preliminary findings of that study, we know that CBD really does improve our customers' health and wellness and some key areas and we're excited to share that data in our messaging to our customers.
Of note among other encouraging results our core broad spectrum blend indicated positive outcomes from mood improvement pain reduction and reduction of inflammation in healthy adults.
This information will serve as a foundation for our focus on educating our customer base about the benefits of CBD.
The clinical study at Colorado State University School of Veterinary Medicine explored our core broad spectrum hemp extracts benefits on dogs mobility and quality of life.
That study provided data from the canine brief pain inventory survey, which utilizes a series of clinical questions to determine how paint interferes with the dogs typical activities our pan her parents and pain severe severity as well as objective data analysis and clinical owner oriented outcomes.
More than accurately assess the dogs quality of life I'm.
I'm pleased to inform you that our broad spectrum hemp extract positively impacted most of the outcome measures assessed using the client's specific outcome measures and the C V P I as compared to baseline measures.
There was also a trend for improvement in objective data analysis and accelerometer you both.
So it was objective measures, which would not be impacted by caregivers perception in other words, the dog's behaviour improved activity increased and pain scores decreased when they can send our broad spectrum hemp extract compared to baseline.
That data supports what we've known for some time.
Dogs with movement issues show improvement when they consume C. D M D as broad spectrum hemp extract we will publish the data from this study later in 2023.
The data generated from our clinical studies will be instrumental to guiding our product development roadmap.
Confirms our products can help customers support their everyday health and wellness.
He used to get data to guide future functional formulas in areas that matter most to our customers after publishing the data and well respected peer reviewed journals, we will launch marketing campaign focused on educating customers on the benefits of our core products.
I can better understand how our products can help them to achieve their goals.
Our approach to developing compelling compelling dietary supplements in a crowded field is to develop formulas, which pair with our clinically proven cannabinoid ingredients. It's other clinically studied functional ingredients that have been proven to support areas that matter most to our customers.
Leading sleep mood and recovery.
The data from our clinical studies has already informed our most recent launch of new flagship products for human consumers, including Gummies tinctures and soft gels containing the same broad spectrum blend that was studied in the human clinical.
The study's results will also guide future investigational studies executed by Stephen M D as Therapeutics Division.
On the regulatory front.
Like to update you on our recent efforts at both the state and federal levels. We have previously discussed our steps to address the lack of regulatory clarity.
In challenging the fda's position and refusal to regulate.
Bollinger Citizen's petition was a required step to follow the well established required regulatory pathway to challenge the agency.
In January of this year, the FDA formally denied our petition and at the same time used a press release.
The state that they require a new regulatory path for all hemp products.
We strongly disagree with the basis for the denial and are considering all available options are products or dietary supplements and any responsible manufacturer of hemp derived supplements already complies with all applicable federal regulations.
I want to be very clear here as a former FDA official.
In a decade and CBD was introduced as a dietary supplement choice and almost five years since the 2018 Farmville past.
And that time FDA has been giving over $5 million two studies CBD.
And has squandered that money on inappropriate and poorly designed studies and after all of that the FDA recently stated they do not have any path forward for hemp derived dietary supplements.
This lack of FDA guidance is for states to Stepan specifically to address the recent concerns of THC derivatives.
Like Delta eight Delta 10, Th C O N H H C.
None of which are legitimate hemp derived dietary supplements and all of which further confuse the objective of clear regulation of our products as dietary supplements.
We have been and will continue to educate latest legislators at both the state and federal levels to ensure that customer access to legitimate hemp derived dietary supplements is preserved.
In the states, we have been active as a company providing comments testimonial public hearings and working the trade groups and lobbyists to help craft positive regulation in states like Colorado, Florida and Virginia.
Although there is still some hurdles to overcome with different regulatory requirements in different states that impact the sales of hemp derived CBD products I can say that our efforts were successful and our products are able to be sold in those markets. We will continue to work directly with trade groups and lobbyists to cross state regulatory policy and to them.
Amend existing regulations to ensure there's a robust market for our products.
At the federal level, we've been speaking directly with legislators committee staff for the past several years and I'm encouraged by the recent level of engagement by both legislators and their stuff when the FDA denied our citizens petition.
Simultaneously stated they need of Congress to provide a new path forward for all have products we.
We immediately contacted legislators and the committee staffers, who has been active in discussing her policy and provided them with our extensive safety and toxicology data or face to face meetings and did follow up phone calls, where we hope to educate them on the science behind our safety studies.
Notably former HR 841 from last year's session was reintroduced in the house is HR 16 29.
There's still has significant bipartisan support in the lifestyle session and shows the intent of Congress to regulate hemp derived cannabinoid use dietary supplements.
We believe our efforts along with the efforts of our trade groups was instrumental in making this happen and we were actively engaged with the bill's sponsors to help further tailor the language. So that it has a chance of passing in this session.
Just last week myself and our colleagues on the hill directly lobbying members of the House Energy and Commerce Committee, whereas HR 16, 29 will undergo debate and market before moving on.
We spoke with the shoppers and many offices, including Crenshaw, though Iraq is Dunkin' in pence. We also spent significant time speaking directly to representative for a country, who is the chair of the health Committee that will be tasked with moving HR 16 29 forward.
He was fully engaged and we feel that he understood. Our concerns. We also met with the lead stopped or for F. D. A issues in the energy and Commerce Committee and she also expressed a desire to get clarity and help get sensible helped drive dietary supplement regulations on the books.
There is much more work to do in a short time.
Groundwork has been laid and we will continue to be engaged.
We also spoke with the staff counsel Chief Oversight Council and the staff director for Congressman Jamie Comer.
Recently sent a letter to the FDA demanding answers to questions related to the agency failure to regulate C V D as a dietary supplement.
As with everyone. We spoke to you on this recent lobbying trip they appeared fully engaged and we're asking questions to help them better understand and articulate the issues they will be seeking to answer in an upcoming oversight here.
Our involvement with representative comers office and their request crustal ball, but then they say pursue oversight.
Gives us hope that our issues will finally be addressed that there's a willingness in congress to get something done this session.
Lastly, and certainly not least we have the opportunity to spend time This north Carolina Senator Chatbot.
And we're able to discuss our issues and our suggested path forward given avid consumers dietary supplements and was very interested in hearing about our specific issues and educating himself on the topic.
Given that senator about represents the home state of C. D. M D and there's also the junior member on the Senate Health Committee. We believe there are efforts to inform and educate senator Bob will pay dividends in the future. If a bill was introduced in the Senate is all F. D. A related legislation must pass through help committee.
There are trade groups and the NPA pack a political action committee focused on supporting legislators, who take action for sensible dietary supplement regulations, we will further our support for those congresspersons willing to hear our issues and take action.
To further our efforts to educate both legislators and the public about the safety of hemp derived dietary supplements. We are working with other leading helped drive supplement companies and a leading objective third party safety and toxicology for them to bring the industry safety data together to recommend a safe daily use of CBD based on science.
We're also working with other Likeminded helped drive supplement companies, who hold themselves to the highest standard to unite on a strategy to progress the dietary supplement pack for CBD.
In closing we firmly believe our products are not drug precluded that our products are legitimate mechanically drive dietary supplements within the definition set forth into shape and.
And that we are fully compliant with all the applicable dietary supplement regulations.
We are advocates for our science based approach to health and wellness.
With regulatory clarity and fair treatment for our industry domestically and internationally. We believe we are the leaders of the industry and we'll continue to fight while others choose to sit back and wait while we paved the way for legal cannabinoid products with that I would like to turn it back over to Brad.
Thank you Sybil.
Total net sales for the second quarter of fiscal 'twenty, three or $6 2 million or <unk> 35 per cent decrease from the prior year comparative quarter, our quarterly e-commerce direct to consumer business generated sales of $4 9 million in the first quarter of fiscal 'twenty. Three this was a 26% year over year quarterly decrease.
We believe sales were impacted during the quarter about pantry loading crouch prior to our new high strike product launch a pullback in marketing spend and macroeconomic forces on consumers.
Commerce represented 78% of our total net sales for the second quarter of 'twenty three versus 72% in the prior year comparative quarter.
Our wholesale business generated $1 4 million of net sales for the second quarter of fiscal 'twenty, three down 56% as compared to 3 million for the comparative quarter in fiscal 'twenty two.
Revenues were impacted as we transition to the new SKU offering with lower wholesale price points as compared to the prior year.
Our gross profit as a percentage of net sales came in at 64% for the second quarter of fiscal 'twenty. Three this compares to 67 for the comparative prior year period, we expect to maintain gross profit margins in the mid 60% range when factoring in sales mix.
Our operating expenses for the second quarter of fiscal 'twenty, three totaled $5 4 million, which is down from 11 5 million in the prior year comparative quarter.
Excluding accounting and other professional expenses costs came down across the board as management continues to focus on profitability.
This decrease is mainly due to reductions across all areas of our operating expenses and was partially offset by 277000 noncash intangible expense as we began amortizing intangibles starting in January of 'twenty two.
Overall this resulted in a loss of operations of approximately $1 4 million for the second quarter of fiscal 'twenty, three as compared to $4 7 million loss for the prior year period, meaning we reduced our loss of $3 3 million over prior year on a GAAP basis.
<unk> operating loss improved $2 5 million from the December 22 quarter. This is primarily attributable to our continued reductions in operating expenses during the second quarter.
Our non-GAAP adjustments to operating expenses for the second quarter of fiscal 2023 included a $118000 and noncash employee stock expense 380000 in depreciation and amortization expense and 108000 associated with noncash a R credits related to our marketing agreement with <unk> hundred 60, resulting in a net.
non-GAAP adjusted EBITDA loss of 795000 for the second quarter of fiscal 'twenty, three as compared to a $3 6 million non-GAAP adjusted EBITDA loss in the second quarter of fiscal 'twenty two.
The decrease in non-GAAP adjusted EBITDA loss over the prior year period is primarily attributed to management's focus on our cost structure and profitability sequentially.
Sequentially, our non-GAAP adjusted EBITDA loss improved by $1 8 million for the from the December 'twenty to 'twenty two quarter.
Based on April's results in our current quarter runway run rate, we are anticipating a continued reduction in both GAAP and our non-GAAP adjusted adjusted EBITDA loss for the third quarter.
We invested 137000 on C V D M D therapeutics R&D during the second quarter of fiscal 'twenty, three as compared to 193000 in 2022.
Our large clinical studies have concluded and we continue to seek opportunity opportunistic ways to enhance our science in a cost effective way we.
We continue to believe the results from our clinical studies and other science provide us with a unique differentiated position for both product efficacy and education in that category.
Other income expense on our consolidated income statement for the second quarter of 2023 includes a noncash contingent liability gain of 48000 related charges December 2018 acquisition of cure based development.
The earn out liability is currently on our balance sheet for 167000.
We are now in the fourth marking period that runs through November 2023.
During the second fiscal quarter of 'twenty, three we utilized approximately $1 7 million of cash. The main component include our adjusted non-GAAP EBITDA loss of 795000 and paid dividends of 1 million.
We had cash and cash equivalents of approximately $1 7 million and working capital of approximately $5 5 million.
March 31, 23, as compared to cash and cash equivalents of approximately $6 7 million and working capital of approximately $10 7 million as of September 30th 22.
Our current assets as of March 31, 23 decreased approximately 37% from September 30th 2022 to $10 1 million a primary driver of the decrease in current assets was the uses of cash for operations and the reduction of prepaid sponsored that ships by $1 2 million, mostly attributed to the termination of athletes.
Sponsorship.
As of March 31, 2023 of the company's total current liabilities were $4 7 million of which approximately $1 4 million as accounts payable and $2 1 million of accrued expenses.
We remain very focused on managing our cash position and liquidity. After our recent common stock offering we had over 4 million in cash and are continuing to explore strategic ways to enhance our balance sheet.
We continue to focus on our cash SG&A expenses and have some projects in the works to continue to optimize our costs and fine tune our margins were.
We remain focused on driving business, kpis, and attracting new customers and delivering for all of our stakeholders.
With that I'll turn it back over to Randy.
Thanks, Brad.
We have a passionate and committed team here at C. V. D. M. D. This team believes in the power of CVD M D products.
And the opportunity to do something special with the C V D M D platform.
We have Great award winning products, we built I believe our science is second to none and we have a strong voice in Washington, we.
We have stabilized our revenue and our business fundamentals continue to improve.
We are committed to move with a sense of urgency to create value for all our shareholders and with that I'd like to now open up the call for some questions.
Thank you we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you'll hear a tone acknowledging your request.
You are using a speaker phone please pick up your handset before pressing any keys to withdraw your question. Please press Star then two well pause for a moment as callers join the queue.
Our first question comes from Anthony Vendetti of Maxim Group. Please go ahead.
Thank you so.
So ronen you you obviously have.
A significant amount of work to reduce SG&A by by $24 million annually.
Some of that I guess it is as you mentioned termination of some athletes are some of the athletes that promote.
How much how much more can you trim or or.
Is this sort of this is you know the.
Where are you at right now and you'll reassess.
Well Anthony Thanks for the question look we've got I think a little bit more left as you look at some of the changes we made.
In the March quarter that under full quarter here for the June quarter, we should see a little bit lower level, we have some.
Our multiple brokers engaged to help us with our corporate facility.
So there's there's a good sort of a million dollars in savings that we are chasing.
Trying to find the right sublet, let or or or building sale and then there is some more structural costs associated with our E. Commerce platform. So we think there's a there is some incremental.
Sort of system infrastructure costs that we're working to reduce as well, but I think we're getting sort of near near that bottom infrastructure cost and are really focusing on growing the top line.
Okay, great. So yeah. So so the topline came down but but your losses came down significantly so it looks like a a focus on more of the higher margin products.
You know reducing expenses on the DTC side, what would you attribute to the reduction in revenues and do you feel like you have a plan in place like you said two to start to turn that around in terms of topline growth.
Yeah look I think if you looked at the product mix that are sort of if you want if you looked at the revenue mix of the products that that.
That we're no longer selling we have significant amount of revenue coming from low ticket items and we are spending a significant amount to acquire those customers and the economics of sort of the CAC versus LTV doesn't add up so by by reducing and pulling back some of them.
That's been in driving consumers into.
Our higher value higher end products, we're seeing stronger retention and improved LTV rates.
So as a result sort of we've been able to reduce.
Yeah revenue has come down some but but as a result sort of our profitability has gone up I think it was a lot of the changes that we've put in place our team sort of.
<unk> started and it was just starting to ramp things up in March. So we've learned a lot through March and April continue to be nimble on pivoting to our spending we're making some changes as I mentioned to two sort of our consumer experience.
That should go live in June and I think that's going to help us continue to accelerate.
Our DTC revenue and.
And the.
Conversion and return metrics that the that comes from our marketing spend.
Okay, and then lastly on some of the newer products that you launched just wondering you know initial commercial traction is one of them I guess, it's high strength CBD products.
And some of the hemp products I know there was obviously a lot of discussion about that from apparel, but just more.
Generally how these new products are.
Our.
Are doing so far what's the initial traction so far.
Yes, so the products, we launched last year have been doing tremendously well for us we've seen a huge shift up in and the milligram strength of what our consumers are buying well, it's been a little slow.
That launch happened at the end of last fiscal year, which is sort of right around the end of September range.
We've seen really strong adoption of that and they're seeing great retention, we've been a little slow watching over the last quarter some new stuff.
But we've been working behind the scenes and have sort of the some exciting products coming to market here.
Starting in June and should rollout here towards the end of the year.
Okay, great. Thank you so much I appreciate the color I'll hop back in the queue.
Thanks.
Once again, if you have a question. Please press Star then one.
Our next question comes from Peter Merkel of make it management. Please go ahead.
Hi, Thanks for taking my question could you give a little color on the U K launch and how that's going and then also the relationship with a 360 media where do you have them specifically trying to focus in and what kind of results have you seen with them so far.
Yeah.
David Thanks for the question from the U K look we launched.
Right towards the end of the quarter, we are seeing traction we're seeing reorders.
Through through Amazon with just sort of on boarded some some incremental resources.
Have a really strong track record. So we're we're confident in our ability to continue to grow and scale that.
The more meaningful number here over the next quarter or two and then with respect to <unk> hundred 60, I think one of the things. We're excited about it is the opportunity to get in front of millions of consumers every day through a lot of other periodicals.
We tend to focus a little bit more of that Hum marketing are more of a female demographic.
So far we started that towards the end of I believe at the end of March that's been ramping up we are seeing some nice exposure coming from that.
And I think as we were working to sort of.
Make some changes to to our ecommerce site over the next 30 days, we're going to continue to ramp that up to really focus on driving track traffic to our site and being able to identify and drive conversion from a lot of media.
Allocation of Mercury 360.
Okay and then can you also talk about what the Wegman Reorders are looking like and they're happy with that relationship. So far and then a final question on with the recent capital raise do you have the ability to try to buy back some of the preferred shares at a discount and conserve future.
Cash outflows.
Yeah.
So with Wegmans weapons, we are seeing a healthy reorders coming from them, we don't get comparative data versus other brands, but we are seeing some acceleration here over since the since January on some of the sell through we as we've learned we're not in every single one of their locations, but from what we've been told in the <unk>.
Data we are in every location that they sell CBD and the relationship there seems to be going pretty well Oh. Your question about the preferred I think we are.
Looking at every sort of option available to us in it.
But but making sure that we.
Has the liquidity available to continue to operate and make improvements to the business and get to a sustainable cash.
Cash flow position. So I think there is a balancing act of could.
Could we buyouts and preferred use of cash now.
How much does that does that really save us over the next 12 months and is it better to.
Preserve the cash at the moment, it's where we're having a lot of conversations around how to how to best handle that.
Okay. Thanks, I'll jump back.
Uh huh.
This concludes the question and answer session I would like to turn the conference back over to Mr. Kennedy for any closing remarks.
Thank you everyone for your questions and interest and we look forward to speaking again on our third our third fiscal quarter fall in the next few months.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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