Q1 2024 Canopy Growth Corporation Earnings Call
Conviction into two purpose built sites.
We outsourced production of edibles, Vapes and beverages to contract manufacturers, which is accelerating speed to market, while reducing the overhead and risks involved in developing new products.
Collectively these actions resulted in a roughly 60% reduction in both our cultivation footprint and total head count.
This transformation to a simplified asset light model is working as evidenced by our increased ability to execute and deliver measurable results.
Today, I'll remaining cultivation facilities in Kincardine, Ontario in Kelowna, British Columbia are.
We are producing the high quality flower that consumers desire.
Our cultivation infrastructure has been greatly simplified and our supply is more effectively matched to demand.
Our transformation has delivered significant cost savings with SG&A expenses and cost of goods sold reduced by a combined $170 million $172 million to date, including $47 million in the first quarter of fiscal 'twenty four.
We continue to expect this transformation to yield $240 million to $310 million in cost savings by the end of fiscal 'twenty four.
While we're pleased with the significant progress already made our work to complete the transformation of canopy growth is not yet done.
Over the next weeks and throughout the remainder of the year, we will continue to execute on opportunities to drive efficiencies and reduce expenses as we drive our business to adjusted EBITDA positive exiting fiscal 'twenty four excluding investments in <unk>.
Next I'd like to spend a few minutes discussing the performance of our Canadian cannabis business in the first quarter of fiscal 2004.
Our adult use cannabis business delivered the third straight quarter of stable to growing revenues, increasing 12% sequentially to $24 million.
This improved performance is being led by the resurgence of our Tweed brand.
In fact in the first quarter to be pushing into 28 Gram was one of the top five performing flower Skus in Canada.
The demand for tweet is strong across the country, including in the larger markets of British Columbia, Alberta, and Ontario.
As more consumers experienced these high quality streams. The demand has elevated the Tweed brand to the number eight rank within the total flower segment of the Canadian adult use cannabis market moving up 19 places year over year.
As we look to the year ahead for our Canadian cannabis business will continue tweeds momentum and apply the same winning approach to our digi and seven acres brands.
Another exciting development for our Canadian portfolio is the addition of Wanna Edibles.
Late May we announced that canopy will now distribute quanta in Canada unifying our North American House of brands, which is part of our long term strategy.
As a significant step towards becoming the leader in cannabis edibles in Canada.
We've developed an ambitious brand growth strategy for <unk> early in the current quarter, starting with the availability of water gummies for registered medical cannabis patients through spectrum therapeutics.
We're already seeing strong demand reaffirming the brand's potential within the Canadian market.
And we're also working with the <unk> team to deliver more industry, leading innovation to drive the brand's leadership in the Canadian cannabis market.
We expect the addition of want it to be accretive to revenue and adjusted EBITDA as we cement canopy as Canada's leading cannabis Edibles company.
I'll now speak to the performance of our consumer products business in the first quarter starting with <unk>.
While steel brand delivered its fourth consecutive quarter of record revenues, increasing 68% sequentially more than double the prior year.
This strong performance by <unk> in the first quarter was due in part to our continued drive into the food drug and mass market channel in Canada ahead of the key summer selling season.
For those of you that live in Canada, I'm sure you've seen that the <unk> brand has become ubiquitous and as prominently featured in gas stations grocery stores and Costco nationwide.
In the U S. We're tightening biofuels geographical focus to prioritize key markets, including the central northeast and southeast regions.
While the brand continues to deliver record top line growth the investments required to sustain this business are significant.
As I outlined on our last call together with our board management is actively engaged in a strategic review of the business, including exploring a sale and we expect to have a decision in short order to reduce the drag on our profitability as we remain focused on our core cannabis businesses.
Turning briefly to our world, leading vaporizer brand stores in vehicle distribution gains in the United States helped grow revenue, 16% year over year to $18 million in the first quarter.
Historically storz <unk> Bickel has experienced significant growth following the launch of new products and I am excited to share that we are in final preparations to launch a new line of innovative storz <unk> Bickel Vaporizers. This fall setting the performance standards for cannabis vaporizers.
I fully expect this will drive the next era of growth the Storz <unk> Bickel brand.
Finally, I'd like to briefly speak about our U S cannabis businesses, which continue to drive brand growth, primarily leveraging an asset light expansion strategy.
Beginning with Jedi. This past July the brand brought California's number one solvent, let's speak to the state of Colorado, It's third U S market after launching in New York State This past March.
Building on their decade of leadership in the California market <unk> expanded its product offerings in the state with the launch of the market's first <unk> certified solvent, let's face and a variety of sativa and into constraints.
<unk> is comparable to organic certification for the cannabis industry.
Moving onto <unk> in collaboration with <unk> wellness in Florida, one of products from the brands premium and innovative cannabis infused gummies lineup are now available to patients in 45 medical cannabis treatment centers across the state of Florida.
Marking the 15th active U S state or territory in which won a cannabis edibles are sold.
It's worthwhile highlighting that in addition to these individual growth strategies cannot be USA ecosystem companies continue to develop collaborative opportunities and synergies.
<unk> terrace, and becoming the sole manufacturer supplier and commercialization partner of water brands in the fast growing new Jersey market as well as being one of its new partner in Maryland, which is now adult use legal.
Speaking of tariffs and I would like to congratulate them on their transformative PSX listing, which marks the first multi state operator to successfully trade on a major exchange.
We look forward to continuing to support their success and working together to capitalize on the large market opportunity in the U S.
In summary, canopies Q1 earnings demonstrate that our transformation to a simplified asset light model is already yielding results.
Our core candidates our core business is stabilizing and growing our commercial execution has strengthened and we have delivered significant cost savings that put us on a path to achieve positive adjusted EBITDA in our cannabis businesses exiting fiscal 'twenty four.
And while Bayou steel continues to demonstrate record topline growth.
Our focus remains north American cannabis leadership and as such we are advancing with strategic options to reduce the cash burn associated with Bayou steel as well as exploring additional measures to monetize other non core assets.
Ultimately, we remain convinced by the potential of the $50 to $70 billion, North American cannabis market and to meet this opportunity, we've transformed canopy and towards asset light and more focused organization.
We'll have more to share about our additional actions to further cement this transformation over the coming months with that I'll turn it over to Judy.
Thank you very much David and good afternoon, everyone.
I'll start by recapping, our first quarter fiscal 2024 results, including the progress, we're making to achieve profitability.
I will then discuss our balance sheet and the additional actions taken to delever, the balance sheet and improve liquidity.
I'll, then review our priorities and outlook for the balance of fiscal 2024.
Let's begin with our first quarter fiscal 'twenty four results.
Overall, we view Q1 as a key inflection point at <unk>.
<unk> business transformation, we've undertaken over the past year are reflected in results across our P&L.
We delivered revenue growth and profitability improvement across virtually all of our businesses.
Generate additional cost savings and remain firmly on track to achieve $240 million to $310 million of cost reduction by the end of current fiscal year.
Looking at our consolidated financial results, we delivered net revenue of 109 million in Q1, which is up 3% compared to Q1 of last year.
Excluding the impact of retail divestiture.
<unk> increased 16%.
Drivers of revenue growth, when Biofuels, which was up 137% and storz <unk> bickel up 16% year over year.
Q1, gross margin was 5% with all businesses, except for Bayou steel showing improvement on a year over year basis.
Excluding biofuel Q1, gross margin was 18% and adding back non cash depreciation and G&A expenses.
We estimate cash gross margin was approximately 35% excluding deal.
Q1, adjusted EBITDA loss was $58 million, an improvement of over 20 million relative to Q1 of fiscal 'twenty three.
We estimate over 60% of adjusted EBITDA loss in Q1 was attributable to Bayou steel.
Free cash flow was an outflow of 151 million, which included a few nonrecurring items, which I'll speak to in more detail later on.
I'd like to now review the results of our key businesses in more detail.
We Canada Q.
Q1, net revenue was $40 million of second quarter in a row of sequential revenue increase.
Our adult use <unk> business was down 9% compared to last year was up 12% compared to the prior quarter led by strong growth from our fleet flower and pre rolled product.
Navy of medical sales increased 7% compared to last year.
Gross margin was negative, 1% and cash gross margin, adding back noncash depreciation costs and <unk> expense have been caught with an estimated 32%.
The improvement versus last year was driven by the cost reduction actions was implemented including savings across our cultivation direct and indirect manufacturing costs facility and distribution costs as part of our business transformation plan.
We expect additional cost reductions to drive further improvement in gross margins. Following a full exit of one Hershey main facility at the end of July .
Most of the World, Canada sales were down 26% year over year, but increased 16% versus Q4 of fiscal 'twenty three.
Last year's revenue increase included a $3 5 million opportunistic bulk sales to Israel as well as the onetime crude sale in the U S CBD business.
Gross margin was 34%, reflecting an improvement in our U S. CPG business post our strategy shift partially offset by a geographic mix shift with last year's margin boosted by high margin bulk sales to Israel.
So when you look at our candidates business in total we delivered revenue of 50 million.
Margin of 18% and an estimated cash gross margin of 32% in Q1.
Turning to non candidates starting with doors apical SMB saw its revenue returned to growth in Q1 with sales growing 16% year over year, primarily driven by improved U S performance.
As you recall our U S sales in fiscal 2023 was negatively impacted in part by financial challenges at certain distribution partners.
Over the course of the past several months, we've enhanced our U S presence with additional resources and this effort is driving expanded distribution of the storz <unk> Bickel vaporizers, and our key U S market.
SMB gross margin saw an improvement of 43% compared to 36% a year ago, driven by higher sales in the U S.
<unk> grew its sales 9% year over year benefiting from increased contributions from our body care product line.
Gross margin remained healthy at 48%.
Let me now spend a couple of minutes of Bayou steel.
<unk> saw an outsized revenue growth this quarter up 137% to over $32 million during Q1, driven by increased distribution into food drug mass and club channel and Canada.
So strong velocity driven by increased brand awareness of bias steel from our NHL sponsorship, which drove greater shipments and expected ahead of the key summer selling season.
We believe Q2 performance will show more modest growth.
Gross margin came in at a negative, 24%, which was impacted by higher warehousing of product cost inventory disruption costs.
Due to aging of certain inventory as well as higher repair and maintenance costs at the <unk> manufacturing facility.
I feel also saw an increase in SG&A expenses compared to Q1 of last year, driven by higher A&P spend due to the NHL sponsorship costs that began in the second quarter of last fiscal year.
As we said in the last call we've implemented a number of actions to reduce our cost across the P&L at <unk> steel, which are expected to improve both gross margin and reduced A&P spend in the coming quarters.
Let me now speak to the progress, we're making on our path to profitability.
Q1 fiscal 'twenty four adjusted EBITDA loss was a negative $58 million compared to $79 million a year ago.
Improvement is driven by cost reduction of $47 million from the business transformation plan, which was partially offset by a $6 million decline in biofuels gross margin.
$12 million increase in Biofuels, A&P spend as not being last year's payroll subsidy benefit of $3 million.
Looking at our SG&A expenses more closely selling and marketing G&A and R&D expenses declined by a combined 15 million or 17% compared to a year ago.
Excluding increased investments at Bayou steel, selling and marketing G&A, and R&D expenses declined by $26 million or 30% year over year.
Our acquisition divestiture and other costs increased by $5 million to $9 billion.
Biggest driver of the increase just over $5 million of costs related to the restatement of Biofuels historical financials.
I'd like to now review, our cash flow our balance sheet.
Our cash and short term investment balance at June quarter end was $571 million, reflecting a net cash outflow of $212 billion from the March quarter end.
Breaking down the cash outflow of $212 million first cash flow from operation with an outflow of 149 million.
Included in the cash outflow with the $30 million of interest payments.
Q1 cash outflow also included several nonrecurring cash payments, including $17 million in litigation related payments and cash restructuring costs that we do not expect to recur.
And biofuel saw an increase in working capital this quarter due to sales growth, including approximately $16 million increase in its accounts receivables.
We expect our cash flow from operation, excluding bias steel to be roughly in line with our interest expenses as we exit FY 'twenty four driven by the completion of our cost reduction program.
Second within cash flow from investing activities Q1 saw an inflow of $8 3 million from disposition of facilities that we closed as part of our transformation business transformation plan.
We continue to expect additional proceeds from asset sales before the end of September for total proceeds of up to $150 million.
And net financing activity resulted in an outflow of $133 million.
Debt pay down during Q1 of 118 million released the second Paydown of the senior secured term loan following the agreement in October of 2022.
$15 million other financing activities related to the lease termination payments for the Quebec JV that we exited.
Turning to the balance sheet as of June 32023, we had $571 million in cash and short term investments and total debt of 1.045 billion.
Subsequent to the quarter end, we've taken additional actions to strengthen the balance sheet and improve liquidity.
We settled the full $237 million principal amount of the July 2023 unsecured notes.
Changing $64 million of the notes into equity.
Financing 40 million into new convertible note, which we expect to advertise poster annual shareholder meeting in September and paying the remaining $133 million in cash.
$93 million of payment to reduce the $100 million of the senior secured term loan principal about at <unk> 93 cents on the dollar and we have a group that the minimum cash liquidity covenant of this terminal.
We also remain on track to generate total proceeds of up to $150 million by end of September of which 90% of the net proceeds will be used to pay down the term loan at 95 cents on the dollar.
So following the completion of these actions and assuming that the promissory note held by constellation has settled in equity we estimate our total debt balance will decline to approximately $570 million with minimal short term debt obligation.
In addition, our annual interest expenses are expected to be reduced by $20 million to $30 million to approximately $80 million to $90 million at current interest rates, resulting in additional cash savings going forward.
And we continue to work on a number of options that are executable over the next coming months that would strengthen our financial position and improved liquidity.
I'd like to now provide our key priorities and outlook for the balance of fiscal 'twenty four.
In Canada. The candidates, we're firmly on a path to achieving profitability at current run rate revenue as we achieved the remainder cost reduction program.
We also believe that the addition of one our gummies and for portfolio provides potential upside to both sales and profitability in the back half of our fiscal 2004.
And rest of World candidates, we expect continued growth in Australia in Poland as well as improved performance in Germany, driven by new supply of high THC flower in the back half of our fiscal 'twenty four.
Restores apical Q2 is expected to be impacted by seasonality with sales and profit down compared to Q1.
However, we expect growth in the back half of the year driven by our new product launch in the fall and a continued focus on improving performance in the U S.
My bias deal, we expect Q2 sales to show more modest growth compared to Q1, our sales velocity and shipment patterns are expected to normalize post the summer selling season.
It's worth sales expected to be down in Q2 versus Q1 again impacted by seasonality.
From a cash flow standpoint, we expect our cash from operation exiting fiscal 2024 to be aligned to our interest expenses, excluding bio skill based on current business momentum across our core businesses and completion of our cost reduction program.
So in closing we believe Q1 results demonstrate that we're well underway to achieving our target of positive adjusted EBITDA as we exit FY 'twenty four with exception of iOS deal. We're also actively working to remove the drag toward profitability and cash flow per <unk> as soon as possible and <unk>.
Initiatives are underway to continue to improve our balance sheet and strengthen our financial position.
This concludes our prepared comments, we will now take your questions.
Operator, David and I are not happy to take questions from analysts.
Thank you.
Ladies and gentlemen, we will now begin the question and answer session.
If you would like to ask a question. Please press star followed by the number one on your telephone keypad.
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To ensure an efficient call that gets to the questions of as many analysts as possible analysts are requested to limit themselves to one question and rejoin the queue for any follow ups.
One moment. Please for your first question.
Your first question will come from Vivien <unk> Zara at TD Cowen. Please go ahead.
Hi, good evening. Thank you so much.
Hi, Vivien.
Hey, Judy who David.
So Judy you mentioned at the end of your prepared remarks that wanted to present upside to the targets that you're reaffirming today and David in your prepared remarks earlier, you noted that the wanted distribution agreement would be accretive to both revenues and profitability. So I just wanted to dig in.
With that a little bit more and better understand how.
One the economics work on distribution because really like.
For business at scale with maybe that's just not the case here.
CPG margins are generally higher than distribution market and so I just want to understand that a little bit and then more importantly, I think from a strategic standpoint like how are you thinking about prioritizing Wanna within your total portfolio because it seems to me that.
We're having a fair amount of success in revitalizing.
Your master brand in flower, but the master brand approach.
You guys inherited.
<unk> brought a lot of risk to the portfolio right and so if you're picking different brands across different categories, maybe you're derisking the portfolio a little bit so I'd love to get your perspective on that thank you so much.
Yes, so I'll start out so yes, so one to one in Canada right now as is.
Roughly 13 share of the edibles market.
We think that with our.
Our team is driving distribution in Canada, we can we can bring to that sure.
A reasonable amount.
We.
As a result of.
Our ownership of <unk> through.
Through the option structure, we actually will get all of the brand owner economics for water in Canada. So it's not just distribution margin its the entire.
Margin related to brand ownership as well as distribution of course, we have to pay.
Custom manufacturer to our our CMO partners. So thats why we think it's generally accretive from a growth standpoint, and it'll be accretive from an <unk>.
EBITDA standpoint, and a margin standpoint, and we also think it will.
It's just a nice from a dollar standpoint too to our portfolio.
Ill address the master brand approach because I think if you look at the brands, we have incentive the flower brands in Canada.
We focused on revitalizing Tweed first because tweet is actually.
We are supporting the survey as the best known cannabis brand in Canada.
However, we had some work to do from a quality standpoint, and I think.
<unk> delivered that quality into the market and we saw a lot of growth behind a couple of really strong strains to tweet and we will apply that to our dontcha branded seven acres brands.
In the flower space.
You talked about one in the edible space in Canada, and then from a.
Our beverages perspective, we continue to drive Tweed as a beverage brand as well as deep space as a beverage brand in this market. So we like that and then the other thing that we like is having one in market slide.
Toronto, and Montreal, and Vancouver, as well as having it end market slide.
But the.
Sure Taro markets in Florida and.
Their overall positioning in Colorado so its.
It starts to get exposure and feel like a real North American Brandon.
We've said this before and I know, we don't disclose financials as it relates to water, but it's a.
It's a profitable business.
<unk> positioned really well in some really key markets across the U S.
So we just want to revitalize that in Canada.
Vivien I think just in terms of from a financial standpoint, if we take a step back when we said about Canada.
All of the actions that we've taken was really to position, Canada and to achieve profitability profitability at the current run rate of revenue and I think I've said in the past.
If we achieve $35 million to $40 million of revenue in Canada.
We believe that we have the cost structure to achieve our profitability.
Now the three.
Orders in a row, where we've been at that range of revenue so to the extent that want to provide upside to that range of revenue. We think that there is potentially an upside to improving our profitability in the Canadian business will provide.
More details as we get more color just in terms of the revenue the profit potential of the plant once it's fully.
Canopy system.
Ananda.
That's really helpful. Thanks, so much.
Your next question will come from Aaron Grey at Alliance Global Partners. Please go ahead.
Hi, good evening and thank you for the question. So once the below book too.
Okay.
Alright, okay.
Yes.
Okay, Great, Yes, I wondering if a little bit to international so I know more recently, you've been bringing up Australia in Poland.
Want to talk a bit about Germany, you mentioned, a little bit about given the high THC flower in the supply.
Some of your peers in the country have been talking about potential big uptick in inpatient growth given its going to be removed from the narcotics wanting to take on Germany, given that what's been one of your key markets better than I look towards so do you think there is a lot of opportunity there for you.
We invigorated patient growth going forward that you might as well take advantage of and how you think about the market.
Yes, so and we've done a lot of work to get.
To get <unk>.
<unk> clearance for.
Our strain offerings in Germany and to ensure that we have the GMP production capacity in Canada.
And we feel good about our ability to produce.
So the rate strength for that market.
At the beginning of July we actually added to.
Significantly actually to our sales team in Germany.
So that we can we can address.
Address that market really well so so we feel we feel bullish on it again I think we're seeing a lot of growth out of Australia, we're seeing really good growth.
The market in Poland.
And we believe that we can we can get some good growth out of.
Out of the German market as well.
As Judy called out in her.
And heard comments are.
We feel good about the performance of that international business, it's a little bit muted on a year over year basis because of the.
One off sale into Israel this quarter last year, but we feel pretty bullish on the international markets.
Your next question.
<unk> will come from Michael Lavery Piper Sandler.
Please go ahead.
Okay.
Thank you good evening.
Yes.
Okay.
Okay.
Just wanted to drill into <unk> a little bit.
It drove the beat against our estimates and has some nice momentum but.
Obviously, you've been clear that.
Okay.
Got it investment level.
It's.
Not appropriate for where you are in that.
Youre looking for.
A better home for it but I guess, a couple of things related to that.
Yes.
Economics are a little tricky given kind of the ramp up stage with them.
As I found a lot of demand for that is there somebody with more appetite.
And ability to make that investment upfront.
And I guess timing wise can you give a sense.
Okay.
That does go through when we might expect that to happen is this something that is.
In the works or I know, there's not much detail on these things.
Normally able to give but just some sense of how to think about what the trajectory looks like and where that fits in kind of the rest of the year or into 2025.
Yes, Michael that's a fair question so.
So.
If we.
We love the <unk> brand as consumers and consumers love the brand.
Fintech.
It's healthy that resonates with consumers, both athletically inspired consumers and others.
But as we started on this path to really.
Simplifying our business and focus on the cannabis industry that we believe in in this $50 billion to $70 billion addressable market that we have.
In the cannabis business just in North America, It just becomes clear that they're there.
We need to make sure that we're at least not sitting here with a.
Real strong drag coming from.
A brand like Bayou steel, that's not a cannabis focused brand that sits in our portfolio right. So so as we said in my comments that it's really probably all I can offer at this point as we're working with our board.
And with the <unk> team too.
To significantly reduce the drag on EBITDA and cash flow that we're experiencing from Bayou steel and we're going to move as quickly as we can on that.
Ladies and gentlemen, as a reminder, if you would like to ask a question. Please press star one now.
Your next question will come from John Zeng borrow at CIBC.
Please go ahead.
Thank you. Good evening. My question is on on the cost reduction plan and it's a fairly wide range that you have remaining when you think about whats left and I Wonder what are some of the factors that will determine whether you get closer to the $240 million.
End of the range or the $310 million and just a clarification on that is does that range include remediation efforts on the biofuel brand or is that to be considered ex bias deal.
So I'll address that John .
So just the second part of your question. This is really excluding <unk> for the cost reduction plan is really around the camera the transformation plan.
Well as just the reductions that we've made across the organization.
Ensure that we are continuing to streamline our businesses simplify our operations financial results. We've been obviously April to generate significant cost savings year to date.
From fiscal 'twenty, three and we have a major cost reduction.
To get to that range of 240 to 310 million target reason.
The reason that we're leaving the range.
Wide or at this point in time is really is the second phase of our cost reduction program is just starting and Ford has executed in July and Thats really about exiting a full exit of the one Hershey.
Campus, where.
We fully exited.
<unk> operation.
We have obviously.
Oh.
Jeff over to.
The beverage the old beverage facility.
David all of the manufacturing and direct call center and direct manufacturing costs. So we think we've done a good enough of a modeling job to understand where are the cost reductions are coming from but we just want to make sure that as we're executing.
The plan that that.
That range is.
As appropriate we'll.
To provide more detail as we have the full P&L visibility in the coming months.
Your next question will come from Matt Bottomley Canaccord. Please go ahead.
Hi, This is Jan came on for Matt Bottomley. Thanks for the question.
I guess just wanted to touch on the EBITDA guidance that was reiterated for fiscal 2024 and apologies if I missed this earlier during the prepared remarks, but.
Just trying to understand the different components within the quarter, the adjusted EBITDA loss in the mall.
For the current quarter, so given that the current outlook is calling for all segments, except Bayou steel to contribute positively to adjusted EBITDA for the full year could you maybe help us formation Y E contribution from each of the segments.
For the quarter and how we should think about these segments contributions to the total adjusted EBITDA will now for the rest of the year.
Yes.
I'll try to be as helpful. As I can.
So I think I can do that by just giving a bit of a breach in Q1.
Our adjusted EBITDA loss in Q1, with roughly $58 million I commented in my remarks that we estimate about 60% of that loss is attributable to bias deal. So if you are basically removing bias deals loss from.
From that $58 million youre going to be somewhere around call it around $25 million of adjusted EBITDA loss.
I have also outlined that basically we have.
The range of the cost savings remaining is roughly $100 million or so at the midpoint of the range. So the 25 million loss will get breached to our expectations.
Breakeven to positive adjusted EBITDA.
Post completion of all the cost savings programs, so that target with bridge from excluding Bayou steel what's remaining in Q1 as an adjusted EBITDA to <unk>.
Adjusted EBITDA positive exiting FY 'twenty four.
There are no further questions. So I will turn the conference back to Mr. Cline for any final remarks.
Yeah. Thanks, Thanks, again for joining us today and I encourage you to try some of our outstanding products from our innovative brands as you enjoy the rest of your summer our Investor relations team will be available to answer additional questions.
Ladies and gentlemen, this does conclude your conference call for this afternoon, we would like to thank you all for participating and ask you to please disconnect your lines.
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