Q3 2023 Zevia PBC Earnings Call
Greetings and welcome to <unk> Q3, 2023 earnings call at this time, all participants are in a listen only mode.
Question and answer session will follow the formal presentation.
Anyone should require operator assistance during the conference. Please press star zero on the telephone keypad.
This conference is being at a contract. It is now my pleasure to introduce your host Reed Anderson managing director ICR. Thank you. Mr. Anderson you may begin.
Thank you and welcome to <unk> third quarter 2023 earnings conference call and webcast on today's call are Amy Taylor, President and Chief Executive Officer.
Neubauer interim Chief financial Officer by now everyone should have access to the company's third quarter 2023 earnings press release and Investor presentation filed. This morning. This information is available on the Investor Relations section of the website at investors.
Before we begin please note that all financial information presented on today's call is unaudited certain comments made on this call include forward looking statements, which are subject to the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.
These forward looking statements are based on management's current expectations and beliefs concerning future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in these forward looking statements.
Please refer to today's press release and other filings with the SEC quite detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward looking statements made today during the call. We will use some non-GAAP financial measures as we describe business performance the SEC filings as well as the earnings press.
Release presentation slides that accompany today's comments and reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are also available on our website at investors <unk> Com now I would like to turn the call over to Amy Taylor.
Thanks, Reed and good morning, everyone and welcome to the Q3 2023 earnings call for PDF T G.
I will leave my sharing with the plans we articulated on our Q2 call to stabilize our supply chain and restore service level are progressing as expected in Q3 and discontinued now in November we use brand remains healthy and demand continued to accelerate supported by the brand refresh we improved on shelf visibility that it delivers and velocity continues to.
Grow a double digit rate.
Consumer spending is up on the brand per household and per trip or pricing remained strong with limited elasticity exceeding our expectation and supporting our continued gross margin improvement.
Media continues to have tremendous long term potential as it gained distribution invest in brand building and win new consumers broader.
Broader value proposition remains one of the most relevant in all beverage.
There is more attention on better for you beverage than ever. It is demand is reflected in dollar velocity growth, which measures sales per point of distribution and was up over 16% for the quarter demonstrating that the brand and product portfolio to meet the needs of today and tomorrow's consumers.
Our initiatives continue to bolster Martin.
And set us up to improve profitability, reflecting the exciting potential in the years to come.
The customer fulfillment challenges that impacted net sales and costs in the back half of the year, our short term and we expect supply chain to be stabilized.
Year end and optimize for 2024, I will detail this as well as cover consumer data and strategic gains by category and by channel on today's call.
Median mission focuses on global health for people and for the planet and in Q3, we removed another 3.2 thousand metric tons of sugar from consumer side never having sold a plastic bottle. He is more affordable and 64% of nonalcoholic beverages in America. Our continued focus is taking our better for you beverages mainstream.
Making them available and affordable for consumers across all income levels.
I'll walk us through third quarter results, and then speak to our focus now and going forward.
Delivered net sales of $43 1 million just above expectations for the quarter.
These were strong despite reduction in promotion given low stock levels and our order book is at or above expectations for all three months of the quarter.
Gross margins are strong and continue to improve year over year.
We are realizing the benefit of improved promotional strategy.
Good thing innovation performance strong sustained pricing.
And reduce cost of goods sold.
These evolution, along with a fully realize supply chain transformation, our input to our continuing improvements in gross margin in the future and proof point of the strength of our business model.
I'll speak to our consumer base evolution and retail indicators be a panel and scan data insight and then I'll walk us through updates against the plan to address customer fulfillment and put the supply chain transformation back on track.
They've increased their brand spend by 13% and their spend per trip also by 13% over the past 12 months, both of which are also up versus prior period with consistent.
Purchase frequency rates further indication of brand and consumer health.
The media shopper is a highly desirable one less price sensitive at all income levels. We are.
Homes talking brand, which remains a competitive advantage as we simultaneously build our singles business and grow cold availability.
Maybe a sharper spent 38% more on beverages versus total non alcoholic beverage shoppers are shoppers also make 30% more trips to purchase beverages. He gets shoppers continue to differentiate themselves even further from average beverage shoppers, including high growth specialty beverage shoppers as they continue to spend more on brand and overall.
The most important scan metric in the quarter is velocity per point of distribution media grew velocity 16, 2% in the quarter, despite 26% reduction in promotion.
Velocity per point of distribution was plus 21, 5% versus prior year measuring growth without distribution or promotional impact our healthy base business is a strong indicator for our long term potential and a return to double digit growth in the future.
I'd like to provide a few channel and category insights before moving on to address some of our operational initiatives and growth for the quarter was led by exciting progress with the world's largest retailer who has doubled video space.
<unk> from six packs to APAC. It continues to test the brands performance in the mainstream carbonated soft drink aisle.
The test is outperforming expectations and bodes well for the future expansion.
Soda is up triple digits and the change in same store sales.
Gartner also started distributing threes media energy drink flavors in selected stores for the first time at the closing quarter.
These moves and conventional retailers are great example of the impact of our brand refresh as we take our brand mainstream and of our total opportunity to lead the exciting growth better for you beverages.
In the food channel give you energy drinks are newly distributed in three additional large regional chains and off to a strong start in October.
Energy drinks represents an exciting future growth opportunities are.
Our soda portfolio also represents tremendous upside and innovation performed very well across core channels creamy root beer and vanilla Cola are number one and number two in terms of contribution does need to be a dollar growth across the quarter and both have ample room to expand distribution further the comparison to our legacy soda flavors.
Those are in top five lost the drivers among VP of flavors and critically we continue to compete on taste with clean ingredients within the zero sugar space.
New and improved Cola taste tests, well among passionate chord with consumers and is rolling out into the market now each new soda item, we've introduced into our portfolio performed better than the last.
Further 12 packs continue to contribute to growth and support improved profitability and sleek single soda cans today sold in natural food intellectual and foodservice are also top drivers of growth within the portfolio and key strategic drivers of trial among new users.
And finally in the convenience channel the Newmar brand made its debut with the National Association of convenience stores Tradeshow in October.
We have augmented merchandising and selling horsepower with a new third party resource to support mass market.
An initial regional convenience engagements for 2020 for spring resets are off to a good start.
I will now provide an update on supply chain with transformation of previous supply chain is a critical initiative to support our continued growth enhance our customer service and drive efficiency and ultimately to materially reduce costs as we scale short term missteps and its execution had a material impact on net sales for Q2.
And the balance of the year.
We consolidated our warehouse networks from 27 locations now to nine we encountered challenges, which impacted inventory management transfers and the accuracy and timeliness customer deliveries and ultimately our ability to deliver on demand.
The last quarter.
We discussed the following elements of our plan to course, correct and I'll provide an update on each one.
One is we have a new leadership team in place across supply chain, the new talent and processes, including new ways of working with third parties and across departments are paying dividends as is evidenced in our fill rate should improve each month, we expect to return to optimal on time and in full deliveries this quarter.
Two we phased transition plans for our warehouse network leveraging legacy providers for support through the transition with ample days of supply across all key Skus. This has been critical to stabilize the network and to address customer fulfillment of customer orders continue to come in strong, but it also has a temporary impact on our adjusted EBITDA.
Due to the higher transportation and storage costs associated with our investment in inventory redundancy to ensure the right product in the right location.
We expect our inventory balance to be lower at the end of Q4 versus Q3 as the pacing of inventory purchases normalized.
Certainly we changed our approach to freight to.
To improve service levels and reduce costs.
And finally in Q3, we sold our company owned warehouse embracing an efficient third party network model.
In summary plans to address the short term issues in logistics and customer fulfillment are working his required organizational changes supply chain transformation adaptation and short term investments, but the plan is on track and we expect a return to normal by year end with a more efficient supply chain going forward.
My last comment center around brand building and I am increasingly confident that we are well positioned to accelerate brand marketing.
With the new brand visualization of market, we have product back in stock and much improved in store visibility while awareness of the better for you beverage proposition is on the rise and as we announced last month, we added a sharp and experienced marketer to our leadership and our CMO kierston for US He brings experience from P&G Taco Bell.
Most recently from an early stage growth brand in the better for you space.
And is already making an impact on how we think about brand building consumer marketing retail activation and also portfolio management, we can share more tactically and regarding marketing investment levels on future calls.
I'll turn it over to for all our interim CFO for additional color to our financial results and I'll return to wrap at the Big picture.
Thank you Amy good morning, and thanks for joining the call today I will now provide an overview of our third quarter financial results discuss guidance and then pass it back to <unk> for final remarks.
As mentioned earlier in the third quarter of 2020, we delivered net sales of $43 1 million down two 6% versus same time prior year.
There are impacts from a strong implementation of a price increase in the second quarter.
With our price increase from August 2022.
And a very positive impact of $1 5 million offset by a decline in volumes of eight 2% or $2 7 million, reflecting the supply chain challenges, resulting in orders with them.
Gross margin remained strong at 45, 4% up two one percentage points versus the same quarter a year ago due to the impact of price increases and favorable cost of goods sold.
Mhm quickly.
A lot of things.
This was partially offset by higher inventory losses related to our.
The legacy of warehouses.
Brand refresh rollout.
Selling and marketing expenses increased by 58, 4% to $20 5 million entirely due to selling expenses.
Or maybe supply chain remediation action right.
Two customers.
Transfer costs, which are highly elevated as expected.
Our increased production levels also impacted our warehousing costs with hiring coming handling charges.
An additional choice.
G&A expenses were $8 3 million or 19, 1% of net sales, which is essentially flat compared to $8 3 million or 15, 8% of net sales versus sometimes why you.
Stock based compensation and noncash expense was $1 1 million as compared to $6 8 million same period and crime.
Net loss was $11 3 million compared to a net loss of $9 2 million last year, a decline of $2 1 million or 22, 3%, primarily driven by the supply chain logistics challenge.
Loss per share was 16% per diluted share to <unk>.
Class a common shareholders.
With last year.
Adjusted EBITDA loss was $9 1 million compared to an adjusted EBITDA loss of $2 1 million.
Our balance sheet remains healthy with $38 5 million in cash and cash equivalents and no outstanding debt as of the end of the third quarter 2023, as well as an unused credit line of 20 million.
Turning to guidance.
We are narrowing our full year annual net sales guidance and reaffirming the high end of the range expecting to be between $165 million and 168 million, but the.
The fourth quarter projections in the range of 36 million to 79 million equivalent to an increase of 2% to 10% over the prior year respectively.
Well, we do not provide guidance on adjusted EBITDA, We do expect costs associated with the supply chain stabilization interest formation to continue to negatively impact us in the fourth quarter, but to a lesser extent versus the third quarter as we complete the corrective action.
Turning back the call to Amy.
Thank you Florent.
I'll close up here with a few comments before turning it over to Q&A media has a very healthy brand and business model and continue to experience robust consumer demand. We are realizing price in the market with strong consumer acceptance and delivering improving gross margin. We are quickly returning to growth in legacy retail partners and winning new distributions by category.
By channel, we look forward to sharing more on our next call. After Q4 and looking ahead to 2024.
Our number one priority in the meantime is to continue to stabilize and improve our supply chain returning it to our best in class service levels and putting the network transformation back on track. So that it supports our long term objective of driving sustainable and profitable growth.
So this concludes our prepared remarks, we will now open the call to your questions operator.
Yeah.
Thank you.
We'll now be conducting a question and answer session.
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I stopped to if you will.
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In the interest of time, we ask that you initially limit yourself to one question and a single follow up one moment. Please poll for questions.
First question comes from the line of Bonnie.
Hi, Joe.
Goldman Sachs. Please go ahead.
Alright, Thank you good morning.
Good morning, Bonnie Good morning, My first question and you know it has to do with your supply chain disruption I guess that was you know.
Maybe hoping for just a little bit more color on the progress you've made turn cruises you know I'd be curious to hear you know how things are trending relative to your internal expectations and then you mentioned, you're seeing progress and improved on time and in full.
Deliveries in the quarter so.
Is there a way to quantify that and then I'm curious if things have possibly accelerated.
In October and so far in November related to that.
Sure sure. Thanks, Bonnie so the supply chain fixes in short required organizational changes supply chain transformation adaptations, and then investments in inventory and thus warehouse and transfer and well we don't provide exact still rates well you can give us a progression or low point from a service perspective was due in July.
Why and in recent weeks, we've reflected material improvement specifically approaching service levels from Q1 at the start of this transformation and we are seeing improvement literally week over week. So we anticipate being back at what I'll call optimal service levels by year end. So that's insight right now and we're here.
Very positive feedback accordingly from retail partners to confirm what we see on our side and in parallel we're able to return to optimal promotional levels to support the return to growth and of course protection of market share growth in November.
Okay, that's encouraging and then.
My second question I just wanted to of course ask you about your presence at the Nab show. This year you know it's the first time you were there and I saw you guys had a great boost so I was just hoping to hear you know any early read on some of the meetings that you had with a lot of the retailers and just you know the opportunity you still see forgetting.
Into the C store channel next year, possibly with spring shelf resets and.
And then the second part of that any would just be maybe an update on progress you're making with DSP partners. I know you guys find advantaged solutions, but any more progress with signing up more DSD partners thing.
Perfect Yeah, you know the store.
Well, Bonnie I think you're kind of reported it there. So we were excited about having a presence at <unk>.
This year for the first time ever and made a lot of very relevant introductions. There also had the opportunity to trial the product and I think theres always a positive surprise in the consumer or retail actually tries media, including our new taste Colo, which we're excited about and really great tasting energy drinks that we really sell on taste and clean ingredients as Paul.
A differentiation within the better for you space and so in terms of speaking with retailers inconvenience, it's too early to provide like quantities or timelines on a rollout there's been very good receptivity for test partners. We can we can share more on the next call, but the target is indeed spring reset and we've had strong interest there.
And are optimistic about being able to operationalize a couple of different test partners.
For the future and then of course wild ready for that as you mentioned, we've enlisted a third party sales agencies, which helps with not only selling horsepower, but also enhancing merchandising.
So that's a step in the right direction to support our enhanced threat a route to market and specifically convenience readiness. We don't have any specific DSD partnership progress to share today, but we've made steps in the right direction were far more ready now for convenience than we were just months ago.
Alright sounds great. Thank you.
Thanks Bonnie.
Thank you next question comes from the line of Jim scenario with Stephens. Please go ahead.
Thanks for taking my question.
Okay.
Okay.
Hi, Good morning, I wanted to drill down a little bit on the household penetration I know you guys mentioned in the footnote on the slides that it's largely temporary due to the supply chain disruptions.
Can you give us some context for if a consumer that previously was the CVA consumer product isn't available for them do they replace it with another diet soda or is it something that just gets dropped from the basket and then maybe as a follow up to that.
When you do get back on shelf do they just snapped back or do you need some sort of kind of advertising or promotion to kind of motivate them back to the brand.
Okay, Jim very much understand your question. It's one of loyalty. So thank you for the question. Yeah. You win when you see strain in our household penetration figure in terms of the size of the user base that is.
Bit of a miss noma as an indicator of interruption to the panel data because of out of stocks and where you can measure health is of course, our continued double digit growth in velocity. So sales per point of district distribution.
And for our existing consumer base, we saw a material increase in dollar spend per household.
And dollars.
Her trip.
The sustained purchase frequency so what that tells US is the base is healthy.
So to answer your question when folks who can't find Xavier on shelf and this is why we and retailers are both passionately committed to getting out of stocks eliminated. They generally don't spend the dollars. So that's it for our retailer be a lost sale, we do see some leakage back into other zero sugar beverages.
But rarely retail we're able to fully replace that higher spend that comes with the Zumiez shopper.
We believe even in October we can provide the data to back it up.
When we are back in stock the Zumiez shopper goes back to buying the GB of flavors that they love and we're able to continue to drive trial, among new users faster, especially now that we're starting to ramp cold singles distributions. So the.
Brand loyalty <unk> is a big part of our quick recovery and the way that you're asking and it also means that we don't have to spent per se to get sharper back.
The one caveat that I'll make is of course, an E. Commerce. If you have a decline in e-commerce and need to build that back up there's an investment necessary to bolster top of mind.
Within that shopping environment, but in retail.
Let's say regaining those sales is quite straightforward as we simply fixed customer fulfillment hopefully that is clear.
Yeah, No. That's that's all very helpful color.
And then maybe as a follow up.
Does expand.
You know the soda in the T offerings.
I've seen T a wholesale clubs near me.
A lot of those different consumers like a soda consumer versus consumer and do they find the brands because they already know soda and then they also drink tea or is it a new consumer coming to the T or coming to the energy that might not be aware of the GBS soda.
Yeah.
Sure. So T. In particular is incremental it's a very different shopper and different consumer we see a lot of interaction between soda in energy. It is largely an existing soda consumer also purchasing a CVR energy drink.
And the reason this is relevant is that we have the opportunity to bring let's call. It a more health scrutinizing shopper to the energy category for the first time and so those are incremental purchases in dollars, but potentially for some of the same shoppers that already know and love Trust the <unk> brand.
Or incremental she tends to be with a new shopper energy tends to be with a Z V. A shopper spends more now on the brand and enters energy drinks for the first time.
Great. That's all helpful. I'll hop back in the queue. Thanks, guys.
Thanks, Thanks chip.
Thank you next question comes from the line of Chris Carey.
Fargo Securities. Please go ahead.
Yeah.
Hey, good morning.
Can you just address.
Margin visibility.
Clearly a lot of focus on the topline but.
Fourth consecutive quarter of margin gross margin expansion.
This has been kind of a point of attention over the past couple of years. So can.
Can you just talk about how you feel about your ability to predict specifically gross margins and.
How do you see things progressing perhaps in the medium term.
Sure. So we're pleased that we continue to improve year over year, our gross margins and central to that improvement is sustained improved pricing strengthened pricing as well as more effective spend on promotion and then finally containment of Cogs and.
And so we've obviously not guiding on gross margin, but we've talked in the past about gross margin in the mid Forty's and we continue to realize those expectations and would expect the same in the next quarter.
And then our plans for the future to continue to March toward those drivers of gross margin improvement that means strengthening in the top line through.
Price and promotion, we don't have any specific plans for price increases, but we believe that there is room, there as well as continuing to optimize promotion.
As well as continue to contain costs and with a more efficient supply chain continued to drive comps down overall.
Chris does that answer your question.
Yeah, Yeah is there anything that youre doing that perhaps.
Is benefiting gross margin that once you are back to growing again, you would need to reinvest or are we getting to a level of gross margin stability that you can see make progress.
Yes.
It does I think we're getting to a level of gross margin stability and we're seeing the impact of our challenges in our supply chain transformation is on the adjusted EBITDA line that being outsized in Q3 far less so in Q4, and then that dissipates as we normalized inventory levels.
Thus the impact of inventory has long warehouse and a transfer but those are our impacted you see showing up in adjusted EBITDA and I think what you're you're indicating here do we see gross margin stability, yes, but there is a further upsides to that as well it can continue to improve going forward.
Okay. Thank you.
Sure.
Thank you next question comes from the line of Dana Telsey with Telsey.
Telsey Advisory group. Please go ahead.
I think hi, hi, good morning, everyone as you're thinking about the changes that you've made whether it's in the size of the cans and what's happening with aluminum pricing. How do you see the puts and takes on expenses going forward and what are you seeing overall from the different they're different.
Retail partners in driving the business. Thank you.
Sure you know I think I'm, we're pleased to see the <unk>.
Put costs such as aluminum.
Stable to improving.
And so Cogs shown up and are in a pretty stable manner for us we don't put a circle around that as a particular risk in the go forward I think.
In terms of controlling the controllable we continued to optimize our portfolio, meaning what we sell and then our price pack architecture, meaning what we sell at what pricing and what channel and we see a lot of upside there and the immediate and long term future if in the past as a new an entrepreneurial company we sold.
All products everywhere to learn what would sell now going forward, we're really matching the package to the shopper in the channel.
To optimize price, which indicates the upside in gross margins we were discussing earlier.
So we don't anticipate a lot of surprises on the cost side and the go forward, we really feel confident around stability as well as the future upside in gross margins because of that and we believe there's still room to optimize promotion and potential price across the board with the portfolio.
Does that answer your question Dana.
Yes, it does.
And then thank you.
And then on the retail partners and what you're saying.
Say, a little more data.
On the retail partners and what you're seeing how is it differing in order patterns shelf shelf placement anything to note there.
Sure. Okay. Thank you yeah, So I mentioned exciting triple digit growth in one of the major players in mass, we're really excited about that as an indicator of the brand's opportunity and what I'll just call. The mainstream so outside of our legacy partners of natural we continue to have growth opportunity within natural again.
As we optimized portfolio drive singles availability bring new flavors all of those are performing really well and legacy partners, but our greatest upside is it the proverbial mainstream retailers, so math major grocery and of course as discussed earlier Bonnie convenience.
Just a quick health checks on on major grocers in the month of October we saw growth in both major national grocery chains and in one of the 22% growth. So when we're selling the right packs at the right price and major grocery will continue to grow and there is further upside as we expand into more effective parts.
Of the store and as we expand coal availability. So we see the biggest upside in what I'll call mainstream channels, but I'll emphasize that we still have growth opportunity through innovation and through single distribution in our legacy channels like natural.
Yeah.
Thank you.
Thanks.
Yeah.
Thank you.
Next question comes from the line of Andrew stretching.
Bank of Montreal. Please go ahead.
Okay.
Hi, This is Daniel goes on for onto shelves like thanks for taking my question.
Good morning.
How much incremental expense was associated with exiting of legacy warehouses are there remaining cost implications as we flow into next year.
So thank you for your question Andrew.
Each of the associated cost.
I'm coming from the supply chain issues, what happened in the third quarter.
You will see that warehouse storage as well as handling in will diminish right as we bringing inventory levels down.
We also reduced our production levels. So you will see a decrease in our freight is to our warehouses.
Thanks, Lawrence and I will just add sort of quantify that.
Supply chain costs drove the majority of our adjusted EBITDA loss in the quarter and so specifically a good two thirds of our negative number and the adjusted EBIT column was a result of supply chain fixes.
Got it that's helpful. Thank you.
On a separate note.
How is your relationship with retailers and impacted by by lower fulfillment levels are or is that really not been impacted since the philosophy for us is so strong.
So I think it's safe to say, we don't come out of the supply chain challenge with no consequence right. This is this is a focus of our organization both fixed it and supply chain as fast as possible as well as maintaining our current and future opportunities with our retailers and given our strong legacy service track record through Covid.
It through the aluminum cramps can't prices and then with extra effort to provide retailers with transparency throughout our supply chain transition. We're pleased that we.
We have maintained retailer trust when we've kept pace with our broader strategic initiatives as a result, so while yes, it's a bumpy road I think our extra levels of transparency have protect protected our broader strategic initiatives with our partners.
Got it that's helpful. Thank you.
Okay.
Thank you next question comes from the line of Allison Stump.
Capital markets. Please go ahead.
Great. Thank you good morning.
I appreciate you taking my question just wanted to you know.
They go back to Bonnie's question on the supply chain disruption.
Understanding that it's very difficult in any case to kind of predict the exact timing of it but sounds like you're pretty confident that by the end of year.
You'll be through this so as move into next year. If that's the case you know you know.
Are you confident that we will see you know at that point sell through demand for your products pretty much matching up.
Shipments or is it something that could still bleed into the early part of next year.
That's great question, we are very confident in our expectation that supply chain will not only be stable in 2024, but become more efficient and when we think about our inventory levels will sell through those and start to get to a closer match between shipments and scan.
Towards the end of the year and it's early part of next.
It is scanned at its lumpy at the moment. The most stable figure is our double digit velocity growth, which is sales per point of distribution and it's our perspective that scan data will start to reflect brand health and in the coming months, maybe not exactly tweaks as the fix of the out of stocks on shelf.
As the fulfillment levels return to to the optimal levels that we've had in the past so more to come on that after our Q4 call to give an outlook on 2024 at which point I think you'll see greater stability and figures and a relationship between shipments and scams.
Yeah.
Understood. Thanks for that color and then I guess just as.
A quick follow up on the cost front.
So I touched on this already but you know it sounds like it's a pretty benign commodity cost environment.
No one's packaging or otherwise heading into next year.
Is that fair to say.
Yeah, I do think so I think obviously, everyone has an eye on inflation and there's someone knowns, but for the most part.
We are in a pretty stable environment with our input costs.
Got it understood. Thanks, Amy I'll hop back in the queue.
Thanks Alton.
Thank you.
This concludes today's question and answer session I would now like to turn the floor over to anyway.
For closing comments.
Thank you operator, and thank you everyone for dialing in this morning.
Just wanted to quickly say that we appreciate your time and attention you know the brand is very healthy the business model is strong and continues to experience robust demand and we're pleased to see our supply chain of course correction efforts returning to optimal customer fulfillment levels, while realized prices the market, we're delivering improved gross margin and we're quickly returning.
Growth this month and look forward to sharing for including a look at an exciting 2024 on our next call. So wish you all the Tuesday. Thank you.
Thank you Scott.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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Yeah.