Q1 2024 Westrock Coffee Co Earnings Call - Q&A

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Alex: Thank you for standing by. My name is Alex, and I will be your conference operator today. At this time, I would like to welcome everyone to the Westrock Coffee Company First Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Thank you for standing by my name is Alex and I will be your conference operator today at this.

Alex: Time, I would like to welcome everyone to the West strong coffee company first quarter 'twenty 'twenty four earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the <unk>.

Alex: One on your telephone keypad, if you would like to withdraw your question Press Star One again I would now like to turn the call over to Robert Monger with West struck Coffey. Please go ahead.

Alex: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. I would now like to turn the call over to Robert Monger with Westrock Coffee. Please go ahead.

Robert Monger: Thank you, and welcome to Westrock Coffee Company's first quarter 2024 earnings conference call. Today's call is being recorded.

Robert Monger: Thank you and welcome to West dropped coffee company's first quarter 2024 earnings Conference call. Today's call is being recorded with US are Mr. Scott Board co founder and Chief Executive Officer, and Mr. Chris Pleasure, Chief Financial Officer by now everyone should have access to the company's first quarter earnings release issued earlier today. This information is available on.

Robert Monger: With us are Mr. Scott Ford, co-founder and chief executive officer, and Mr. Chris Pledger, chief financial officer. By now, everyone should have access to the company's first quarter earnings release issued earlier today. This information is available on the investor relations section of Westrock Coffee Company's website at investors.westrockcoffee.com.

Robert Monger: The Investor Relations section of West dry coffee company's website at investors <unk> coffee dot com <unk>.

Robert Monger: Certain comments made on this call include forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to several 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 for a more detailed discussion of the risk factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today.

Robert Monger: 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 1995.

Robert Monger: These forward looking statements are based on management's current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward looking statements.

Robert Monger: Please refer to today's press release and other filings with the SEC for a more detailed discussion of the risk factors that could cause actual results to differ materially from those expressed or implied in any forward looking statements made today.

Robert Monger: Also, discussions during the call will use some non-GAAP financial measures as we describe business performance. The SEC filings, as well as the earnings press release, provide reconciliations of these non-GAAP measures to the most directly comparable GAAP measures. And with that, it is my pleasure to turn the call over to Scott Ford, our co-founder and chief executive officer. Thank you, Robert.

Robert Monger: Also discussions during the call we'll use some non-GAAP financial measures as we describe business performance the SEC filings as well as the earnings press release provide reconciliations of these non-GAAP measures to the most directly comparable GAAP measures and with that it is my pleasure to turn the call over to Scott <unk>, Our co founder and Chief Executive Officer. Thank you Robert and good afternoon, everyone.

Scott Thomas Ford: Thank you, Robert. Good afternoon, everyone.

Scott Thomas Ford: Thank you for joining us for this pivotal financial and operational update.

Scott Thomas Ford: Thank you for joining us for this pivotal financial and operational update. As most of you know, we've been engaged in the development of what we believe is the world's largest roast-to-extract-to-ready-to-drink facility, and today we are thrilled to announce that it is now operational, producing finished, sellable product, and we have commenced the full-fledged fill-it-up mode. On top of this, our first quarter performance was outstanding across a number of fronts.

Scott Thomas Ford: As most of you know we've been engaged in the development of what we believe is the world's largest roast to extract to ready to drink facility and today. We are thrilled to announce that it is now operation producing finished sellable product and we have commenced the full fledged fill it up mode.

Scott Thomas Ford: Our first quarter adjusted EBITDA was up 32% over the prior year due to double-digit growth in every product segment except for roasting ground coffee, which remained weak. Our Conway, Arkansas, Extract and Ready to Drink plant commenced operations on April 16th exactly as planned almost a year ago, and solely based on our currently committed order book, we already expect to run at roughly 75% of installed capacity utilization in 2025, our first full year of production.

Scott Thomas Ford: On top of this our first quarter performance was simply outstanding across a number of fronts.

Scott Thomas Ford: Our fourth quarter adjusted EBITDA was up 32% over the prior year due to double digit growth in every product segment, except for roast and ground coffee, which remained weak.

Scott Thomas Ford: Our Conway, Arkansas extract and ready to drink plant commenced operations on April 16th exactly as planned almost a year ago.

Scott Thomas Ford: And solely based on our currently committed order book, we already expect to run at roughly 75% of installed capacity utilization in 2025, our first full year of production.

Scott Thomas Ford: Our Select Milk Producers JV for two aseptic ESL lines and requisite cold storage capabilities in Littlefield, Texas, continues on pace for an expected closing and funding in the third quarter of this year and a subsequent product launch in mid-2026. Our current indicated order book for this already reflects one line essentially spoken through.

Scott Thomas Ford: Our select milk producers JV for two a septic ESL lines and requisite cold storage capabilities and Littlefield, Texas continues on pace for an expected closing and funding in the third quarter of this year and our subsequent product launch in mid 2026, our current indicated order book.

Scott Thomas Ford: For this already reflects one line essentially spoken for.

Scott Thomas Ford: We are in the midst of a meaningful string of sales victories across multiple customer channels and product types, and our expected volumes for late 24 and 25 are anticipated to be materially higher than current run rates. With our Conway Coal Chain Multi-Serve Bottle Line in commercial operation, we are now in the product commercialization phase with several customers on our high-speed canline, and we continue to expect our glass bottle line to commence operations in the fourth quarter of this year, which remains completely sold out.

Scott Thomas Ford: We are in the midst of a meaningful string of sales victories across multiple customer channels and product types and our expected volumes for late 'twenty four and 'twenty five are anticipated to be materially higher than current run rates.

Scott Thomas Ford: With our Conway cold chain multi serve bottle line in commercial operation. We are now in the product commercialization phase with several customers on our high speed can lines and we continue to expect our glass bottle line to commence operations in the fourth quarter of this year, which remains completely sold out.

Scott Thomas Ford: Given these results, our updated order book outlook, and our ongoing expense reduction plan, we are pleased to reaffirm our adjusted EVADOC guidance range of between $60 and $80 million for 2024. Additionally, we are introducing our first preliminary view for 2025 adjusted EBITDA of roughly $115 million.

Scott Thomas Ford: Given these results our updated order book outlook and our ongoing expense reduction plans. We are pleased to reaffirm our adjusted EBITDA guidance range of between 60 and $80 million for 2024.

Scott Thomas Ford: Further we are introducing our first preliminary view for 2025, adjusted EBITDA of roughly $115 million.

Scott Thomas Ford: This view reflects the current state of our traditional business plus the addition of those new customers and products that we are in the final stages of contracting, commercializing, and preparing to manufacture. With that overview, I'd like to spend a few minutes drilling down on the key challenges and objectives we are executing against over the remainder of 24 and 25. As I'm sure everyone on this call is aware, fuel and food inflation continue to disproportionately impact a growing segment of American diners and shoppers, which in turn continues to affect our roast and ground coffee. And while part of our volume decline is the result of a customer moving some low-margin roasting ground volume, the more important declines seem to be directly attributable to ongoing food price inflation.

Scott Thomas Ford: This view reflects the current state of our traditional business.

Scott Thomas Ford: Plus the addition of those new customers and products that we are in the final stages of contracting commercializing and preparing to manufacturer.

Scott Thomas Ford: With that overview I'd like to spend a few minutes drilling down on the key challenges and objectives, we are executing against over the remainder of 'twenty four and 'twenty five.

Scott Thomas Ford: As I'm sure everyone. On this call is aware fuel and food inflation continued to disproportionately impact a growing segment of American diners and shoppers, which in turn continues to affect our roast and ground coffee volumes in.

Scott Thomas Ford: And while part of our volume decline is the result of a customer moving some low margin roasting ground volume the more important decline seem to be directly attributable to ongoing food price inflation lease.

Scott Thomas Ford: We simply see no quick fix to the reality that many end consumers will continue to struggle to afford food and beverages, especially when purchased away from home, and we will be adjusting a number of our operating expenses accordingly in the coming months. But of even greater impact on our business is the quickening transition of the coffee consumer from pots of hot coffee to cold-based and single-serve RTD-style coffee offerings. This transformational shift plays directly into our strengths as we launch the Conway Extract and RTD facility and as our single-serve cup business continues to see meaningful shared shift opportunities materialize.

Scott Thomas Ford: We simply see no quick fix to the reality that many and consumers will continue to struggle to afford food and beverages, especially when purchased away from home and we will be adjusting a number of our operating expenses accordingly in the coming months.

Scott Thomas Ford: But I have even greater impact to our business is the quickening transition of the coffee consumer from parts of hot coffee to cold based and single serve RTD style coffee offerings.

Scott Thomas Ford: This transformational shift plays directly into our strengths as we launched the Conway extract an RTD facility and as our single serve Cup business continues to see meaningful share shift opportunities materializing.

Scott Thomas Ford: In these instances, our growing team of product development, commercialization, logistics, and operations professionals continue to be recognized across our industry as one of the premier teams to partner with globally. We are excited to be collaborating on a number of development and scale-up projects with key customers across industry segments who are global leaders in these quickly growing categories. It takes considerable effort and time to execute on this type of multi-layered, consumer-driven product.

Scott Thomas Ford: In these instances our growing team of product development commercialization logistics and operations professionals continue to be recognized across our industry is one of the premier teams to partner with globally.

Scott Thomas Ford: We are excited to be collaborating on a number of development and scale up projects with key customers across industry segments, who are global leaders in these quickly growing categories.

Scott Thomas Ford: It takes considerable effort and time to execute against this type of multi layered consumer driven product shift but.

Scott Thomas Ford: But I believe the Westrock team has distinguished itself as the leading partner for consumer-facing clients to work with to capture the benefits these rapid consumer and product shifts enable. You can clearly see from our guidance updates that we are winning much more than our traditional fair share of these customer relationships. We view this as critically important strategically because as customers choose their product development, new product launch, and meaningful scale-up partners today, they are making decisions that will ripple through our industry for the next decade.

Scott Thomas Ford: But I believe the west rock team has distinguished themselves as the leading partner for consumer facing clients to work with to capture the benefits these rapid consumer and product shifts enabled.

Scott Thomas Ford: You can clearly ascertain from our guidance updates that we are winning much more than our traditional fair share of.

Scott Thomas Ford: Of these customer relationships, we view this as critically important strategically because as customers choose their product development, new product launch and meaningful scale up partners today, they are making decisions that will ripple through our industry for the next decade.

Scott Thomas Ford: Being dedicated to our customers' long-term success, no matter the short-term dislocation pain to our operations or to preset, self-imposed financial metrics, has been a critical differentiator for Westrock in the eyes of our customers. I fully acknowledge this sometimes painful reality and appreciate the great patience that everyone has shown as we upsized the Conway plant yet again and again for entertainment. But I, our executive team, and our board remain steadfastly resolute in our belief that this is how we must have acted in order to help our growing list of customers make the transition from hot to cold and from multi-serve to single-serve coffee and energy-based drinks. It was imperative that we say yes when we were asked for help.

Scott Thomas Ford: Being dedicated to our customers long term success no matter the short term dislocation pain to our operations or to preset self imposed financial metrics has been a critical differentiator for west rock in the eyes of our customers.

Scott Thomas Ford: I fully acknowledge this sometimes painful reality and appreciate the great patients that everyone has shown as we upsized the Conway plant, yet again and again for instance.

Scott Thomas Ford: But I, our executive team and our board remain steadfastly resolute in our belief that this is how we must have acted in order to help our growing list of customers make the transition from hot to cold and from multi served as single serve coffee and energy based strength. It was imperative that we say, yes when asked for help.

Scott Thomas Ford: Enduring the attendant dislocations over the past few years, we are today partners with most of the leaders in the various industry sectors we service across multiple product categories. We are being entrusted by more and more of them each quarter with a growing set of products as part of their strategic development. Product Development, Ethical Sourcing, Logistics, and Production Partners. The guidance we are sharing today about our late 24 and full year 25 adjusted EBITDA serves, I believe, as the first but definitely not last major proof point of the wisdom that our investors and board have placed in our leadership team to execute this non-conventional but value-enhancing corporate transition.

Scott Thomas Ford: For enduring the attendant dislocations over the past few years, we are today partners with most of the leaders in the various industry sectors, we service across multiple product categories, and we are being entrusted by more and more of them each quarter with a growing set of products as their strategic development.

Scott Thomas Ford: Product development ethical sourcing logistics and production partners.

Scott Thomas Ford: The guidance, we're sharing today about our late 'twenty four and full year of <unk> 25, adjusted EBITDA serves I believe as the first but definitely not last major proof point of the wisdom that our investors and board have placed in our leadership team to execute this nonconventional, but value and.

Scott Thomas Ford: <unk> corporate transition.

Scott Thomas Ford: I'll be glad to answer questions in a moment, but with that, let me turn the call over to our CFO, Chris Pledger, who will take you through the key metrics that underpin all of these remarks. Chris?

Scott Thomas Ford: I'll be glad to answer questions in a moment, but with that let me turn the call over to our CFO, Chris pleasure, who will take you through the key metrics that underpin all of these remarks.

Thomas Christopher Pledger: Chris, thanks Scott, and good afternoon everyone. As Scott mentioned, our business performed well in the first quarter, highlighted by 13% sales growth in our Flavors, Extracts, and Ingredients platform and 8% gross profit growth in our Beverage Solutions segment, both of which contributed to 32% growth in. On a consolidated basis, net sales for the quarter were $192.5 million, down 6.3% from the first quarter of 2023. The drop was largely volume driven with continued softness in our roast and ground coffee.

Thomas Christopher Pledger: Chris Thanks, Scott and good afternoon, everyone.

Thomas Christopher Pledger: This was partially offset by a 42% increase in net sales in our sustainable sourcing and traceability segment and 13% sales growth in our flavors, extracts, and ingredients platform. Despite the drop in sales, consolidated gross profit was up 8.7%, driven by gross profit improvement in single-serve coffee and across flavors, extracts, and ingredients. This drove consolidated adjusted EBITDA of $11.1 million in the first quarter of 2024, which is a 32% increase year-over-year, and our adjusted EBITDA margin was up 167 basis points year-over-year.

Thomas Christopher Pledger: As Scott mentioned, our business performed well in the first quarter highlighted by 13% sales growth in our flavors extracts and ingredients platform in 8% gross profit growth in our beverage solutions segment, both of which contributed to 32% growth in our consolidated adjusted EBITDA.

Thomas Christopher Pledger: On a consolidated basis net sales for the quarter were $192 5 million down six 3% from the first quarter of 2023. The drop was largely volume driven with continued softness in our roast and ground coffee business. This.

Thomas Christopher Pledger: This was partially offset by a 42% increase in net sales and our sustainable sourcing and traceability segment and 13% sales growth in our flavors extracts and ingredients platform.

Thomas Christopher Pledger: Despite the drop in sales consolidated gross profit was up eight 7% driven by gross profit improvement and single serve coffee and across flavors extracts and ingredients.

Thomas Christopher Pledger: This drove consolidated adjusted EBITDA of $11 1 million in the first quarter of 2024, which is a 32% increase year over year and our adjusted EBITDA margin was up 167 basis points year over year.

Thomas Christopher Pledger: Moving to our segments, Beverage Solutions contributed $158.1 million in net sales, which is a decrease of approximately 13% compared to the first quarter of last year. While we continue to see strong results in our flavors and extracts and ingredients platform, this growth was offset by continued softness in our traditional roast and ground coffee business. As has been widely reported in the financial news and on other earnings calls this quarter, lower and middle-income consumers remain budget conscious.

Thomas Christopher Pledger: Moving to our segments beverage solutions contributed $158 1 million of net sales.

Thomas Christopher Pledger: Which is a decrease of approximately 13% compared to the first quarter of last year, while we continued to see strong results in our flavors and extracts and ingredients platform. This growth was offset by continued softness in our traditional roast and ground coffee business.

Thomas Christopher Pledger: As has been widely reported in the financial news and on other earnings calls this quarter lower and middle income consumers remain budget conscious theyre, making fewer trips to restaurants and convenience stores and when they do make trips they're looking for ways to spend less.

Thomas Christopher Pledger: They're making fewer trips to restaurants and convenience stores, and when they do make trips, they're looking for ways to spend less, often by foregoing a beverage occasion. Likewise, U.S. grocery sales are experiencing similar volume declines as shoppers absorb significantly higher food and beverage prices.

Thomas Christopher Pledger: Often by foregoing the beverage occasion, likewise U S. Grocery sales are experiencing similar volumes declines as shoppers absorbed significantly higher food and beverage prices. These consumer base decisions drive the volume drop we experienced in the first quarter.

Thomas Christopher Pledger: These consumer-based decisions drive the volume drop we experienced in the first quarter. But despite the drop in net sales, gross profit in our beverage solutions segment increased 8%, driven by double-digit gross profit growth in single-serve and across flavors, extracts, and ingredients. An adjusted EBITDA in beverage solutions for the quarter was $10.8 million, a 28% increase compared to our prior year first quarter. The adjusted EBITDA margin in beverage solutions was up 217 basis points.

Thomas Christopher Pledger: But despite the drop in net sales gross profit and our beverage leasing segment increased 8% driven by double digit gross profit growth in single serve and across flavors extracts and ingredients and adjusted EBITDA in beverage solutions for the quarter was $10 8 million at 28% increase compared to our prior year first quarter and adjusted EBITDA margin in <unk>.

Thomas Christopher Pledger: Beverage solutions was up 217 basis points.

Thomas Christopher Pledger: In our Sustainable Sourcing and Traceability segment, sales net of intersegment revenues were $34.4 million during the first quarter of 2024, an increase of 42% compared to the first quarter of 2023, primarily due to increased volume. Adjusted EBITDA in our SS&T segment for the quarter was $300,000 compared to breakeven for the first quarter of 2023.

Thomas Christopher Pledger: And our sustainable sourcing traceability segment sales net of Intersegment revenues were $34 4 million during the first quarter of 2024, an increase of 42% compared to the first quarter of 2023.

Thomas Christopher Pledger: Primarily due to increased volumes.

Thomas Christopher Pledger: Adjusted EBITDA in our <unk> segment for the quarter was $300000 compared to breakeven for the first quarter of 2023.

Thomas Christopher Pledger: Moving on to capital expenditures, during the first quarter, we deployed approximately $7 million of CapEx, primarily related to our Conway Extract and RTD facility. Through the end of the first quarter, we spent over $200 million of the anticipated $315 million on the Conway facility, and we expect to spend approximately $90 million over the next nine months of fiscal 24, and then the balance in the first half of 2025. As our Conway CapEx intensity abates, and our Conway sales intensity ramps up in the first half of 2025, we expect to be free cash flow positive in the second half of 2025.

Thomas Christopher Pledger: Moving on to capital expenditures during the first quarter, we deployed approximately $7 million of Capex, primarily related to our Conway extract an RTD facility.

Thomas Christopher Pledger: Through the end of the first quarter, we spent over $200 million of anticipated 315 million on the Conway facility and we expect to spend approximately $90 million over the next nine months of fiscal 'twenty four and then the balance in the first half of 2025, as our Conway Capex intensity abates, and our Conway sales intensity ramps in the first.

Thomas Christopher Pledger: 2025, we expect to be free cash flow positive in the second half of 2025 at quarter end, we had approximately $188 million of consolidated unrestricted cash and undrawn revolving credit commitments.

Thomas Christopher Pledger: At quarter end, we had approximately $188 million of consolidated unrestricted cash and undrawn revolving credit commitment. Our consolidated net secured leverage ratio as of March 31, 2024 was five times based on our LTM adjusted EBITDA. As we said all along, we expect leverage to increase and remain elevated through the build-out of our Conway facility, and these leverage levels are in line with our expectations. Turning to our outlook for 2024, we are reiterating our expected consolidated adjusted EBITDA guidance of $60 to $80 million in fiscal 2024.

Thomas Christopher Pledger: Our consolidated net secured leverage ratio as of March 31, 2024, with five times based on our LTM adjusted EBITDA.

Thomas Christopher Pledger: As we said all along we expect leverage to increase and remain elevated to the build out of our conduit facility and these leverage levels are in line with our expectations.

Thomas Christopher Pledger: Turning to our outlook for 2024, we are reiterating our expected consolidated adjusted EBITDA guidance of $60 million to $80 million in fiscal 2024.

Thomas Christopher Pledger: While we expect our second quarter results to look similar to our first quarter from an adjusted EBITDA standpoint, we expect meaningful growth in the second half of 2024 as our high-speed can lines and glass bottle lines commence operations and the volume throughput in our Conway facility intensifies. As Scott mentioned earlier on the call, we're also introducing Preliminary 2025 Consolidated Justity Guidance of $115 million, which we expect to achieve if customer onboarding and product commercialization continue as planned. With that, I'll turn the call back over to the operator for questions.

Thomas Christopher Pledger: While we expect our second quarter results to look similar to our first quarter from an adjusted EBITDA standpoint, we expect meaningful growth in the second half of 2024 as our high speed can line and glass bottle lines commence operation and the volume throughput in our conduit facility intensifies.

Thomas Christopher Pledger: As Scott mentioned earlier on the call. We're also introducing preliminary 2025 consolidated adjusted EBITDA guidance of $115 million, which we expect to achieve a customer onboarding and product commercialization continues as planned.

Thomas Christopher Pledger: With that I'll turn the call back over to the operator for questions.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via a loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star 1 to join the queue. Your first question comes from the line of Ben Bienvenu with Stevens. Please go ahead.

Speaker Change: Thank you we will now begin the question and answer session. If you have dialed in and would like to ask a question. Please press star one on going telephone keypad. During your hand joined the queue. If you would like to withdraw your question Kimberly Press Star. One again, if you are called upon to ask your question in a listening by allowance.

Benjamin Shelton Bienvenu: The current device.

Operator: Pick up your handset and ensure that your phone is not on mute when asking your question again.

Operator: Star one giant queue. Your first question comes from the line of Ben Bienvenu with Stephens. Please go ahead.

Benjamin Shelton Bienvenu: Hey, good afternoon, and congratulations. Thank you, Ben.

Benjamin Shelton Bienvenu: Hey, good afternoon congratulations.

Brenda: Thank you Brenda.

Benjamin Shelton Bienvenu: As it relates to the 2025 guidance, which is great and super encouraging, what was it that gave you guys the confidence to give that sort of guidance, recognizing that it hinges heavily on Conway, were, four months into the year or so in 2024. That signals a lot of confidence, which is great. And I'd love to hear a little bit about the kind of critical path that helped you get here to offer that guidance to us for now.

Benjamin Shelton Bienvenu: As it relates to the 2025 guidance, which is great super encouraging.

Benjamin Shelton Bienvenu: What was it that gave you guys the confidence too.

Benjamin Shelton Bienvenu: Give that sort of guidance recognizing hinges heavily on Conway, where.

Benjamin Shelton Bienvenu: Yes.

Benjamin Shelton Bienvenu: Four months into the year so in 2024.

Benjamin Shelton Bienvenu: Signaled a lot of confidence which is great.

Benjamin Shelton Bienvenu: And so I'd love to hear a little bit about kind of the critical path that helped you get here to offer that guidance to us for next year.

Scott Thomas Ford: Thank you, Ben. This is Scott.

Benjamin Shelton Bienvenu: So thank you Ben this is Scott and yes, it is a bit far out for.

Ben: What any normal company would do on a normal guidance timeframe, but we've been going through something exceptional we've been building the world's largest roaster ready to drink.

Scott Thomas Ford: Facility.

Scott: It was important.

Scott: Our board thought it was important that we share with you some level of indication about what we've already sold.

Scott Thomas Ford: And yes, it is a bit far out for what any normal company would do on a normal guidance timeframe, but we've been going through something exceptional. We've been building the world's largest roaster ready to drink facility, you know, and I thought it was important, and our board thought it was important that we share with you some level of indication about what we've already sold. What we've put in front of you is what we've sold as of now, as we are finalizing commercialization and actually getting ready to ramp up.

Ben: What we've put in front of you is what we've sold as of now that we are finalizing commercialization and actually getting ready to ramp up we do have roughly 25% of the capacity of that facility yet to fill up which we intend to do and I think we will do.

Scott Thomas Ford: We do have roughly 25% of the capacity of the facility yet to fill up, which we intend to do, and I think we will do probably in the next few months. But at this point in time, we wanted to give you a sense of what we've accomplished with Conway turning on and being able to make a commercially sellable product. Well, it would generate, given our current run rate in our core business and the new contracts that we've sold into Conway just coming on, it would generate that EBITDA number, and we wanted you to have some sense of what that looked like.

Scott Thomas Ford: Probably in the next few months, but at this point in time, we wanted to give you a sense of what is it that we've accomplished with Conway, turning on and being able to make commercial sellable product well it would generate given our current run rate in our core business and the new contracts that we've sold.

Scott Thomas Ford: Into Conway, just coming on it would generate that EBITDA number and we wanted you to have some sense of what that looked like.

Scott Thomas Ford: I assure you it will change. It will move up or down based on whether things happen on time and on the marks that we think they're going to hit, but we had to start somewhere so you had a sense of order of magnitude about what it is that has happened as Conway turns.

Scott Thomas Ford: Assure you it will change it will move up or down based on whether things happen on time and on the marks that we think theyre going to hit but we had to start someplace. So you had a sense of order of magnitude about what it is.

Scott Thomas Ford: Has happened as Conway turns on.

Benjamin Shelton Bienvenu: It's great and is much appreciated. As we think about kind of the ramp, and Chris, your comments are helpful in kind of how we should think about this next June quarter, should we think of the back half of this year as a step function change higher to get to the EBITDA range you've reiterated today for 2024, and then, SteadyRAMP into 2025, or Scott, you know, I just heard your comments, I know this won't be a straight line So anything as you expect it, anything you could provide as you expect it today, recognizing it's subject to change would be helpful in terms of us kind of calibrating our models into 2025. Thanks so much.

Speaker Change: That's great and much appreciated.

Benjamin Shelton Bienvenu: As we think about kind of the ramp.

Benjamin Shelton Bienvenu: And Chris your comments are helpful on kind of how we should think about this next.

Benjamin Shelton Bienvenu: June quarter should we think of the back half of this year as a step function change higher to get to the EBITDA range, you've reiterated today for 2024 and then.

Benjamin Shelton Bienvenu: A steady ramp into 2025 or Scott I just heard your comments.

Benjamin Shelton Bienvenu: I know this won't be a straight line so anything as you expected.

Benjamin Shelton Bienvenu: Anything you can provide as you expect it today recognize it recognizing it's subject to change would be helpful. In terms of us kind of calibrating our models into 2025. Thanks so much.

Thomas Christopher Pledger: Sure, we do have a little bit of Conway coming through in the back part of 24 in our current thinking, but most of 24 is work that we've done away from Conway that is just now coming through. We've been working on about an 18-month sales cycle where we had a lot of things come in the last part of this year, the first part of this year, that don't actually start production until late 24.

Speaker Change: Sure sure we do have a little bit of Conway coming on in the back part of 2004, and our current thinking but most of 'twenty four is work that we've done.

Thomas Christopher Pledger: Hey from Conway that is just now coming through we've been working on about 18 months sales cycle, where we had a lot of things coming in the last part of this year. The first part of this year that don't actually start production until late 'twenty four that's a big driver. There is some EBITDA help in the back half of 'twenty four as well but.

Thomas Christopher Pledger: That's a big driver. There is some EBITDA help in the back half of 24 as well, but I'm not sure what we've said about that. It's not a huge number, who should see it over the back. I'd say it's really about a three-quarter launch between the fourth quarter and the first two quarters of 25. That's where you should see the curve really accelerate on a run rate basis as things turn on in full.

Thomas Christopher Pledger: I'm not sure what we've said about it's not a huge number.

Thomas Christopher Pledger: Who should see over the back I'd say, it's really about.

Thomas Christopher Pledger: A three quarter launch between the fourth quarter and the first two quarters of 'twenty five is where you should see the curve really accelerate on a run rate basis as things turn on in full.

Thomas Christopher Pledger: And this is our best kind of guesstimate. The 115 is our best attempt at guessing what that should look like if everybody stays on the calendar, hitting their marks, which is frankly as much up to our customers as it is to us, but everybody has been hitting their marks to date.

Thomas Christopher Pledger: And this is our best kind of guesstimate of the $1 15 is our best attempt at guessing what that should look like if everybody stays on the calendar hitting their marks which frankly.

Thomas Christopher Pledger: As as much up to our customers as it is us, but everybody has been hitting their marks to date.

Benjamin Shelton Bienvenu: And part of the strategy is to make sure that in 24 we can commercialize as much as we possibly can for Conway so that you're able to run as much of Conway in 2025 as possible. So there'll certainly be a ramp, but the more we spend time commercializing what we've currently sold and sell throughout the rest of the year, the better the number that we get in 2025.

Thomas Christopher Pledger: The part of the strategy is to make sure that in 24 that we can commercialize as much as we possibly can for Conway said that you are able to run as much of con way in 2025 as possible. So there will certainly be a ramp but the more we spend time commercializing what we've currently sold and sell throughout the rest of the year the better the number that we get in 2025.

Operator: Yep. Okay. Understood. Thanks so much. Much appreciated.

Speaker Change: Yes, okay understood. Thanks, so much much appreciate it.

Speaker Change: Thanks Ben.

Todd Morrison Brooks: Your next question comes from the line of Todd Brooks with the Benchmark Company. Please go ahead.

Operator: Your next question comes from the line of Todd <unk> with the Benchmark company. Please go ahead.

Todd Morrison Brooks: Hey, good afternoon, everyone, and congrats on sticking the landing as far as getting the plant up and running in April. Well done. Thanks, Todd.

Todd Morrison Brooks: Hey, good afternoon, everyone and congrats on sticking the landing as far as getting the plant up and running in April well done.

Todd Morrison Brooks: Thanks Todd.

Todd Morrison Brooks: Two questions for you. One, if you could look at the early stage commercialization process. And you've explained to us in the past that a lot of the timing relates to how much the customer needs to approve on the new lines, how long that acceptance period runs. Which early take on the actual acceptance window versus how long it possibly could have been when we were discussing it in the past.

Todd Morrison Brooks: Hi, two questions for you one.

Todd Morrison Brooks:

Todd Morrison Brooks: If we look at it.

Todd Morrison Brooks: Early stage commercial commercialization process and you explain to us in the past and a lot of the timing.

Todd Morrison Brooks: Relates to how much the customer needs to prove on the new lines, how long that period runs.

Todd Morrison Brooks: Which puts you early take on on the actual acceptance window versus how long it possibly could have been when we were discussing it in the future.

Todd Morrison Brooks: Thanks.

Scott Thomas Ford: Holistically speaking, and not to get into which product and which SKU and which customer and all of that stuff, but holistically speaking, because a number of those things have to do with customers and also with approval processes that the customers, regulators, approving, and authorizing agencies all have to work through, we are ahead of schedule. Whether that will continue to hold is the $64 million question, but as of right now,

Todd Morrison Brooks: Holistically speaking and not to get into which product and which skew in which customer.

Scott Thomas Ford: All of that stuff, but holistically speaking because a number of those things have to do with customers and also with approval processes that the customers regulators proving authorizing agencies all have to work through.

Scott Thomas Ford: Our head of schedule.

Scott Thomas Ford: Whether that will continue to hold as this is the $64 million question, but as of right. Now we are ahead of schedule.

Scott Thomas Ford: Okay.

Scott Thomas Ford: And then, second of three questions, the incremental 25% capacity that's not reflected in the fiscal 25 guidance. Why wouldn't that be sold out going into, given just the demand for flavors and extracts?

Scott Thomas Ford: The second of three questions the incremental 25% capacity thats not reflected in the fiscal 'twenty five guidance.

Scott Thomas Ford: Why why wouldn't that be sold out doing into 2012, given just the demand exactly what flavors and extracts.

Scott Thomas Ford: Subscribe to the group. Yeah, that's exactly the question I asked the sales force, and they said, Don't worry, boss; we have got it covered. But we don't have it signed. So it's not in our numbers.

Speaker Change: Yes, that's exactly the question I ask the Salesforce and they have said don't worry boss, we have got it covered but we don't have it signed so it's not in our numbers.

Scott Thomas Ford: There's a group of customers that can sign on ahead of time because they may have moving capacity from from other vendors or they have other sources But if you've got customers where they've only got one or or two other vendors They need to be able to see product produced on the on the equipment And so a little bit of it is once we're able to show we can produce the product and the time frame in which we said That the quality that we said our ability to be able to sell out the the rest of the line Is we feel pretty strong about

Speaker Change: There's a group of customers. They can sign on ahead of time, because they may have moving parts.

Scott Thomas Ford: <unk> for them from other vendors or they have.

Scott Thomas Ford: Other sources, but if you've got customers, where they've only got one or two other vendors they need to be able to see product produced on the on the equipment and so a little bit of it is once we're able to show we can produce the product and the timeframe in which we said that the quality that we said our ability to be able to sell out the rest of the line.

Scott Thomas Ford: We feel pretty strong about that.

Todd Morrison Brooks: Okay, great. And then my final question in the comments section of the release. Scott, you talked about just the sales pipeline development efforts and several new contract wins in the quarter. I'm wondering how broad the contract wins are now that you've brought customers, many of them new to Westrock, in through Conway. What type of contract wins are you getting, and how far does it branch out as far as cross selling into single servers, resting ground, or other potential opportunities?

Speaker Change: Okay, Great and then my final question.

Todd Morrison Brooks: Comments in the release.

Todd Morrison Brooks: Got you talked about just as soon as pipeline development achieved several new contract wins in the quarter I am wondering how broad the contract wins are now that maybe brought customers many of them new to west rock in through Conway.

Todd Morrison Brooks: What type of contract wins that you're getting and how far does it branch out as far as cross selling into.

Todd Morrison Brooks: We will serve our restaurant ground or other potential opportunities. Thanks.

Scott Thomas Ford: Todd, it has been a mix. We have, we have brought customers in, we have been introduced to new customers through Conway, even just looking at Conway, then it has. Turned out to be, we landed a roasting brown coffee contract. We started talking about roasting ground, and we ended up getting single-serve cup contracts. We have one customer that came in, that started in the roasting ground, is now looking at cups, and is now wanting to move their beverage platform in.

Scott: Todd It has been a mix.

Scott Thomas Ford: Ben we have we have brought customer.

Scott Thomas Ford: <unk>.

Scott Thomas Ford: We've been introduced to new customers through Conway, even just looking at Conway.

Scott Thomas Ford: <unk> has.

Scott Thomas Ford: Turned out to be we landed roast and ground coffee contracts.

Scott Thomas Ford: We received we started talking about roast and ground and we ended up getting single serve cup contracts.

Scott Thomas Ford: We have one customer that came in.

Scott Thomas Ford: It started in roast and ground is now looking at Cups, and now is wanting to move their beverage platform and.

Scott Thomas Ford: And what's nice about this is that we have a number of customers of various sizes, from some of the largest retailers who have never launched a private label in some of these categories to private label providers that want to switch vendors. That's always kind of part of it. But we've also got a very nice assortment of what we would call emerging brands in the RTD, single-serve coffee space, as well as some really large brands that are looking at adding products to their portfolio over time. And Conway Turning On has been a great place for us to meet, sit down, and go through all of the things we can do.

Scott Thomas Ford: What's nice about this is that we have a number of customers various sizes from some of the largest retailers who have never launched private label in some of these categories.

Scott Thomas Ford: Label providers that want to switch vendors, that's always kind of a part of it.

Scott Thomas Ford: But we've also got a very nice assortment of what we would call emerging brands.

Scott Thomas Ford: RTD single serve coffee space.

Scott Thomas Ford: As well as some really large brands, they're looking at adding products to their portfolio overtime and Conway turning on has been a great place for us to meet sit down and go through all of the things. We can do and I think we signed new contracts in every one of our product categories.

Scott Thomas Ford: And I think we signed new contracts in every one of our product categories, and I think we signed new contracts in every one of our customer channels in the last six months as a result of that activity. And I believe over the next six months we will dwarf. This is just a personal guess, not in our guidance. I think we have the possibility of dwarfing those wins over the next six months.

Scott Thomas Ford: I think we signed new contracts in every one of our customer channels in the last six months from that activity and I believe over the next six months, we will dwarf just a personal guess not in our guidance I think we have the possibility of dwarfing those wins over the next six months.

Todd Morrison Brooks: That's fantastic. Look forward to seeing it happen, Scott. We'll talk to you later. Me and you both. Thank you.

Speaker Change: That's fantastic look forward to seeing it happen Scott will talk to you later.

Speaker Change: Me a new boat. Thank you.

Operator: The next question comes from the line of Matt Smith with Stifle. Please go ahead.

Todd Morrison Brooks: Your next question comes from the line of Matt Smith with Stifel. Please go ahead.

Matt Smith: Hi, good afternoon. I just have a couple of questions here. Last quarter, you talked about the wide range of EBITDA in 2024 reflecting maintaining some flexibility to prioritize customer onboarding versus kind of flat out running production through Conway. Can you talk about the phasing of that customer onboarding in using up some of the line capacity? Meaning, as you get into the second half of 2024, and you have cans and glass bottles running, are you still, you know, toggling back and forth between production and trying to fill the remaining 25% of contracts?

Matt Smith: Hi, Good afternoon, just a couple of questions here last quarter, you talked about the wide range of EBITDA in 2024, reflecting maintaining some flexibility to prioritize customer onboarding versus.

Matt Smith: Kind of flat out running production through Conway.

Matt Smith: Can you talk about the phasing of that.

Matt Smith: Customer onboarding and using up some of the line capacity, meaning as you get into the second half of 2024, and you have cans and glass bottles running are you still.

Matt Smith: Toggling back and forth between production and trying to fill the remaining 25% of contracts.

Scott Thomas Ford: I think we've got all of the above going on, Matt. And we're also, you know, it's been less than 90 days since we spoke to you last. It's not like we have a huge amount of additional visibility into exactly when the third and fourth quarter commercialization production runs will start. But so far, everything is on track. And so that's why we're able to say, well, let's at least pencil them in for them. If we land that in 24, whenever that might be, what will 25 look like?

Matt Smith: So I think we've got all of the above going on Matt and were also.

Scott Thomas Ford: It's been less than 90 days since we spoke to you last it's not like we have any.

Scott Thomas Ford: Huge amount of additional visibility into exactly when the third and fourth quarter commercialization production runs will start but so far everything is on track and so that's why we're able to say well, let's at least pencil out for them. If we land that in 'twenty four whenever that might be what will 25 look like.

Scott Thomas Ford: And his pleasure has said multiple times.

Scott Thomas Ford: And as Pledger has said multiple times, and it's said in jest, but it's actually true, we have a lot more visibility into what we're going to do in 25 than we do in 24. Because of all the song and dance processes, we have to line up with all of the various customers.

Scott Thomas Ford: It said in jest, but it's actually true we have a lot more visibility into what we're going to do in 'twenty five than we do in 24 because of all the song and dance processes, we have to line up with all of the various customers.

Scott Thomas Ford: I appreciate that. And one last one for me, you mentioned in the prepared remarks about a customer moving on from low margin roast and ground. Can you just provide a little more color on what's behind the customer moving on and what they're pivoting to? What they're pivoting to, I'm not really sure.

Speaker Change: I appreciate that and one last one for me you mentioned in the prepared remarks about a customer moving on from low margin roast and ground could you just provide a little more color on to what's behind the customer moving on and what they are pivoting to.

Scott Thomas Ford: What they're pivoting to, I'm not really privy to. It's not really my business.

Scott Thomas Ford: But what they are 52, I'm not really privy to it's not really my business.

Scott Thomas Ford: It was it was a large kind of wholesale type roasting ground piece of business that had been done the old SMB plant and at the end of the day.

Scott Thomas Ford: It was a large kind of wholesale type hosting ground piece of business that had been done in the old S&D plant. And at the end of the day, as we exchanged out our accounting systems and started taking a hard look at all of our costs and all the redundancies and all of the support that that pulled on, there were better customers for us than that one. And also, we are managing the transition from customers where we do commodity work versus customers where we do important brand work for them. And in that transition, we had one move on, and it's about half of the volume decreased we experienced in the quarter over the prior year in roasting grain.

Scott Thomas Ford: As we exchanged out our accounting systems and started taking a hard look at all of our cost and all the redundancies and all of the support that that pulled on.

Scott Thomas Ford: There were better customers for us than that one.

Scott Thomas Ford: And also we are.

Scott Thomas Ford: Managing the transition from customers, where we do.

Scott Thomas Ford: The work versus customers, where we do important brand work for them and in that transition. We had one move on and its about half of the volume decrease we experienced in the quarter over the prior year in roast and ground.

Speaker Change: That's very helpful. Thank you.

Operator: Your next question comes from the line of Sarang Vora, with a tag, please go ahead.

Scott Thomas Ford: Your next question comes from the line of sight on Lora.

Sarang Vora: Please go ahead.

Sarang Vora: Great. Thank you. And my congratulations as well on the opening of Conway. A big venture has started. So great.

Sarang Vora: Great. Thank you and my congratulations as well on the opening of gone with a big venture started so great.

Sarang Vora: You know, just digging deeper on the 2025 EBITDA guidance of $150 million. You know, that is driven a lot. The growth is coming mainly from Conway. So can you help us understand the margin profile of this new business compared to your old business? You know, I know FD&I, significantly higher margin on the growth side. So just trying to understand, like, as we look out at 25, like how does your gross margin profile inflect as well as cost? So if you can share a little more color on, you know, the profile of Conway, that would be great.

Sarang Vora: Just digging deeper on the 2025 EBITDA guidance of $150 million.

Sarang Vora: That is doing a lot of the growth is coming mainly from the conveyance can you help us understand the margin profile of this new business come back to your old business.

Sarang Vora: I know after you know significantly higher margin on the growth side. So just trying to understand like you know as we look out to 'twenty five like how does your gross margin profile inflect as well.

Sarang Vora: And costs. So if you can shed a little more color on the profile of con way that could be cake.

Scott Thomas Ford: Sure, and we will do a lot more of that for you as this year goes on. But at a high level, the Conway plant has a higher margin than most of our traditional businesses, and parts of the Conway plant have a much higher margin, gross profit margin, EBITDA margin, than our traditional businesses, and that's in the extract world. And so the balance of where we are making extract and shipping it out to some people versus then running it through a lower margin further process or packaging process, if you will, that will create what the blended margin of Conway will look like.

Speaker Change: Sure and we will do a lot more of that for you as this year goes on but at a high level. The Conway plant has a higher margin than most of our traditional businesses and parts of the Conway players have a much higher <unk>.

Scott Thomas Ford: Margin gross profit margin EBITDA margin than our traditional businesses and that's in the extract world and so the balance of where we are making extract and shipping it out to some people versus than running it through a lower margins further process or packaging.

Scott Thomas Ford: Process, if you will.

Scott Thomas Ford: It will create what the blended margin of Conway will look like there will be places, where we just do extra sales in bulk and then places where we do extract sales into a finished product. The finished product line does.

Scott Thomas Ford: There will be places where we just do extract sales in bulk, and then places where we do extract sales into a finished product. The finished product line is not the greatest whiz-bang business in the world from a margin and capital return standpoint, but it's a really good business compared to when coupled with the extract sales business, and I think you're going to see the industry continue to line up in that regard. Our core theory is simply this, Saron, and I know that you want a specific margin number, which we will take you through later in the fall.

Scott Thomas Ford: So it's not the greatest Whiz-bang business in the world from a margin and capital return business, but it's a really good business compared to when coupled with the extra sales business and I think youre going to see the industry continue to line up in that regard.

Scott Thomas Ford: Our core theory is simply this song.

Scott Thomas Ford: Know that you want a specific margin number which we will take you through later in the fall.

Scott Thomas Ford: The core principle is this. Our collective industries have faced off against our customers in the ways that companies wanted to do business. They want to sell just extract. They want to just do a canning process. They want to just run a cold chain. They want to just do product development and have you pay them a fee. That's the way the industry has been structured and what Basically, we bet on was that people would want to see all of those things under one roof, where they could then embed their own product development engineers, food scientists, and then they could say, I want to turn this into a can, this into a bottle, this I want to extract where I can fill my own bottle, this I want to blend with milk, this I want to do with oat milk, this I want to do with an alternative plant-based milk, Providing that vehicle for people to bring their own food scientists in and say you tell us how you want to pick and match Various functions and services we can provide And we'll let you do that that has garnered an immense response from our customers.

Scott Thomas Ford: Core principles. This our collective industry has faced off against our customers in the ways that the companies wanted to do business. They want to sell just extract I want to just do.

Scott Thomas Ford: Canning process, they want to just run a cold chain.

Scott Thomas Ford: They want to just do product development have you pay them a fee that's the way the industry has been structured and what.

Scott Thomas Ford: Basically we bet on.

Scott Thomas Ford: People would want to see all of those things under one roof, where they could then embed their own product development engineers and food scientists and then they could say I want to turn this into a can this into a bottle. This I want extract where I can fill my own bottled. This I want to blend with milk. This I want to do with oat milk. This I wanted to do with an alternative plant based.

Scott Thomas Ford: Providing that vehicle for people to bring their own food scientist in and say you tell us how you want to pick and match various functions and services we can provide.

Scott Thomas Ford: Let you do that that has garnered an immense response from our customers now you're asking.

Scott Thomas Ford: Now you're asking me exactly how that set of Tetris blocks will land and how the numbers will play out, and I can't answer that yet any more than I can give you the specific guidance by quarter for 24. But I think you get the idea that it is a meaningful lift to the core EBITDA of the business and the aggregate report.

Scott Thomas Ford: Exactly how that set of tetra blocks will land and how the numbers will play out and I can't answer that yet any more than I can give you the specific guidance by quarter for 24, but I think you get the idea that it is.

Scott Thomas Ford: A meaningful lift to the core EBITDA that the business and the aggregate reports.

Sarang Vora: No, I mean, some of your margins are 2x your current margin profile, so I can understand, but I was just trying to see if you could have a curve or how high the margins can go.

Scott Thomas Ford: No I mean your margins are two X. Your current margin profile. So I can understand but I was just trying to see if you can you have a car about how high the margins getting go. So that's helpful. Thank you so much and I have one one quick question on the expense reduction plan I know you mentioned in the press release, you talked about it that you're trying to.

Sarang Vora: So plan. I know you mentioned in the press release that you talked about it, that you're trying to cut back on certain costs. So help us understand, you know, areas that were a bit out of control from a cost standpoint, and then, you know, how are you planning to address the, you know, reduction of cost or something? Thank you.

Sarang Vora: Cut back on certain costs, so help us understand you know.

Sarang Vora: <unk> that were a bit out of control from a cost standpoint, and then how about are you planning to address the reduction of cost or something thank you.

Thomas Christopher Pledger: I think turning on the Conway facility and the distribution center that comes along with the Conway facility really creates opportunities to be able to maximize the manufacturing footprint. So we can look to consolidate operations to where they're most profitable to be able to produce. And so now that the facility is up and running, now that we've got the distribution center that's associated with it, we're going back and looking at the rest of the operations to see how we look at our business, and what can we do within our business in order to maximize the value of the platform we've created? Are there opportunities to rationalize assets in order to be able to streamline how we operate? And if we can save expenses in the process, then that's just a smart thing to be able to do.

Sarang Vora: I think that the.

Sarang Vora: Turning on the Conway facility in the distribution center that comes along with the Conway facility. It really creates opportunities to be able to maximize the manufacturing footprint. So we can look to consolidate operations to where they're most profitable to be able to produce and so now that the facility is up and running now that we've got the distribution center that's associated with it.

Thomas Christopher Pledger: We're going back and looking at our at the rest of the operations to see how do you look at our business and how can what can we do within our business in order to maximize the value of the platform. We've created are there opportunities to rationalize assets in order to be able to streamline how we operate.

Thomas Christopher Pledger: And if we can save expenses in the process and that's just the smart thing to be able to do.

Speaker Change: That's great. Thank you.

Scott Thomas Ford: That concludes our Q&A session. I will now turn the conference back over to Scott Ford, Chief Executive Officer, for closing remarks.

Thomas Christopher Pledger: That concludes our Q&A session I will now turn the conference back over to Scott <unk>, Chief Executive Officer for closing remarks.

Scott Thomas Ford: Well, I think we've answered. I think you guys have asked all of the right first-level questions, and I think you've gotten what we know about them at each level. I'll say this.

Scott Thomas Ford: Well I think we've answered I think you guys have asked all of the Reits first level questions and I think you've gotten what we know about them at each level I will say this we were extremely pleased with our first quarter operations.

Scott Thomas Ford: We were extremely pleased with our first quarter operations. We are making good progress on the margins and expenses in our core business at the same time that we've been able to turn on Conway exactly on time. I don't think there were many people that thought it would happen on time, and it was a thrill to see the first product come out and to see it ship out and sell. We are extremely excited about what the next nine to 12 months hold for that.

Scott Thomas Ford: We were we are making good progress on the margins and expenses.

Scott Thomas Ford: In our core business at the same time that we've been able to turn on Conway exactly on time I don't think there is many people that thought it would happen on time.

Scott Thomas Ford: And it was it was a thrill to see the first product come off and to see it.

Scott Thomas Ford: Strip out and so we are extremely.

Scott Thomas Ford: It is still a period of great flexibility and flux, if you will, about exactly how it will land, but we thought it was imperative that we gave you some sense, if the ship just carries on at today's course and speed, about what you should expect for 2025. We hope that that helps you frame up your thinking about evaluation because this is the kind of question set that we go through with our board, which, as everybody knows, is largely made up of institutions and family offices that have carried the lion's share of the financing of all of these operations. Since they are asking that question and are worthy of the answer, we wanted to share it publicly as well.

Scott Thomas Ford: Excited about what the next nine to 12 months hold on that it is still a period of great.

Scott Thomas Ford: Flexibility and blocks, if you will about exactly how it will land, but we thought it was imperative that we give you some sense. If the ship just carries on at todays course and speed about what you should expect for 2025, and we hope that that helps you frame up your evaluation thinking.

Scott Thomas Ford: Because this is the kind of question set that we go through with our board, which as everybody knows.

Scott Thomas Ford: <unk> is largely made up of.

Scott Thomas Ford: Institutions and family offices that have carried the lion's share of the financing of all of these operations.

Scott Thomas Ford: So since they are asking that question and are worthy of the answer we wanted to share publicly as well and.

Operator: We appreciate your support. We appreciate your interest, and we hope you have a good afternoon. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect. Please wait; the conference will begin shortly.

Speaker Change: We appreciate your support we appreciate your interest and we hope you have a good afternoon. Thank you.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect. Please wait; the conference will begin shortly.

Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

Operator: Please wait the conference will begin shortly.

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