Q1 2024 Local Bounti Corp Earnings Call

May 9, 2024

Operator: Good morning, and welcome to Local Bounties' first quarter 2024 earnings conference call. All participants will be in a listen-only mode.

Good morning, and welcome to local boundaries first quarter 'twenty 'twenty four earnings conference call.

Good morning, and welcome to local boundaries first quarter 'twenty to 'twenty four earnings conference call.

Oh participants will be in a listen only mode.

All participants will be in a listen only mode.

After todays presentation, there will be an opportunity to ask questions. Please note today's event is being recorded.

Operator: After today's presentation, there will be an opportunity to ask questions. Please note, today's event is being recorded. At this time, I'd like to turn the conference over to Jeff Sonnek, Investor Relations at ICR.

Speaker Change: At this time I'd like to turn the conference over to Jeff Sonic Investor Relations of ICR. Please go ahead.

At this time I'd like to turn the conference over to Jeff stomach Investor Relations of ICR. Please go ahead.

Jeff Sonnek: Thank you and good morning. Today's presentation will be hosted by Local Bounties Chief Executive Officer Craig Hurlbert and Chief Financial Officer Kathleen Valisek. The comments made during today's call may contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Therefore, all statements, other than statements of historical facts, should be considered forward-looking statements. These statements are based on management's current expectations and beliefs, as well as a number of assumptions concerning future events.

Speaker Change: Thank you and good morning, today's presentation will be hosted by local boundaries, Chief Executive Officer, Craig Hurlbert, and Chief Financial Officer, Kathleen Bayless Sac.

Thank you and good morning, today's presentation will be hosted by local boundaries, Chief Executive Officer, Craig Hurlbert, and Chief Financial Officer, Kathleen <unk>. The comments made during today's call may contain forward looking statements within the meaning of the safe Harbor provisions of the private Securities litigation.

Jeff Sonnek: Such forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statement. Some of these risks and uncertainties are identified and discussed in the company's filings with the SEC. We'll also refer to certain non-GAAP financial measures today. Please refer to the press release, which can be found on our investor relations website, investors.localbounty.com, for reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures. With that, I'd now like to turn the call over to Craig. Okay, Craig?

Speaker Change: Comments made during today's call may contain forward looking statements within the meaning of the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.

And reform Act of 1095.

All statements other than statements of historical facts are considered forward looking statements. These statements are based on management's current expectations and beliefs as well as a number of assumptions concerning future events.

Speaker Change: Such forward looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the results discussed in the forward looking statements.

Such forward looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the results discussed in the forward looking statements some.

Speaker Change: Some of these risks and uncertainties are identified and discussed in the company's filings with the SEC. We will also refer to certain non-GAAP financial measures today. Please refer to the press release, which can be found on our investor relations website investors that local Bonnie dot com for reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures.

Some of these risks and uncertainties are identified and discussed in the company's filings with the SEC. We'll also refer to certain non-GAAP financial measures today. Please refer to the press release, which can be found on our investor relations website investors that local Bonnie dot com for reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures.

Speaker Change: With that I'd now like to turn the call over to correct Greg.

With that I'd now like to turn the call over to correct Greg.

Craig M. Hurlbert: Thank you Jeff and good morning everyone. Our first quarter demonstrated strong operational progress which enabled us to drive double-digit top-line growth versus both the prior quarter and the prior year, as expected. This performance was the result of a combination of recent improvements that we've made to our business, which I'll touch on briefly before passing the call to Kathy for her financial remarks. Our stack and flow technology continues to underpin our strategy.

Greg: Thank you, Jeff and good morning, everyone.

Thank you, Jeff and good morning, everyone.

Greg: Our first quarter demonstrated strong operational progress, which enabled us to drive double digit top line growth.

Our first quarter demonstrated strong operational progress, which enabled us to drive double digit topline growth.

Greg: As both the prior quarter and the prior year as expected.

As both the prior quarter and the prior year as expected.

Greg: This performance was the result of a combination of recent improvements that we've made to our business of which I'll touch on briefly before passing the call to Cathy for her financial remarks.

Our stock and flow technology continues to underpin our strategy. It has allowed us to ramp up production at our Georgia facility over the past quarter and it afford us the opportunities to further enhance our model, which is predicated on capital efficiency.

Craig M. Hurlbert: It has allowed us to ramp up production in our Georgia facility over the past quarter, and it has afforded us opportunities to further enhance our model, which is predicated on capital efficiency. In fact, we recently initiated a trial at scale for a differentiated use of our stack towers that in a smaller trial demonstrated a further yield increase of at least 10% beyond what we were currently achieving. We are excited to see those results in the second quarter.

Greg: In fact, we recently initiated a trial at scale for a differentiated use of our stack towers that in a smaller trial demonstrated a further yield increase of at least 10% beyond what we're currently achieving.

In fact, we recently initiated a trial at scale for a differentiated use of our stack towers that in a smaller trial demonstrated a further yield increase of at least 10% beyond what we're currently achieving.

Greg: We're excited to see those results later in the second quarter the.

We're excited to see those results later in the second quarter.

Craig M. Hurlbert: The flexibility of our design is of the utmost importance and allows us the ability to fine-tune individual plant recipes to maximize the utilization of our assets at all of our stack-enabled facilities. These iterations can make a significant impact and can also be implemented extremely efficiently across all our stack-and-flow facilities, which further highlights the advantages of our efficient and data-driven stack-and-flow model, where we are able to apply our learnings Our experience at the Georgia facility armed us with immense highlights that we've incorporated into our new purpose-built facilities in Washington and Texas.

Greg: The flexibility of our design is of the utmost importance and allows us the ability to fine tune individual plant recipes to maximize the utilization of our assets at all of our stack enabled facilities.

The flexibility of our design is.

Greg: Most important it allows us the ability to fine tune individual plant recipes to maximize the utilization of our assets.

All of our stack enabled facilities.

These iterations can make a significant impact.

These iterations can make a significant impact and can also be implemented extremely efficiently across all our stack and four facilities, which further highlights the advantages of our efficient and data driven stack and for a model, where we are able to apply our learnings rapidly.

Greg: Can also be implemented extremely efficiently across all our stack in foil facilities, which further highlights the advantages of our efficient and data driven stacking for a model, where we are able to apply our learnings rapidly.

Greg: Our experience at the Georgia facility have armed us with immense highlights that we've incorporated into our new purpose built facilities in Washington and Texas.

Our experience at the Georgia facility have armed us with immense highlights that we've incorporated into our new purpose built facilities in Washington and Texas.

Craig M. Hurlbert: These state-of-the-art facilities are optimized for our stack and flow technology from the ground up and have an operational design that maximizes capital efficiency and drives productivity. We're thrilled to report that we are shipping from Washington and Texas in the second quarter. This is a huge milestone for Local Bounty, and I want to recognize our entire team for their individual contributions to get these new facilities built and operational with amazing speed and efficiency.

Greg: This state of the art facilities are optimized for our stock and flow technology from the ground up and have an operational design that maximizes capital efficiency and drive productivity.

Greg: The state of the art facilities are optimized for our stack in flow technology from the ground up and have an operational design that maximizes capital efficiency and drive productivity.

Greg: We're thrilled to report that we are shipping out of Washington, and Texas in the second quarter. This is a huge milestone for local Bonnie and I want to recognize our entire team for their individual contributions to get these new facilities built and operational with amazing speed and efficiency.

We're thrilled to report that we are shipping out of Washington, and Texas in the second quarter. This is a huge milestone for local Bonnie and I want to recognize our entire team for their individual contributions to get these new facilities built and operational with amazing speed and efficiency.

Craig M. Hurlbert: With the new capacity from Washington and Texas, our commercial team is working extremely hard to capitalize on pent-up demand from existing customers and convert new opportunities. At that point, we are thrilled to begin serving two new customers, Albertson Seattle and Brookshires, to bring our fresher, more nutritious, and longer-lasting leafy green products to consumers in the Pacific Northwest and Texas region.

Greg: With the new capacity from Washington, and Texas, Our commercial team is working extremely hard to capitalize on pent up demand from existing customers and convert new opportunities.

Greg: On that point, we are thrilled to begin servicing to new customers Albertsons, Seattle and Brook shares to bring our fresher more nutritious and longer lasting leafy green products to consumers and the Pacific Northwest and Texas regions. We are also expanding upon our existing relationships to <unk>.

Craig M. Hurlbert: We are also expanding upon our existing relationships to add new distribution in Texas as well. As I noted on our last call, we are continuing to work on our next phase of projects to add future capacity for growth. This is comprised of capacity expansions across our existing network of facilities, the opening of a new facility in the Midwest, and the conversion of our Montana facility to a commercially focused operation. While final determinations have yet to be made for the facility expansion, construction is slated to begin late in the second quarter of 2024.

We're also expanding upon our existing relationships to add new distribution in Texas as well.

Greg: New distribution in Texas as well.

Greg: As I noted on our last call. We are continuing to work on our next phase of projects to add future capacity for growth.

As I noted on our last call. We are continuing to work on our next phase of projects to add future capacity for growth.

Greg: This is comprised of capacity expansions across our existing network of facilities.

This is comprised of capacity expansions across our existing network of facilities.

Greg: The opening of a new facility in the Midwest and the conversion of our Montana facility to a commercially focused operation.

The opening of a new facility in the Midwest and the conversion of our Montana facility to a commercially focused operation.

Greg: While final determinations have yet to be made for the facility expansion.

Construction is slated to begin late in the second quarter of 2024.

Greg: Construction is slated to begin late in the second quarter of 2024.

Craig M. Hurlbert: And in terms of our new facility in the Midwest, we are currently anticipating breaking ground in the third quarter of 2024, pending ongoing negotiations for final site selection. With respect to the transition of our Montana facility from its current R&D focus to one that is more commercially oriented and grows produce for sale to customers, while this provides us with incremental revenue, we expect it to be more impactful in terms of our cash flow.

Greg: And in terms of our new facility in the Midwest. We currently anticipating breaking ground in the third quarter of 2024 pending ongoing negotiations for final site selection.

And in terms of our new facility in the Midwest. We currently anticipating breaking ground in the third quarter of 2024 pending ongoing negotiations for final site selection.

With respect to the transition of our Montana facility from its current R&D focus to one that is more commercially oriented and growing produce for sale to customers.

Greg: While this provides us with incremental revenue, we expect it to be more impactful in term of our cash flow as our capacity is scaled up this has afforded us the ability to integrate our R&D efforts throughout our entire facility footprint, which is helping absorb those costs and also accelerate the learnings.

While this provides us with incremental revenue, we expect it to be more impactful in term of our cash flow as our capacity is scaled up this has afforded us the ability to integrate our R&D efforts throughout our entire facility footprint, which is helping absorb those costs and also accelerate the learnings.

Craig M. Hurlbert: As our capacity is scaled up, this has given us the ability to integrate our R&D efforts throughout our entire facility footprint, which is helping absorb those costs and also accelerate the learnings at each of our sites. We are on track to implement the shift this summer. And when complete, the Montana facility will be accretive to our overall adjusted gross margin and be an important component to us reaching our goal of achieving positive adjusted EBITDA in early 2025. Our R&D efforts also operate in parallel with product innovation, which has been working hard on new offerings to meet customer and retailer demand.

Greg: At each of our sites.

At each of our sites.

Greg: We're on track to implement the shift this summer and when complete the Montana facility will be accretive to our overall adjusted gross margin.

We're on track to implement the shift this summer and when complete the Montana facility will be accretive to our overall adjusted gross margin.

Greg: And be an important component to us reaching our goal of achieving positive adjusted EBITDA in early 2025.

And be an important component to us reaching our goal of achieving positive adjusted EBITDA in early 2025.

Greg: Our R&D efforts also operate in parallel with the product innovation team, who has been working hard on new offerings to meet customer and retailer demand as.

Craig M. Hurlbert: As we previously said, in the third quarter, we will be expanding our BabyLeaf product assortment by introducing several high-velocity offerings, including Arugula, Baby Spinach, Spring Mix Blend, and PowerDry. This expansion remains on track, and although we are still scaling up, we were able to deliver our first shipment of spinach to customers from the Georgia facility in March. We've also made excellent progress towards the national expansion of our popular grab-and-go salad kits, which bring our total distribution to approximately 700 doors throughout the Pacific Northwest and the Southern US.

Greg: As we previously said in the third quarter, we will be expanding our baby lead product assortment by introducing several high velocity offerings, including Arugula baby spinach and spring mix blend and powertrains. This expansion remains on track and although we are still scaling up we weren't.

As we previously said in the third quarter, we will be expanding our baby leaf product assortment by introducing several high velocity offerings, including Arugula baby spinach and spring mix blend and powertrains. This expansion remains on track and although we are still scaling up we weren't.

Greg: Able to deliver our first shipment of spinach to customers from the Georgia facility in March.

To deliver our first shipment of Spanish to customers from the Georgia facility in March.

We've also made excellent progress towards the national expansion of our popular grab and go salad kits, which bring our total distribution to approximately 700 doors throughout the Pacific Northwest and Southern U S. The response to this expansion has been very positive and we look forward to working with our.

Craig M. Hurlbert: The response to this expansion has been very positive, and we look forward to working with our partners to bring our convenient grab-and-go salad kits into more consumers' homes. In closing, the efficiency of our operations and the new capacity we are bringing online will support our plans to grow the business and meet the incredible demand we are seeing for our product. Combined with new compelling product offerings, we are well positioned to deliver a step up in revenue growth in the second half of this year to achieve our full year guidance, which calls for a doubling of revenue versus 2023 and puts us on track to achieving our near-term goal of With that, I will turn it over to Kathy for her review of it.

Responding to this expansion has been very positive and we look forward to working with our partners to bring our convenient Robyn go salad kits into more consumers' homes.

Greg: Our partners to bring our convenient grab and go salad kits into more consumers' homes.

Greg: In closing the efficiency of our operations and the new capacity, we are bringing online will support our plans to grow the business and meet the incredible demand, we're seeing for our products.

In closing <unk>.

<unk> of our operations and the new capacity, we're bringing online will support our plans to grow the business.

Meet the incredible demand, we're seeing for our products.

Greg: Bind with new compelling product offerings, we are well positioned to deliver a step up in revenue growth in the second half of this year to achieve our full year guidance, which calls for doubling of revenue versus 2023 and puts us on track to achieving our near term goal of becoming adjusted EBITDA.

Greg: Combined with new compelling product offerings, we are well positioned to deliver a step up in revenue growth in the second half of this year to achieve our full year guidance, which calls for doubling of revenue versus 2023 and puts us on track to achieving our near term goal of becoming adjusted EBITDA.

Greg: Positive in early 2025.

Positive in early 2025.

Greg: With that I will turn it over to Kathy for her review of the financials.

With that I will turn it over to Kathy for her review of the financials.

Kathleen Valiasek: Thank you, Craig. I'll start by reviewing our first quarter 2024 results, then provide an update on our capital structure, before finishing with an update on our year-to-date progress in 2024. First quarter 2024 sales increased 25% to $8.4 million, as compared to $6.7 million in the prior year, and increased 22% compared to $6.9 million in the fourth quarter 2023. Our results largely reflected increased production and growth in sales from our Georgia facilities.

Kathy: Thank you Craig.

Kathy: Thank you Craig I'll start by reviewing our first quarter 2024 results then provide an update on our capital structure before finishing with an update on our year to date progress in 2024.

Kathy: First by reviewing our first quarter 2024 results then provide an update on our capital structure before finishing with an update on our year to date progress in 2024.

First quarter 2024 sales increased 25% to $8 4 million as compared to $6 7 million in the prior year and increased 22% compared to $6 9 million in the fourth quarter 2023, our results largely reflected the increased production and growth in sales from our Georgia facility.

Kathy: First quarter 2024 sales increased 25% to $8 4 million as compared to $6 7 million in the prior year and increased 22% compared to $6 9 million in the fourth quarter 2023, our results largely reflected the increased production and growth in sales from my Georgia facility.

Kathleen Valiasek: First quarter adjusted growth margin, excluding depreciation and stock-based comp, was approximately 24%. Our adjusted growth margin performance was consistent with our fourth quarter 2023 results and reflects costs associated with the ongoing optimization and scaling up of our growing facilities. We expect our adjusted growth margin to increase in the coming quarters as sales ramp in parallel with our capacity scale up this year. Beyond the scale-related benefits, we also have other initiatives that we expect to support margin improvement. As Craig mentioned in his remarks, we have a scaled trial ongoing related to our stack zones that is providing some compelling data.

Kathy: First quarter adjusted gross margin, excluding depreciation and stock based comp was approximately 24%. Our adjusted gross margin performance was consistent with our fourth quarter 2023 results and reflects costs associated with the ongoing optimization and scaling up of our growing facilities, we expect our adjusted gross.

First quarter adjusted gross margin, excluding depreciation and stock based comp was approximately 24%. Our adjusted gross margin performance was consistent with our fourth quarter 2023 results and reflects costs associated with the ongoing optimization and scaling up of our growing facilities, we expect our adjusted gross.

Kathy: Margins to increase in the coming quarters as sales ramp in parallel with our capacity to scale up this year.

Margins to increase in the coming quarters as sales ramp in parallel with our capacity to scale up this year.

Kathy: And the scale related benefits. We also have other initiatives that we expect to support margin improvement.

The scale related benefits. We also have other initiatives that we expect to support margin improvement.

Kathy: Craig mentioned in his remarks, we have a scaled trial ongoing related to our stack zones, such as providing some compelling data once we have those results and implement the adjustments. We also see an opportunity to drive down other production costs for instance seed optimization is an area that we've done some work and then.

As Craig mentioned in his remarks, we haven't scaled trial ongoing related to our stack zones, such as providing some compelling data.

Kathleen Valiasek: Once we have those results and implement the adjustments, we also see an opportunity to drive down other production costs. For instance, seed optimization is an area that we've done some work on, and in recent trials, we were successful in reducing our seed costs by more than 20 percent. We would look to implement this program more broadly across all of our stack-enabled facilities later in 2024.

Once we have those results and implement the adjustments. We also see an opportunity to drive down other production cost for instance.

Kathy: Optimization is an area that we've done some work and then recent trials we were successful in reducing our <unk> costs by more than 20%, we'd look to implement this program more broadly across all of our stack enabled facilities later in 2024 <unk>.

Kathy: Recent trials, we were successful in reducing our <unk> cost by more than 20%, we'd look to implement this program more broadly across all of our stack enabled facilities later in 2024.

Kathleen Valiasek: SG&A for the first quarter decreased $8.4 million to $7.6 million, driven by cost-saving actions we took in the fourth quarter to streamline our organizational structure, as well as lower stock-based comp. We expect to continue to benefit from the cost-saving actions and the resulting lower cost base through the end of 2024. The net loss was $24.1 million in the first quarter of 2024, as compared to a net loss of $23.5 million in the prior year period. Adjusted EBITDA loss was $6.9 million, as compared to a loss of $7.4 million in the prior year period, and reflects an improvement from the fourth quarter loss of $9.4 million.

Kathy: SG&A for the first quarter decreased $8 4 million to $7 6 million driven by cost saving actions, we took in the fourth quarter to streamline our org structure as well as lower stock based comp we expect to continue to benefit from the cost saving actions and the resulting lower cost base through the end of 2024.

SG&A for the first quarter decreased $8 4 million to $7 6 million driven by cost saving actions, we took in the fourth quarter to streamline our org structure as well as lower stock based comp we expect to continue to benefit from the cost saving actions and the resulting lower cost base through the end of 2024.

Net loss was $24 1 million in the first quarter of 2024.

Net loss was $24 1 million in the first quarter of 2024 as compared to a net loss of $23 5 million in the prior year period, adjusted EBITDA loss was $6 9 million as compared to a loss of $7 4 million in the prior year period and reflects an improvement from the fourth quarter loss of $9 four.

Kathy: Compared to a net loss of $23 5 million in the prior year period, adjusted EBITDA loss was $6 9 million as compared to a loss of $7 4 million in the prior year period and reflects an improvement from the fourth quarter loss of $9 4 million.

Kathleen Valiasek: From a capital structure perspective, as of March 31st, 2024, we had cash, cash equivalents, and restricted cash in the amount of $14.7 million. Additionally, as of first quarter end, we had approximately 8.4 million shares outstanding. On a pro forma basis, including warrants and our employees' restricted stock units outstanding, we have a fully diluted share count of approximately 15.1 million shares. We continue to expect to close on four conditional commitment letters from a commercial finance lender in the second quarter of 2024, subject to finalizing documentation and customary closing.

Yeah.

From a capital structure perspective as of March 31, 2024, we had cash cash equivalents and restricted cash in the amount of $14 7 million as of first quarter end, we had approximately $8 4 million shares outstanding.

Kathy: From a capital structure perspective as of March 31, 2024, we had cash cash equivalents and restricted cash in the amount of $14 7 million as of first quarter end, we had approximately $8 4 million shares outstanding on.

Kathy: On a pro forma basis, including warrants and our employees restricted stock units outstanding we have a fully diluted share count of approximately $15 1 million shares. We continue to expect to close and for conditional commitment letters from the commercial finance lender in the second quarter of 2024 subject to finalizing.

On a pro forma basis, including warrants and our employees restricted stock units outstanding we have a fully diluted share count of approximately $15 1 million shares. We continue to expect to close and for conditional commitment letters from the commercial finance lender in the second quarter of 2024 subject to finalizing.

Kathy: Documentation and customary closing conditions together the ccls provide for total financing of approximately $228 million to fund, our 2024 expansions or new Greenfield facility in the Midwest and to repay certain existing construction financing, which will lower our cost of capital we are.

Documentation and customary closing conditions together the ccls provide for total financing of approximately $228 million to fund, our 2024 expansions or new Greenfield facility in the Midwest and to repay certain existing construction financing, which will lower our cost of capital we have.

Kathleen Valiasek: Together, the CCLs provide for total financing of approximately $228 million to fund our 2024 expansions, our new greenfield facility in the Midwest, and to repay certain existing construction financing, which will lower our cost of capital. We are very pleased with the growing support for Local Bounties' unique CEA approach.

Kathy: Very pleased with the growing support for local bounties unique approach. We continue to believe that we have access to the necessary capital to fund our operations complete the construction of our ongoing projects and reach positive adjusted EBITDA. In early 2025 are very very important milestone that our entire organization.

Very pleased with the growing support for local boundaries unique approach. We continue to believe that we have access to the necessary capital to fund our operations complete the construction of our ongoing projects and reached positive adjusted EBITDA. In early 2025 are very very important milestone that our entire organization.

Kathleen Valiasek: We continue to believe that we have access to the necessary capital to fund our operations, complete the construction of our ongoing projects, and reach positive adjusted EBITDA in early 2025, a very, very important milestone that our entire organization has been working hard to achieve. We expect that the combination of increased revenue contributions from our new facilities, lower SG&A expenses, and decreased R&D costs from shifting our Montana facility toward more commercial activities will get us there in early 2025. Additionally, we continue to pursue opportunities to lower our cost of capital and replace our construction financing, including sale-leaseback transactions and our work with a licensed USDA lender.

Kathy: <unk> has been working hard to achieve we expect that the combination of increased revenue contribution from our new facilities lower SG&A expense and decreased R&D cost from shifting our Montana facility toward more commercial activities are what will get us there in early 2025. Additionally, we continue to pursue.

<unk> has been working hard to achieve we expect that the combination of increased revenue contribution from our new facilities lower SG&A expense and decreased R&D cost from shifting our Montana facility toward more commercial activities are what will get us there in early 2025. Additionally, we continue to pursue.

Kathy: Opportunities to lower our cost of capital and replace our construction financing, including sale leaseback transactions and our work with a licensed USDA lender with respect to our outlook and in consideration of our year to date performance. We are providing our full year 2024 sales guidance of $50 million to $60 million disc.

Opportunities to lower our cost of capital and replace our construction financing, including sale leaseback transactions and our work with a licensed USDA lender with respect to our outlook and in consideration of our year to date performance. We are providing our full year 2024 sales guidance of $50 million to $60 million disc.

Operator: With respect to our outlook and in consideration of our year-to-date performance, we are providing our full year 2024 sales guidance of $50 to $60 million. This guidance reflects expected production out of our Georgia, California, and Montana facilities and, to a lesser extent, the partial year contribution from production ramping up at our Texas and Washington facilities. In terms of how to think about the year from a quarterly cadence perspective, we anticipate sequential revenue growth from Q1 to Q2, reflecting Georgia at full production and Washington and Texas, which begin shipping to customers in the second quarter.

Kathy: <unk> reflects expected production out of our Georgia, California, and Montana facilities and to a lesser extent the partial year contribution from production ramping up at our Texas and Washington facilities in terms of how to think about the year from a quarterly cadence perspective, we anticipate sequential revenue growth from Q1 to Q.

<unk> reflects expected production out of our Georgia, California, and Montana facilities and to a lesser extent the partial year contribution from production ramping up at our Texas and Washington facilities in terms of how to think about the year from a quarterly cadence perspective, we anticipate sequential revenue growth from Q1 to Q2.

Kathy: Two reflecting Georgia at full production, and Washington, and Texas, which begins shipping the customers in the second quarter. We then expect a significant step up in revenue growth for the back half compared to the compared to the first half as Washington, and Texas production ramps up with the fourth quarter being larger than the third quarter to meet our full year guidance.

Two reflecting Georgia at full production in Washington, and Texas, which begins shipping the customers in the second quarter. We then expect a significant step up in revenue growth for the back half compared to the compared to the first half as Washington, and Texas production ramps up with the fourth quarter being larger than the third quarter to meet our full year guidance.

Operator: We then expect a significant step up in revenue growth for the back half compared to the first half as Washington and Texas production ramps up, with the fourth quarter being larger than the third quarter to meet our full year guidance. That concludes our prepared remarks. Operator, please open the call for questions.

Speaker Change: That concludes our prepared remarks, operator, please open the call for questions.

That concludes our prepared remarks, operator, please open the call for questions.

Operator: Your first question comes from the line of Kristen Owen from Oppenheimer. Your line is open.

Speaker Change: Your first question comes from the line of Christopher <unk> of Oppenheimer. Your line is open.

Your first question comes from the line of Christopher <unk> of Oppenheimer. Your line is open.

Kristen E. Owen: Great. Thank you for taking the time to answer the question. Good morning, everyone, and congratulations on all the progress this quarter. I wanted to ask you about your gross margin outlook. You highlighted some of the things that are going to move the needle there, I think, bringing Montana out of R&D and making that sort of productive. Just help us understand how you're thinking about the cadence of gross margin as we go through the year to support that outlook of, I think you said, actually early 2025 EBITDA break even.

Christopher: Great. Thank you for taking the question good morning, everyone and congratulations on all the progress this quarter.

Great. Thank you for taking the question good morning, everyone and congratulations on all the progress this quarter.

Christopher: I wanted to ask about your gross margin outlook you highlighted some of the things that are going to move the needle there I think bringing bringing montana out of R&D and making that sort of productive.

I wanted to ask about your gross margin outlook you highlighted some of the things that are going to move the needle there I think bringing bringing montana out of R&D and making that sort of productive just help us understand how you're thinking about the cadence of gross margin as we go through the year to support that outlook.

Christopher: Help us understand how you're thinking about the cadence of gross margin as we go through the year to support that outlook.

Christopher: That actually early 2025 EBITDA breakeven.

That actually early 2025 EBITDA breakeven.

Craig M. Hurlbert: Hey, good morning, Kristen. Great to hear from you. Kathy, you want to just tackle that one? You may be on mute, Kathy.

Speaker Change: Hey, Hey, good morning, Kristen great Great to hear from you Kathy you want to just tackle that one.

Hey, Hey, good morning, Christian Great Great to hear from you Kathy you want to just tackle that one.

Speaker Change: You may be on mute Kathy.

You may be on mute Kathy.

Kathleen Valiasek: I was on mute. Thank you. Sorry about that.

Kathy: I was on mute. Thank you sorry about that [laughter] get worried at Christina great to hear your voice and thanks for the question Yeah. So when we think about.

I was on mute. Thank you sorry about that.

Kathleen Valiasek: Good morning, Kristen. Great to hear your voice. And thanks for the question. Yeah.

Kathy: Good morning, Chris and Great to hear your voice and thanks for the question Yeah. So when we think about the.

Kathleen Valiasek: So when we think about the growth margin as compared to each quarter, you know, for the rest of 2024 by quarter, when we think about it, Georgia is going to continue to improve, whereas Texas and Washington are probably not going to be, you know, they're going to be ramping up, right? So, what I would say is we're going to see sequential improvement each quarter. Yeah, and especially when we think about the R&D trial on improving yield, that's going to have a significant impact that we can implement right away, as we said, and also just the seed optimization, which is significant also, which we'll put into place in the second half of the year. But again, even that rollout, we can bring to Texas and Washington also.

Kathy: The gross margin is as each quarter for the rest of 2024 by quarter.

Gross margin is as each quarter for the rest of 2024 by quarter.

Kathy: When we think about Georgia is going to continue to improve whereas Texas and Washington are probably.

When we think about Georgia is going to continue to improve whereas Texas and Washington are probably.

Kathy: Not going to be they're going to be ramping up right. So what I would say is we're going to see sequential improvement each quarter.

Not going to be you know theyre going to be ramping up right. So what I would say is we're going to see sequential improvement each quarter.

Speaker Change: Yeah, and especially like when we think about the R&D.

Speaker Change: R&D trial on improving the yield that's going to be a significant.

Speaker Change: To have a significant impact that we can implement right away as we said in and also just the seed optimization.

I have a significant impact that we can implement right away as we sat in and also just the seed optimization.

Speaker Change: Which is significant alpha which will put into place in the second half of the year, but again even that.

Speaker Change: As significant alpha, which will put into place in the second half of the year, but again even that.

Speaker Change: Rollout, we can bring in to Texas and Washington also.

Rollout, we can bring into Texas and Washington also.

Craig M. Hurlbert: Okay, that's helpful. Thank you. So, the other question that I wanted to ask, one of the updates that you provided in your prepared remarks was the additional customers that you signed on in the quarter. Just wondering, as the facilities ramp up, how much of your capacity is already committed versus how much are you keeping available to be able to add those new doors?

Speaker Change: Okay.

Okay.

Speaker Change: That's helpful. Thank you. So the other question that I wanted to ask one of the the.

Speaker Change: Data that you provided in the prepared remarks.

Updates that you provided in the prepared remarks.

Speaker Change: The additional customers that you signed on in the quarter just wondering.

Speaker Change: As those facilities ramp how much of your capacity is already committed versus how much are you keeping available to be able to add new doors.

As those facilities ramp how much of your capacity is already committed versus how much are you keeping available to be able to add new doors.

Craig M. Hurlbert: Yeah, Kristen, great question, really good question. As you know, retailers have different periods of time during which they award new awards for different partners, if you will. So obviously, that's kind of on top of everything I'm about ready to say. But the momentum in our commercial group is really palpable. There is a lot of momentum with a lot of different customers, many of which we either couldn't name or didn't name in the prepared remarks.

Speaker Change: Yeah, Kristen Great question really good question.

Yeah, Justin Great question really good question.

Speaker Change: As you know retailers.

Speaker Change: As you know retailers you know.

Speaker Change: Have different periods of time in which they award.

Have different periods of time in which they award.

Speaker Change: New awards for different partners. If you will so obviously, that's kind of over top of everything I'm about ready to say.

New awards for different partners. If you will so obviously, that's kind of over top of everything I'm about ready to say.

Speaker Change: But the momentum in our commercial group is really palpable.

But the momentum in our commercial group is really palpable.

Speaker Change: There is a lot of momentum with a lot of different customers many of which we.

There is a lot of momentum with a lot of different customers many of which we.

Speaker Change: Either couldnt name or didn't name and in the prepared remarks.

Either couldnt name or didn't name and in the prepared remarks.

Craig M. Hurlbert: So what I would say to you is that's a number that we're tracking, and it will play its way out over the next couple of quarters. But I can tell you we're all excited about the, what I would call, enthusiasm around our kind of expanding platform across our existing customer base, and there's a lot of excitement with new customers inside of the regions. Like Brookshire is a good example; I think it's 250 grocery stores, roughly, and primarily in Texas, Louisiana, and some in Oklahoma.

Speaker Change: So what I would say to you is that that's a number that we're tracking and it will it will over the next couple of quarters play its way out.

So what I would say to you is that that's a number that we're tracking and it will it will over the next couple of quarters play its way out.

Speaker Change: But I can tell you. We're all excited about the what I would say the enthusiasm around our kind of expanding platform across our existing customer base and there is a lot of excitement with new customers inside of the regions like Brookfield is a good example.

But I can tell you. We're all excited about the what I would say the enthusiasm around our kind of expanding platform across our existing customer base and there is a lot of excitement with new customers inside of the regions like Brookfield is a good example.

Speaker Change: I think it's 250 grocery stores roughly and.

Speaker Change: It's 250 grocery stores roughly.

<unk>.

Primarily in Texas, Louisiana, and some in Oklahoma. They came to visit the site in Mount Pleasant, and Texas, and we're just super excited and blown away by.

Speaker Change: Primarily in Texas, Louisiana, and some in Oklahoma. They came to visit the site in Mount Pleasant, and Texas, and we're just super excited and blown away by what we were putting in there and what that would allow.

Craig M. Hurlbert: They came to visit the site in Mount Pleasant, Texas, and we were just super excited and blown away by what we were putting in there and how that would allow their consumers to enjoy a more local-based product. So that's one example we did mention. But then our existing customers are just looking to expand as well. So there is a lot of momentum, a lot of positive momentum, and some of which is just the way the retail business works.

What we were putting in there and what that would allow their consumers to enjoy.

Speaker Change: Their consumers to enjoy.

Speaker Change: A more local based products. So that's one example, we did mentioned but that our existing customers looking to expand as well. So a lot of momentum a lot of positive momentum and some of which is just the way the retail business works.

A more local based products. So that's one example, we did mentioned but that our existing customers looking to expand as well so a lot of momentum a lot of positive momentum.

And some of which is just the way the retail business works.

Craig M. Hurlbert: Yeah, and I'll just add, you know, Craig alluded to it, all the customers have shelf reset schedules, right? And so when we even think about our 2024 builds, we talk to all of our customers and think through, like, what is the capacity that we're going to have for the builds that we're completing this quarter and then also the 2024 builds, and we do earmark the capacity for our

Speaker Change: Yeah, and I'll, just add Craig alluded to all the customers have the shelf reset schedules right and so when we when we even think about our 2024 builds we talked to all of our customers and think through like what is the capacity that we're going to have four are the builds that we're completing this.

Speaker Change: Yeah, and I'll just add.

Craig alluded to it all of the customers have the shelf reset schedules right and so when we when we even think about our 2024 builds we talked to all of our customers and think through like what is the capacity that we're going to have.

Or are the builds that we're completing this quarter and then also the 2020 for belt and we do earmark that capacity for our customers.

Speaker Change: Order and then also the 2024 belts and we do earmark that capacity for our customers.

Kathleen Valiasek: Okay, that makes sense. It's sort of the last question that I'll ask here that is very related to that, and it may be too soon to be able to quantify this, but maybe qualify it for us. The revenue generation capacity for Washington and Texas, particularly given that these are built to purpose and some of the learnings that you've had in both Georgia and Montana, how to think about, maybe even relative to your prior expectations, what the revenue generation capacity is for those facilities.

Speaker Change: Okay.

Okay that makes sense, it's sort of and then the last question that I'll ask here. It is is very related to that and it may be too soon to be able to quantify this but maybe qualifying it for us the revenue.

Speaker Change: Makes sense, it's sort of.

Speaker Change: The last question that I'll ask here. It is is very related to that and it may be too soon to be able to quantify this but maybe qualifying it for us the revenue generation capacity for Washington, and Texas, particularly given that these are built to purpose and some of the learnings that you've had.

And any generation capacity for Washington, and Texas, particularly given that these are built to purpose and some of the learnings that you've had in both Georgia and Montana, just how do you think about that maybe he didn't relative to your prior expectations, what the revenue generation.

Speaker Change: In both Georgia, and Montana, just how to think about that maybe he didn't relative to your prior expectations what their revenue generation.

Kathleen Valiasek: And I'll leave it there. Thank you. Kathy

Speaker Change: He is.

For that facility and I'll leave it there. Thank you.

Speaker Change: And I'll leave it there thank you.

Speaker Change: Kathy.

Kathy.

Speaker Change: Yeah.

Yeah.

Operator: Yeah, sure. So when we think about each of the different facilities, we typically don't give the revenue by facility, but we absolutely estimate that they will, you know, Texas is six acres. So we estimate and assume that it will exceed the revenue out of Georgia, whereas Pasco Wright is three acres, but the productivity and the yields out of both of those facilities will be higher than Georgia, simply because they are.

Kathy: Yes, sure. So when we think about each of the different facilities.

Yes, sure. So when we think about each of the different facilities.

Kathy: Typically don't.

Typically don't.

Kathy: Give the revenue by facility, but we absolutely estimate that that they will.

Give the revenue by facility, but we absolutely estimate that that they will.

Texas is six acres, so we estimate and assume that it will exceed the revenue out of Georgia, whereas Pasco writers is three acres, but the the productivity and the yields out of both of those facilities, we anticipate will be higher than Georgia simply because they were.

Texas is six acres, so we estimate.

Assume that it will exceed the revenue out of Georgia, whereas Pasco writers is three acres, but the the productivity and the yields out of both of those facilities, we anticipate will be higher than Georgia simply because they were.

Operator: You know, both purpose-built facilities, whereas, you know, as we all know, we inherited kind of the Georgia build, which again, the Georgia build has improved significantly, and we're doing very, very well there. But the Texas and Washington will be standout facilities because they're purpose built. Thank you so much. Your next question comes from the line of Ben Klieve of Lake Street Capital Markets. Your line is open.

Kathy: Both purpose built facilities, whereas you know as we all know we inherited kind of the GA build which again the GA build is.

Both purpose built facilities, whereas you know as we all know we inherited kind of the GA build which again the GA build is has improved significantly and we're doing very very well, there, but the Texas and Washington will be standout facility is because they are purpose built.

Kathy: It has improved significantly and we're doing very very well, there, but the Texas and Washington will be standout facility is because they are purpose built.

Speaker Change: Thank you so much.

Thank you so much.

Speaker Change: Thanks, Greg.

Thanks, Greg.

Speaker Change: Your next question comes from the lineup in case of Lake Street Capital market. Your line is open.

Your next question comes from the lineup Vancleef of Lake Street Capital markets. Your line is open.

Benjamin David Klieve: All right. Thanks for taking the questions and congratulations. Good, Doug. Nice little start to the year here. A question about OpEx.

Vancleef: Alright, thanks for taking the questions and congratulations good Doug nice little start to the year here.

Alright, thanks for taking the questions and congratulations good start to the year here.

Benjamin David Klieve: You guys did a lot of work to right-size the business in late 2003. It had a much more pronounced and immediate impact than I was anticipating here in the first quarter. And I'm wondering if you can comment on the extent to which we can use first-quarter SGA and R&D as appropriate benchmarks for Q2 and beyond.

Vancleef: Question about Opex you guys, there's been a lot of work to rightsize the business.

Question about Opex you guys. There's been a lot of work to rightsize the business in late 'twenty three had a much more pronounced than immediate impact than I was anticipating here in the first quarter and I'm wondering if you can comment on the extent to which we can use kind of the first quarter SGA and R&D.

Vancleef: 23 had a much more pronounced and immediate impact than I was anticipating here in the first quarter and I'm wondering if you can comment on the extent to which we can use kind of the first quarter SGA and R&D.

Vancleef: Appropriate benchmark for Q2 and beyond or if theres any major puts and takes we should consider.

Vancleef: Corporate benchmark for Q2 and beyond or if theres any major puts and takes we should consider.

Vancleef: For the balance of this year, especially as new facilities are coming online.

Vancleef: Okay.

Kathleen Valiasek: Yeah, sure. Kathy, do you want to take that one also?

Speaker Change: Yeah sure. So I'll take that one also yeah, yeah, Sir and boy do I Love that question Ben.

Yeah sure. So I'll take that one also yeah, yeah, Sir and boy do I Love that question Ben.

Kathleen Valiasek: Yeah. Yeah, sure. And boy, do I love that question, Ben, honestly, because we, you know, in terms of SG&A, I would anticipate that it's going to continue to decrease quarter over quarter through 2024. And honestly, I mean, I think we talked about it even on our annual call back at the end of March. We did reduce SG&A, and what we found is that we're actually much more efficient than we were before we made the edits and the changes, right? So it's fantastic.

Speaker Change: Because we.

Because we.

Speaker Change: You know in terms of SG&A I would anticipate that it's going to continue.

You know in terms of SG&A I would anticipate that it's going to continue.

Speaker Change: Continued to decrease.

Continued to decrease.

Speaker Change: Quarter over quarter through 2024, and and honestly I mean, I think we talked about it even on our annual call back the end of March.

Speaker Change: We did.

We did.

Speaker Change: <unk> SG&A and what we found is that we're actually much more efficient.

<unk> SG&A and what we found is that we're actually much more efficient.

Speaker Change: And we were before we made the edits and the changes right. So its fantastic, but I would say.

And we were before we made the edits and the changes right. So its fantastic, but I would say.

Kathleen Valiasek: But I would say SG&A is going to continue to decline quarter over quarter, and you'll see the greatest decline, I want to say Q3, Q4, but you'll see a decline in Q2, okay? And then R&D is likewise going to continue to decline. However, when you think about it, Texas and Washington scaling in the second half of the year, there will be, you know, some costs that will be R&D related.

Speaker Change: G&A is going to continue to decline quarter over quarter and Youll see the greatest decline I want to say Q3, Q4, but you'll see a decline in Q2, Okay. And then R&D is likewise going to continue to decline. However, when do you think about it Texas and Washington scaling the second half.

Speaker Change: G&A is going to continue to decline quarter over quarter and Youll see the greatest decline I want to say Q3, Q4, but you'll see a decline in Q2, Okay. And then R&D is likewise going to continue to decline. However, when you think about it Texas and Washington scaling the second half.

Speaker Change: For the year, there will be some costs that will be R&D related.

Half of the year, there will be some costs that will be R&D related.

Speaker Change: Hopefully that okay. That's helpful, but yes, yes.

Okay. That's helpful. Yeah earned is yeah go ahead, and then I'll follow up on that go ahead.

Speaker Change: Yeah go ahead, and then I'll follow up on that go ahead.

Craig M. Hurlbert: So that was very helpful. I mean, Craig, if you have any comments on that, you know, please let me know. Otherwise, I do have a couple other questions.

Speaker Change: Yes.

Yes.

Speaker Change: So that was that was very helpful Me Crazy. If you had any comments on that please let me know or otherwise I do have a couple of other questions.

So that was that was very helpful. I mean, Craig if you have any comments on that please let me know.

Craig M. Hurlbert: Yeah, I think my comment on that is when you get a platform that has multiple facilities, there's inherent efficiencies that come across the whole organization, actually, and transitioning Montana and, you know, Georgia, Texas, Pasco, and the California facilities. You know, Kathy and I sit on these calls with all of our GMs, and the whole organization is just really focused on efficiency and really taking lessons learned quickly in different facilities and applying them.

Couple of other questions, Yes, I think I think my comment on that is.

Craig M. Hurlbert: Yes, I think I think my comment on that is.

Craig M. Hurlbert: When you get a platform that has multiple facilities there is inherent efficiencies that come across.

When you get a platform that has multiple facilities theres inherent efficiencies that come across.

Craig M. Hurlbert: The whole organization actually and transitioning Montana.

The whole organization actually and transitioning Montana.

Craig M. Hurlbert: And Georgia, Texas, Pasco, and the California facilities.

Georgia, Texas, Pasco and the California facilities.

Craig M. Hurlbert: We sit Kathy and I sit on these calls with all of our Gms and the whole organization is just really focused on efficiency and really.

We said Kathy and I sit on these calls with all of our Gms and the whole organization is just really focused on efficiency and really <unk>.

Craig M. Hurlbert: Taking lessons learned quickly and different facilities and applying them and I think we're really seeing that across the board in this case, we're talking about costs.

Taking lessons learned quickly and different facilities and applying them and I think we're really seeing that across the board in this case, we're talking about.

Craig M. Hurlbert: And I think we're really seeing that across the board. In this case, we're talking about, you know, cost, and getting cost out. So, I think we're going to continue to see that over time until, you know, you get to a point where there's just nothing left to get out. But that's something that's going to continue to happen. And to some degree, we knew that was going to happen, but maybe not to the extent.

Craig M. Hurlbert: Costs are getting cost out so I think we're going to continue to see that.

Costs are getting cost out so I think we're going to continue to see that.

And over time until you get to a point, where there's just nothing left to get out but that that's something that's going to continue to happen.

Craig M. Hurlbert: Overtime.

Craig M. Hurlbert: Till you get to a point, where there's just nothing left to get out, but that's something that's going to continue to happen and to some degree we knew that was going to happen, but maybe not to the extent. Thank you bet I appreciate the questions.

And to some degree we knew that was going to happen, but maybe not to the extent. Thank you Ben I appreciate the question.

Benjamin David Klieve: Thank you, Ben. I appreciate the question. Yeah, no, thanks. Thanks for the color, Craig. A couple more for me.

Benjamin David Klieve: One big picture, you noted your expectation of achieving positive adjusted EBITDA in early 2025. Does this imply that you guys have line of sight to that EBITDA profitability number from your existing facility footprint as they ramp, and not with any contributions coming from new facilities in the Midwest or elsewhere?

Speaker Change: Yes, thanks for the color Craig.

Yes, no thanks for the color Greg.

Speaker Change: A couple others from me.

Speaker Change: A couple of others for me.

Speaker Change: One big picture.

One big picture.

Speaker Change: You noted your expectation of achieving positive adjusted EBITDA in early 'twenty five does this imply that you guys have line of sight to that.

You noted your expectation of achieving positive adjusted EBITDA in early 'twenty five does this imply that you guys have line of sight to that EBITDA profitability number from your existing facility footprint as they ramp and not with any contribution coming from new facilities in the Midwest or elsewhere.

Speaker Change: Profitability number from your existing facility footprint as they ramp and not.

Speaker Change: Not with any contribution coming from new facilities in the Midwest or elsewhere.

Kathleen Valiasek: That's a great question. I'll take that one, Craig.

Speaker Change: That's a great. That's a great question I'll take that one Craig.

Craig M. Hurlbert: It's with our existing footprint.

It's with our existing footprint.

Craig M. Hurlbert: Okay, great. Great templates. This seems so bright.

Craig M. Hurlbert: Okay, great templates footprint yet.

Speaker Change: Okay, great simply it's something that I'm missing.

Speaker Change: Footprint yet.

Benjamin David Klieve: Perfect, thank you. And then last one for me, and I'll get back in queue, the California facilities have been kind of a persistent source of issues for the last year or so. You didn't mention anything around those 2 facilities here today. Can you just kind of give us a state of the state on those 2 facilities? Are they operating as expected? Is there still work to be done here to kind of fix the lingering issues from last year? Any updates out of California would be great.

Perfect. Thank you and then last one for me and I'll get back in queue.

Speaker Change: Perfect. Thank you and then last one for me and I'll get back in queue.

Speaker Change: The California facilities have been kind of a persistent source of issue for the last year or so you Didnt mentioned anything around those.

Speaker Change: The California facilities have been kind of a persistent source of issue for the last year or so you Didnt mentioned anything around those that those two facilities here today can you just kind of give us a state of the state out of those two facilities are they operating as expected or is there still work to be done here.

Speaker Change: Are those two facilities here today can you just kind of give us a state of the state out of those two facilities are they operating as expected or is there still work to be done here to kind of fix the lingering issues from last year any update on the California that'd be great.

Speaker Change: Kind of fix the lingering issues from last year any update on the California would be great.

Kathleen Valiasek: Yeah, sure. I think I said on the year-end call that we were going to meet our budget in terms of revenue for California, which we did in Q1, which is fantastic. We did have significant rains again in Q1 of 2024, nowhere near what it was in Q1 of 2023, but I would say the facility is performing better. Okay, and it's going to continue to perform better, and not a large CapEx spend or anything like that.

Yeah sure. So I think I said it on the year end call that we were going to meet our budget in terms of revenue for California, which we did in Q1, which is fantastic.

Speaker Change: Yeah sure. So I think I said it on the year end call that we were going to meet our budget in terms of revenue for California, which we did in Q1, which is fantastic.

Speaker Change: We did have significant ramp again in Q1 of 2024 nowhere near what it wasn't in Q1 of 2023.

We did have significant rain again in Q1 of 'twenty 'twenty four nowhere near what it was in Q1 of 2023.

Speaker Change: But I would say that facility is performing better okay, and thats going to continue to perform better and not not a large capex spend or anything like that but you.

But I would say that facility is performing better okay, and that's going to continue to perform better and not not a large capex spend or anything like that but you know like like we said there was the impact in Q1 2023, but you know just a lot of repairs and maintenance spend.

Kathleen Valiasek: But, you know, like we said, there was the impact of Q1 2023, but, you know, just a lot of repairs and maintenance spend is going to decline. We saw a decline in Q1, and it'll continue to decline through the rest of the year.

Speaker Change: Like like we said there was the impact in Q1 2023, but you know just a lot of repairs and maintenance spend.

Speaker Change: Is going to decline.

It is going to decline we saw a decline in Q1 and it will continue to decline through the rest of the year.

Speaker Change: Saw a decline in Q1 and it will continue to decline through the rest of the year.

Benjamin David Klieve: Great. Very helpful. I appreciate taking my questions, and I'll get back to you.

Speaker Change: Great.

Speaker Change: Very helpful. I appreciate taking my questions and ill get back in queue.

Very helpful. I appreciate taking my question and then I'll get back in queue.

Benjamin David Klieve: Ben, thank you very much.

Speaker Change: Ben Thank you very much.

Ben Thank you very much.

Operator: There are no further questions at this time, so I'd like to hand you over to management.

Speaker Change: There are no further questions at this time I'd like to hand back to management.

There are no further questions at this time, so I'll hand back to management.

Yeah.

Speaker Change: Great.

Great.

Craig M. Hurlbert: Thank you so much, Gavin. And on a personal note, Kathy and I would like to thank the entire Local Bounty team for their dedication and hard work. And I can tell you, we just had dinner in Pasco.

Speaker Change: Thank you so much Gavin.

Thank you so much Gavin and on a personal note I know Cathy and I would like to thank the entire local bounding team for their dedication and hard work and I can tell you. We just had a dinner in pasco.

On a personal note I know Cathy and I would like to thank the entire local bounding team for their dedication and hard work.

Speaker Change: And I can tell you, we just had a dinner in pasco.

Craig M. Hurlbert: Working with these people is just an absolute inspiration. We appreciate everything you're doing and all of the great progress we're making. And with that, I would like to thank everybody for joining us today, and we look forward to updating you on our progress as we further scale and grow the local bounties business in the upcoming quarters. Thank you so much.

Speaker Change: Just working with these people is an absolute inspiration we appreciate everything you're doing and all the great progress, we're making and with that I would like to thank everybody for joining us today and we look forward to updating you on our progress as we further scale and grow local boundaries business in the upcoming quarters. Thank you so much.

Speaker Change: It was just working with these people is an absolute inspiration. We appreciate everything you're doing and all of the great progress, we're making and with that I would like to thank everybody for joining us today and we look forward to updating you on our progress as we further scale and grow local boundaries business in the upcoming quarters. Thank you.

Speaker Change: <unk>.

Speaker Change: So much.

Operator: That does conclude our conference for today. Thank you for participating.

Speaker Change: Thanks to everyone that does conclude up that does conclude our conference for today. Thank you for participating or disconnect.

Speaker Change: Thank you everyone that does conclude up that does conclude our conference for today. Thank you for participating minute or disconnect.

Speaker Change: [music].

Sure.

[music].

Speaker Change: Yes.

Speaker Change: [music].

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