Q3 2025 Solesence Inc Earnings Call

Good day, and thank you for standing by. Welcome to the so lessons. Third quarter 2025 conference call

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Statements that include forward-looking statements within the meaning of the federal Securities laws which are pursuing to the safe harbor, provision of the private Securities. Litigation Reform, Act of 1995.

This conference call may contain statements to reflect the company's current beliefs and a number of important factors could cause actual results for future periods to differ, materially from those stated on this call.

This important factors include without limitation, a decision of the customer to cancel purchase order or supplies agreement, demand for an acceptance of the company's Personal Care ingredients, Advanced Materials and formulated products changes in development and distribution relationships. The impact of competitive products and Technology possible disruption in commercial activities, occasion by public health issues, terrorist activity and armed conflict and other risk indicated in the company's filings with the Securities and Exchange Commission.

Conference over to Kevin Carrington president and chief executive officer, please go ahead, sir.

Thank you, operator. And thank you to all of our investors teammates and Friends joining us today.

We have a lot to cover. So we appreciate your time, patience and attention.

Today is a meaningful moment in the history of solesence.

This is my first opportunity to speak with you since stepping into the role of President and chief executive officer.

I am truly honored to take on this responsibility and energized by the incredible Talent of our team and the strong opportunities that had to continue growing profitably with our brand partners.

It is also a significant moment for another reason.

Today marks Jess's final earnings call as a member of the solessence leadership team.

Many of you know that Jess and I began this journey together in 2012, when he brought me in to help chart A New Path forward.

The conversations we had during that interview process, about transforming the business, from a materials company, into a product focused organization became the foundation of what solesence is today.

Jess has been an exceptional partner to me and to all of us working tirelessly to ensure we had the financial strength to grow, innovate, and establish ourselves as a leader in beauty innovation.

With that, I'd like to turn it over to Jess for a few remarks.

Jeff.

Thanks. Kevin.

Since this will be my final earnings call, I would like to briefly touch on my time at the company and why now is the right time for Kevin to lead the company going forward.

Over the past decade.

So lessons, pioneered, the skin health and mineral-based beauty industry establishing more than 90 globally, issued patents across 4 technology platforms.

By collaborating, with our brand Partners, the use of mineral-based. Active ingredients in beauty, products has become more widespread.

now we're seeing more and more Brands Infuse, their products with SPF technology,

we've grown at a cager of greater than 7x as compared to our addressable Market in the skincare color cosmetics and suncare cosmetics areas.

And have won 8 awards, for product and Technology Innovation so far and are sure to win more.

Now where the industry leader in this space.

And as I passed the torch to Kevin, we believe we can expand on this position for several reasons.

First.

The complexity and difficult logistics that go into creating these types of products mean that our industry has substantial barriers to entry, which limit the number of potential competitors.

Second.

We possess a unique mix of expertise.

Best-in-class, Technology and Manufacturing capabilities that very few can match.

And third.

So lessons will maintain the same Relentless commitment to Scientific excellence and Innovation that has always driven us.

As I've reflected on my time here, I couldn't be more gratified by what we've accomplished.

The transformation of Celeste is a testament to the hard work and dedication of our team.

And I'm grateful for having the opportunity to work alongside so many talented individuals.

It has been no less than a privilege.

This includes Kevin, with whom I've worked closely for over a decade.

With his extensive industry experience. Deep expertise and vision.

I'm confident that he is the right person to lead the lessons into this next exciting era of growth.

I'll now pass the call to Kevin who will provide a summary of the quarter as well as the vision and outlook for the company.

Kevin.

Thank you, Jeff, for your partnership. And again, congratulations turning. Now to our work today, I've been honored to be in leadership positions with the lessons, for over a decade, including leading the founding and development of our core consumer, Beauty health and wellness business, which has grown into the company we are today.

Well, that journey and the accomplishments just covered have all been important achievements and we should feel rewarded.

Our entire organization knows. We have much work ahead of us as evidenced by our third quarter results.

The third quarter of 2025 represented the first quarter in almost two years where we did not have a year-over-year revenue increase.

Performance. We expect

So, the comparison was going to be difficult.

However,

we remain confident in our ability, both on a near-term and a longer term basis to continue to grow at a multiple of the industry's growth rate remain highly profitable while doing so.

Our confidence is reinforced by the growth plans of our strategic brand Partners, without exception. Each of them is expecting to outperform the market and the same manner as they have over the previous 2 years.

Our products are important. Drivers for these companies Revenue typically representing 30 to 60% of their business volume.

So, their success is our success.

These brands are winning in the key retail segments, where consumers want to buy beauty products.

Specifically at specialty Beauty retailers and through Tik Tok, and Amazon.

Revenue growth combined with best-in-class, profitability comes from the combination of the changes. We've made in our leadership and our organization's structure.

We believe three factors have hindered our ability to generate profitable growth.

These are 1 product design, 2, labor, efficiency, and 3, inventory control.

I'll now touch on each of these areas in greater detail and how we addressed them in our recent changes.

First product design is related to having exacting specifications. Not just in terms of what the product is made from. But also, how will be manufactured and how it will perform?

For the selections business. This is more complex because unlike many other beauty products, the products produced by Celeste are considered over-the-counter drug products.

They must meet product performance criteria similar to what is required of prescription drug products while ensuring that the product delivers a joyful experience such that the consumer will buy it again and again.

And we must be able to make it consistently at a high volume at a cost, that's 20% or less of the retail value.

Our ability to deliver on these criteria gives us a sustainable competitive advantage, which protects our business position and is a critical factor in achieving profitability standards. We expect.

Every day on millions of units, annually, we meet this standard. However, when we have underperformed in this area, it was a significant factor in our results.

During the end of Q2, in all of Q3, we reorganized the team responsible for ensuring product Integrity. Creating a newly unified group accountable for product design from the initiation of product concept, all the way to product shipment,

This unified group, The Innovation and product Integrity group is a combination of the R&D and quality departments.

through the unification of this group under 1 liter, we have already seen improvements in both Clarity of product requirements and control to ensure that products are made right the first time

The new leader you're on a divorce act, who is just appointed as vice president of innovation and product, Integrity is also being recognized by the renowned cosmetic, executive women's group or CW, as they are more commonly known as a 2025 innovator Honore.

This honor reflects not just our confidence in your Honor's ability to help us drive more profitable growth, but also the industry's awareness of her exceptional capabilities.

Moving on, to the next area of improvement, labor efficiency. This issue has long impacted our direct profit performance.

To be clear. This is not just direct labor, but also has impacted by our maintenance, and Engineering efforts that drive both uptime and throughput.

As some of, you know, we began investments in this area, almost 2 years ago.

These investments have included automating our processes and implementing Overall Equipment Effectiveness, or OEE, which is a key metric for managing our manufacturing processes.

While these investments initially enabled a significant improvement in capacity, it was only during Q3 that we started to see the positive impact on labor efficiency.

Those improvements enabled our company to reorganize, its operating schedule virtually eliminating overtime expenses. While maintaining improved operating capacity and flexibility.

Were reflecting in a reduction of the average labor cost per unit by close to 25% on a year-over-year basis and an increase in our OE performance by 10 percentage points.

We further strengthen this area by reorganizing the reporting structure, which was partly enabled by consolidating our three facilities down to two.

The consolidation and loan will yield a mid-six-figure reduction in annual operating costs.

We further expect that the labor efficiency savings will contribute to a similar High 6 Figure to low 7, figure reduction and direct labor expense on an annual basis as we move forward.

Finally, and perhaps most impactful is our inventory control. The change in scope and scale of our customer base is brought a change in the scope and scale of both. The number of raw materials and components that we purchase and the number of products that we produce.

To put it in perspective. Just 6 years ago, we generated 80% of our Revenue, 8 million from 40 products, built around a dozen raw materials. In fact, 60% of our Revenue resulted from just 5 products built around 3 raw materials.

Fast forward to today, 80% of our revenue—approximately $1 million—is generated by over 300 products and well over 1,500 different raw materials and components.

It's easy to see how this change, when not effectively managed, can negatively impact our ability to realize the full profit potential of our company.

I'll now briefly describe how some of the initial changes that have been put in place will help Drive profitable growth.

The change we made in manufacturing leadership now allows the most senior leaders in operations to be focused on addressing our supply chain challenges.

Some of the first work that has occurred here is to increase material, surveillance, and control, resulting in almost daily tracking of variances that could occur through materials, handling consumption of materials, and batch making or spillage and waste.

By increasing surveillance. We're now able to capture the significant issues that can contribute to negative income and put in more impactful. Corrective actions.

There is still much more to be done, but I'm confident in the ability of our team whose leadership is now comprised of people with direct experience in the beauty and personal care industry.

They come from organizations that are some of the largest and best operated in the business.

I'll now turn the call over to Laura who will provide a recap of our financial performance. Laura

Thank you, Kevin, and good morning, everyone. I'm pleased to be joining you on today's call.

Revenue for the third quarter was 14.5 million, a decrease of 14% year-over-year. I missed a general softening in the industry. Reflecting the shift in consumer behaviors. As Kevin mentioned earlier. Last year's third quarter was a record quarter. Creating a challenging comparable as our customers adjusted their inventory levels as compared to the third quarter of 2024.

In the third quarter, our shift in open orders, which represent the total value of customer orders that we've either already shipped or are still awaiting fulfillment, is currently $64 million compared to $34 million in the third quarter of last year and $60 million in the second quarter of 2025.

Gross profit in the third quarter was $3.4 million compared to $6.1 million in the third quarter of 2024. Gross margin was 23% compared to 36% for the same period last year.

The decrease was related to manufacturing operating inefficiencies and facilities improvements.

Operating expenses in the third quarter totaled 4.2 million compared to 2.9 Million. In the third quarter of 2024, the increase is due to increased employee related costs legal costs allowance for credit loss, Severance costs.

And costs related to our uplifting to NASDAQ in 2025.

along with approximately 300,000 in interest, received related to the delayed payment

The ERC is a refundable payroll tax credit made available under the cares act, and subsequent legislation.

interest income included, interest paid relating to the amount of about 200,000 in the third quarter, 2025

The ERC payments and related interests did not apply to 202024.

So lessons reported a net loss of 1.1 million compared to net income of 3 million in the third quarter of 2024.

Adjusted Eva for the quarter was a loss of 435,000, compared to adjusted Eva of 3.6 million for the third quarter of last year.

As Kevin noted, we made significant improvements to our business operations. That will enable us to grow and deliver the highest quality products, to our brand Partners more efficiently, and from a greater cost position.

That concludes our opening remarks.

Operator, you may open the call for questions.

Thank you. And as a reminder to ask a question, simply press star 1, 1 to get in the queue and wait for your name to be announced.

To withdraw. Your question, press star. 1 1 again. 1 moment for our first question.

And it comes from the line of when ruin, please go ahead.

Uh, congratulations, Jeff. Um

I hope your retirement goes well, I probably won't, but into it Wrigley Field but um good luck to you know, you won't. But in the meantime really feel

Um, I'm very disappointed.

This was supposed to be a better year.

Are we making the same mistakes over and over and over again? And um, where do we get some optimism for the the sales part? Bothers me a lot? What's the matter with that?

and just

the mistakes we made is not very comforting and I'd like your uh response. Kevin

Uh, good morning, Wayne. Um, you might bump into me at Wrigley Field, by the way. Um, but uh, to be thank you for your questions and we do, um, take all of these very seriously. Uh, so let's start with the first question, which you are, as are we making some of the

The same same mistakes over and over. Um I can tell you Wayne that um there are some areas that we have had a longer time to repair. Um which is why we made some of the changes that we've made to the organization over the last uh quarter.

So specifically around Inventory management. Uh, that is an area that has taken us more time than we would like to repair. But with the changes that we've made, we're confident that we're on the right path to fixing that issue.

Um your other question was related to uh the the revenue and what's going on there. I think first let's make sure we're clear and we didn't talk about it um in our prepared remarks but on a full year basis where up 10 million dollars over prior year. So the trend for growth is is strong. Um, 1 of the things that has changed and is really related in part to, um, consumer sentiment and our brand Partners, desire to be conservative relative to their inventory levels is that they're not giving us the same lead time that they have in the past and they're not stocking inventories at the same level that they have.

Last year.

so that had a material impact on a year-over-year basis, uh, between what we saw in uh 2024 in terms of Revenue and what we saw in 2025

A rest assured again, that we have and continue to expect to grow, uh, at the top line. So, that is something that we're we're confident in.

We've made in terms of structure and the changes that we've made in terms of, uh, some of the other processes that we mentioned during our prepared remarks.

Uh, thank you. And how come you waited? So long to put off the third quarter because normally, you do it the first week

You know, yeah. Uh, another good question Wayne, um, you've got a new leadership team that wanted to make sure we did it right the first time. Um, that was me.

I'm sorry.

I said, "There you go. That's a good idea. Thank you. So that's it. That was the reason."

Thank you, and let's look for, um,

Do we have possibilities of Greater?

Uh, sales reports for the fourth quarter this year.

Um, our expectation on a a full year basis, uh, is that we will see, uh, an improvement over prior year.

Um, so yes, I think that in total, you'll see um, a positive, uh, Revenue versus 2024. Um, so we're we're staying on that Trend uh, Wayne. So yes,

Thank you.

Thank you. Our next question comes from the line of Ronald Richards. Please proceed.

Um, can you hear me?

Yes, sir, we can hear you please proceed. Hi Ron.

All right. Um, you know I've got a few questions but

I guess I'll start off with a really simple 1, you know, it was a really

Uh simple mistake that led to your big lawsuit a couple years ago.

uh, in a contract where there was 1, little sentence that somebody missed

Uh, then this last quarter 2 quarters ago, you had this million dollar error because of a screw up on a new order.

And this quarter.

you know, it's really really simple and you you might think it isn't meaningful but

The announcement for this conference call referred to central daylight time, in Eastern Daylight Time.

you know, all these things have a common

uh, point to

them just the the, uh,

the simple things the details are overlooked is this going to improve or or are we going to continue having a series of

Of simple mistakes that that caused the problems we're having.

Thanks Ron for the question. Um, first, your first statement related to the lawsuit, I'm presuming, you're referencing the BASF lawsuit, um, you know, will agree to disagree on that. That wasn't really driven by contractual mistake or error. Um, in fact, it was a decision, let's just put it this way, the simplest way for us to put it is just commercial points of difference. Um and we did settle that in a amicable way, amicable way with a BASF and um that has been an important part of quite honest, the our ability to continue to set scale the solessence business

On the other 2 points. Well taken. Um, we certainly know that the details matter, it's an important part of our business. Uh, it's 1 of the things that we mentioned in our prepared, remarks around product design and making sure that we have the exacting specifications.

Clearly understood and stated. Uh so thank you for that comment. We we are taking those things to heart. And um, it is an important part of what we're doing uh, to to improve the profit performance of the company.

Our next question comes from the line of Stefano Bowleys.

Uh, please proceed.

Hello, good morning, and congratulations, Kevin, on your new role. And thanks to Jess for having us.

For having saved the vessel during all these years uh up to this point.

Uh, and welcome to Florida.

The fact that he's not.

Uh uh around or slightly above the 30%, is this? Because of this reorganization work that you mentioned uh initially or

was there something else?

Yeah. Your your question related to gross margin is um just to be clear Stefano and hopefully you can respond to this. Um you're asking is is the the cause of the lower gross margin is that what you're referring to? Yeah. Yeah. Okay. Yes. Yes. So in part the uh the lower gross margins were related to uh the expenses um with the consolidation that we're able to be capitalized. Um but um they were also related to the transition that we mentioned. Uh, so we have

Good performance, uh, on a year-over-year basis at the direct labor level, where we actually decreased direct labor pretty significantly on a per unit basis and in total.

Um, but we are as that transition was occurring to the newer structures, um, still had higher indirect expenses that we are addressing as we go forward. Uh, so that was the 1 of the, the big drags on the indirect or excuse me, on the gross margin. Um, and I think, you know, Laura had mentioned, uh, some of the, the benefits of the changes that we're making Laura. Would you want to comment at all on those?

Um, you know, in obviously the short time I have been with the company, we have...

Taken seriously, the indirect costs and I feel very confident that we are making the changes and having the discussions that are necessary to improve our overall indirect costs. And I expect to see that Improvement, um, within the next

Few quarters.

And actually sooner than that.

Thank you.

Our next question comes from the line of Tony Ruben. Please proceed.

Hi, good morning. Um

This is, um, a couple of questions, but following up on the first gentleman's question who asked about your, uh, sales and margin forecasting. You just said sales would be up in 2025; there, through the first three quarters, already up ten million dollars. And as we're basically halfway through Q4, can you, uh, shed any light on what, uh, sales for the fourth quarter will look like and what margins will look like as well? Also, could you give us an outlook, uh, in some general sense as to 2026?

Uh, Good morning, Tony. So, yes, you're correct. The sales are up, uh, 10 million on a 9-month basis. Um, as Laura indicated, on a, a shift in open. And you remember that metric that we've been using, um, we're projecting uh, around 64 million for uh, the year essentially which would put us up roughly 12 million for on a full year basis, um, versus the prior year.

Um, we are working through the changes that we mentioned and so we're very confident in improving.

The direct margin levels, uh, on a continuing basis that that work is well in hand and is yielding the results that we expected. Um, the indirect margins or excuse me, indirect costs, I should say that are contributing to the growth profit level are going to be as Laura mentioned, uh, work over the next couple quarters to improve that. So uh, as we improve that over the next couple quarters, we'd expect the margins to normalize back to levels that we have seen um say uh, a year ago. Uh, this quarter. So we do anticipate doing that as we go through the next couple, uh, quarters or so

uh, in terms of a projection on 2026,

Certainty, uh, that we're seeing from the marketplace and consumer sentiment. Um, we're going to refrain from giving too much guidance there except to say that uh, 2 things 1. We know that in general, um most consumer markets, are slowing down. And beauty is no exception to that. It is slowing

However, we're still confident that our growth rate will be a multiple of the industry's growth rate.

So, um, we'll refrain from saying too much more than that at this point over the next. Um, coming weeks we do plan on uh, presenting our first investor presentation Tony. Uh, and then that will give more guidance in terms of our expectations, not just for 26, but for the the next few years beyond that as well.

Who comes from Stefano Bowleys, please proceed.

Yeah.

Uh, sorry a photo on, um, on the indirect cost so uh, Just for future modeling, the, the level, the Run rate of the sgna expenses, uh, is it going to stay on this uh, 3 million that we have seen in the last 2 quarters?

or this is due to those uh 1 of uh impacts that you mentioned the up listing and some uh

credit losses allowances and so on.

Yeah, I could you repeat your question, we had a hard time hearing you at the beginning of your question, okay? Uh the question is on the the expected run rate of the sgna expenses. That um, I mean, from historical levels for

Uh, at 2 million or below 2 million. And uh the last friend this quarter they they are 3 million. Is this the new level or there was

uh, a lot of components that are, uh, 1 of

Yeah, I would say for planning purposes, where operating in, um, that Zone on a going forward basis. I think that, um, some additions to our leadership team are part of that, obviously, to help strengthen the organization and to improve our overall performance,

Performance, we've obviously added Lara. We've also added a VP of HR. There's been some other support functions added in there as well.

And, you know, generally for the business as we're operating right now we have a little higher legal fees than, um, we've had historically, but it is something that we've given the nature of our business. We've got to at least plan for that um over the the next few quarters there. There was also Stefano though a uh significant hit um

For me, there was a $0.00. You have to take the expenses for severance at one time.

So that will not repeat going forward. So, you know, right there, that's 15% of that. Total is not coming back, and we also think that generally speaking, we are going to have all of our, um,

Our doubtful accounts run through sgna not cogs. So we believe we are going to have better experience in that going forward. So that's going to mitigate some of the Investments we're making on the other side um to do that.

Our next question comes from Tony Ruben, please proceed.

Yeah, hello. Um

I just wanted to follow up, uh, to your question or to your response Kevin on margins, you, uh, indicated that you thought margins would get back to a level of a year ago. What is your expected or Target 2026 margins and, uh, given all these spins on Capital, uh, efficiency measures etc, etc. Uh you still, I think no matter what number you say, are going to be short of your coid uh era margins, where you were, you know, in that 40% range. And uh, is that something that we will ever

In your words or to paraphrase a leader in in making these, you know, complex, uh, uh, formulations that the market does want and just kind of as a, a side follow-up, I guess, I'm trying to cram a lot in here, you mentioned that you will grow at multiples of the industry but that the industry is grow is uh softening. And uh, if you could clarify what exactly that means because that's it's pretty difficult to parse

That. Yeah. So I'm gonna

Thank you. Thank you, Tony. There were, uh, 3. Very important questions there, um, and we'll try and make sure we answer them all, and I will say to the team that's managing this call. If we, if we fall short, please let Tony re req. So I can answer that that third question. But let's start at the top, um, on the margins. So our guidance at this point, Tony we're going to refrain from giving too much guidance on 2026. We we will be prepared to provide further guidance soon. Um, but we absolutely expect that. Um, our goal is 30%, is really the floor for our guidance. Um, not the ceiling. Um and so just that's that's all we're going to be prepared to say.

Day today at least on 2026.

uh, in terms of Co error margins,

you know, 1 of the things, we talked a lot about as a leadership. Team was what is the margins that we anticipate achieving? Um, we view ourselves as a technology leader. Um, as you mentioned, um, and and quite, honestly, the Investments that we make in IP that has translated into our growth.

Reinforce that um, all of the different patents that are unique in terms of uh a company, our size and and operating in such a focused Market. As we do,

In terms of being able to um represent us as a as a technology company. So we expect to achieve

Margins in that 40 plus percent, um, Range, that is an objective for our business. Um, we know that that won't be something we can do overnight. Um, but at the very top of that list, we are doing a, a much better job at driving direct margin performance. And ultimately, with some improvements at the, uh, indirect level will will be able to, to improve overall, gross margin.

As well.

Um, and I think the third question I'm looking at Laura,

And don't remember. Um, so I don't remember the third question. So Tony, if you can read that for us. Yeah, req and repeat. That would be helpful. Thank you.

Tony, your line is open.

uh, I think you gave the flavor of

What I was asking for I I would hope for more uh specificity and I would hope 30% would be uh, considered a disaster, not a, even a floor. Uh you know with respect to that. I do applaud. Um, the company having a uh an investor presentation, presumably to get some institutional, sure Holdings and to uh you know, articulate the uh the story. Uh as I'm sure you're aware of the stock has plunged in recent weeks which uh, as I'm sure everybody on this call and the management team especially is not happy with. So the ability to provide more clarity going forward certainly uh would be appreciated and frankly uh the company is excelled at R&D has been good to great at sales but has continually

Failed an operation. So any

Measures that can really fix those issues and could instill confidence in the community. I'm sure would be rewarded in Spades and, uh, you know, to the benefit of all. So, uh, you know, good luck and Godspeed and, and thank you.

Was about the multiple of the market relative to how our growth was going to be. Yes, yes, thank you. But somebody's paying attention here. Well, Jess, you can always have a job and and helping us answer those questions. But uh, thank you Tony for your comments and, um, you know, I do think that we, we will, we'll take that praise. Well, that we've been excellent at R&D and good to great on the, um, the sales and marketing sides of the organization. We also accept the criticism that the company needs to improve in operations. And that's really a reflection of a lot of the changes that we've made and announced. It's also, uh, reflected in the type of recruiting that we've done over the last year and a half. Um, in terms of bringing in,

Um, really excellent people from Top organizations that have been in the beauty and personal care industry and understand, uh, what it takes to translate, uh, the products that we design into finished goods that are meeting or exceeding. Um, our profit expectations,

Um, in terms of the going forward and what's happening in industry?

Um, so generally, the industry is slowing down. I I will say that 1 of the good parts of our focus is that the SPF infused Beauty, areas where we operate are continuing to be strong, um, and they are growing faster generally than the industry.

Um, our benefit has been over the past few years, is that along with the growth of SPF, infused Beauty.

Consumers preference in that space has tended and trended toward mineral-based SPF, infused Beauty.

and you combine that consumer preference um with um the growth in the industry, that means that generally

mineral-based SPF infused beauty is gaining share um against other types of um approaches to providing SPF.

That said, um, you then further as you have already mentioned, Tony our leadership around technology. Um, and enabling that technology, quite honestly enables us to have preferential Aesthetics in terms of transparency on skin, the lightness of the textures the, the, the fullness of coverage when when require or transparency and the skin light appearance, that our products can deliver all our preferences. And so that has helped us, uh, through having some great brand Partners to really be able to grow at a multiple of the industry. And we continue to expect through our investments in those brand Partners to sustain that that growth rate.

Our next question is from Ronald Richards. Please proceed.

I wanted to follow up with my first question. Uh, I I didn't really understand this ERC payment, uh, was that in this Q3, or was that in last year's? Q3? I, I, I thought that you said it was in this year's Q3 without that payment would the financials have been 1.3 million dollars worse.

Hi Ron, thank you for your question. Um, the ERC payment was in this quarter of third quarter of 2025 you are correct.

Ma'am, that doesn't sound good. The total bottom line here.

it would have impacted obviously our bottom line for the

third quarter.

And ladies and gentlemen, this concludes our Q&A session, I will pass back to Kevin keratin for concluding remarks.

Thank you, Carmen.

Back in, uh, 2019 when the consumer products business was less than 2 million dollars.

Looking forward. We believe that remains true.

Consider that sunare is expected to be 1 of the fastest growing segments in Beauty over the next 5 years.

Further mirror, we observe that the ongoing transition of daytime products to incorporate UV protection as a key benefit, enabling longevity, Health, and Wellness.

Because of these market dynamics, our technological and product leadership and commitment to driving improvements in operations that will yield significantly improved profitability.

We remain confident and committed to delivering best-in-class performance. Not just to Consumers, but also to our shareholders,

In the coming weeks, we will release our first investor presentation.

This will help each of you further, understand our confidence in our future, and the returns that our business can deliver to our investors.

Like longevity and health. Our process to deliver these results is a journey

We appreciate all of you who will remain on this journey with us, as we believe like the prior 5 years, the next 5 years will yield Dynamic returns for all our investors.

Thank you and have a great day and happy holiday season to all of you.

And ladies and gentlemen, this concludes our conference. Thank you for participating. You may now disconnect.