Turning Point Brands, Inc. (TPB) Q2 2021 Earnings Report, Transcript and Summary

Good morning and welcome to the Turning Point Brands Second Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. All lines have been placed on mute to prevent any background noise. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to your speaker Louie Reformina, Chief Financial Officer. Please go ahead.

Thank you. Good morning everyone. This is Louie Reformina, our Chief Financial Officer. Joining me are Turning Point Brands’ President and CEO, Larry Wexler and Graham Purdy, Chief Operating Officer. This morning, we issued a news release covering our first quarter results. This release is located in the IR section of our website www.turningpointbrands.com, where a replay of today’s conference call will also be available. In this call, we will discuss our consolidated and segment operating results and provide our perspective on our progress against our strategic plans. As is customary, I direct your attention to the discussion of forward-looking and cautionary statements in today’s press release and the risk factors in our filings with the Securities and Exchange Commission. The disclosure outlines various factors that could cause actual results to differ materially from projections or forward-looking statements that may be cited in today’s discussion. These forward-looking statements and projections are not guarantees of future performance and you should not place undue reliance upon them, except as provided by federal securities laws and we undertake no obligation to publicly update or revise any forward-looking statements. In the call today, we will reference certain non-GAAP financial measures. These measures and reconciliations to GAAP can be found in today’s earnings release, along with reasons why management believes that they provide useful information. I will now turn the call over to Larry Wexler, our CEO.

Thank you, Louie, and good morning everyone, thank you for joining the call. We are pleased to report a quarter and once again outperformed our expectations. In the second quarter, revenue was up 17% to $123 million above our prior guidance range. And adjusted EBITDA was up 32% to $30 million. Revenue growth was led by Zig-Zag, which had an exceptional quarter with over 70% growth. We are harvesting the fruits of our strategic growth initiatives and are continuing to outperform the market. You’re also aided by a favorable comparison against COVID disruptions in our wraps business that negatively impacted the prior year period and the consolidation of ReCreation Marketing’s results. There was progress throughout our product lines. Paper cones and e-commerce continued to provide a big boost to sales while our wraps business benefited from sales force execution against favorable market demand and benefit from the trade inventory load, in total wrap sales doubled in the quarter. Stoker’s performed in line with our expectations was up 8% led by double-digit growth in MST, which continues to be well-positioned for the secular shift into the value of category. Our chewing tobacco business gain share, we’ve had a modest sales decline, as a comp against a competitor going offline in last year’s quarter. NewGen faced a tough year-over-year comp and the new regulatory hurdle outperformed our expectations during the quarter. The vape distribution team responded well to the implementation of the PACT Act, which made the logistics of delivering vape products to customers and consumers more challenging. While we still expect volatility in NewGen, we’re seeing progress in both the FDA’s efforts around the PMTA process and increased enforcement against unauthorized products still in the market. During the second quarter, the FDA issued 52 warning letters to manufacturers that did not submit the PMTA to bring the total to the end of the quarter to 131 warning letters sent out since January, in effort to bolster its enforcement against illegal products in the market. Importantly on May 20, the FDA posted its continued compliance list, which provides a directory of those deemed new tobacco products for which a PMTA was timely submitted. We believe this list will provide retailers and trade customers where more clarity on which products they can carry. This includes our submissions for our deem products, all of which have now received acceptance letters. A number of the products are now in scientific review. We are confident that we have submitted robust filings and anticipate working successfully with the FDA through the process. We believe that both the PACT Act and the PMTA process are creating barriers to entry in our business that will position us well in the long-term as these factors forced a consolidation in the industry. We’ve also been very active in our capital deployment with share purchases and investments. In April, our subsidiary ReCreation Marketing acquired DVW, a distributor was strong presence in British Columbia and with major national chains. Well, DVW as marginal profitability at the onset, it serves as a great platform to expand distribution of our more profitable proprietary products in area where we previously had limited reach. Last week, we announced $8 million investment in Old Pal, one of the most recognized brands in the cannabis space, with product offerings in seven states. Old Pal has a nimble, asset like, non-plant touching business model has allowed it to scale across multiple states. The team has been adept at managing the ever-changing complexities of the cannabis market. Old Pal fits well within our strategy of building a house of scalable well known brands in the cannabis industry. Joining previous investments in Docklight, we chose the rights to the Marley brand for cannabinoids and dosist. We caught our attention with Old Pal, is their experience management team and the awareness they have been able to build with the brand, even in states in which they do not currently operate. Our investment will allow them to accelerate their growth, also providing a prime opportunity to increase our own product sales presence in dispensaries. Yesterday, we also announced the acquisition of certain cigar assets of Unitabac. Cigars are very important multi-billion dollar category where industry observers have highlighted that growth is being driven by cannabis consumption. Cigars are a perfect compliment, complimentary product to our MYO cigar business, but one where we were lacking the necessary IP to compete effectively in the space. Unitabac assets come with a portfolio of Grandfathered Products and other FDA pre-market filings providing us with a broader and more cost effective platform to compete in the market. Our plan is to expand distribution for Unitabac’s brands while leveraging the IP to introduce line extensions in the Zig-Zag cigar portfolio. With approximately $180 million of liquidity on our balance sheet during the second quarter, along with strong free cash flow generation we remained very active on the acquisition and investment front. With another solid quarter performance, we are able to raise our guidance once again and look forward to continuing our momentum. That’s some additional color and perspective on our quarter and the path forward, let me turn the call over to Graham Purdy, Chief Operating Officer.

Thank you, Larry. Let me now give you a quick snapshot of the performance from the segment level. Zig-Zag Products are double-digit growth in the quarter led by a doubling of sales in both our MYO cigar wraps and Canadian businesses, and strong double-digit growth in U.S. rolling papers led by e-commerce and paper cones. Our MYO cigar wrap business compared favorably against the previous year period that experienced a COVID-related disruption, when our third-party manufacturer went offline. Retail sales accelerating, we were able to leverage a more efficient supply chain post the Durfort acquisition to fill the backlog that was built up heading into the current quarter, and further benefited from an inventory trade load-in as our customers built buffer inventory, which pulled roughly two million of sales into the quarter. In the U.S. Zig-Zag paper’s position as the leading premium and overall paper brand strengthened, increasing its share in the measured market by 2.4 points year-over-year to 35.1% according to MSAi. After not growing share for the first three years since our IPO, this was the eighth consecutive quarter of Zig-Zag has realized year-over-year share growth, reflecting the portfolio and channel efforts put in place to revitalize the business where we were still in the early stages of this process. Our new products and our expanding e-commerce platform again provided a boost. During the quarter, our paper cones had 33.3% share of the second in the major channel according to MSAi up 10.5 points from the previous year as our volumes more than double. We continue to lead the growth and penetration of the product in convenience stores, and our expanding our presence in the non-measured alternative channel where Zig-Zag is still underrepresented. In Canada, we had a strong quarter of growth with our business more than doubling, as recreation marketing, which has now being consolidated, continues to ramp and is now being bolstered by DVW. E-commerce was again a big driver of growth, our e-commerce business, which is now double-digits of our U.S. paper sales, it’s still only a year and a half old, and continues to make strides up over 3.5 times last year’s levels and up 50% from the previous quarter. Stoker’s products are high single-digit growth in the quarter with double-digit growth from moist snuff, again being the driver. Stoker’s market share was up to 5.8%, a little over 50 basis points compared to a year ago according to MSAi. Stoker’s moist snuff is now in stores representing 62.2% of industry volumes, 3.8 points above last year’s level, which still leaves a long runway for further growth. Chewing tobacco sales saw low single-digit decline during the quarter after comping against a quarter that saw 6% growth when a competitor experienced COVID-related disruptions in the prior year period. Despite the tough comp, Stoker’s chew gain 20 basis points with a 26% share in the second quarter, according to MSAi to positioning Stoker’s is the number one chewing tobacco brand. With the continued secular shift into the value category and Stoker’s positioning as a leading value brand. The chewing tobacco business is well placed to provide us with a stable annuity stream of cash flow going forward. Moving to NewGen where we once again had a resilient quarter in a very disruptive environment. Our big distribution business, we saw double-digit declines against a tough comp during the prior year, when we’ve benefited from a COVID-related disruption at a B2B competitor and the strong B2C orders during state stay-at-home provisions. The business did benefit from advanced buying in April headed straight through shipping regulations around vaping as a result of the implementation of the PACT Act. We believe, this boosted sales by 2 million during the quarter as customers adjusted to the longer lead times by building inventory. The PACT Act had a meaningful impact on costs, our outbound freight expense in vape business, which we recognize and SGA [ph] was up over 300 basis points as a percentage of its sales from the previous quarter. And this increase was only partially passed onto the customer. We believe that the additional cost and complexities around logistics of delivering vape products to customers caused by the PACT Act that is consolidating industry, further and positions us well to take share. Outside vape, while we haven’t contributed to our growth and we’re encouraged by the early reception of our free white nicotine pouch as we begin its rollout during the second quarter. Going forward, while we continue to expect short-term volatility in the vape distribution business, we like our positioning from a long-term competitive standpoint and are excited by some of our new product launches, including free at Nu-X. And with that, I’ll turn it to Louie for review of our fourth quarter financial performance, Louie?

Thank you, Graham. Our performance in the second quarter was ahead of plan once again. Turning to the segment reviews, Zig-Zag product net sales in the quarter increased 72.3% to $47.2 million with a doubling in our MYO cigar wrap and Canadian businesses and strong double-digit growth in U.S. rolling papers. Total Zig-Zag segment volume increased 64.6% while price mix increased 7.7%. According to MSAi, first quarter industry volumes for U.S. rolling papers increased mid single digits in the measure mark measured channel. During the quarter, our volumes grew at 2.8 times the rate the overall market in Zig-Zag contributed over 90% of the industry’s growth, with our paper cones, being the major driver. This growth excluded the incremental volume growth we are seeing from the alternative and e-commerce channels and why cigar wrap industry volumes were up strong double digits in the quarter. During the quarter, we saw the segments gross margin expand by 160 basis points to 58.8%. This was the result of the financial benefit of eliminating royalty payments to Durfort resulting higher margins for MYO cigar wrap product. Zig-Zag accounted for 58% of our segment operating income in the second quarter and continues to be our fastest growing second. Stoker’s products net sales increased 8.3% to $33.4 million in the quarter, net sales for the MST portfolio grew 16.1% and represented 62% of Stoker’s revenues in the quarter up from 58% a year earlier. Total Stoker’s volume increased 2.4% with price mix advancing 5.9%. Segment gross margins expanded by 80 basis points to 54.4% during the quarter driven by price across the segment and fixed cost leverage in our MST business. Year-over-year, industry volumes for MST were flattish with chewing tobacco declining by approximately 3%. Stoker’s branded shipments to retail continued to outpace the industry in the quarter, growing its MSAi share in both chewing tobacco and MST. Moving to our NewGen segment. Net sales decreased 10.0% to $42.1 million driven by sub comps and the vape distribution business was up 13% sequentially, which was above our expectations. We continue to expect near term volatility due to the PMTA process in 2021, along with the impact of the PACT Act. For the quarter NewGen gross profit contracted 20 basis points to 33.5%. Now moving to the consolidated business. Adjusted EBITDA for the quarter was a 32% to $30.0 million. We achieved 41% incremental margins during the quarter, reflecting the strong performance in our core segments as we leverage our fixed cost structure. And this morning’s release, we updated our 2021 guidance as that follows. Net sales of $447 million to $462 million, this is up from previous guidance of $422 million to $440 million and includes $109 million to $114 million in the third quarter. Adjusted EBITDA for the full year is now expected to be $108 million to $113 million up from previous guidance of $103 million to $108 million. For Zig-Zag, we expect strong double-digit sales growth. As Larry mentioned, MYO cigar wrap benefited from roughly 2 million of orders from a trade inventory load that pulled forward sales from the third quarter. As a reminder, in 2020, our cigar wrap business benefited from $5 million in backlog build in the fourth quarter, as we recover from manufacturing related disruptions early in the year. This will affect year-over-year comps during that fourth quarter. Going forward, we expect Zig-Zag gross margins to moderate slightly from second quarter levels due to make this recreation marketing ramps up and add the contribution of lower gross margins from its DVW acquisition. For Stoker’s we expect high single digit sales growth. And chewing tobacco, we paid another tough comp in the third quarter when we grew 10% year-over-year, last year as a competitor was temporarily out of the market. For NewGen, we now expect flat growth up from previous guidance of mid-to-low single-digit decline in revenue. This includes low single-digit declines for vape distribution. This is up from previous guidance of single-digit decline offset by growth in Nu-X. We believe vaping sales in the quarter benefited by 2 million as customers increased inventory levels, as they adjusted to the longer delivery time due to the logistical challenges of the PACT Act. Moving to our balance sheet, we ended the quarter with $167 million of cash and balance sheet and $179 million of available liquidity. This puts us in a strong position to execute on an active pipeline of opportunities. We are currently evaluating to grow our business. With that, I’ll turn the call back to Larry for closing comments.

We had a strong first half to the year. Our core businesses continued to perform led by Zig-Zag’s performance. We’re benefiting from solid execution and a favorable environment driven by the secular growth in cannabis consumption. Stoker’s continues to drive, share gains, and NewGen has performed well. This is disruption of the PMTA process and the PACT Act, which are likely to be transformational events for the industry. A strong performance would not be possible without the continued efforts of our employees. I want to personally thank them once again for the commitment and contribution to our success. Thank you for participating in the call today. And with that, I’d like to open the call to questions.

[Operator Instructions] We have our first question from Eric Des Lauriers from Craig-Hallum Capital. Sir, your line is open.

All right. Great. Thanks for taking my question and congrats on a really impressive quarter here. So first for me in NewGen, nice job weathering the volatility from both PMTA and PACT Act here understanding the dust has not fully settled yet. But could you give us an update on the competitive landscape there and your ability to ultimately increase mix of proprietary products?

As, as we’ve been talking about, there’s a lot of volatility in the business we’ve seen on a number of smaller competitors go out of business. We’ve also seen some of the – one of the larger competitors grow a bit. Looking forward, we expect to see accelerated activity by the FDA, as it gets close to their previously announced date for completing the PMTA process, which is in September. I don’t think they’re going to hit that. They’ve given every indication. They’re not going to complete the process by them, but I think that they’re going to want to put some news out in terms of where they are in along that process. So we continue to see a volatility. The USPS is currently still shipping the some B2B products. So we haven’t seen the complete implementation of the PACT Act. That’ll be another disruptive event in the going forward.

Okay, great. It seems like you guys are well positioned to handle all that. So good to see. Next one for me on the M&A front. So you guys have really made some nice investments and dosist and Docklight now Old Pal, clearly building up an impressive brand portfolio, kind of attaching yourself to that high growth cannabis segment. With Old Pal, you guys called out the fact that they are non plant touching. Would you guys look to consolidate any of these non-plant touching cannabis brands, in the near future here? Or should we think of, really all of these as, as sort of remaining minority investments until we get some sort of federal reform?

Yes, I mean, so they are minority investments at the moment, as you mentioned. I think our objective is that, these are standing alone companies right now, we have the option to deploy more capital. So I think that the strategy here is to build a house of brands, diversify our portfolio and be able to kind of double down as a, these businesses at the risk. And we closer to federal legalization to bring them in house. And, how we do that, we’ll be kind of determined to feature as the mark on the [indiscernible].

Okay. That makes sense. And then last one from me here just within the Zig-Zag business. I’m not sure if I missed it because you guys quantify to the best of your ability that inventory pull through in the quarter. And then maybe just give us an update on the competitive landscape in that non-measured channel and your efforts to increase, share there. Thanks.

Yes, Eric, so Eric is Graham. Yes, we estimate it’s about $2 million. That was pulled into the quarter.

Yes, so what happened was the, going into we filled our backlog and, and post the quarter, our trade customers wanting to build up inventory or buffer and given what happened with COVID over the last year. And so we believe that full 2 million of that inventory into the quarter.

Okay. That makes sense. And then just an update in that non-measured channel in the competitive landscape to your ability to penetrate there, just any kind of color that will be helpful. Thanks.

We continue to make progress. We actually had tested putting some – starting to send people to that area. We liked the results of that test. We’re now in the process of hiring more people to address the non-measured channels, if you will. You’re starting to see some penetration by Zig-Zag, additional penetration by Zig-Zag in dispensary’s, and as well as in head shops and other non-traditional areas. We long runway, you still have lots of upside there. We’re not totally satisfied where you’re at, but we’re making progress.

Yes. I would say you, the, Old Pal investments in outside of the investment itself being attractive is a great strategic compliment to our strategy there. And Old Pal sells the decent mix of a flower. It’s a percent of sales, which goes along well with our smoking accessories, they go into dispensaries.

Okay. That makes sense. Congrats again guys.

Your next question comes from the line of Gaurav Jain from Barclays. Sir, your line is open.

Hi. Good morning team thanks a lot for taking my questions. So, three questions. One is on this acquisition of Unitabac, can you help us just dimensionalize like how could this opportunity pan outdoor the next few years? And Zig-Zag has been going quite fast over the last 12 months, but I guess after six months actually element to [indiscernible] comps. So could this kind of growth rate that we are seeing as Zig-Zag right now like 30%, 40%, can it sustain now for the next few years as you can scale up the cigar business?

Yes, I don’t think we’re going to underwrite 40% growth forever. So, what I will say is with the markets that we compete in now with rolling papers and wraps is less than $500 million from a wholesale manufacturer revenue standpoint. The cigar is market, which is I think perfect complement to our MYO cigar wraps product, is a $2.5 billion plus market and growing pretty nicely. And so this provides us a great platform to be able to enter that, we enter that market more efficiently and more cost-effectively. And so that’s a big market opportunity for us to be able to get back into with this acquisition

Okay. That’s very excellent. Secondly on all these acquisitions that you have done, why those [ph] they are now almost, I would say at the year old. So what are we on learning being and have those aspirations met the targets that you had set out then when you’re in there and do the initial investments?

Yes, I think, you know the, we’ll have our expectations for gradual ramp. I think that is taking place now. It is a relatively new category and smokable hemp CBD. That is one that, we feel is as growth potential as, as some nicotine cigarette smokers want a alternative form of smoking experience without the nicotine. so it’s been, as we expected and dosist, we are we’re kind of pleased with the, some of the transformation is doing in terms of expanding the brand into other categories, like gummies and other form factors as well as entering the CBD line, but it’s early in the progress bill in terms of kind of the introduction of big.

Sure. And lastly, a housekeeping item, what was the benefit of the consolidation of Recreation marketing, which I think has often into the Zig-Zag line, if you could just set it out for us. And if there were already the benefit of this acquisition, that recreation, that the DVW acquisition in this quarter.

Yes, the $2.5 million for the quarter. And DVW had about a little over a month of benefit into that quarter. Yes, two months of benefit in during the quarter.

Sure, thanks a lot.

Your next question comes from the line of Susan Anderson from B. Riley FBR. Ma’am your line is open

Yes, Alex Rygiel on for Susan. Just a question on Zig-Zag sales to the e-com channel. Have you ever disclosed what percentage of sales are through e-com and then just longer term, what percent of penetration would you aim to reach, and then what’s the margin delta between selling through your e-com channel versus your partners?

Sure. It’s about, right now as a percent of our U.S. paper sales in the teams percentage of our U.S. paper sales. So, our goal is to continue to ramp that the one part of the business that we think has more significant opportunity to ramp is our B2B business. So that is kind of dovetails with alternative strategies to getting more of our product into dispensaries and head shops. So part of the strategy last year, in terms of fact, and that was using this platform in going to trade shows to sign up more consumers and customers onto it, not to see that did not happen that extent that we thought last year, we weren’t run any trade shows. So that’s still a big piece of the strategy that we are still kind of rolling out. So, we continue to expect that that e-commerce business to continue to ramp for us.

And then I guess just the margin difference between selling through that channel.

It’s comparable at the moment. It can fluctuate depending on the product mix.

Okay. And then I guess, another follow-up on Zig-Zag, just utilizing that brand awareness. I think you’ve mentioned previously on expanding into apparel and accessories at the alternative channel. I guess, how is that progressing and then what do you think the longer term opportunity for that would be?

It’s going well. It’s still a small piece of the business, but growing nicely and this also dovetails well into our head shops and alternative shops, and e-commerce, these are products when we focus just the convenience stores, there wasn’t really a home for them, the convenience store, it’s just because of the limited shelf space that you have, but they are perfect products to get into head shops that want to embrace more of the lifestyle around the brand. And so we’re seeing some success around that as long as well as selling through our e-commerce channel. So still early as well on accessories, but we’re seeing nice growth on it.

Perfect. Thank you so much.

[Operator Instructions] Your next question comes from the line of Greg Pendy from Sidoti & Company. Please go ahead.

Hey guys. Thanks for taking my questions. Just shifting gears to Stoker’s. Can you just kind of walk us through in light of the 8% growth there? Did you take pricing typically in the May, June period, and I think earlier you mentioned the tray down, where were – where do you think we are in terms of consumers trading down? Is it more intense than normal, or is it just kind of on par with what you saw last year?

Okay. So the trade down is a secular trend over many years. We did see some acceleration last year during the lockdown period of COVID moving in. I think it’s returning more towards traditional long-term secular rates.

Okay, great. And then just in pricing, did you take some pricing on tubs and then cans like you did in the prior year?

Yes.

Okay. And then just also just moving on in terms of the buyback, you bought back a little bit more stock than you typically have, it looks like, just how are you thinking about the buyback in terms are there any metrics that we should be thinking about that that’s accelerating – accelerated the buyback during the period?

It’s meant our buyback has meant to be opportunistic in situations where there’s a lot of non-fundamental kind of drivers to our thought. We take those opportunities to be more aggressive on the buyback.

All right. And then just one final one. Just in the premium innovation that you’re seeing, I guess from papers to cones, where do you think we are in terms of that kind of like what percentage, and then how much legs does that have to it, or is it just kind of a trend that as several years to go you think?

We think it’s – we are driving, there’s two separate channels, but there’s the measured channel and the non-measured channel. So let’s think the measured channel first. So in the measured channel we are driving the growth and penetration of kind of cones in there. So it’s still relatively new in the C-store channel of our – within the industry of stores that ordered papers only 30% ordered paper cone. So there’s still a decent opportunity there in terms of penetration within our papers business in a measured channel and the teams percentage of our volume. So there – we’re still kind of hurling that penetrate and to measured channel and the non-measured channel, we believe cones the bigger percentage of the market, and we are also much more heavily underrepresented there. So, we see bigger upside in the non-measured channel in terms of kind of our opportunity set there.

Okay, great. That’s very helpful. Thanks a lot.

[Operator Instructions] Your next question comes from the line of Vivien Azer from Cowen and Company. Your line is open.

Hi, this is [indiscernible] on for Vivien. Thanks very much for taking my questions. My first question is on Zig-Zag. Can you please offer more color on the growth that you saw by channel? Last quarter we discussed your distribution opportunities in alternative channels. How big of a contributor was that channel, and more specifically you shouldn’t gain in that channel? Thank you.

Sure. It’s well – I would say that we saw strong growth across the channels, right? Because in the measured market we’re gaining share cones is a big driver, our ability to gain share in that channel, in the non-measured channel lot of it’s incremental, right? So e-commerce is a big driver that I mentioned it was teams as a percentage of our U.S. paper sales and that was just starting to ramp really in Q2 of last year, so a decent contributor of growth. And you’re seeing, in our mix, a bigger percentage of our volumes that are going into these non-measured channels, which means that the alternative strategy is ramping up. So, we’re seeing healthy growth in each of the channels in the measured-channel driven by our market share gains in the non-measured channel kind of increasing our penetration in terms of the stores that we are in.

Understood. Thank you. And my next question is turning to Stoker’s, despite a tough conference the business continues to do well. Can you comment on the growth by form factor specifically tubs versus cans? Thank you.

So, with Stoker’s we were introduced the concept of tubs into the market, which is now these Stoker’s tubs as the leading brand and remains the leading tub product in the market and then it is the driver of the growth. It is an excellent value by for the consumer. If you look at it at a per can basis, it sells at a discount to our cans and yes, the convenience factor of only going to the store once a week or so. And so tubs are the driver. In fact, what we see when we put tubs into cans stores that you do see a migration from cans, the tubs, so the cans are actually a great introductory product for the tubs and leads to consumers to the tubs. They’re a great combination.

Makes sense. Understood. Thank you. And last question, as it relates to your recent investment in Old Pal, can you elaborate on the mechanics of being able to make that investment? Thanks.

Sure. Yes, I mean, it was Old Pal is structured as a non-plant touching cannabis company, so they license out the brand to their partners in. So we were able to invest directly into that. We have a convertible note at the moment, but that is convertible into a kind of a series of common shares as well.

Thank you.

There are no further questions at this time. Sir, please continue.

Well, thank you everybody for joining the call. We look forward to seeing you next quarter and with some more good news. Thank you.

This concludes today’s conference call. Thank you for participating. You may now disconnect.