Good afternoon and welcome to Reed’s Second Quarter 2019 Earnings Conference Call for the period ending on June 30, 2019. My name is Diego and I will be your conference call operator today.

Today’s call is limited to one hour and we will have prepared remarks from Val Stalowir, Reed’s Chief Executive Officer and Iris Snyder, Reed’s Chief Financial Officer. Following management’s remarks, they will take your questions. Before we begin today’s call, I have a Safe Harbor statement to read to our listeners.

I would like to remind our listeners that during this call, management’s remarks may contain forward-looking statements and that management may make additional forward-looking statements in response to your questions.

Forward-looking statements are only current predictions and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievements to be materially different from those anticipated by such statements.

These factors include, but are not limited to, the company’s ability to manage growth, manage debt and meet developmental goals, reduction in demand for our products, dependence on third-party manufacturers and distributors, changes in the competitive environment, access to capital and other information detailed from time-to-time in our filings with the United States Securities and Exchange Commission.

Although we believe that the expectations reflected in forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. In addition, any projections as for the company’s future performance represent management’s estimates as of today, August 13, 2019.

We assume no obligation to update these projections in the future as market conditions change.

Additionally, please note non-GAAP financial measures referenced during this call are reconciled to their comparable GAAP financial measures in the press release and supplemental materials filed with the SEC and is posted on our website at investor.reedsinc.com.

Non-GAAP financial information is not meant as a substitute for GAAP results, but is included solely for informational and comparative purposes.

We present modified EBITDA, because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of core operating performance. I will now turn the call over to Mr. Stalowir. Please go ahead, sir..

Thank you. Good afternoon, everyone. We appreciate you joining us today. We had several accomplishments during the second quarter and demand for our core brands and new product introductions were very strong.

Unfortunately, we encountered short-term supply chain challenges as the quarter progressed that did not allow us to fulfill all of the orders and customer requests we had in hand.

I am going to begin with a brief overview of the quarter, discuss the short-term supply chain challenges we are working through and plans over the coming quarter to address these issues. I will then discuss our progress on brand building and growth initiatives, including our innovation and sales and marketing efforts.

I will then turn the call over to Iris to run through the financial results in greater detail. First, during the second quarter, we generated 1% net sales growth. You will recall we divested our private label business at the beginning of this year as part of the planned sales of Chris Reed.

We also discontinued brands and SKUs that did not align strategically with our long-term focus. The combined net sales that we are lapping this year for private label and discontinued items totaled approximately $6 million.

Focusing on core brand gross revenue, we delivered 13% growth in Q2 versus prior year and would have shown 28% growth if we were able to fulfill all customer orders and demand during the quarter. Despite our supply chain challenges, we generated 22% volume growth on Virgil during the second quarter.

We also delivered 7% volume growth on Reed’s brand returning our top selling brand to growth for the first time in several quarters. In total for Q2, we left $1.1 million of core brand sales orders unfulfilled and 400,000 of delayed innovation sales.

As we shift to all the products we had orders for and demand on hand, Virgil’s brand would have grown 43% and Reed’s brand growth would have been 15%. Turning now to the supply chain, the production shortfalls we experienced in June were driven by a number of factors.

The first was packaging failures as we transition from paper to pressure-sensitive labels on our glass bottles and we encourage extended downtime at our East Coast co-packer to manage through the transition. We also had unplanned downtime at our two West Coast co-packers.

Our main co-packer on the West Coast, our prior LA facility now called California Custom Beverage or CCB, which we sold last year were shutdown much longer than expected while installing new high-speed equipment. The backup West Coast facility also had unplanned downtime in the month of June and could not fulfill the production gap created by CCB.

While a single shortfall may have been overcome, the concurrence of events at all three existing co-packers had a meaningful and relatively sudden impact on our inventory. Our current co-packer footprint was not robust or flexible enough to sustain the one-time issues that came our way.

We need to build additional redundancy and flexibility into our supply chain infrastructure and are now laser focused on expanding our co-packer relationship to fulfill short-term shortages and ensure there is sufficient and flexible capacity to support our long-term growth expectations and new innovation.

To quickly address and recover, we have established a corrective strategic plan and are leveraging our entire leadership team. We will bring on additional redundant production capabilities over the coming months and are currently in negotiations with several potential new co-packers.

One such co-packer will begin its first run of Virgil’s glass in September. Additionally and in support of both further gross margin improvement and supply chain simplification and flexibility, we are going to leverage the deep R&D technical bench of two well-known beverage flavor houses later this month.

Well, I would like to be in a position to tell you these production shortfalls will be corrected immediately we still have work to do to bring inventory levels back to the optimal position. Our 3 co-packers are now all up and running and are increasing their levels of production output to compensate for the shortfalls to-date.

They are also in the process of installing new equipment to expand capacity and add new capabilities such as can production. However, it will take time to normalize inventory given the ripple effect of the June shortfall. As Iris will discuss, we have lowered our growth expectations for 2019.

This is driven by both sales – lost sales of our core brands due to inventory availability, the delayed launch of our 16-ounce can offering and delayed expansion of our Reed Zero Sugars and cans due to the need to refocus our available production on supplying our core item.

I can assure you that we are fully committed as a team to quickly enhancing our supply chain both for near-term demand and long-term redundancies and capabilities to support our growth and innovation.

We have successfully faced and addressed many challenges over the past 2 years and optimizing our supply chain infrastructure is now our top priority and we will get this done. We are also adding experienced relationships and knowledge to support our supply chain initiatives by the addition last week of Lou Imbrogno to our Board of Directors.

Lou has 40 years of global beverage experience including leading operations, contract manufacturing, concentrate operations, R&D and quality for Pepsi-Cola North America and PepsiCo Beverages International. Lou’s experience in relationships will be invaluable.

In fact, Lou has already been able to open the dialogue with additional co-packer partnership that we are now pursuing. Now, turning to the progress we have made in terms of our sales, marketing and brand building initiatives.

The investments we have made in our core brands this quarter, including the Reed Zero Sugar launch, the introduction of Reed’s cans, our packaging refresh on both brands and brand awareness building programs have begun to have a positive impact on sales momentum as I have stated at the beginning of my call and will set the stage to help drive future accelerated growth.

We are very encouraged by the initial positive response from distributions, retailers and customers around our new product news and marketing efforts. In May, we turned on our marketing efforts, including our first ever 360 degree marketing campaign called Canada Dry fooled your mom and introduce the tagline Ready For Real Ginger.

The campaign included digital outdoor print and radio advertising social media programs, in-store displays, coupon programs, sampling events and enhanced PR. We launched program in New York City and quickly expanded to Boston, Seattle, Los Angeles and San Diego.

We also launched national advertising through SIRIUS Radio ads on several of their stations, including live Reed’s by Howard Stern. The campaign generated hundreds of millions of consumer impressions and will see positive feedback from retailer, distributors and consumers about the campaign.

Syndicated data showed sales trend improvement across all of our heavy up-markets versus all other markets. We have also begun to leverage via patent social media, the fact that both Reed’s and Virgil’s Zero offerings are now keto-certified.

This is a large and growing consumer group and we kicked off our keto efforts by sampling our product at the KetoCon Convention in Austin this past June. And we will be updating our packaging to reflect our keto certified status.

On the sales front, we continue to add new doors and expand our distribution footprint in some of the largest retail chains in the U.S. During the second quarter, we added approximately 2,300 new doors, which includes 7 new SKUs and over 1,000 Wal-Mart stores.

Due to the successful sell-through of our Virgil’s Zero Sugar line, we have now expanded to a national footprint at target total of 1,500 stores. At Costco, we executed rotation of Virgil’s Root Bear in the Northern California region, a new Reed’s extra 12-pack cans rotation in the Texas region.

We also implemented a successful roadshow on Virgil’s Zero Sugar cans in Texas that resulted in rotational commitment of Zero Root Beer 12-pack to launch in Q3.

We also continue to ramp up our international sales efforts and are laying the groundwork to expand our presence in several countries, including Mexico, Peru, Japan, Bermuda and the Dominican Republic.

On the category innovation front, we can confirm the successful rollout of the Reed hemp-based wellness drinks to select markets at the end of Q2, which was supplied by our recently added fourth co-packing operation based in Northern California.

We are also on track to launch the Ginger Wellness Shots line in the fourth quarter utilizing a separate shot manufacturing supply chain model.

Unfortunately, we have had to redirect the focus of our current co-packer partners for supplying our core brand needs, which necessitated the delay of the Ready-to-Drink Mule pilot launch until the end of the year.

We are however taking advantage of the added time to further optimize the Ready-to-Drink Mule formulation, utilizing improved sugar alcohol ingredients we have uncovered through our recent new co-packing partnership discussions.

While the short-term supply chain challenges are disappointing, they do not attract from what we have today and what we are in the process of building with our Reed’s and Virgil’s brands. We have transformed the company and returned our core brands to grow. In the second half of the year, we continue to expect double-digit growth of our core brands.

We remain committed to driving shareholder value of establishing long-term relationships with all of our investors. We are confident with our plans and are pushing hard to build our brands and drive increased growth. Now, let me turn the call over to Iris to run through the second quarter results..

Thank you very much, Val and good afternoon everyone. As Val mentioned, the entire Reed’s leadership team is focused on addressing the current product availability challenges. We are making good progress in minimizing the impact on our sales growth efforts in the short-term and building in greater production flexibility and redundancy in the future.

Now, let me run through the financial results. Second quarter net sales increased 1% to $9.5 million compared with $9.4 million in the prior year, while core brands gross sales increased 13% compared to the prior year.

The strong performance of our core brands is driven by 14% case growth, including 22% volume growth of Virgil’s and 7% volume growth of Reed’s. As Val mentioned, our sales were suppressed by $1.5 million as a result of product storages reflecting lower than expected co-packer production and delays in our innovation sales ramp-up.

Finally, as anticipated the core brand growth was partially offset by lower sales of exited and non-core products, including the sale of the private label business in conjunction with the planned sales at the end of 2018. Sales of these discontinued non-core and private label products represented $0.9 million of sales in the second quarter of 2018.

For the second quarter, gross profit was negatively impacted by charges related to inventory adjustments, obsolete and expired ingredients and packaging transitions. Some of these costs are related to the transition of the LA facility, California Custom Beverage.

Other costs on packaging and ingredients were related to accelerating the launch of our new packaging and reformulation efforts. The majority of the write-off of one-time charges and we believe going forward charges will be more modest. These charges impacted gross margin by approximately $0.6 million.

Inclusive of these costs, gross profit decreased 25% and gross margin as a percentage of net sales decreased to 24%. Excluding these charges, the gross margin would have been 30%. Delivering handling costs increased 15% to $1.4 million. It increased 190 basis points as a percentage of net sales during the quarter compared to the prior year.

This reflects higher less than truckload shipment to the new retailers, inventory balancing positioned inventory for the required geographic distribution centers as well as higher than normal handling costs for new products that were produced in limited geographic locations.

Selling and marketing costs increased 164% to $3.2 million during the quarter. The increase reflects the investment in sales and marketing infrastructure and growth initiatives.

These increases in sales and marketing were expected and are consistent with our strategy to refresh the brand, increase brand awareness, support the launch of new products and packaging into the market, open new retail outlets and channels and lay the groundwork to reaccelerate growth of our core brands.

General and administrative expenses decreased 49% to $1.7 million in the second quarter compared to $3.4 million in the prior year period. The year-over-year decrease is largely driven by reduced severance, non-cash performance-based equity awards and bonus accruals.

The second quarter operating loss increased to $4.1 million from $2.8 million in the prior year. Interest expense decreased to $0.3 million in the second quarter compared to $0.4 million last year. Net loss was $4.5 million or $0.13 per share in the second quarter of 2019. This compares to $3.4 million or $0.13 per share in the same period last year.

Moving to the balance sheet and cash flows, we entered the second quarter of 2019 with $1.6 million in cash and $5.4 million of availability on our revolving line of credit. While we do not expect to generate the level of operating cash flow that we have initially anticipated in fiscal 2019, we have the capacity to support our efforts this year.

During the second quarter, the company used $2.8 million of cash to operating activities compared to $5.8 million in the prior year period. The decrease relates primarily to reduced investment in inventory.

Turning to guidance, as a result of the supply chain challenges we have discussed and the delayed ramp-up in sales driven by innovation, we are adjusting our fiscal 2019 guidance. We now expect to generate net sales in the range of $35 million to $40 million and anticipate core brand growth of 13% to 20%.

Reported net sales growth will reflect the elimination of approximately $6 million of private labels and discontinued non-core revenue in 2018. Additionally, we now anticipate a gross margin of 30% plus for the second half of 2019.

Given the reprioritization of our supply chain resources to maximize production output, the implementation of several gross margin improvement initiatives maybe delayed for later this year. To be conservative, we are reducing our guidance to 30% versus original guidance of 32% or greater.

Now, let me turn the call back to the operator to begin the question-and-answer session.

Operator?.

Thank you. [Operator Instructions] Our first question comes from Anthony Vendetti with Maxim Group. Please state your question..

Sure, thanks.

So I guess a couple of questions, I know guidance now is 35 to 40, I don’t have what the original guidance was in front of me, so revenue guidance prior to today was what?.

It was 42 to 44..

42 to 44, okay.

And then so in terms of the shortfall, so is $1.1 million related to the unplanned West Coast co-packer downtimes, it seems like it all sort of came together like you said concurrently?.

It was all the co-packers, Anthony. It was – volume was down, this all happened in June. Volume was down transitioning from paper to the plastic and it just could not run the PSL labels correctly, I am not going into details of what drove all that, but it took them amongst to get up and running in terms of West Coast – East Coast production.

That’s our big co-packer on the East Coast and they do a ton of volume for us. On the West Coast, yes, the CCB plant was supposed to be up in May and it did not get up and running until July. And it’s still not running at optimal levels.

And then we had hoped to have a backup with Langers on the West Coast and they also could not jump in and fill the void created by CCB on the West Coast. They had the wrong production issues.

So it was sort of a perfect storm of all three having issues in June and that led to yes 1.1 of short ships of POs and then 400,000 worth of delayed launch of the 16-ounce cans and really us pulling the accelerator off on the Zero Sugar and the cans, because of our core product needs..

Okay. And then the 400,000 on innovations that’s where things like the Ready-to-Drink Moscow Mule, is that…..

No, that’s what we have just said, 400,000 is really that core innovation that we are launching, so that was the 16-ounce can that was supposed to launch in May and did not because of the production issues and then also the Reed’s and Reed’s cans and Reed’s zeroes which we did launch into market, there are lot of customers we could have gone and walked in orders, but we knew that we had production issues and we kind of pulled back on that.

So it was really the delayed launch and delayed ramp up of those three items..

Those three. Okay, so you also mentioned though that the Ready-to-Drink Moscow Mule is pushed to the end of year, but that had nothing to do with…..

No, our category innovation there are three, right, there is the hemp, the Ready-to-Drink Mule and the shots. While the hemp launched on time at the end of June and is in a couple of markets now, so we are happy with that and that was because it was in the fourth co-packer not related to our core co-packers.

Mule is definitely being delayed and that was supposed to launch end of June, it didn’t have a lot of volume planned for June and it really all three didn’t have a lot of volume planned for the entire yea.

So, the reduced guidance is really driven by the currently fulfilling all potential orders on our core given our tight inventory position and really driven by the delayed launch of the 16-ounce cans and the delayed ramp up of the Zero Reed’s extra and the Reed’s cans.

So the innovation really did not materially impact any of the volumes or guidance since we didn’t build in a lot of volume behind those three..

Okay.

And then just on the hemp-based drinks that was on time into June that is – there is not a lot factored into guidance, but you said it for that, but can you talk about a little bit of how that’s being marketed, any issues that you had to deal with from a legality standpoint?.

Yes, that’s a good question. So now, we have got a lot of interest on the product and again, this co-packer is kind of small. So he has got to ramp up slowly, it’s not our sort of long-term co-packer partner, it’s really just the launching for the pilots. So he is ramping up production as we speak.

We are in two states, we are in Texas and Vermont, I am not going to go into details on customers, because we would like to keep a low profile in terms of the regulatory, but so far so good, there has been no regulatory reaction in either of those two states and the retailers that we are in.

So far they are happy with its performance, but it’s really early days and we really started shipping pallets at the end of June. So, we need a lot more time to see and learn from the reaction from distributors, retailers and consumers..

Okay. And then lastly obviously you outlined a lot of different issues here contributing to the quarter as well as the guidance, the guidance range not only went down from revenues but widened, right, it was 42 to 44 was pretty tight, 35 to 40 is not only lower, but wider.

Is that because at this stage, as you are working through some of these issues, you don’t yet have enough confidence that all of these issues are behind you or what’s the reason for the widening of the range?.

Yes. Look, we want to deliver on our commitments and obviously we haven’t in the second quarter. So we are building in a conservative plan that we know we will achieve. And so we want to make sure that, that bandwidth captures all of our scenarios. So the bandwidth is little.

And we also don’t want to lower the high-end, because if things go well and we continue to make the progress that we are in terms of getting back up to speed in terms of our current co-packers and adding new co-packers, I mean, I didn’t really think we could be able to get a backup co-packer on the East Coast up and running in September, but it looks like we will.

So, given that we have a lot of the optimization plans in place, the question is how quickly we will be able to materialize all of those initiatives and it’s just hard – it’s hard to predict.

So there is little more uncertainty, but we wanted to give guidance that we know we would hit given the new initiatives and that’s why we have given you the range that we have given you..

Okay.

And you said detailed negotiation with other co-packers, on the West Coast, CCB, which is California Custom Beverage, that’s your old LA facility, you sold to Chris Reed, correct?.

Correct..

Great..

I mean, I am just curious – I guess you do not anticipate some of that and then no, we did – that’s why we thought Langers – we had Langers locked up on the West Coast and Langers had its own surprises and could not jump in and fill any other voice. So that was our backup I guess needed to backup..

And basically what you are saying is you are now close to securing another West Coast co-packer that gives you that gives you that flexibility?.

Yes. We have spoken to several. Unfortunately, like I said, the one we are starting up in the September is East Coast. There just seems to be better choices of strong partners east to the Rockies and west to the Rockies, but we are turning over every stone in terms of the West Coast. We have had multiple discussions on the West Coast.

Some will have to add equipments such as pasteurizers to be up and running. There might be a chance that we will get a backup co-packer up and running on the West Coast before the end of the year, but I can’t commit to that at this point. Langers might actually begin stepping up, but obviously, having not stepped up to-date, I can’t guarantee that.

So, yes, there is a lot of activity right now to building redundancy on both coasts and we will be able to turn on an additional very large and capable co-packer on the East Coast. And worse comes to worst, Anthony, we will heavy up East Coast production and ship it west as needed to make sure that we fulfill all of our customer orders..

Okay.

And then the last question I have was the Wal-Mart stores, how many did you say we are in?.

Over 1,000..

Okay.

And when does that – I know usually those resets happen either semiannually or usually annually, when is that next reset date and when could that expand beyond that?.

Yes.

Can you just repeat the question?.

Yes, the reset date for Wal-Mart, when could it – it’s in the thousands, you ran 1,000 stores now, when could that be more than thousands or when is the next meeting with them we may look to reevaluate?.

Hey, Anthony, good question, it’s Neal, how you are doing?.

Good.

How are you?.

Good. We have a meeting with Wal-Mart next week. So we will review our present performance and then we will hope to put a good enough story together to see if you can expand, but it’s very early for them. And this was all a new step for them, a new 4-foot step across the older stores or I should say across the 1,000 stores that they are testing..

They have been really up and running for about 3 months on shelf?.

Not even, but…..

Yes. They have been on shelf 9 weeks. So I think it’s hard for Wal-Mart to get a solid read. I mean, it just takes time to get on shelf, drive trial, drive repeat, it’s probably early for them to make decisions on go, no go on expansion but, hopefully we are well performing whatever else is on that shelf..

Okay great. I will hail back in the queue. Thanks guys..

Thanks..

[Operator Instructions] Our next question comes from Chris Krueger with Lake Street Capital Markets. Please proceed with your question..

Hi, good afternoon..

Good afternoon..

Hi I thought your last guy went a lot of my questions so most of mine are answered but, in general the co-packing issues you said kind of materialized in the month of June.

I mean does it largely – did it drag into the third quarter, March? Or how should we look at that?.

Yes, It's – inventory is tight. When you don't – when all of your co-packers aren't producing in June and one of your co-packers is not producing in May or June yes then it is a ripple effect.

So, we are expanding our production across all three as fast as possible but we are tight on inventory and so, your co-packers have other customers as well now they have the [indiscernible] they have been doing everything they can to increase our output to make up for the shortfall but we have not made up the hole that was created in June.

The good news is decent position on some of our core items but like I said inventory is going to be tight for this month and possibly into the next month before we are fully backed to our inventory positions to be able to fulfill all our orders across all geographies..

Okay. Then on gross margin you indicated several one time charges is i t safe to say that you kind of went through as many of those as you could during the quarter and we shouldn’t see so much of that going forward..

Yes that’s right Chris we believe going forward the charges will be much more modest, believe you have got really the large majority of the one time charges. .

Yes this Q2 were still transitioning from CCB’s our old plant and we have hired a new inventory personal here who is just very skilled at uncovering and looking under every stone. And that’s the process that we have gone through and we believe we have uncovered all the major items from that transition so we don’t expect those to reappear..

Okay then last question I noticed with your marketing efforts much more prominent presence on like Facebook and Twitter just wanted to hear any feedback and how those efforts are working. .

Yes now we have got an lot of mileage in terms of engagement impressions given the amount of capital we have spent there we did a lot of tactics to learn what was moving the needle and we are really happy with all of our social media investments on Facebook Instagram some of the paid social we are going to continue investing in that platform because people are really liking the message that we were informing people for the first time that hey your Ginger ale had no ginger in it and so we are going to continue investing in that platform and SIRIUS Radio actually did very well for us.

I mean they generated almost a 100 million impressions Howard did a great job telling our story and we hope to continue that relationship in the future as well.

And those who are very efficient cost per thousand impressions some of the others probably wouldn’t repeat because there was a sort of learning process on all tactics but absolutely a major portion of our future marketing spend would be on digital and as I said I think I would love to keep developing and grow deeper on the serious partnership..

Alright. That’s all I got. Thanks..

Thanks..

Thank you our next question comes from Don Lardy with D.A. Davidson. Please state your question..

Hi, Val. The Target relationship are we seeing good inventories of both the Virgil’s product in accordance inventory is the Reed’s product and obviously, had a supply problem.

Do we see the Reed's products going to ramp back up with target out here on the West Coast or by what you see happening there?.

Hey, Don, this is Neal.

Are you saying you are not seeing inventory on the West Coast or you are seeing?.

That’s what we did and it’s gone, okay.

What I am seeing, I am seeing flocks that are down empty or renamed and so I am not seeing the Reed’s product here in the West Coast, I am seeing the Virgil’s, but not Reed’s as far as the Target stores?.

Yes. So what we have – the problem we targeted is because we are not a DSP operation, direct to store we hope with their problems, we had sometimes difficult time giving those guys the store personnel to backup the stores and order. And so we have initiated a merchandiser that is now helping us nationally to fix this. And….

Okay, great..

You will start seeing the presence come back. If you want to forward me the store or stores, you will follow-up on that meaningfully..

Yes, we heard it from the call..

Yes, that’s perfect. Survey.com and they are sort of the Uber of merchandising and obviously we have focused our efforts – their efforts on Wal-Mart launch.

So that’s where we want to make sure that we do that, because when we launch Target last year, we did see a lot of out of stocks, because of store personnel assuming we are a DSP and someone else is going to do the work and no one did. So they came in and actually improved our presence in Target and that led to our expansion now.

And so we hired them and they really focused. We want to make sure that we weren’t going to do that again with Wal-Mart and so we had focused their energies on Wal-Mart kickoff which was in the first 4 to 6 weeks. And now we are shifting over the focus now that Wal-Mart stores are in pretty good shapes we are refocusing their efforts on Target.

So they might be….

Okay, okay..

Thank you. Ladies and gentlemen, there appears to be no additional questions at this time. I will turn the conference back over to Mr. Stalowir for closing remarks. Thank you..

Thank you for continued support and for participating on today’s call. Our mission is to materially disrupt the multi-billion mainstream soft drink and ginger beverage categories with our superior and innovative product and package offerings and compelling consumer communication efforts.

A significant growth upside we have identified remains unchanged. Our supply chain optimization efforts are well underway and we will continue to lay the groundwork through our investment in sales and marketing infrastructure and new product news to accelerate our capture of this untapped potential.

We are committed to supporting and growing our brands and driving long-term shareholder value. Thanks again for listening..

Thank you. This concludes today’s conference. All parties may disconnect. Have a great day..