Richard Galterio - IR, Ascendant Partners Dr. Robert Smith - President and CEO Brent Rystrom - COO and CFO Michael Goose - President, U.S. Ingredient.

Paul Sonz - Sonz Partners Chris Krueger - Lake Street Capital Markets Marc Nuccitelli - Dillon Hill Capital Alexander Scharf - Maxim Group Tim O'Brien - DG Capital.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the RiceBran Technologies First Quarter 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.

[Operator Instructions] As a reminder, this conference is being recorded. I'd now like to introduce our host, Mr. Richard Galterio of Ascendant Partners. Please go ahead, Mr. Galterio..

Thank you, operator. Good afternoon, listeners. Welcome to the RiceBran Technologies’ first quarter 2018 financial results conference call. With us today are Dr. Robert Smith, Chief Executive Officer and President of RiceBran Technologies; Brent Rystrom, Chief Operating and Chief Financial Officer; and Michael Goose, President of U.S. Ingredient.

Before I turn the call over to Robert, I want to remind listeners that during the call, management’s prepared remarks may result in forward-looking statements that are subject to risks and uncertainties. Management may make additional forward-looking statements in response to your questions today.

Therefore, the Company claims protection under Safe Harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from the results discussed today. And therefore, we refer you to a more detailed discussion of these risks and uncertainties in the Company’s filings with the SEC.

In addition, any projections as to the Company’s future performance represented by management include estimates as of today, May 8, 2018 and the Company assumes no obligation to update these projections in the future as market conditions change.

This webcast and certain financial information provided in this call, including reconciliations of non-GAAP financial measures to comparable GAAP financial measures are available at www.ricebrantech.com on the Investor Relations page. At this time, I would like to turn the call over to Dr. Robert Smith, CEO and President of RiceBran Technologies.

Dr., please go ahead..

Thank you, Rich. I’d like to welcome everyone to the RiceBran Technologies 2018 first quarter conference call. Thank you for joining us. RiceBran Technologies’ first quarter revenue up $3.55 million was in line with our expectation, and our adjusted EBITDA loss of $1.4 million was also similar to internal modeling.

Our balance sheet remained solid during the quarter, with proceeds from warrant exercises offsetting much of our cash burn and helping to slightly increase our shareholders’ equity. It’s been a busy year so far at RBT.

All areas of the Company are focused on growing revenue, increasing our bran supply, and obtaining certification throughout our production system.

We’ve initiated multiple CapEx projects to upgrade our production facilities to support SQF certification, which will come in stages, beginning in the third quarter and will result in full certification sometime late in the fourth quarter or early in the first quarter of 2019.

We also expect to complete the move of our corporate headquarters by the end of this month to the Woodlands, a suburb of Houston. This location provides us with much better, access to the majority of rice bran available in the U.S., which is mainly grown in Arkansas and Louisiana.

We are excited to see RBT generate meaningful revenue growth so far in the second quarter. However, growth in the next few months will be more difficult to generate than we would have desired as bran supplies to our processing facility in Louisiana are constrained for the next few months.

We are largely able to supplant the reduced supply from Louisiana with bran from our facilities in California. But, this will have a negative impact on margin as the cost to shift from California to our customers in the Midwest will be considerably higher than cost of shipping from Louisiana.

The short supplies will also limit our capacity in adding new customers. We plan to add additional bran capacity in the Delta region soon and expect our Louisiana facility to resume production, concurrent with harvest of the new crop in July or August of this year.

This will position us for more substantial growth and improvement in adjusted EBITDA in the second half of 2018 and beyond. Our sales team is continuing to make inroads, and we are excited by the growth opportunity that we see on the horizon. I’ll now turn the call over to Michael Goose to provide some insight on this.

Michael?.

Thanks, Robert, and good afternoon, everyone. I’d like to start my comments by focusing on our efforts to build sales growth. About nine months ago, we started a process of repositioning our sales efforts by developing tighter focus on customer segment and adding key people to the several strong performing team members we already had.

We are now strongly positioned in the following categories, bakery, cereal and breading, companion animal, equine and feed, lifestyle, natural food, and protein. This focus is starting to deliver us some important wins. And we are excited by what we see in our expanding pipeline.

We recently received a shipped our first order from a large natural foods company for using a gluten-free bread. Just last week, we respect [ph] into a better-for-you chip with an independent fast-growing snack company and will start shipping in the third quarter.

We have many irons in the fire in the companion animal and plan to substantially grow this segment in the second half of the year. We are finding new customers for our specialty product, which not only helps to grow sales but also has a major favorable impact on margin by improving absorption in our Dillon facility.

We see significant opportunities to grow our equine and feed business in the second half of 2018. We are being tested in numerous new and exciting products and look forward to updating on these in future conference calls.

And we are becoming more engaged in R&D days, lunch and learns, and gaining a better understanding of the technical need and uses of our customers and prospective customers. We recently reworked customer pricing and minimum order size, both of which are having a positive impact on our revenue and margin.

We are also working with large distributors and few technology companies to develop additional markets and customers. We are building a new customer service effort in our new offices in the Woodlands. We recently hired a new customer service manager to lead this effort and look forward to her building her team.

We also plan to selectively add sales team members, so we can provide greater focus for our key segments. I would now like to return the call over to Brent Rystrom.

Brent?.

Thanks, Michael. I'm going to first start with few operational highlights from the quarter.

Robert DePaul, our Vice President of Operations has our entire operations team focused on completion of the CapEx projects necessary to attain our planned certification, and we expect to complete this process in the timeline that Robert Smith outlined earlier in the call.

We had a strong second quarter production at our Mermentau facility as management there did an excellent job of maximizing production. Our Dillon, Montana facility was negatively impacted during the quarter by planned product -- production limitations as we had several CapEx projects during the quarter.

We’re now about halfway through these projects with an estimated completion by September of this year. As Michael’s team drives increased demand for products from this facility, we expect major improvements in capacity and profitability, starting in the fourth quarter of 2018 at Dillon.

We’re making planned improvements toward processing, warehousing and distribution facility in West Sacramento, California. We’ve greatly enlarged our capacity for carrying inventory which will help us improve our in-stocks for customers. In particular, we’re working to increase our capacity in our final grade offerings.

Finally, we continue to work on building brand supplies from the Delta region. Something involving all aspects of our Company is the pending move of our corporate offices to the Woodland in May. As Robert Smith mentioned earlier, the Woodlands is geographically closer to the vast majority of bran supply to the U.S.

and offers the Company a strong pool of professionals for our recruiting efforts. We’ll put out a press release in late May, once we occupy the new site, to update everyone with our new address. Next, I would like to provide some quick thoughts on some of the financial metrics of the quarter.

Revenue declined slightly, which was consistent with our guidance. Animal nutrition saw positive sales growth, while food sales declined mainly on the impact of one customer.

Gross profit was negatively impacted by higher bran prices, the mix shift to animal nutrition customers from food customers, and poor absorption at our Dillon, Montana facility as production there was limited due to the major CapEx projects during the quarter that we expect to complete in September.

Dillon was also negatively impacted by lower revenue. The large customer there we have that had a decline was a Dillon customer. SG&A increased 26% due to higher selling expenses, staffing needs for SQF certification, some legal needs and bonus accruals. Adjusted EBITDA of a negative $1.4 million was in the range of our internal model.

Finally, the balance sheet ended in solid shape with cash and cash equivalents of $5.2 million, shareholders’ equity of $14.9 million and $15,000 of long-term debt. Next, I have some updates for our guidance for the year. Our second quarter is off to a favorable start with revenue growing in April.

However, the loss in production from Louisiana will impact us in several ways over the next few months. First, we are shipping production to California which will lower our margins due to higher freight cost.

Second, our growth capacity is constrained until we add, plan, new bran supplies from the Delta and production resumes at our facility in Louisiana. We expect to add a new bran supplier in the next two months and should see production resume at Louisiana in July or August.

Finally, we are seeking additional production in the Delta region in the next six to twelve months as our sales pipeline shows a need for greater capacity there and we want to mitigate the risk of a repeat of our situation in Louisiana this season.

We still expect to achieve revenue of at least $16 million for the year based on the visibility we believe we have for the development of our sales pipeline. We expect our revenue growth to accelerate sequentially as well through the end of the year.

Adjusted EBITDA in the second quarter will not show the sequential improvement we originally expected and will likely be lower than the first quarter given the negative impact of freight cost resulting for increased sourcing from California. This has also caused us to delay the addition of several large new customers.

We had previously planned the customer adds in the mid-second quarter and that will now push to early third quarter when our bran supplies improve. We expect sharp sequential improvements in adjusted EBITDA in the third and fourth quarters. However, we now see full-year adjusted EBITDA ranging from a negative $3.5 million to a negative $4 million.

Our goal remains to achieve positive adjusted EBITDA in the last few months of 2018 or very early 2019.

We remain comfortable with our balance sheet, especially as we have realized substantial proceeds from warrant exercises that have significantly limited the impact of our cash burn, a process largely and clearly successfully managed by Dennis Dykes, our Chief Accounting Officer.

Our long-term confidence and expectation for our business continues to improve. The success that Michael’s team is achieving and identifying in landing new customers and expanding with existing customers is building. We’re looking to substantially increase our capacity to meet these growth expectations.

We would like to close the call by thanking our employees for all their efforts in this busy and productive time of transitioning the Company to growth. And we’d like to thank our investors for their confidence in our plans and continued investments in RiceBran Technologies. We look forward to updating everyone on our next call in August.

Operator, we’d now like to open the call to questions..

[Operator Instructions] First question comes from Paul Sonz with Sonz Partners. Please go ahead..

Good afternoon. I have a question.

Could you comment about the progress you’re making in Arkansas?.

At this point, I’ll just tell you that we are very actively working to build our presence in that space. And we hope to have some news shortly..

Okay.

Could you just tell us what the total number of warrants exercised was?.

During the quarter, it was probably about 2 million, approximately, give or take 100,000..

And so, that would now be left with how many shares outstanding?.

There were about 20,789,000 [ph] shares in this report at time of file. .

And then, the -- and I think you said the new equity is 14.9 million?.

Shareholders’ equity is actually up a little bit in the quarter from the fourth quarter. It was 14,900,000..

Right.

What you -- are you giving any guidance what you think the cash will be at the end of the year?.

We’re not giving guidance on the cash. But, we have modeled internally part of our comments about being comfortable with the balance sheet. If we think for the business that we seen right now, we’re adequately financed and we should be able to do that without running out of the cash..

And then, is there any more color you can give us on what happened in terms of running out of supply and become some supply constraint?.

Sure. Good question, Paul. I think from a simplistic perspective, the easiest answer is that the -- mill that we partner with in Louisiana is a mill that’s primarily focused on export volumes. And the focus of that industry typically is exports that tend to be strongest after a crop is harvest and then they hale off as year the progresses.

Typically that mill would have a slower period in what is our second quarter. Typically April through about July would be slow.

And historically, they’ve had periods of five to six weeks where they haven’t been able to produce any rice or mill rate, and then they might have a week where they get an order in mill and then they may go few more weeks, and then another few days where they mill. And we have been able to piece way through with that process.

With the smaller rice crop this year in Louisiana or last year I should say that is about to be completed with the new crop coming in July, the old crop, it was increasingly sparks, there just wasn’t as much supply. And we don’t think our mill partner plans to mill between now and until the crop comes in.

So, where we had periodic shutdown but often limited production in burst throughout that period, this year we are not going to have any. So, we have been forced then to shift our source into facilities in California and we will have to do that until we bring on that mill again and/or add other supply in the region..

I might just add. This is Robert Smith. I might just add that with the strategy that Brent Rystrom is putting in place with additional rice supplies out of Arkansas that this is one of these issues that we hope will not come back and bite us again in the future.

So, we are actively dealing with these potential limitations and shortages by adding on additional bran supplies that are based on milling for U.S. as opposed to export and that should alleviate some of those issues in the future..

Right. I have two questions, two last questions.

One is, have your -- and going out and look, talking to customers, has any of them looked at this stance and said, well, wait a second guys, I don't know if we want to deal with you because clearly you are having a problem with supply? And then, the second part of the question would be which area are you having the most interest in from -- in terms of potential new customers?.

So, that’s a great question. And one of the benefit that we have versus our limited competition is that we are the only people that have dual sourcing for bran right now in the U.S.

And our ability, even though it’s not ideal to be able to supply customers from either coast if there is any issues within them, kind of set us up for that ability to walk around that issue.

Also by opening up a footprint of additional bran supply will give us additional sources, which will allow customers to remain a little bit more confident that our supply chain is intact..

So, the customers have not been pushing back on you and question your ability to deliver?.

We’ve had many customers that have looked at are looking at our footprint and basically said, well, at least, you have a backup plan, just in case..

Okay..

So we’re trying to do -- Paul, we’re trying to be very careful about bringing on customers as opposed to them being worried about this where we really want to make sure we bring these large customers on when we 100% certainly we can fulfill with continuity..

Do you see that going into next year that you may be able to grow more geometrically, because you're bringing on -- it sounds like you're going to be doing something in Arkansas, would that allow you to really start to geometrically increase growth?.

I think what we'll have next year is more sustained growth throughout the year, because we’ll have this capacity available for the full year. So, I think if that's what you're asking, I think, yes..

Okay. Is there any particular area that -- I know you were at a conference where you were -- you located yourself in sort of hot new stuff, as opposed to the stuff.

And I just wondered, if you're seeing -- what came out of that? I know it’s only about 50 days, 60 days ago you went, but are you seeing any follow through from that in terms of new potential product?.

We have been unbelievably busy since that show. And I believe you’re referring to the Expo West show in Anaheim..

Right..

I was at that show and with our new location; we received probably about 30 to 40 projects that are above the funnel. Of those right now, we’ve seen about 10% of those drop into highly probable activity that we should see in the near future.

But, that show was absolutely a success and people are accepting our product and are looking at our product towards innovation..

And as of last week, we actually had one drop in as order..

Okay. The next question comes from Chris Krueger with Lake Street Capital Markets. Please go ahead..

Sure, thanks. You talk about the second quarter growing so far, but that we could see some weakness in the next couple of months.

If you look at the full quarter, would you expect it to be positive growth or more flattish or how should we model that?.

Yes. I think, the way we would characterize it, Chris is that the growth will be weaker than we would have expected. We have visibility for customers coming on, but we're pushing -- deferring the timing on that a little bit to make sure that we're in good supply. So, we're going to kind of manage that process.

I would view it as modest growth, but still looking to grow in the quarter..

Okay. That helps.

And as far as your share count, I think the last caller asked about it, what’s the good share count do you think you use for the next couple of quarters, was it $20 million you said?.

Well, in the Q, we filed with about 20,789,000 shares, so 20,800,000. We have noted in the release and in our comments today that we’ve had subsequent exercises of warrants, post the end of the quarter. So, I would certainly use something higher than 20.8 million. I would think about adding another 1 million shares at least..

Okay. The next question comes from Harry Goldsholl, [ph] he’s a private investor. Please go ahead..

Okay. So, I have a couple of questions. One is, after years and years of failing to secure adequate supplies of bran, why is it still a problem when apparently -- I was thinking it was a Brazil problem and not a problem we had in the U.S.? And secondly, what is the CapEx project in Dillon? I thought that had been completed last year.

And also, environmentally, you’re consolidating facilities or logistic purposes why are you moving to yet another location for your corporate?.

Thank you for the question. So, couple of thoughts in that and I’ll kind of tie into a couple of answers the first and the third part. So, on the bran supply itself, historically, the Company has had a few mills where they’ve had very long-term relationships and those have been very valued relationships, and these are great partners that we work with.

Having said that, more and more of rice production, and particularly, we think bran production is going to come out of Arkansas. And we historically not had a base of business in Arkansas. If you look at it on average last five years or so, it’s between 50% and 60% of all the acres planted for rice production and it’s based to come out of Arkansas.

This year, right now, we’re looking at 1,331,000 acres and that’s out of 2,690,000 acres total, so about half. We need to get better positioned for that. And Robert alluded earlier to year-round milling, milling for domestic purposes, Arkansas is core of that. So, we need to get a better supply in that part of the country.

From the perspective of your comment about the consolidation, I think that is a good question. As a Company, we’re going to need a lot more brand supply. We’re looking at opportunities right now.

Mike discussed things that his team is looking at that some of these opportunities are substantially bigger than what we sell into the food market, single opportunities are substantially bigger than everything we’re doing combined right now in the food market. So we’re going to need the scale of the business.

I don’t think investors would want us to be too reliant on a small number of mills. So, I think it’s in the best interest of the business to have a diverse base of mills and not be dependent on any one partner.

So, I think that’s -- the consolidation refer to, I think on a distribution perspective, on processing and some of the other stuff, I think there is some benefits to that. But as far as the sourcing for mills, I think it will pay to be diverse. As far as Dillon, the CapEx project in Dillon is related to a number of things really.

Some of it’s production related, a lot of it is just to bring the facility itself up to the standards that we can get the SQF certification. The primary part of that is refurbishing the drum dryers. There is four of them.

And combined, there is about $1.5 million of CapEx that’s going, just little under that, maybe $1.4 million of CapEx going into refurbishing the drum dryers to bring our standards up to meet the certification requirements..

Next question comes from Marc Nuccitelli Dillon Hill Capital. Please go ahead. .

Congrats on the progress, guys. I really appreciate it. I think most of my questions have been answered with respect to Louisiana and the repositioning of the Company. So, I don’t really want to belabor this. But just, I want to delineate for a moment.

There’s not a shortage of rice bran in Louisiana? You guys have a shortage problem, because you don’t have enough of your equipment co-located with enough mills, is that correct?.

I think, in generally, that’s the right idea. From where the rice supply worked this year, we were at a disadvantage because our partner was not going to pursuing milling in this environment..

Okay. Because it was starting to sound eerily similar to what happened in California during the draught.

So, I just want to make sure that this is -- in the aggregate, we are not going to have a shortage of bran, if we’re sourcing from California, Louisiana or Arkansas, then we’ll have three reliable areas to source from if we have enough equipment or partners in those regions..

Yes. I think, to combine that with the previous caller’s question, Marc, probably this year we are going to use less than 2% of the available bran in the U.S. So, there is tremendous capacity out there. Our production was less aligned with that..

So, again, not to belabor the -- from the customer standpoint, is this going to cause any consternation on part of your customers rapidly because of the shortage?.

I don’t think so.

I think, Michael do you have comments?.

Our teams done a really good job of adjusting to make sure that all orders have been closed..

So, Michael, when you say -- you are a single source company but you are now sourcing from several regions. So, even though sourcing from California may not be as profitable, the customers can be assured they will get the supply they need if they start to scale with RiceBran..

Yes, and that’s how we are handling the current situation right now. I’m very pleased with how our teams worked together to make sure that all orders were filled as a top priority..

[Operator Instructions] The next question comes from Alexander Scharf with Maxim Group. Please go ahead..

So, piggybacking off of Chris's question on the revenue guidance, are you expecting the loss revenue from Q2 to be just pushed out and pretty much all made up in the third quarter or is that going to be more evenly spread across the back half of the year in order to reach your $16 million number?.

It’s a good question. I think from a simple perspective, we have a couple of customers identified that we know a set amount of business that they are going to do each month. So, we are not deferring -- you are not going to see back month, back orders coming into the third quarter. Literally, we will turn a customer on that business will start to flow.

So, I don’t know if that really answers your question. But from a simplistic perspective, the deferral of bringing these customers on is not going to create a kind of a swell if you will of activity at the front. They will just come on at ratable kind of regular amount of business to start.

There won't be any backfilling to cash them because they were getting whatever they were getting from somebody else..

Can you talk about the addition of sales personnel, specifically how many did you add in the quarter, how many do you currently have, and then your expectations for the rest of the year?.

I agree. We currently have a sales support team, four people externally and they include internal sales as well as our customer support team. That’s six people. We are currently looking to add one to two more positions. And what we are focusing on those positions is the following, one is expertise in certain categories that we’re really going after.

For example, we see a lot of growth opportunity in the bakery space and quite frankly the four guys we have right now they can't hit every bakery in the U.S. and tell our great story. And then secondly, we’re focusing on geographically. And we want to make sure that every region is covered by where a salesperson is from the outside sales standpoint.

So, I hope that answers that question..

That’s good color. And then, my last question, so, the new customer wins you expect to turn on and impact 2018.

Can you give us a sense or quantify the segments that you expect those to be in, animal food or specialty?.

I think, yes, all of them..

So, no sort of a pretty even mix between those three or you're not giving your guidance on that?.

I think what we’ve said in the past is on -- we expect probably, fairly even split this year between food and animal. Over time, the biggest opportunity is in food..

Okay. The next question comes from Tim O'Brien with DG Capital. Please go ahead..

Hey, guys. Two questions for me. It was just sort of alluded to here, just looking at mix shift. You know that the margin being hit a little this quarter with mix shift.

Can you just talk about how do you see that adapting or changing going forward through the year and what it could do to your margin, especially on the gross margin?.

Yes. So, the mix shift is something we had planned for. And we've been talking about our guidance. So there's nothing new there from that perspective, just to make sure that’s understood. So, margin realized the plan level on the animal size is smaller than the food size.

What we do, how we do it is a different level of processing, and different activity. So there's different margins in those two businesses. The added part that’s impacting us is going to be the freight cost.

So as we're forced to ship more from California versus Louisiana, to our customers in the middle part of the United States, the freight costs were going to go up pretty substantially..

Got it. I guess my question is more around just the shift from animal to food. How you see that occurring and progressing through the year..

So, I guess what we're seeing is, we expect our growth this year to be split evenly between animal and food. And presently, the split between animal and food is pretty even. So, we're not anticipating. There was a shift in the quarter, the first quarter, where there was more animal, growth in animal and a little decline in food.

But for the year, we're expecting the growth to be comparable between the two sides of the business..

Got it.

And the large customer issue in Q1, is that temporary, do you expect that customer going to come back and I guess be within your expectation?.

I think at this point, it’s an unknown. We’re hopeful, it is a good customer, they’re good company, and we’re hopeful. But we just don't have visibility for where their product is going..

Okay.

And lastly, the certification costs, if you were to strip those out this year, how much are you spending on certification costs?.

I think that’s -- it’s a great question, I think it's a little difficult to answer. So, I’m going to give you a couple of thoughts. I would say the actual dollar spend on expenses, so basically our Q ‘18 consultants and other things we’re doing to work on this, you’re probably talking several hundreds of thousands of dollars of added expenses.

And then, on top of that there is CapEx. And the CapEx in total is going to be well over $2 million, not all of it is related, but almost all that would have to be done to meet certification needs, there is other production needs, there is efficiency needs.

So, your expense is going to be in the several hundreds of thousands and your CapEx outlay is going to be probably in the low 2 million..

And that’ll presumably go away after you’ve done with this spend at the end of the year?.

It would diminish considerably. It will not go away. We will have a need for annual recertification, but if the cost is much lower, it’s a lot easier to deal, once you get the first level. Also as we add new facilities, we’ll have to get those certified as well. So, we’ll have ongoing needs to do it, but the level will go down considerable..

We have a follow-up question from Paul Sonz with Sonz Partners. Please go ahead..

Two follow-ups.

Could you give us some reason why the customer you decided not to proceed with you guys? Was it that their product wasn’t selling well or did they replace you with the different component or any ideas?.

Paul, so, we’re not quite sure of the question.

Are you asking about the previous question or somebody just asked about the decline to one customer?.

Yes, that one customer that you lost and then he asked whether he was coming back. I am just….

So, we didn’t lose the customer, our volume of that customer went down. So, we’re still expecting…..

I see. You’re still expecting.

It’s not like they decided to use a different ingredient?.

No. It is just the volume of what they’re producing. Our ingredient -- anything that goes into their products; their overall production has come down some and so proportionally so did our supply to them..

And then, I just wanted to, one other, I wanted to just make sure that I got this right that you -- in terms of being EBITDA positive, you said that you hope by the end of this year or very beginning, is that right?.

Yes. We have the goal internally to get to adjusted EBITDA positive as soon as possible. We have a stretch internal goal that we’d like to really see if would be in a month or two positive by the end of the calendar year.

And it’s possible -- it’s just fresh, but it’s possible we could reach it in a quarter, but certainly by the first part of ‘19, that’s our goal to get a full quarter positive and stay there..

If I remember correctly, the last call, you were hoping to do it at the beginning of next year or mid next year.

It’s something -- what changed that made you sort of push it up?.

I don’t think there is anything in particular. But, Michael’s team has a very active pipeline.

And if the pipeline falls certain ways, particularly with certain mix, getting back to one of the questions earlier, if we get a little heavier mix or food or to the especially products out of Dillon, and we’re getting some visibility from maybe some of that happening that will help us get there faster..

And one last question, in relation to the mill in Louisiana that chose not to operate for its own reason.

How do you deal with that? Did you have a tough talk with them, a tough minded talk with them about how can use you if you are going to do this or how does that progress from a business to business standpoint?.

It’s good question. I think, we don’t really have a tough talk with them. This is a mill that’s geared to do their business this way. So, we know this and we operate around what their preferred methods are. And so, we are just basically working with that ebb and flow. I think, they are going to remain an incredibly good partner for us going forward.

So, it doesn’t really changes long-term our relationship with them. What it does is it creates a couple of opportunities there needed for us. Clearly if we are going to rely solely on this mill, we’d want to have a lot more warehousing and distribution capabilities in that region, so we could have greater safety stock on hand in case this happened.

I think that would be relatively inefficient. So, I think it’s going to be better for us to create other sources of supply in the region. And when this mill slows, then we will rely more heavily on these other facilities. This is very productive for us when they are producing. I think it was February or March.

We had 2.9 million pounds produced in one month..

It's one of the largest mills in Louisiana in terms of production..

Okay. This concludes our question-and -answer session. Now, I’d like to turn the conference back over to Robert Smith for any closing remarks..

Thank you, operator. And I want to thank our listeners today for joining us on our conference call. And we all look forward to giving you further updates in our next conference call in August. Thank you all..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..