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See Blue - Earnings Call Transcript - Indiva Limited (NDVAF) CEO Niel Marotta on Q2 2021 Results - Earnings Call Transcript
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There is some great stuff in here. The company presentation is very similar to this morning's PR. So I jumped to the Q&A portion. See the blue highlights. - FUNMAN


Aug. 24, 2021 12:32 PM ET
Indiva Limited (OTCQX:NDVAF) Q1 2021 Results Earnings Conference Call

August 24, 2021 8:30 AM ET

Company Participants

Niel Marotta - President, CEO, Director, Co-Founder

Jennifer Welsh - Chief Financial Officer

Conference Call Participants

Andrew Semple - Echelon

Alan Brochstein - NCV Media

Chris Damas - BCMI Research

Rahul Sarugaser - Raymond James

Operator

Good morning ladies and gentlemen and welcome to the Indiva Limited Q2 2021 earnings conference call. [Operator Instructions]. Also note that this call is being recorded on Tuesday, August 24, 2021.

And I would like to turn the conference over to Niel Marotta, CEO of Indiva, Please go ahead, sir.

Niel Marotta

Thank you operator. Welcome everyone. Thank you for joining us this morning to discuss Indiva's financial results for the second quarter ended June 30, 2021.

Before I begin, will just read the forward-looking statement. Matters discussed in this conference call include forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Certain material factors and assumptions were considered and applied in making these forward-looking statements. Additional information regarding [indiscernible] is available on our earnings press release issued today as well as our risk factor section in the quarterly MD&A and other public disclosure documents available on Indiva's SEDAR profile.

I am pleased to report record revenue, record gross margin and positive adjusted EBITDA for the second quarter of 2021. Indiva is hitting its stride, delivering record financial results driven by organic growth in sales of award-winning products that consumers love produced by our world-class team at our fully-licensed facility in London, Ontario.

Net revenue increased 46% sequentially, more than tripled year-over-year, primarily driven by higher sales of edible products where Indiva remains the national leader and continues to grow its market share. Gross margins before fair value judgments and impairments improve significantly in the quarter to record 34% as significantly lower distillate cost positively impacted cost of goods sold. Finally, we are very pleased to report positive adjusted EBITDA of over $0.5 million in the quarter. And now that we have achieved positive adjusted EBITDA, we are taking dead aim at achieving positive earnings-per-share.

Looking back at Q2 2021, we had some terrific operational highlights. According to national market share data from Hifyre, Indiva's Q2 market share increased to 50% in the edible category, up from 46% in Q1. Market ranking in Q2 2021 showed that top seven edible SKUs were Wana Sour Gummies led by Strawberry-Lemonade. And nine of the top 10 edible SKUs were from Indiva, with both Wana and Bhang continuing to lead their respective subcategories. Separately headset data for the month of June 2021 showed seven of the top 10 edible products in Ontario were Indiva products. Bhang milk Chocolate was the highest velocity product in Ontario according to OCS data for the fiscal year ended March 31, 2021. Additionally, Bhang Dark Chocolate was the sixth highest velocity product.

In Q2, Indiva successfully introduced two new Bhang chocolate flavors, Bhang Cookies and Cream White Chocolate and as well as Bhang Caramel Mocha Milk Chocolate, brining our Bhang SKU count to seven. Bhang Cookies and Cream, in particular, has had a very strong reception with unit sales quickly rising to challenge industry-leading bhang milk chocolates and having a strong impact on our national market share in the chocolate subcategory. Indiva expanded its distribution of Wana Quick fast-acting gummies to six provinces and one territory and made its first shipment of products to Newfoundland, including Wana, Bhang and Artisan Batch products. In the quarter, Indiva introduced additional strains in the Artisan Batch brand, which were well-received and also introduced bubble hash concentrate product into the Province of Quebec.

Turning to events subsequent to quarter-end, for the month of July 2021, according to Hifyre data, Indiva has captured over 52% share in the edibles category, including 53% market share in the gummy subcategory nationally and over 40% market share of the chocolate subcategory nationally. This represents an 800 basis point increase in the share of the chocolate subcategory and illustrates the positive impact strong sales of new SKUs such as Bhang Cookies and Cream White Chocolate.

This month, we have introduced three new cookie SKUs from Slow Ride Bakery into the Ontario market, marking Indiva's first baked goods introduced into the edibles category. Initial sell-in over the last two weeks has been very strong and Indiva has quickly become the leader in the baked goods subcategory in Ontario. We expect to expand distribution of Slow Ride cookies coast-to-coast in the coming months. And we will also introduce additional seasonal offerings from Slow Ride Bakery later this year. Speaking further about baked goods for a moment, this subcategory is underrepresented in the Canadian edible category, coming in at the low 1% of the edibles category. This compares to some 10% to 15% share in mature U.S. edibles markets.

So this kind of innovation and new product introduction will accomplish two things. First, it will drive incremental revenue growth for Indiva. And second, it will help to expand the edibles categories as a percent of the total cannabis market.

Lastly, Indiva recently introduced new high-potency, craft grown cultivars to the Canadian market under its Artisan Batch brand, including Unicorn Sherbert and Cereal Milk by KRFT and Sticky Larry by Stinky Greens. The company expects to introduce more exciting and unique cultivars from Canada's best craft cultivators in the coming months.

Looking forward, in the second half of 2021, we expect continued strong revenue growth driven by new SKU and product introduction and further gross margin improvement driven by lower distillate costs and improved efficiencies. September will mark the one-year anniversary Wana Gummies being available in the Canadian market. The growth in Wana Gummies has been nothing short of fantastic and these products are truly loved by our customers. We have sold over five million units of Wana in past 152 months and as a result, Indiva is now ranked third amongst all of these nationally measured by units sold. This performance has also strengthened our relationship with provincial wholesalers, which is very important as it relates to new product and SKU introduction and distribution coast-to-coast. We have over 20 new SKUs which w will introduce in the second half of 2021, including new multipack CBD Wana Gummies SKUs coming to market next month. I am always delighted to hear our customers say they wish they could actually eat more want gum in one sitting. We hear you and we have products coming soon that will allow just that.

Last not least, I would like to thank all of Indiva's employees, including all the staff at our facility in London, Ontario for their fantastic work as we continue to ramp up our effort. Thank you and I am sure cannabis enthusiasts everywhere in Canada thank you too.

I will now turn it over to Indiva's Chief Financial Officer, Jennifer Welsh to review the financial results in greater detail.

Jennifer Welsh

Thank you Niel. I will review Indiva's performance for fiscal Q2 2021.

Gross revenue in the first quarter grew 249% year-over-year and grew 44% sequentially to $9.87 million. Year to date, gross revenue increased 229% year-over-year to $16.74 million. Net revenue grew 255% year-over-year and grew 46% sequentially to $9.08 million in the quarter. Year-to-date, net revenue increased 235% year-over-year to $15.3 million surpassing in six months what Indiva achieved in net revenue for the entire fiscal year of 2020. The strong year-over-year growth was driven mainly by strength in our core edible products. Overall, edibles represented 93% of net revenue in Q2 2021.

Gross profit before fair value adjustments and impairment increased 160% sequentially to $3.1 million. Year-to-date, adjusted gross profit increased to $4.27 million versus nil in the corresponding prior yea period. Operational gross margin, defined as gross margin before fair value adjustment and impairments, increased to 34% in Q2 2021 versus 19% in Q1 2021 and nil in Q2 2020 as the company benefited from lower cost distillates and higher operating efficiency. Encouragingly, our incremental gross margins are significantly higher by 34% when measured on a sequential and year-over-year basis. Year-to-date, gross margins were 29%.

52 million milligrams of distillate were sold in the second quarter versus 30 million milligrams in the first quarter of 2021, an increase of 73%. As a reminder, CBD and THC distillate are the active ingredients in our edible products. It is important to remember that there is not necessarily a direct correlation between units sold and milligrams sold as each SKU has its own combination and total milligrams of active ingredient. Distillate cost averaged $0.02 per milligrams sold in the second, a significant decline from the average of $0.038 per milligram in Q1 2021.

Please note that gross margins in Q2 only partially reflect the benefit of lower cost distillate in finished goods with significant benefit yet to be realized in gross margins in the second half of 2021. Current spot prices for distillates are some 75% lower than the realized cost in Q2. As a result, the company expects to see continued gross margin improvement in the second half of 2021 as lower realized distillate costs flow through our cost of goods sold.

Operating expenses in the quarter increased to $3.1 million and increased year-to-date to $5.3 million, primarily due to higher marketing and sales commissions driven by higher sales volume and higher public company costs. Operating expenses, as a percentage of net revenue, declined to 34% in Q2 2021 and we expect that declining trend to continue.

Indiva achieved positive adjusted EBITDA of $544,000 in Q2, a sequential improvement from the loss of $524,000 in the first quarter and a loss of $1 million in the same period last year. Comprehensive loss declined to $1.4 million in Q2 versus a loss of $3 million in Q1 2021 and a loss of $2.4 million in Q2 2020. Comprehensive loss in the quarter included one-time expenses and non-cash charges including inventory write-downs totaling $1 million.

One-time expense and non-cash charges for the quarter include inventory write-downs of $290,000 relating to aged inventory and obsolete packaging and owners contract charges relating to timing differences in deliveries against third-party manufacturing contracts. Including all one-time expenses and non-cash charges, comprehensive loss per share in Q2 2021 was $0.01 versus a per-share loss of $0.03 in the year ago period.

Cash balance stood at $3.4 million at quarter-end and working capital stood at $5.21 million.

Niel Marotta

Thank you Jen. Operator, I think with that, we will open it up to questions, please.

Question-and-Answer Session

Operator

[Operator Instructions]. And your first question will be from Andrew Semple at Echelon. Please go ahead.

Andrew Semple

Hi there. Good morning and congrats on the very strong Q2 results.

Niel Marotta

Thank you Andrew. Good. Morning to you.

Andrew Semple

Good morning. My first question is just on the cost of distillate. If I applied the current spot prices of distillate to the Q2 results and the number of milligrams sold, I am arriving at it would have been approximately $800,000 tailwind to gross profits and a 9% tailwind to gross margins. As we look at the back half of the year, just wondering how many quarters you think it will take to work through some that existing higher cost inventory? And do you believe you could end the year with an exit gross margin rate above 40% because you may have achieved that this quarter had current spot prices been applied today?

Niel Marotta

That's absolutely right. I don't know that we want to go so far as to give guidance for the year-end margin, but your math is 100% right. We are definitely on track to be above of 40% gross margins.

In terms of the timing and how it flows through, I will let Jen handle that more specifically.

Jennifer Welsh

Yes. We are forecasting that we will be into the distillate flowing through cost of goods sold within Q4. So we do expect to take that this year.

Andrew Semple

Okay, That's helpful. Great. Second question. I noted the number of milligrams sold increased at a faster rate than revenue for the second quarter. I just wanted some additional color on the dynamics there. Is that consumers generally shifting towards products with a higher number of milligrams within a package? Or were there some pricing pressure on some of your branded products within the second quarter compared to the first?

Niel Marotta

Yes. I can say none of it is pricing pressure. We haven't faced any pressure to lower our wholesale prices at all and we haven't really seen any pressure at retail that I am aware of. So it really is just a mix shift, Andrew. To give an example, so many of our Wana Gummies only have 10 milligrams of THC in the whole package. And this goes as a spectrum all the way up to our Pomegranate Blueberry, which we call PBA, that SKU has 60 milligrams in a package and that's, perhaps out surprisingly, becoming our top seller. I think consumers look at it and say there's a lot of milligrams in this pack and the price per milligram is significantly lower than other edibles or even other products in competing categories like some concentrates for instance. So it's primarily mix shift that's driving that acceleration in milligrams versus just unit.

Andrew Semple

That's great. And then just a final question here before I hop back in queue and apologies if you touch on this earlier in the call as I was a couple of minutes late. I am just looking for an update on the product launches you got lined up in the second half of the year. First of all, just an update on your recent launch for baked good sales, baked good products in the Ontario cannabis market would be great. And I believe in the press release, you spoke to 20 SKUs in the back half of the year, If you are able to provide a color on the mix between edibles and new kind of dry flower products that you anticipate bringing to market, that would be excellent.

Niel Marotta

Sure. I mean most of what, I shouldn't say most, but a good chunk of the new SKUs that are coming out are edibles. I would say, probably three quarters of the new SKUs are edibles, Andrew. And that would be gummies, chocolates and cookies. There's also one product, I believe, which may not land in Q4, but it's very close, which would be Jewels. These are basically like a chewable tablet. That's very much like a sweet tart. On the Wana side, we have got two different multipack flavors. So this will be a 10 pack of CBD gummies and the first one to come out will be strawberry flavor that should land in September. We are very excited to see the reception. And then we have got seasonal chocolate SKUs and also seasonal cookies that we intend to launch in the fourth quarter as well. So that's kind of broadly. And then in addition, we have got a brand extension of Artisan Batch into pre-rolls where we will be using some of the craft cultivated flower and putting that into market as well as a very exciting new craft cultivator that we will have more to say about in the next few weeks that we brought on board growing some terrific product here in Ontario. And so that will be a pretty big addition too. There will be at least one if not two Artisan Batch strains that we haven't talked about yet coming out in the fall.

Andrew Semple

That's great. Thank you for taking my questions. I will get back in queue.

Niel Marotta

Thanks Andrew.

Operator

[Operator Instructions]. And your next question will be from Alan Brochstein at NCV Media. Please go ahead.

Alan Brochstein

Hi Niel. Congratulations on the best quarter ever.

Niel Marotta

Thanks Alan.

Alan Brochstein

I had a question. It seems like only two guys competing in the edibles category, but the edibles category proportionally is really restricted. You mentioned the success in more milligrams per package. Was that any sort of hunch on when Health Canada might relax the packaging limits of 10 milligrams of THC?

Niel Marotta

I don't know if I have a hunch, but I can tell you that I don't think it's necessarily right around the corner. I don't know that that's sort of our business. I think our growth is quite strong. But the Cannabis Act will begin a review process in October within about two months time. Obviously, most people are aware, we are having an election in this country next month. But that review process could take upwards of twelve months. And then we will be in position to look at new legislation subsequent to that.

So I think we are probably looking at least another year-plus with the existing regulations. Anything could happen. But I think reasonably, it might be another year-plus. But in the meantime, we are trying to come up with innovative products that continue to grow the category. And while the category, you are absolutely right, Alan is sort of 4.5% to 5% in Canada, maybe a little bit more than 5% if you exclude Quebec from the denominator where edibles are generally not allowed.

That's still quite a bit lower than what you would see in which mature markets in the U. S. of 10% or 15% or even more depending on season. So part of that, for sure, is potency. So we hope we will see changes and we are prepared for that, if and when it happens. But I think it's also a matter of innovating and providing new products that are underrepresented in Canada. And I think that the baked goods and the cookies from Slow Rider are a good example of that.

Alan Brochstein

Okay. And then I wanted to ask you, but first of all thanks for the product launch update. The one product you have been holding in reserve for quite some time are the salts and sugars from Ruby. I guess Ruby in the right ways to say it. But what is the outlook there for introducing those? Those are great different products than what are on the market now?

Niel Marotta

Yes. We are excited to launch those and we are making the sugar already. We haven't brought it to market just quite yet. It's relatively complex to package that in a profitable way. And so we will have more on that probably in our third quarter conference call in terms of specific timing. But we think prior to launching and sales would follow on that, we have not begun making the salt yet. But the Jewels, which combine the sugar with a powderized fruit and are pressed into a tablet, those we are making right now and we have good interest from several Canadian provinces.

So that would be kind of the first product. And then once we have the proper packaging installed in the coming months, then we will release the sugars. So it has been a while, but we are getting very close. We just unfortunately or fortunately prioritized products that have had really broad appeal and now as we march towards being free cash flow positive, enables us to do a lot more lot more thoughtful innovation, I think.

Alan Brochstein

Okay. And then finally one of the big things over the last year for you guys was the relationship with Sundial. And I am just wondering if you can comment upon the nature of that relationship? Was it just as debt and equity investor passively? Or are you actually involved in any sort of strategic way with Sundial?

Niel Marotta

No, it's really more of the former. They are a passive investor. You are absolutely right. They are our largest shareholder at about 18%. They have also provided an $11 million dollars senior debt facility to us. They have been very supportive. But at this point, we don't have any other commercial relationships. They don't hold a Board seat. So they are, I guess, passive investors, but also very supportive of the path that we have taken.

Alan Brochstein

And are there nay limits on their ability to invest more in the company in the future, should you want that investment?

Niel Marotta

There's no limits, per se. I mean, there would be limits on ownership capped at, I guess, 19.96% before it becomes a little more complex. But in terms of their ability to invest further the capital into Indiva, there's plenty of ways to accomplish that, if both parties wish to do so.

Alan Brochstein

Got it. Thanks. Congratulations to you.

Niel Marotta

Thanks Alan. Thank you.

Operator

[Operator Instructions]. And your next question will be from Chris Damas at BCMI Research. Please go ahead.

Chris Damas

Yes. Hi. Good morning. The THC cost, the distillate, it's two milligrams. So it's approximately $1 million in COGS of six million sold. It's going to become less and less an impact after this year. Can you comment on trends in costs of cocoa, sugar and other inputs? Thank you.

Niel Marotta

Yes. We haven't seen too many, let's say, aggressive price increases on any of those core ingredients, not to the extent that it would move the needle in our margin projections. Certainly it's a much lower percentage of the cost than what you would see for distillate. So occasionally, I think we were looking at some raspberry flavoring and there was a bit of shortage and so you get these price spikes. But so far the other core ingredients are very stable and probably flat, Chris.

Chris Damas

Great. Thanks Niel. And is your labor unionized or not? Has the UCFW got to you guys yet?

Niel Marotta

No and no. I would like to thank our labor forces. It's just fine. So we haven't, no one's unionized. We haven't heard any problems as of yet.

Chris Damas

Good. Congrats on a great quarter.

Niel Marotta

Thanks Chris. Thank you.

Operator

Thank you. Next question will be from Rahul Sarugaser at Raymond James. Please go ahead.

Rahul Sarugaser

Good morning Niel and Jen. Thank you so much for taking my question. And also congratulations on the positive adjusted EBITDA. That indeed is unique, as we all know in this environment. So I guess my first question really is a higher level question, which is around defensibility of your position of number one in edibles. We see edibles tipping from 4% of the market to 5% of the market there recently. So it is indeed growing quickly given the overall market growth quite quickly. Since competition is mounting, a lot of much larger players starting to infuse SKUs into the category. You guys have had a real head start in the space and have had a garnered real loyalty among consumers. So, how are you approaching defensibility of your position as the big balance sheets start to weigh in here?

Niel Marotta

Yes. Great question Rahul. I mean I would say, so far, we have never been one of the companies with a big balance sheet to weigh in on any sector. I think what we have tried to is focus on brands and products that we knew were of extremely high quality. I don't think it necessarily means luxury but I think it means product that deliver what customers are asking for. And I think with edibles, subject to regulatory limits, pace is important. I think both the Wana and Bhang brands on their success in the U.S. was a pretty good indicator for us that they would well in Canada. We do pay royalties on these brand but I think it's been worth it.

So I think the fact that these brands and I would like to think eventually they will grow into global brands. I really think that's where the industry will go over the next decade or so. So I even know we are a smaller producer in terms of our balance sheet or our footprint, we are in one 40,000 square-foot facility. We don't have the greenhouses or multiple facilities in Canada or outside of Canada. That's allowed us to focus and focus on making products that Canadians really do love.

I regularly travel around the country and I visit dispensaries and it doesn't matter whether I am in Ontario or Alberta or BC, I would say extremely rare, I almost never go into dispensary that is not carrying Wana or Bhang or both. And the feedback that I get is always very positive. So it's tough to predict exactly what creates a moat around our business in Canada, given how restricted we are with advertising and given restricted we are with what we can do with products. But the formulations and the performance of these products, I think, will stand the test of time.

There is no doubt we will see more entrants and more competition, but it's going to get tougher and tougher, I think, to get listings unless your product is extremely differentiated. Why would a provincial wholesaler take something off the shelf that's performing very well to try something new. And we plan to continue to innovate to continue to defend and also grow our market share.

Rahul Sarugaser

Terrific. That's nice clarity particularly your point about potential retailers not substituting high performance SKUs. So now turning a little bit to what you talked about your intention move into premium or super premium flower. This indeed lines up well with the high margin business that is edibles business and that seems to be well aligned. So could you give us put a little bit more color in terms of the strategic direction that you are taking with super premium? How are you securing consistent supply of premium flowers, just given that there's been a pretty big appetite again with big balance sheet gobbling up these smaller players and maintaining your position in that rapidly growing high margin business?

Niel Marotta

Yes. Look, I think at last count, there's 700 licensed producers in Canada. And the last time I checked, you have got about 1,700 SKUs and about 130 LPs that are listed, let's say, in Ontario. So that means not all of those, let's say, 570-plus or 600-plus LPs that are not currently listed in Ontario are micro growers or necessarily even cultivators, but a good majority of them are.

So that these, I would argue, probably hundreds of different craft cultivators and licensed producers and micro grows that have product that they need to take to market. But the last mile in this business is very difficult. It's not easy to take flower and actually get it listed and get it on the shelf. So I think where we have maybe a bit of an advantage is that a little bit of grow, let's say a 1,000 kilos or less per year, can make a big difference on our business whereas some of the very large LPs, it might not move the needle to the same extent.

So I think we can pursue this strategy of sourcing from multiple different micro grows. And look, Artisan Batch is kind of rotational and limited time offer in nature. So it really does suit. I like the symmetry between having think a variety of different suppliers and also sort of being able to compete with larger players with multiple small suppliers. And like you said, focusing on the super premium category.

Not everybody wants to pay $50 retail for an eight or 3.5 grams, but there's absolutely a section of the market that does and really cares about the potency, the terpene profile, the freshness of the flower, the bag appeal. And so our goal is to constantly strive to source and package product that gets better on all of those metrics. And I think that will allow us to compete in that segment against much bigger players.

Rahul Sarugaser

Sure. Thanks so much for that. That's really great color. And there's one sort nuts and bolts question, probably more for Jen. Given that you are now tipping over into positive adjusted EBITDA, Niel, you referred to moving into to positive EPS. Given the current cash position and the trajectory of the company, how are you looking, how should we be thinking about liquidity for the company over at the short term?

Niel Marotta

Yes. I will let Jen speak to any sort of liquidity questions, numbers directly. But I think I think we are in a good position. As you pointed out earlier, we have never had a huge balance sheet. So we are very good at running a lean company and being very cost conscious. Our quarterly G&A, including non-cash charges, is still only $2.5 million. We do have access to capital. I would say, we have probably turned down capital more often than not. So I think we are in good position if we do need any capital going forward to support our growth.

Maybe I should defer to Jen, but we are not necessarily burning cash from an operational perspective anymore, which is a very great position to be in. It took a long time to get here. And the industry as a whole, I don't think it's there yet. But we are kind of in that position where what you are seeing is maybe our receivables going up as our sales growth. So the kind of financing I think that we are looking at now, if we are looking at anything at all, is more to improve our balance sheet rather than fund our operations.

I don't know if you agree with that, Jen?

Jennifer Welsh

Yes.

Rahul Sarugaser

Okay. Great. That's very helpful. Thank you very much again for taking my questions and congratulations again on the terrific quarter.

Niel Marotta

Thanks Rahul. I appreciate it.

Operator

Thank you. Next question will be from Andrew Semple at Echelon. Please go ahead.

Andrew Semple

Hi there. Just had a follow-up question. Given the growth rate seen this quarter and certainly year-over-year and the number of our product launches on deck in the second half of this year, are you still comfortable with your existing footprint in the facility and the capacity within that facility to be able to kind of meet the operational ramp expected in the second half? Thank you.

Niel Marotta

Yes. Good question. I think the short answer is yes. We are probably operating at about half of our capacity. And one thing we haven't talked about too much yet because it's not in place yet, but we put deposits on automation for our packaging as it relates to both gummies and chocolate, which is the vast majority of our sales and our units.

We think this will double our shift capacity and our current run rates can save upwards of $1 million per year. I would we expect that system to be in place until early 2022. So won't see the results for probably another six to nine months. Let's call it Q1 2022, we might start to see some results there into Q2. But we are not overly concerned with capacity. I mean, we are not running flat out. We don't run 24/7. And we have got plenty of incremental shift capacity.

Just to give a little bit more color, the gummies that we produce, for instance, take us two shifts to package where it takes us one shift to cook. So if we want to produce more we could. And by adding some automation, we can certainly package more at a much lower, let's say, unit cost. So we are in good shape to ramp up and I think it's only going to be better.


Andrew Semple

That's great. I appreciate the additional color. Thanks for taking my follow-up.

Niel Marotta

Thanks Andrew..

Operator

[Operator Instructions]. And at this time, Mr. Marotta, we have no further questions. Please proceed.

Niel Marotta

Okay. Great. Well, thanks everybody for joining the call today and we are going to go and get back to work and we look forward to speaking with you again probably in mid to late November when we release our third quarter results. Thanks everybody. Have a great day.

Operator

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.

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