Farmer Bros Co (FARM) 2020 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Farmer Bros Company Q3 Fiscal Year 2020 Earnings Conference Call.

(Operator Instructions)

I would now like to hand the conference over to your speaker today, [Ms.

Rachel Goldman].

Thank you.

Please go ahead.

Thank you.

Good afternoon, everyone.

Thank you for joining Farmer Brothers Third Quarter Fiscal 2020 Earnings Conference Call.

Participating on today's call are Deverl Maserang, President and Chief Executive Officer and Scott Drake, Chief Financial Officer.

Earlier today, the company issued its earnings press release which is available on the Investor Relations section of Farmer Brothers website at www.farmerbrothers.com.

The press release is also included as an exhibit to the company's Form 8-K available on the company's website and on the Securities and Exchange Commission's website at www.sec.gov.

A replay of this audio-only webcast will be available approximately two hours after the conclusion of this call.

The link to the audio replay will also be available on the company's website.

Before we begin the call, please note that all the financial information presented is unaudited and various remarks made by management during this call about the company's future expectations, plans and prospects may constitute forward-looking statements for purposes of the Safe Harbor provisions under the federal securities laws and regulation.

These forward-looking statements represent the company's views only as of today and should not be relied upon as representing the company's views as of any subsequent date.

Results could differ materially from those forward-looking statements.

Additional information on factors that could cause actual results and other events to differ materially from those forward-looking statements is available on the company's press release and public filings.

On today's call, management will also give you certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin and assessing the company's operating performance.

Reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures is also included in the company's press release.

I will now turn the call over to Deverl.

Please go ahead.

Thank you, Rachel.

Good afternoon everyone and thanks for joining us.

We hope you and your families are safe and healthy.

Scott and I are together in our Farmer Brother support center and are practicing social distancing with safety in mind.

On our call today, I'll discuss our response to the COVID-19 pandemic and how we are managing our business through the crisis.

And then, Scott will discuss our third quarter results in detail and provide an update on how we're managing our liquidity and capital during this time.

Then we will take your questions.

First, on behalf of our team here at Farmer Brothers, I'd like to express our deepest sympathies for those affected by COVID-19.

We appreciate the work being done by first responders, health-care workers and others on the frontlines fighting this global pandemic.

I also want to take this opportunity to recognize the efforts of our team members who are ensuring we continue to supply coffee and other products to our customers and consumers.

This is a challenging time and we appreciate their dedication.

As the COVID-19 outbreak was declared a global pandemic in March and state and local government here in the US began to issue stay-at-home orders and mandate closure of non-essential businesses, we move rapidly to address challenges and adapt out operations to new ways of working.

Our response to this crisis has been focused on three priorities.

First, protecting the health and safety of our employees and our customers.

Second, taking actions to preserve liquidity and support the long-term sustainability of our businesses.

And third, managing our business through this time which is meant supporting some of our customers who have faced unprecedented demand, as well as accelerating strategies that will enable us to quickly take advantage of new sales opportunities.

When there is a crisis like COVID-19, the power of our team working together under the absolute pressure that we must do something trumps change, management and culture.

We have had to make some tough decisions, but our team has come together as needed.

And I believe we will emerge as a stronger company once the country fully reopens and we see our DSD volumes start to return to pre-COVID levels.

The safety and health of our Farmer Brothers team members is our top priority.

In operating our business through the pandemic, we have followed guidelines issued by the US Centers for Disease Control and Prevention, as well as state and local health authorities.

Our team members working in manufacturing, distribution and other areas that require them to report to work on-site are following enhanced safety guidelines.

As appropriate by facility, these guidelines include a combination of facility cleaning, temperature checks, personal protection equipment, social distancing, staggered shifts to reduce the number of associates on-site at any given time, and self-quarantine if an associate or family member is sick.

In addition, we implemented remote workforce team members able to do so and suspended in-person meetings and visitors to our headquarters in other sites.

We've now become very good at video conferences and utilizing technology to communicate to all of our team members across the country.

Before I discuss the actions we're taking to support the long-term sustainability of our business and how we are managing our business through this time, I'd like to touch on our financial results for the third quarter.

We ended the quarter with our turnaround strategy in five key initiatives, continuing to show results.

Based on the results, we have achieved through January, February and early March, across both DSD and direct ship, we are on track to exceed our expectations and delivered adjusted EBITDA in excess of prior quarters, demonstrating that our key initiatives are working.

This quarter would have reflected our best adjusted EBITDA performance since the new leadership team and I took the helm at Farmer Brothers.

In mid-March however, COVID-19 pandemic began to significantly impact our DSD sales network, as our customer base had limited their operations or had closed their doors entirely in compliance with various federal state and local government restrictions.

As a result, we saw DSD decline very quickly by the end of March, with a single day peak of down 70% compared to pre-pandemic sales run rates.

The largest declines were from restaurants, hotel and casino channels, while demands from health care and convenience stores were less impacted.

As for our direct ship business, we experienced an increase in sales within our e-commerce and resell grocery channels, along with a favorable customer mix shift during the third quarter.

However, our direct ship sales declined in the quarter compared to the prior year period, due to lower coffee volume and impact of coffee prices from cost-plus customer.

Given the significant decline in sales, we took swift action to reduce expenses and preserve cash in an effort to help us navigate the current environment.

As announced at the end of March, we eliminated or reduced all discretionary expense as possible, including marketing, travel and entertainment, supplies of materials.

We reduced our workforce by 44% or over 600 positions across the organization, through a combination a furlough program and the elimination of certain roles.

We temporarily reduced the base salary of management team members and suspended our 401 K matching cash contributions.

Our executive leadership team members and I have taken a 15% reduction in base salary and the Board will forego its cash compensation for the quarter.

In addition, we are closely managing inventory and have reduced capital expenditures.

Scott will discuss this in more detail later.

On a combined basis, we expect all of our cost savings actions will reduce our monthly expenses by approximately $6.5 million per month, starting in April and beyond.

Of course, we will continue to closely monitor our expense structure and our sales levels going forward and make adjustments as needed.

At the same time, we are working to preserve cash.

We've also taken bold steps to accelerate strategies that will enable us to quickly take advantage of new sales opportunities presented in this process, while positioning Farmer Brothers to emerge as a better and stronger business.

We've been able to pivot extremely quickly making decisions and executing in days and weeks that would normally take 12 to 18 months.

Clearly, this has been amazing to witness and something I've not seen in my 33 years in business.

Importantly, we have accelerated our e-commerce initiative and expanded our grocery direct services via new digital platform.

As online and grocery sellers are prospering, we are exploring ways to offer our products to more consumer-facing retail methods.

We are actively working on systems to allow e-commerce sales both direct from Farmer Brothers and through marketplace sites and we are marketing and messaging more directly to consumers to build this business.

We will be enhancing our offering and capabilities with these newly acquired consumers, given the reality of the current and expected post-COVID environments.

We are also leveraging our coffee brewing equipment capabilities.

We currently operate the largest coffee and tea equipment service business in the country.

We continue to improve our service capability and build upon our competitive advantage and we are focused on stepping up capabilities in our branches and service center.

We're also planning to test non-branded trucks in order to service equipment for all businesses, regardless of whether they purchase our coffee and allied products.

Another area we are focused on is augmenting the presale and [Telcel] approach in our DSD business.

We have enhanced our business development strategy to build new customers through pre-sale and to call ahead to establish order needs through Telcel . This new approach allows us for rehiring of a dedicated selling team, early delivery drivers and related warehouse support that we anticipate being a higher selling and less costly structure than today.

As a country reopens and as we see sales opportunities, we look forward to bringing back team members who are furloughed or those former positions were eliminated to fill these roles.

Further, we are testing ways to serve consumers directly that are giving us insights into potential new sales channels once we are beyond the pandemic.

For example, we have established sales capability for branches and route pop-up direct sales to consumers.

Through last week, we have generated over $330,000 in sales since we began the project and continue to see sales rise each week, as we have all the models.

It is clear that we are tapping into consumers that have never known our brand and are excited to purchase our great selection of quality coffee, tea spices and other culinary products.

In addition to these ways that we have pivoted our business, we're continuing our efforts to execute the key initiatives I've outlined on past earning calls.

Let me walk through a couple of our major initiatives.

For example, we continue to de-risk Houston by rebalancing volumes across our manufacturing network, with the goal of optimizing our production capability and assets.

During the pandemic, we have fully operationalized a new retail packaging line and we'll soon have an additional three lines up and running in DFW with an additional 13 million pounds of packaging capability.

We have also utilized the time to begin the installation of an additional roaster and three lines to further enhance the build out of the DFW roasting facility.

We've also completed the full analysis of opening of a West Coast distribution facility.

As we have previously reported, 40% of all of our customers are located in the Western US and we believe major transportation and distribution savings can be obtained by opening a West Coast distribution facility.

We also remain focused on enhancing our demand planning and sales forecasting with the goal of improving our inventory levels and scrap expense.

A new branch ordering tool has been developed as a result of the project.

These initiatives as discussed before, will allow us to enhance our operational efficiency and cost structure of the business on an ongoing basis.

We look forward to telling you more about them and savings we believe can be achieved in the coming quarters.

While it is difficult to forecast the future given the uncertainty presented by COVID-19 and we're not in a position to provide guidance, I'd like to provide some color on what we've seen in our business to-date in the fourth quarter.

As I mentioned, demand deteriorated DSD in March at point that was 70% below pre-COVID level.

However, last week we saw improvements for the first time in daily and weekly sales results since the outbreak began.

The first few days of this week, we have seen a DSD system sales decline of 59% and 57%, with markets that have just recently opened only experiencing a 50% decline.

These are the best numbers we have seen since the peak of the pandemic.

We fully expect these numbers to dramatically improve as the country reopens in the coming months.

Additionally, direct ship for e-commerce is 7 to 8x normal volume with retail grocery achieving 4 to 5x normal volume.

We have yet to see the return of normal volumes for convenience stores and quick service restaurants to pre-COVID levels.

I look forward to being able to provide updates on our performance and continued progress in our initiatives on future earnings calls.

With that, I'll now turn the call over to Scott for a more detailed review of financial results.

As you know, Scott joined Farmer Brothers as Chief Financial Officer on March 23rd.

He has hit the ground running as we have addressed the COVID-19-related challenges.

We are pleased to have him join Farmer Brothers and bring his financial expertise and knowledge of the food and beverage and retail industries.

He is already making strong contribution to our team and business.

Scott?

Thanks, Deverl.

I'm pleased to be joining the Farmer Brothers family.

As Deverl acknowledged, this is a very difficult time for the company and for the country as a whole.

That being said, I'm extremely encouraged by the prospects for Farmer Brothers and the talented team here.

The dedication and strength that I've seen in the face of this unprecedented crisis is inspiring and I'm confident we will navigate this trying time and emerge a stronger organization that will excel at meeting the needs of our existing and new customers in many improved ways.

Now let me walk through our third quarter results beginning with coffee volumes.

Volumes in this quarter decreased by 2.2 million to 25.7 million pounds, a 7.9% decrease over the prior year period.

I will talk more in a moment on the drivers for this decline.

The mix of coffee volumes processed and sold during the quarter was approximately 8.4 million pounds or 32.5% of the total volume through our DSD network while direct ship customers represented approximately 17.1 million pounds of green coffee processed and sold or 66.4% of total volume.

Approximately 300,000 pounds or 1% of the total volume was through distributors.

Turning to the income statement.

Net sales for the quarter were $129.1 million which is a decrease of $17.5 million or 12% from $146.7 million reported in the same period one year ago.

The decline in net sales was driven primarily by lower sales of coffee, beverage and allied products sold through our DSD network due to the COVID-19 pandemic, as well as the sale of our office coffee business in July 2019 and net customer attrition.

As Deverl mentioned the impact of the pandemic on DSD revenues by the end of March 2020 was a decline of approximately 65% compared to pre-COVID sales run rates which peaked a few points higher during April and are now showing signs of recovery.

The largest DSD revenue declines were from restaurants, hotels and casino channels while demand from health care and convenience-store channels were less impacted.

Our direct ship sales declined compared to the prior year period due to lower coffee volume and the impact of coffee prices for our cost plus customers partially offset by favorable customer mix shift.

At the same time, volume from our retail business and key grocery stores under their private labels as well as third-party e-commerce platforms have seen significant increases as Deverl mentioned earlier, as the general public has self-quarantine during the pandemic.

Gross profit in the third quarter of fiscal 2020 was $37.9 million, a decrease of $2 million or 4.9% from the prior year period.

The fact that gross profit declined at a lower rate than our sales speaks to the efficiency improvements in our business and is the reason the gross margin increased to 29.4% from 27.2%.

The increase in gross margin was primarily driven by lower reserves for slow-moving inventories, lower freight costs, lower coffee brewing equipment costs and improved production variances.

Turning to operating expenses.

Operating expenses in the third quarter of fiscal 2020 were $83.1 million or 64.4% of sales compared to $46 million or 31.4% of sales in the prior year period.

Operating expenses in the third quarter of this year reflect impairments of goodwill and intangible assets of $42 million which were associated with our annual impairment test as of January 31, 2020, adjusted further by the impact of COVID-19 which reduced the fair value of certain intangible assets.

Outside of these impairment charges, our cost structure demonstrated declines in spending as compared to the prior year period.

Selling expenses decreased by $2.5 million primarily driven by efficiencies realized from DSD route optimization, lower DSD sales commissions and travel expenses.

General and administrative expenses also decreased by $2.5 million due to reductions in third-party costs, lower headcount, the absence of Boyd coffee integration costs and a one-time credit for employee incentive costs due to the reversal of the fiscal 2020 management incentive compensation accruals.

These cost reductions were partially offset by COVID-19 related severance costs.

Interest expense in the third quarter of fiscal 2020 decreased $500,000 to $2.5 million compared to $3 million in the prior-year period, largely due to lower pension interest expense and less borrowings on our credit facility during the quarter.

Better working capital management matched with the sale of some owned real estate has led to a decline in our borrowings compared to a year ago as of March 31.

Continuing with items recorded in other income, in March 2020, we announced the termination of our post retirement medical benefit plan effective January 1, 2021.

The announcement triggered a remeasurement and resulted in a curtailment gain of $5.8 million in the current quarter.

Other net in the third quarter of fiscal 2020 increased $600,000 to $1.1 million in the quarter compared to $500,000 in the prior-year period, primarily due to the lower mark-to-market net losses on coffee-related derivative instruments not designated as accounting hedges.

Turning to income tax.

We reported an income tax benefit of $1 million in the third quarter of fiscal 2020 compared to an income tax expense of $43.2 million in the prior year period.

The tax benefit is primarily due to the previously recorded valuation allowance and change in our estimated deferred tax liability during the three months ended March 31, 2020, compared to the prior year period which reflected the impact of the reassessment of our deferred tax valuation allowance.

Net loss was $39.8 million in the third quarter of fiscal 2020 compared to the net loss of $51.7 million in the prior year period.

Net loss available to common stockholders was $39.9 million or $2.32 per common share on a diluted basis in the third quarter of fiscal 2020 compared to a net loss available to common stockholders of $51.9 million or $3.05 per common share on a diluted basis in the prior year period.

Adjusted EBITDA was $6.6 million compared to $4.5 million in the prior year period.

Our adjusted EBITDA margin increased to 5.1% for the quarter compared to 3.1% for the third quarter last year, which again speaks to progress that was being made in the business before the impacts of COVID-19.

Now, turning to the balance sheet.

Overall, we've continued to strengthen our financial flexibility by reducing our net debt levels and managing our working capital more efficiently over the last 12 months.

At the end of the quarter, we had $26.4 million in cash and $80 million borrowed on our revolving credit facility or $53.6 million in debt net of cash.

This compares favorably to debt net of cash of $110.8 million at March 30, 2019.

Our debt, net of cash continues to decline quarter-over-quarter and is the lowest it's been in the last several years due to asset sales, better operating performance and better working capital management.

During April we took two draws on our credit facility to borrow an additional $42 million on our $125 million revolver which brings the total amount outstanding on our revolver to $122 million.

This was done in order to preserve financial flexibility in these uncertain times.

Subsequent to the draw, we now feel well equipped with over $65 million of cash and cash equivalents to best support our customers and improve our business model for the long term in the face of the current challenges that COVID-19 presents to us and our customers nationwide.

During the quarter, our accounts receivable balance decreased $9.5 million to $50.9 million compared to $60.4 million at the end of the second quarter and was down $14.9 million from $65.8 million at the end of the prior year period.

Overall, our aged receivables have improved causing our bad debt reserve to decline since June 30, 2019.

Our inventory levels increased slightly during the quarter by $800,000 to $85.9 million compared to $85.1 million at the end of the second quarter and are down $14.5 million from $100.4 million for the prior year period.

Accounts payable decreased during the quarter to $59.6 million compared to $59.8 million at the end of the second quarter and is down $3.2 million from the prior-year balance of $62.8 million.

Turning to capital expenditures.

CapEx for the third quarter was $4.1 million of which $3.2 million related to maintenance spending.

Our maintenance CapEx has declined $1.2 million from $4.4 million a year ago, primarily due to lower plan spending on new coffee brewing equipment and an increase in our use of refurbished coffee brewing equipment, which has a lower cost per unit.

Depreciation and amortization expense was $7.3 million in the third quarter versus $7.6 million in the same period of the prior year.

We expect CapEx for the remainder of the year to be $4 million to $6 million, which will be predominantly spent on impactful near-term initiatives as Deverl mentioned around derisking our Houston production facility and technology that enables us to better serve our customers online and their locations and in our branches.

We anticipate our depreciation and amortization expense will be approximately $7.2 million to $7.4 million for the final quarter of fiscal 2020 based on our existing fixed asset commitments and the useful lives of our intangible assets.

We expect minimal accrued income tax expense and cash payments in fiscal 2020.

We believe the steps we are taking will enable us to weather these turbulent times.

And with that, I'd like to turn the call back over to the operator for any questions.

(Operator Instructions) Our first question comes from Gerald Sweeney with ROTH Capital.

Deverl and Scott, I appreciate you taking my call.

You obviously gave a lot of detail there in the opening remarks.

I wanted to discuss direct ship a little bit.

Obviously, if the direction on DST but on direct ship, I don't know how much detail you would like to get into but just trying to figure out how much e-commerce and retail are maybe prior to the pandemic.

Just trying to get a better gauge on how some of these national accounts are doing.

I'm in Philadelphia.

Dunkin' Donuts are closed, McDonald are closed, other fast-food restaurants are closed.

There could be that store is up serving coffee or (inaudible) behind the counter and you had to ask for it.

So just trying to figure out how these larger accounts doing in the quarter so far.

Sure.

Thanks, Gerry.

Between Scott and I will try to give you as much color on this as possible.

Here's what I would say.

When you look at e-commerce and you look at retail grocery and you heard in our comments that we had a pretty substantial increase in e-commerce 7 to 8x what the normal run rate was free.

You heard us talk about retail grocery fortify.

What that actually did is it made up the difference for all the other elements of direct ship.

So when you talk about QSRs and you talk about convenience.

Convenience was plugging along pretty well at the beginning of the pandemic and then we saw it decline when they realized that they needed to serve behind the counter.

Some moved to that, some just cut off their coffee and tea out in the convenience area.

It obviously had a follow-up component on the actual volume for convenience stores.

However, any place that we service and we have some direct ship customers, as you know that service the industry on an RTD extract beverage component and we their roast coffee and ship.

That volume was also up.

So, net of all of it we saw at times 10% to 20% overall gain and then we have the offset from the others.

As we're seeing a comeback, -- we're still seeing -- we've got a lot of orders backed up, part of the retail line that we put in and the reason we rushed to get that line fully operational in literally inside a few weeks.

We've been producing on that line 24/7.

And so what's good is we have that capability with that line that was basically completed.

We just needed to operationalize it, and that's out.

So we had a nice balance out.

To get to your direct question on overall direct shift, pre COVID levels, as you know, we were reporting direct ship volumes from 1% to 2% over prior year.

So, we are going to continue to watch this area well, and I'll turn it to Scott for any other comments that he may want to make, as it relates to that specific question.

Yeah, thanks Deverl.

I think Deverl did a nice job covering the gives and takes that are within the space.

I think the only real thing that I would add is that our direct ship customers, the majority of those customers are on a cost plus type arrangement on their pricing.

So when you look at the pricing and the revenues for that segment, I kind of go back and look at the coffee market movement over the period as well.

If you look at the end of the calendar year, the coffee market pricing was quite a bit higher than at the end of the quarter, and the decline of just coffee markets were about 8% to 11%.

So I think that's another factor on just when you look at the pricing that was a factor across that segment as a whole of those cost-plus customers.

Got it.

And then shifting to margins.

I think you mentioned about $6.5 million of cost take out on a monthly basis, which is quite substantial.

Trying to figure out how much of that -- you're hitting a lot of different component -- I suspect some of that is in the cost of goods sold versus SG&A and I'm just trying to figure out what happens to margin with the lower absorption of overheads and then the positive is the cost outside.

Maybe could you walk through that a little bit if we can get a little bit more detail?

Yeah, Gerald.

As you see obviously the product margins expanded a little bit due to the lower reserves on slower moving inventories, the freight, the CVE, and some of the product variances that we had.

But I think if you follow that through the P&L and get to the full margins, you're right.

The saving -- some of those savings are impacting margin because it does come through in cost of goods, some of the efficiencies from the plants and distribution.

But it really is marked down the entire P&L where these savings are, so a couple of things I would point out is that the majority it is payroll related in some way, not the vast majority, but it's certainly a majority and that comes through with the headcount that's either been terminated a furloughed, also just you have the natural decline in some commissions and bonus programs that come with that.

And then the specific actions we took to reduce salaries.

There has been 401k matches, et cetera.

There's been a lot of other actions reducing temporary labor and that goes for the home office here, the store support center as well as out in our different branches and production facilities.

But as you go through, there's a lot of other direct costs that I look at that are related to volume declines, kind of volume metric.

So if you go through that you get into all the different the production cost, the freight, the fleet, obviously with the coffee brewing equipment, the CVE segment.

We're slowing down on service cost of parts and accessories there as well as the marketing the T&E, those controllable.

So part of the difficulty in getting to what that margin is really going to fall out is that as you take these actions, employees are a good example.

A lot of employees are still using and we're supporting them a medical costs and they're also now going through their vacation pay.

So that vacation pay is going to continue to show in our P&L, until they exhaust their vacation balances and then that will change these metrics a little bit as well.

But I think overall it's just tough to overcome that top line hit and the sheer dollars you're going to add that we should certainly see improvements within the margins, both product margin and our cost margins.

Got it.

That's helpful.

And then I missed, I think you went through some metrics, you're obviously working on the working capital side, and I didn't hear what you said on the inventory side, just taking a bunch of notes.

But I'm assuming inventory was down and what is sort of a good inventory number for you guys to have as you work through the pandemic?

Obviously it's going to change as we come out of this, but what is sort of an appropriate number, if you can discuss that?

I think that Deverl may have some thoughts on the number of longer term as well, but actually when you look at inventory, versus last quarter, I think as a micro-storing inventory a macro-storing inventory.

So last quarter was actually up slightly, was up just a few hundred thousand dollars.

It's kind of the micro-storing as we the pandemic started to impact.

The inventories that they flow through our system, but on a macro level, it was over $100 million last year at this time.

So it's come down about 15% year-over-year and my thoughts on the long term are you're also -- as you, derisk Houston and you get your production facilities where you want them, and you get them optimized.

I think that'll help inventories in the long term, but I also think it's just hard in these times of -- as we walk through the different customer types that we have and channels we have, with the different behaviors, some are up substantially summer pretty flat, others are down substantially.

That's a tough environment to really have your inventories right.

You just want to make sure you can be there for people with the products they need, so I think that's the focus near term, but I think it should continue to improve.

Only other comment I'd add to that Gerry is we, there is a pandemic, we got a pretty quick view after the first 2 days and then the first week.

We immediately cut off supply of all inbound goods.

We started assessing how much inventory we had, and more importantly, we've taken this opportunity where we've -- we went to full make to -- make the order only versus make the stock, so we could work that down.

You heard us talk about the 330,000 as of last week, in regards to selling our inventory both that was distress.

So, we first started those programs for pop ups and branches from a distressed perspective and then we started moving into new inventory versus distressed inventory and also servicing all customers with product coming out of warehouses that were enabling us to bring down the inventories and not ordering anything else.

Got it.

I think long term and inventory, we still see it as an opportunity.

If you go back to Chris' time here, he started inventory program.

I continue that work with the team.

We believe there's a lot of opportunity.

We're going to get better visibility on our WMS that we're implementing and continue to drive down route branch in DC inventories.

Got it.

I appreciate it.

I'll jump back in line.

Thanks.

Thank you.

(Operator Instructions) And speakers, I'm showing no further questions in the queue at this time.

I'd like to turn the call back to the speakers for any closing remarks.

Thank you.

As we navigate through the uncertain period.

We will continue to prioritize the health and safety of our team members and customers as well as take actions to support the long-term sustainability of our business.

We are thankful to our dedicated team members who have demonstrated remarkable commitment and courage during this global pandemic.

We strongly believe the strategic actions we are taking as a company will position us for success when the nation begins to emerge from the state of crisis.

We appreciate you calling in today and thank you for your continued interest in Farmer Brothers.

Ladies and gentlemen, thank you for your participation on today's conference.

This does conclude your program and you may now disconnect.