Lifecore Biomedical Inc (LFCR) 2015 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Landec third-quarter fiscal 2015 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. (Operator Instructions) As a reminder, today's program is being recorded.

I'd now like to introduce your host for today's program, Mr. Gary Steele, Chairman and CEO of Landec Corporation. Please go ahead.

Good morning, and thanks for joining Landec's third-quarter fiscal 2015 earnings call. I have with me today Greg Skinner, Landec's Chief Financial Officer; and Molly Hemmeter, Landec's Chief Operating Officer.

During today's call, we may make forward-looking statements that involve certain risk and uncertainties that could cause actual results to differ materially. These risks are outlined in our filings with the Securities and Exchange Commission, including the Company's Form 10-K for fiscal 2014.

We experienced continued growth in our third quarter, with consolidated revenues increasing 10% year-over-year, driven by a 90% growth in sales of our Eat Smart superfood products at Apio, our food business. Overall revenues in Apio's value-added vegetable business increased 21% due to increased same-store sales as well as penetration into new retail grocery chains. The growth in our superfood product line resulted in a favorable product mix change that led to a 34% increase in gross profit in our value-added food business and a 44% increase in Apio's operating income during the third quarter versus last year.

Overall operating income in the third quarter was consistent with guidance for the quarter and included expected lower sales of higher-margin fermentation products at Lifecore Biomedical. As we have previously reported, we experienced a one-time inventory reduction by one of our Lifecore's long-standing customers, resulting in a greater than 50% reduction in shipments to that customer during the third quarter compared to the third quarter last year. We do expect orders from this key customer to return to historical levels during our new fiscal year 2016, which commences in June.

Let me turn it over to Greg to report more details of our financial results.

Thank you, Gary, and good morning, everyone. We reported yesterday that revenues for the third quarter of fiscal 2015 increased 10% to $138.5 million from $126.4 million in the year-ago quarter. The improvement was primarily due to a 21% or $20 million increase in revenues in Apio's value-added business, which includes its Eat Smart fresh-cut specialty packaged vegetable business, Apio Cooling and Apio Packaging.

This increase in revenue was partially offset by a 27% decrease in revenues at Lifecore, due primarily to expected lower sales from a one-time inventory reduction by a key customer, and by a 23% decrease in revenues in Apio's export business, primarily due to the West Coast Longshoremen's labor dispute.

Net income in the third quarter of fiscal 2015 was $3.8 million or $0.14 per share compared to $6.4 million or $0.24 in the year-ago quarter. The decrease was primarily due to a $5.6 million decrease in operating income at Lifecore, primarily from lower shipments to a key customer from a one-time inventory adjustment by that customer, and from a $793,000 write-off of the Company's equity ownership in Aesthetic Sciences.

These decreases in net income in the third quarter were partially offset by 44% or $1 million increase in operating income at Apio, due primarily to increased revenues and a favorable product mix shift to higher-margin superfood products, and from a $1.7 million increase in the change in the fair market value of the Company's Windset investment.

For the first nine months of fiscal 2015, revenues increased 14% to $404.8 million from $355.9 million in the same period last year. The increase was primarily due to a 21% or $54.6 million increase in revenues from Apio's value-added businesses and a 3% or $1.8 million increase in revenues at Apio's export business. These increases were partially offset by a 20% or $7.6 million expected decrease in Lifecore's revenue.

Net income in the first nine months of fiscal 2015 was $9.3 million or $0.34 per share compared to $14.6 million or $0.54 per share in the first nine months of last year. The decrease was primarily due to, first, a $7.6 million decrease in operating income at Lifecore; second, a $4.6 million decrease in the change in the fair market value of the Company's Windset investment; and third, a $793,000 write-off of the Company's investment in its Aesthetic Sciences. These increases -- these decreases in net income in the first nine months of fiscal 2015 were partially offset by a 46% or $4.9 million increase in operating income at Apio and a $2.6 million decrease in income tax expense.

Landec ended the second quarter with $15.7 million of cash, which was a $1.5 million increase from fiscal year of 2014. During the first nine months of fiscal 2015, Landec generated $13.4 million in cash flow from operations and increased net borrowings by $15.4 million. These increases in cash were offset by the Company's increasing its investment in Windset by $18 million and spending $10.2 million in capital expenditures, primarily for capacity expansion. As of March 1, 2015, the Company had $26.1 million available under its lines of credit.

Let me now turn the call over to Molly.

Thank you, Greg. We continue to experience growth in Apio's value-added packaged food business as consumers seek out easy and delicious ways to eat healthy and add more vegetables to their diets. The growth in Apio's value-added business is being fueled by Apio's Eat Smart salad kit products, which contain a variety of superfoods. These products are currently being sold to over 100 club, retail and food service customers throughout North America.

For the first nine months of fiscal year 2015, this new product platform has reached an average weekly run rate of $2.2 million in revenues, with gross margins more than double that of our historical core products. We continue to meet our commitment of launching an average of at least one new product each quarter. During the first nine months of fiscal 2015, we added three salad kits to our lineup -- the wild greens and quinoa salad, the roasted yam salad, and the beets and green salad.

We plan to launch our fourth salad kit for this fiscal year this month, starting with Costco Canada. We estimate the North American salad kit category, including both retail and club stores in the US and Canada, to be approximately $1.1 billion, measured in consumer retail dollars. Although the Canadian salad kit market is much smaller than that of the US, Eat Smart salad kits have experienced incredible growth in this market, and are driving growth of the overall salad kit category in Canada.

Eat Smart has an estimated 12% share of the North American salad kit market, including both retail and club stores, up from zero just under three years ago. Consumer awareness of our superfood products continues to grow. During the first quarter of fiscal year 2015, we launched the new EatSmart.net consumer website that is compatible with mobile phones and tablets.

In November 2014, we started a three-month online advertising and social media trial in 11 states throughout the northeastern and mid-Atlantic regions of the US to raise awareness of Eat Smart among consumers and to incent consumers to purchase our products in-store. The final result of this trial were extremely positive. In retail stores throughout our advertising geography, Eat Smart products experienced a sales lift of 20% as a direct result of the Eat Smart online campaign. Even more encouraging, Eat Smart products have experienced a sustained lift of 17% in the four weeks following the trial's completion in the same retail stores.

Due to these positive results, we plan to expand the Eat Smart online consumer campaign during fiscal year 2016. In parallel with the focus and growth of our salad kit products, we have started to phase out specific lower-margin core vegetable products and selectively seek price increases for other core vegetable products. We expect to begin seeing results of these efforts in fiscal year 2016.

Revenues in our core product lines may decline slightly as a result, but Apio's gross margins should be enhanced longer-term. Along with growing the sales of our higher-margin salad kit products, we believe margin enhancement in our core Apio business is essential for the long-term growth and profitability of Landec.

Apio is the innovation leader in the packaged fresh vegetable category. We invest in gaining a deep understanding of consumer trends, and strive to offer consumers easy and delicious ways to make vegetables an important part of their diet. The results of these investments are showing. Through the first nine months of this fiscal year, approximately one-third of Apio's value-added sales are being generated by new products that Apio has launched within the last three years. We are committed to continuing to invest in new product development so that we can offer fresh, easy and delicious ways for consumers to eat healthy every day.

Let me turn it back to Gary.

Thanks, Molly. Increasingly, our focus going forward will be on margin improvement in our food business. You will note that through our first nine months, the gross margin in Apio's value-added vegetable business increased 100 basis points from the prior year. Margin improvement over the next 24 months will come from product mix changes focusing on higher-margin salad kit products, from operational cost reductions driven from capital expenditures to improve plant productivity, and from selective price increases where possible and where appropriate.

We may sacrifice some revenues doing this period of time in order to improve margins. As we enter the fourth fiscal quarter, we expect a strong finish in Apio's value-added business, generating good momentum into fiscal year 2016, which starts in June. Looking to fiscal year 2016, we expect substantial growth at Lifecore, continued growth in Apio superfood products, and continued increases in the value of our Windset investment. We will be able to give specific guidance for fiscal year 2016 during our year-end fiscal 2015 earnings report and conference call.

Based on preliminary estimates for fiscal year 2016, altogether, we believe consolidated revenues, excluding the $9 million of revenues from the extra week in fiscal year 2015, could grow up to 10% in fiscal year 2016 compared to this fiscal year, with preliminary estimates of net income increasing approximately 60% to 75%. Keep in mind that we are just in the middle of our budgeting process and this process is not at all complete.

Our capital allocation priorities over the next 24 months are, first, to continue new product development of our salad kit product line at Apio, with a launch of one new product per quarter on average. Second, expansion of our Hanover, Pennsylvania food processing facility; and third, investments in facility productivity improvements in all three of our Apio processing facilities, and further capital investment and expansion at Lifecore.

As a result of these priorities, we expect capital expenditures to more than double in fiscal 2016 compared to fiscal year 2015. Landec's focus is on developing market-leading and innovative healthy living applications within the food and biomedical markets. We believe our products are on trend with North American consumers who are increasingly equating healthy and -- eating healthy and living healthy, allowing us to execute on our strategy to continue to grow revenues, with a greater emphasis on increasing margins across our businesses.

We are now open for questions.

(Operator Instructions) Tony Brenner, ROTH Capital Partners.

Two topics. First of all, Molly, your website indicates that there are a total of 11 superfood kits in the marketplace. You talk about -- or the release indicates there were only seven. There were six salad kits on the website, not five; and three slaw kits, whatever those are. What's the difference?

Oh, that's because you are including the slaw kits. So we have different product lines. We look at our salad kits that are slaw kits as a separate product line than our vegetable salad kits that are based on superfoods.

Okay. But the website includes six salad kits and you talk about there only being five.

Sometimes we have different varieties of the same one. I'd have to look at what's on the website right now.

You stumped us Tony. We'll look at it.

We've got two SKUs of wild greens and quinoa, for example. With wild greens and quinoa, we have an avocado dressing version, and we also have a strawberry version that is in Costco. So that can make the difference. We also have -- the other difference is ginger bok choy, our Asian salad.

And sesame bok choy. That's probably --

And sesame bok choy --

-- that's probably the difference.

-- is just a variation on ginger bok choy that we sell only to Publix, because they had a specific request not to have peanut. So we have some of those where we do a special SKU that is a variation on an existing SKU. And when I'm talking on these meetings, I'm only including the core SKUs, not all the variations.

Okay. And what are the slaw salad kits?

We've had those for many, many years at Apio, and they've been very successful over the years. We have three of them -- a broccoli slaw kit, a salad kit; we have an Asian salad kit; and we have a chipotle salad kit. They've probably been out for 15 years or so (multiple speakers) --

But that's not considered a superfood kit?

They are very separate from the superfood. And we have a different positioning, and the superfoods are more taking the concept of the slaw salads, but these are more on-trend with current vegetables and current kind of health concerns that consumers have.

Got it. Thank you. The other question concerns Windset Farms. Your guidance previously was for a total contribution of $8.5 million to $9.5 million, including dividends. It looks like you're going to be between $1 million and $2 million short of that for this fiscal year.

There is no incremental capacity that comes into play this year. So presumably, the difference is that Windset has fallen short on its expectations for revenue and earnings growth. I wonder if you can elaborate a little on that?

Sure. I'll -- this is Greg. It's not so much that, Tony. It's the fact that we just received, for the first time in 15 months, updated projections from them in February. And we've given everyone a heads-up for some time now that we were expecting new projections, and based on those new projections, it could change our projections -- and they have.

But the primary reason is that we had certain expectations in our guesstimates on when new expansions, one of which is in Nevada, we've mentioned that, a greenhouse that they purchased in Nevada would come online. That's been delayed about six months due to permitting and other issues. And then a new technology, new technique, for growing new crops at a much lower cost than glass greenhouses in California.

That is going to start later than we had originally expected. And it's going to start small, which makes sense, because you've got to have a proof of concept, and then grow from there.

So, the combination -- those are the primary changes to the projections we were using before to the new ones. And, as a result, we do expect that the fair market value change is going to increase next year. We expect that increase to be higher than the increase this year. It's just going to be lower than what we had been anticipating three to six months ago.

So the delay in the Nevada greenhouse permitting is affecting this year or next year? Or both?

Well, primarily this year, because we thought this would start up in June originally. It's now going to -- it's now looking more like January of next year.

So that one affects -- that one can affect this fourth quarter, and then the modest (multiple speakers) --

How does it affect the fourth quarter if you thought it would come on in June?

Well, the -- you've got to understand how -- and I don't think this is the forum to go through this level of detail -- but the fair market value is based on a cash flow concept. So (multiple speakers) --

Okay, I've got it. I understand.

All right.

Don't go through it.

Enough said? Okay.

Yes, thank you.

Windset's core business is doing well, Tony. It's the timing of these projects.

Got it, thank you.

Morris Ajzenman, Griffin Securities.

A follow-up to Tony's question there. I don't know if you'll comment that we have two facilities up and running for Windset. And this past year, we took a course to get things operationally up to, I guess, optimum speed, so to speak. Are you prepared to comment on this next fiscal year as far as new expansion at this point for Windset?

Repeat what you just said.

Yes, I guess I'm, well, a little confused on your question, I mean, Morris. Exactly what are you asking?

The expansion that we foresee for them in the next year is what Greg just talked about. Nevada and this new approach with a lower capital that's going to be a totally new project, new expansion in California, new targets, a different greenhouse approach, still using their know-how and their proprietary hydroponic approach. So those are the two expansion areas in this next fiscal year.

Okay. So what I was referring to is Santa Maria, there's nothing on the calendar for fiscal -- this coming fiscal year, Santa Maria -- that's what I was referring to.

Yes. No, the new capital -- the new technology approach, the new target project, that's in California. That's contiguous with their Santa Maria huge operation. So it's right next door.

Oh, this is contiguous -- okay, fine. Okay, okay.

But there's no plans for large glass greenhouses in their current projection for this next year.

Got you. I guess a question for Molly. I look over the last couple of quarters, and the first fiscal quarter when you talk about Eat Smart, the superfoods, you talk about a $1.5 million per week run rate or, if you annualized that, $78 million. The last quarter, second quarter, was up $2 million with $104 million run rate. Now it's $2.2 million, $150 million run rate.

(multiple speakers) What sort of rate can that increase to over the next handful of quarters? I mean, do you have anything you kind of want to share with us -- what sort of growth you see that continuing that?

Hi, Morris. First, just to correct your math, with the $2.2 million run rate, if you multiply that by 53 weeks, I think you should get about $117 million for this year. So we should be at about that run rate -- that for this year annually.

As far as future growth, we're going to keep launching products. We have a great new product coming out this quarter that we are very excited about. We're going to test it with Costco Canada and see what the consumer response is. And we have plans to continue to launch at least one new product per quarter.

So, I think we've done our research. I think we've already been pre-selling these products to key accounts, so I think we'll get the distribution. And the growth is going to depend on the consumer, and how well-received they are and if they turn. So, we are going to be doing our marketing campaigns that I talked about online to get the word out to consumers and raise awareness, and let them know about these new products. And the amount of growth will determine the velocity we see in-store.

Let me ask a little differently then. The capacity you brought onstream and you've done things to tweak, what's the available capacity for this particular category, the Eat Smart, the superfood product line?

Let me tell you we have at least enough capacity to get us to $200 million in revenue for the superfoods. And we are building more. And for that -- that should make us through for the next year as we are building more capacity. I think we talked last quarter about the capacity we are expanding in Hanover.

Did that answer your question?

So --

Did that answer your question?

Right. So for the next 12 months, is it fair for us to look out, 12 months out, and that capacity would be fully utilized? Or is that conjecture on my part?

That's conjecture.

I think that's conjecture on your part.

Are you comfortable with that conjecture?

Yes.

Yes, we don't know yet, Morris.

We want to build to the upside in case some of these products really take off with the consumer, like our Sweet Kale Salad did. We want to build for that. But we want to make sure we have the capacity we need, but I would not plan on that, all that capacity for next year. I think the guidance is more along with what Gary talked about for next year.

One last question and I'll get back in queue. Going back to Lifecore biomedical, I guess there is inventory reduction by your one large customer. Clearly, you stated in the press release and on the call here that you expect that to resume to normalcy as of June 1. I presume that's with close conversations with this customer.

Are there any other nuances we should be aware of, both positive and negative, as we look out to fiscal 2016 for Lifecore?

The positives are that we are darn confident that that customer comes back in normal ordering patterns. And the other is that we've been working with a partner company to help them formulate and manufacture their products for a therapeutic application, pharmaceutical therapeutic application, that -- they are in clinical studies. And so far, it's going well.

They tell us that their plans to submit to the FDA are on track. And hopefully, this will have a positive impact on Lifecore in its second-half fiscal year FY16. And it's -- you know it's a substantial program and they are a good partner. And we -- they've been doing a very large clinical study. And they are about to wrap up and conclude that study, and then look at the data. And then, based on that, submit to the FDA.

So, we are hopeful that that program continues on track and has an effect on us in the second half of fiscal year 2016, and then in FY17 really be substantial. It would be quite material in 2017 and 2018.

Thank you.

Thank you.

(Operator Instructions) Mitchell Pinheiro, Imperial.

So what was the rate of growth in the last quarter of the non-Eat Smart value-added Apio sales?

Okay, wait a minute, the non-Eat Smart -- oh, you mean like private label?

Well, yes. So everything in your value-added category other than Eat Smart.

Wow, you got me. (laughter)

Well, I guess what I'm asking is, you were also talking about earlier about you're going to sacrifice some revenue to improve margins. You also talked about phasing out some lower-margin veggie. So, if you are going to grow next year, like the value-add side, 10% on average, is that 10% minus 3%? Or is that 12% -- you know, 13% minus 3% to get to 10%? And what was -- and how is it performing now?

Let me try this. Molly, do you want to try? Because if I'm understanding, we have this high-growth superfood category; as you know, we have numbers in the release and in our comments about the enormous growth of that program. But it wouldn't be unrealistic as we go in -- we are in this budgeting process -- it wouldn't be unrealistic that we have score veg line that has nothing to do with superfoods.

And it wouldn't be unrealistic, given what I said about looking for some pruning, looking for some price increases, it wouldn't be unrealistic to see that core business flat.

Okay. And -- okay.

(multiple speakers) And then that 10% would be driven by the growth in superfoods, which would be 25%-ish -- you know, in that ballpark.

Okay.

Does that answer your question?

Yes, it does. And then just -- and the superfood -- the $2.2 million a week is why you are at a run rate now of about $115 million. Is that correct?

That's right.

Right.

Okay. All right, that was helpful. And is it just going to be sort of normal ordinary business quarter by quarter we'll see some pruning if there is any? Or does it come in chunks?

I think it should be pretty normal business unless we have a single customer that we hit, that's a large customer that comes in chunks. I cannot say I'd know that right now. But I don't think it -- I think it should be pretty much quarter-on-quarter like this year.

And these are the same accounts you've been talking about for a while, that --?

Yes.

Okay. Okay.

And Mitch, just to expand on it a little bit, we've -- in our core business, not the superfood business, we've talked for several years now about margin compression, the costs going up, difficulty in raising prices, yada yada yada. Then -- so we've been focused on product mix changes. But it's time to, really, pass on some of these costs.

And so, we have this cost reduction effort, productivity improvements, but we are going to have some price increases. And it's possible that there could be a chunk -- meaning there could be a sizable customer that is just real unhappy, and it's -- it involves only our core lower-margin business. And they could walk. And we're -- you know, you've got to be prepared for that.

And like how low of a margin -- when you say your lower-margin stuff, is that (multiple speakers) one-third of your average? Half your average?

No, it's -- it'd be half your average.

Okay, okay. Okay, that's helpful. The second thing -- question for Molly is -- so you've been doing a great job with one new product a quarter, but is that cadence really necessary? Is it -- I mean, what -- eventually, obviously, one new product a quarter, you hope it continues to -- you know, you keep on adding your shelf space. I get that.

But does it, A, complicate maybe the supply chain, so to speak? And are you getting -- will you have to remove -- is it just a matter of culling the bottom end? Is that what you are doing with these one new product? And does it costs a lot of money to introduce these new products? So is there a risk -- not a risk, but some earnings loss or hit by a bad new product?

Well, I think to answer your last question first, there is definitely an investment in the product development of these products. However, the ROI on the sales has been extremely high. So we believe that investment is worth it.

As far as the cadence of coming out with one product per quarter, we believe that's the right cadence for now. But to your point, that doesn't mean it will be forever. We see opportunity with coming out with one per quarter. And it makes sense now. There is going to be continued challenge to find -- to increase facings at retail. There's going to be increased challenge to find more slots at club.

But at the same time, when you launch a new product line, you have to create an entire line of product. And that line needs to have enough SKUs in it to justify the entire line. We also need to make sure -- we also know that all these products aren't going to hit and be winners.

And so we always need to keep innovation going, so that if one isn't turning, we don't lose that facing to a competitor, and we have the next one to fill that slot.

Okay.

At the same time, we're pruning -- remember, we are pruning SKUs. So, even in our core business, we are pruning SKUs, opening up facings to put in new products. And we want to replace those SKUs that we prune with new products with higher margins.

Okay. And then just last question. When I look at -- when I go into the grocery channel, you are seeing a lot more copycats. People are putting salad kits out. I mean, obviously, yours is certainly favored by consumers. But there's going to be a lot of trial by consumers saying, hey, let me try this.

And at what point -- when does this -- when does the salad kit category get commoditized or more commoditized? Are we in the early innings of this? Mid-innings? Where do you think we are there?

Well, obviously, there will be maturity to it. Right now, the market is still growing at 30% -- over 30%. So that's a pretty high growth rate. And that's why a lot of people are jumping into it, to see if they can capture a part of that market.

We -- I think we said in the press release, if you look at North America, including club and retail, US and Canada, we've gone from 0% to 12% market share in just three years. We are hoping that growth continues. And we are hoping to take more than our share of the pie because of our innovative salads that we believe offer more value.

Mitch, let me mention one other distinguishing thing. You will see an array from the Doles and the Fresh Expresses salad kits and chop salads -- they're lettuce-based. Okay? They're all kinds of different forms of lettuce that are chopped and throw in some radicchio, that kind of thing.

Our angle is to take very healthy, high nutrition vegetables and make those into salads and salad kits. So it is -- it's in a unique approach. And you are buying a lot of nutrition and good health when you eat those products. So, to be -- they are -- we are distinguished from the lettuce-based salads.

Okay. Well, listen, I'll get back in the queue. I appreciate the color. Thank you.

Okay. Thank you.

Thank you.

Rick Fetterman, Fetterman Investments.

I just had one -- wanted to get one thing cleared up. One of the early callers -- earlier callers mentioned in asking a question that the Lifecore customer who has deferred purchases this year, this fiscal year, was going to start again you had said in the -- in fiscal 2016, the caller said begin again June 1. Is there -- it may not be June 1, but have you had an indication from that customer as to when they may begin purchasing again on a regular basis?

Yes. This is Greg. They are going to go back to historical order patterns and quantities. And I can tell you, and you see the results in this third quarter, this customer takes the lion's share, if not 100%, of the product that they reduced this year by more than half, in the third quarter. So that will be the quarter you'll see the impact from them going back to historical levels.

The reference to June 1, Rick, was that that's when our new fiscal year begins.

No, I realize that. I just didn't know if there was going to -- if we should expect any revenue and resulting profit starting again in -- early in the year or if it will be as primarily in the back half?

Yes, back half.

Third quarter.

Okay. That's all I had. Thank you very much.

Yes, thank you.

Thanks, Rick.

(Operator Instructions) Will Lauber, Sterling Capital Management.

What progress are you guys making in, I guess, the food service business? Have you made any progress on that?

You know, modest.

We sell mostly our green been products, which are in several different varieties of green beans, from your traditional green beans to yellow beans to wax beans, to French beans. We've also sold a lot of the Sweet Kale Salad blend, so we don't have the master packs in there, but the food service operators are beginning to order more and more of the Sweet Kale Salad for the base vegetable. And then they customize it in their restaurants.

And we do have very small amount of cut veg business from our Eat Smart products, but it's very small amount. We haven't made a lot of progress in selling the Eat Smart products, except for the Kale Salad into food service.

The margins there are more challenging. You've got a third-party typically -- you know, a Sysco or US Food Service, Will. And it hasn't been a strength of ours. It's not a focus of ours, but it is -- it's over $30 million in annual sales.

If we increase that, it will be at much lower margins than what we are typically seeing in retail or club.

And would there be any potential with restaurants or I guess quick service? I mean there's talk of McDonald's putting kale on the menu now, and I saw you guys -- someone from Apio was quoted in one of the stories in the pack around that. I mean, would that be a possibility at all?

Yes. You know, again, we sell the kale kit and those are being used in, gosh, many, many restaurants right now. As far as McDonald's, I don't think that's an immediate one on our list, but we are out there bidding for the business.

All right, thank you.

Thank you.

Thank you. (Operator Instructions) And this does conclude the question-and-answer session of today's program. I'd like to hand the program back for any further remarks.

We want to thank you all for being with us on the call today. And we look forward to keeping you apprised of our progress and our plans. Many thanks.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect.