Lifeway Foods Inc (LWAY) 2010 Q3 法說會逐字稿

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-- or, let's say, expanded accounts. So this was really a quarter that was strictly organic, same-store, if you will, sales, things like that. In terms of the cost of goods sold and the other expenses that we have going down the line -- milk, obviously, was significantly higher than it was at the same period in 2009.

Something very important to note -- that even though the price of milk is still relatively low, when compared to last year's third-quarter, which was at a historic low, an all-time low. So, the cost of milk, which is our largest expense or cost of goods sold was approximately 50% higher in the third quarter of 2010 versus third quarter of 2009. In addition, our advertising expense increased dramatically. Obviously, as we continue to try to fuel growth, and increase awareness and marketing and all this, the budget for that is increasing.

Obviously, we have a very profitable Company and the cash flows are continuously very strong. We're lucky enough that we have this good large budget that we can put into to make sure that we continuously have growth. So it's an investment, obviously, into the future. And as I talk a little bit more, we'll go into kind of where we see -- where our prospects are for the fourth quarter and even some time into 2011.

So, total income before taxes was approximately -- do we have that number -- was approximately $1.1 million compared to $1.9 million for the same period in [2009] -- I'm sorry. The total income before taxes was approximately $1.9 million in the third quarter of 2010 compared to approximately $3 million in the third quarter of 2009. Again, that takes into account a 53% tax rate for basically both periods. It was 54% last year, but very similar. As well as, again, the increase in the cost of goods sold component and, of course, an 88% increase in selling expenses, which relates to our advertising efforts.

For the nine months, sale increased approximately 10% to $47.42 million during the third quarter of 2010. This is up approximately $3.8 million from $43 million -- $43.6 million last year. Again, a lot of it is due to organic growth.

In terms of the nine months cost of goods sold, again, the big story is, here's going to be the cost of the milk, as I said before -- in the three-month period ended, it was approximately 50% when compared to last year. In the nine-month period, it was approximately 30% higher for the nine months when compared to the same period last year.

Other different things that we've -- that has happened in our Company, obviously, in terms of assets and liabilities, we paid down close to $1 million in debt in the third quarter. We paid down much more than that in the first nine months, closer to $3 million. So the note that was issued in February of 2009 to help purchase the Company, the Fresh Made acquisition, that note was accelerated. We paid it down completely in August.

So, again, we're really taking some of these strong cash flows. In addition to using them to help fuel our growth, we're also paying down some of these long-term debts and really strengthening our balance sheet going forward.

So in terms of -- I talked a little bit about kind of how we're doing with advertising and increasing the marketing and all these different initiatives that we're doing to help fuel our growth. In the fourth quarter, just a couple of nice accounts. We expanded our Safeway store distribution. And Safeway is, at this point, one of the, I would say, top two to three national grocery chains in the country. They have about 1,200 to 1,300 stores. A lot of them are on the West Coast, but nationally, they run -- their banners run about 1,200 to 1,300 stores. Previously, we had four of our organic SKUs in their natural stores, which are about 500 to 600 of that 1,200 to 1,300.

In the fourth quarter, we began to roll out our three most -- or, excuse me, our four most popular SKUs of kefir to all 1,300 Safeway stores. So now it's a really, really -- it's probably one of our largest quote/unquote national chains, along with Kroger and other chains like that. But to add that in -- to add four SKUs in 1,300 new stores is a really big deal for us. Additionally, those existing 600 stores will still have their organic kefir items that have always been in there. So really, it's a net gain just on that chain of 1,300 stores.

Additionally, Wal-Mart -- the numbers really just keep going up. Every week their sales are increasing per store. So they like that. So we're going to start -- we're going to expand the store list from about [200] -- from 220 to -- about 30% to about 300. This will also take place in the next couple of weeks, probably by the end of the year.

And another chain, 7-11. We had put a couple of our eight-ounce SKUs in about 150 7-11's in the Chicagoland area. In October, we expanded that to basically all of their stores nationally. So I believe it puts us at -- or it gives us the opportunity to service about 2,000 7-11 stores. Now, we're not guaranteed that all 2,000 of them are going to have placement, because a lot of the stores are franchise-owned; but there's definitely a large enough expansion of at least 1,500 of those 7-11's -- convenience stores.

And of course, we launched BioKefir. We launched it in Whole Foods in the middle of September. It finally hit their shelves after a little bit of -- I would say there was some stumbling blocks -- not on our part, but on the part of the distributor of Whole Foods said it went so quickly, it was accepted so quickly that they almost put the cart before the horse. But by the -- I think by the first week in October, every Whole Foods in the nation had BioKefir.

So that exclusive is going to end in December. The response we've had so far from everyone else that we've presented it to has really been tremendous, and I think it's probably going to end up being one of our most -- like, for our new product launches, probably one of our most successful new products.

And then, of course, the other kind of more historic thing that happened was the change in the classification of milk. This is a historic type of regulatory item that's happened in our Company. We were really pushing this to get done; obviously, we are the category leader in kefir. We own about 97% of the category at this point. So it's in our best interest to make sure that our product -- that our costs that we pay are in line with what our competitive product, like a drinkable yogurt or another type of a yogurt is getting charged. We need to be playing on the same level playing fields.

So starting in January of 2011, that rule goes into effect. And it's really going to -- it's really historic because it's going to give us the opportunity to take the exact same structure but pay a lower cost for -- of about 10% to 20% on average from Class I to Class II pricing. And that windfall of cash, it's, at this point, it's changed our budget for the next two years of what we have the ability to now spend to continue to grow the category.

It's a problem, but it's actually one of the best problems that I've ever encountered, because now, yes, our budget has shifted, but in a way that we'll say, okay, what do we do with all this? How much do we keep it into retained earnings? How much do we decide to spend on more marketing initiatives and all that?

So we'll see how it goes down, how it affects us in the future. And we'll know more -- I'll probably have more to talk about that in May, when we do our -- what will end up being our next basically conference call to discuss the fourth quarter earnings -- I'm sorry, not May; first week of April. So I'll have a better idea on that call as to how this, let's say, shift in regulation has affected us.

And like I said, just at this point, we know what our sales are for the nine months; for the fourth quarter, we're trending closer to $17 million, where, hopefully, I think we can -- if we get a couple of really good pushes towards the end of the year, I think $17 million is somewhere we're going to be close to. So I'm really positive, considering last year's fourth quarter, our revenue was about $14.5 million. So we're definitely trending in the right direction of where we want to be.

Besides that, I think that that's all I had for my remarks. Let me just look over my notes and make sure I didn't leave anything out. I talked about the BioKefir; Class I milk. And if I went through this a little bit too quickly, whoever is going to be asking questions, feel free; I can update them on that.

So I think that that might do it for my prepared remarks. I'm going to unmute everyone's line and then let's try to go through a relatively non-chaotic question-and-answer session, since we don't have an operator. And then we'll just take them as they come.

Hello? I think if people want to start asking questions, they can -- I think everyone's line should be unmuted. Maybe not; I'll try it again. (multiple speakers)

Hi, Ed. This is Howard from Taglich Brothers. I have a couple questions. The Safeway -- the additional 600 stores, if history repeats itself, those additional 600 stores and their reorder rate, what kind of value do you place on those additional 600 stores on an annual basis?

Sure. It's actually not an additional 600; it's actually a net gain of about 1,200. Because remember, those existing stores, 600 of those 1,200 will now have dual placement. They'll have the original set that we've always had for several years or whatever, and now in all 1,200, they're going to have in the mainline dairy set. So even some of the stores will have dual placements within the store.

But to answer your question, we don't really go into exact customer numbers, but I think it's safe to say that the Safeway account maybe was a $1 million to $2 million account for us over the -- for, let's say, for 2009 or something. That could easily go to $5 million to $6 million, depending on how successful and the reorder rate, and how successful the product does within the store, which we think there's a reason why we expand into some of these chains. It's because our numbers are so great there.

Okay. And for the Wal-Mart stores, are they the Wal-Mart supermarkets, the supercenters that you're adding? Or is it just ones maybe without?

No, it is all the supercenters. Yes, the ones with more of a food aisle. So I believe they have about -- and I don't know if these numbers are exactly accurate, but I want to say they have about 600 of these supercenters stores, maybe just in the Midwest or something. But we started out in, I believe, 200 or 220 of them in the Midwest with about five or six states. So, Illinois, Ohio, Michigan, Wisconsin, et cetera.

And we're increasing that to about 310, 315 or 320-ish. Again, based on very, very positive results week after week. So they want to see more of the product. They want to see the product being sold in more stores and in a wider variety.

Okay. And BioKefir product, I assume is a premium product. What kind of extra margin might you be able to get for that product once it really gets rolling?

Well, that product is actually going to be even higher -- a more higher margin product than some of our traditional kefir lines. It's several different things. Obviously, when you're selling a smaller unit, the margin is higher than when you're selling in bulk. So if you compare a three-ounce product to a 32-ounce, that's considered moving into bulk.

Not only that, there's no cap; it's a foil cap so there's no actual plastic cap. So some of the components that go into it, there's much less of. So again, it's too early to tell and say, this product has a 50% margin and another one has a 30% margin; it's too early to tell. But it is going to be on the higher side of our product spec list.

Okay. So would it be safe to say, based on the introduction of BioKefir and the change in regulations, that -- and I'm not asking the magnitude, but is it safe to say that margins, as long as prices don't go crazy altogether, should be higher in 2011 than we've seen in 2010?

Well, again, yes, they're moving in the right direction. Obviously, the change in the classification means a tremendous amount for us. Now let's say if all things being equal and the price of our milk is 20% less starting in January, if those prices move up 20%, then that kind of negates anything going forward. However, when you're comparing apples to apples, obviously, there's going to be a savings.

So we don't know -- we can forecast butter fat right now is and for the last three months has been at a close to record high. So anything that has a lot of butter fat in it, the margins, we're getting cut on it. BioKefir, incidentally, is a nonfat product, so it has no butterfat. So all these things are definitely positives in the margin area.

Okay. And two final questions. One, I think in the previous call, I think you both had mentioned that you were looking to do something in Canada. Has that progressed at all?

You know what? It's progressing but we don't know how we want to go about doing it, whether we want to -- before, in our last -- and the last time we did the call in April, we were leaning towards possibly building from the ground up a factory and starting. We don't want to go that route, I don't think, any more. I think we want to go more towards finding a partner in Canada who already has an operation up and running.

That being said, I went to -- Julie and I visited Toronto about a month ago, and it is interesting that some of the markets there, they have a very developed kefir market already. Way more developed in some of the stores than we have here. So if you'll go to a nice large supermarket in Chicago, you might find two brands of kefir. If you go to a Whole Foods, you might find three brands. And we own two to three of those anyways.

In Canada, there are a variety of those. None of them are national or anything, but there is definitely more competition in Canada for this type of a product. And then some places don't have anything. So there's opportunity and there's room but we're going cautiously towards it. Again, we also have so many different initiatives here in the United States, so we just purchased this First Juice Company. That's going to take some time to work around.

We're also -- we have a ton of new products that we're launching, which I don't want to go into details about now, but that we're launching in 2011. 2010 was really BioKefir -- that was the focus for 2010, getting that off the ground in 2010. In 2011, we're going to have a host of new products, some non-dairy, probiotic products. So it's going to be very intensive. If we have time to do other things, Canada is always still on the back burner.

(multiple speakers) And my final question is regards, I guess, the selling and marketing aspect and the increase, I think, year-over-year is like [earning] $3 million more. And so I'm wondering if there are more Safeway's, I guess, out there, based on the work that you've done and the spending that you've done, that we could see in the next six months or so?

You know, that's a great question. I don't know if we've ever touched on what we look at as our quote/unquote ACV, which is the amount -- your percentage of your distribution in the national grocery stores excluding Wal-Mart. And right now we have about a 38% ACV, which is not that high. Typically, Coca-Cola has a 95% ACV, which basically means they're in, call it, 100% of every supermarket in the store -- or every supermarket in the nation.

So a developed -- very developed brand will have 96%, 97% ACV. We're at 30%. There's still so many chains out there that we are in but we're only in portions of. So, for instance, a Kroger -- again, same thing.

Kroger is a large supermarket chain in the country, but we're only in maybe 50% of their stores where they consider that they have what's called a natural or organic food section. But then there's 1,000 other stories that don't, but that just sell regular yogurt or drinkable yogurt or your Dannon and Yoplait.

So those are -- that's kind of what we look at as low-hanging fruit. And it's just a matter of time before our number gets to a certain success rate that they say, okay, now it's time to go into the rest of the stores. Same thing with the Wal-Mart. Safeway just happened. So, that's where we're moving now -- we're moving more into the mainline dairy section and out of the, call it, niche market.

Okay. Well, keep up the good work and things should -- like you say, with a run rate of $17 million, things should start to hopefully get rocking and rolling on the top-line come the new year.

Yes, and you know, again, with the top-line and the revenue, we're still -- we still see, unfortunately, a very weak consumer when it comes to items like this or just in general, with still 10% of the country unemployed, just even people who are employed -- I can't tell you how many times that day I get either emails or phone calls from people saying they need coupons or why is it so -- the price is so high or they just lost their job or all these things that are coming into play.

So eventually when, hopefully, that that will -- that kind of more macroeconomic aspect will turn around, we'll see a bump there as well. But in the meantime, we're just increasing our distribution points, what products we serve to our existing customers, and the other part will take care of itself.

Well, thanks.

Ed, this is Steve in Memphis, Tennessee. I've got a question. On the advertising, you spent $2.3 million but your sales for the quarter went up $474,000. So I was wondering if you could elaborate a little bit on what specifically you guys are doing from an advertising perspective? And do you see levels of advertising to continue with what you're doing and how you're going to measure the effectiveness of it?

Well, we spent $2.3 million, but it was an increase of a little less than $900,000. So the selling -- the expense went up -- you know, was $2.3 million, but it was -- it's coming from a small number itself.

We traditionally have just not spent much on advertising as a portion of our overall sales. We spend much less on -- we, historically, have spent much less on advertising than I would say any other similar product or company would do. We're spending close to 5%, 6%, 7% and -- at direct advertising, but we want to see that number go up.

When we do -- so we spent -- let's say we spent this $2.3 million in the third quarter, but that's going to pay dividends down the road. So when -- you know, I just got -- the last question was, thinking about the next -- for the fourth quarter's run rate, we're already seeing that advertising spend paying out or paying dividends, when we do get a higher clip for our fourth quarter sales, which, like I said, are going to come in higher than the current quarter or the previous quarter, the third quarter.

Okay. One another follow-up question. What is your capacity utilization?

What we're producing in our factory?

Correct.

We're at about 50%. We just -- a couple of years ago, we have been -- we increased our capacity; we doubled it. So we're constantly doing things. We just put online in our Niles facility, we just started the large cooler there. It's about a 60,000 square foot cooler on its own. And that had been unused previously for the previous three or four years that we've owned that space. We just started that. We turned that online, I think, either this week or last week. So -- yes, but so capacity is about 50% between all of our different factories as well.

Okay. Well, I like what you guys are doing and I've invested a good amount of my own personal money, so I'm hoping it will turn out well.

Sure.

Edward?

Yes.

This is Ivan from Marion, Illinois. I had a couple of questions. First I wanted to ask you on the tax rate going forward, are we still going to be at around 53%, 54%?

You know, that's more of a question, I guess, for our accountant or auditors. I don't decide how the effective tax rate ends up on the books. Historically, we're at 40%. We pay the federal government about 35%. We pay the state about 5%, 6%. Some quarters are less just because there's different things that go into it. I'm not exactly the expert on it yet, but there's deferred tax assets and liabilities, and there's things that go on from previous periods that use up -- you know, and current periods and vice versa.

So, that number -- I don't look at that number so much as a metric because they do fluctuate. Sometimes you'll have a 60% effective tax rate compared to a quarter where you'll have a 20% effective tax rate for whatever reason. They end up blending out over the course of the year to, call it, 38% to 39%. But if you're taking snapshots, that's just what it is.

Okay. So this one was really a little higher than the average for the whole year?

Yes, absolutely. If you look at the nine-month effective tax rate, it's closer to 42% or something, and probably when you take in the fourth quarter, it will blend itself down even further.

Okay. And the question the gentleman just asked on the selling expense -- now, the selling expense only has selling expenses of your salespeople and marketing and all, and general and administrative expense would be the management and all, right?

Correct. Yes, that is correct.

Okay, so -- okay, I see. So that actually (multiple speakers) --

So that number is going down.

That went down. And this other is just to produce sales. And did you also say that you paid all the debt off on the Fresh Made acquisition?

That's correct, yes. So the original note amount was approximately $2.7 million. It was a -- it was due -- it was a two-year note, so it was due February 2011. And we paid it down basically instead of 24 months, we paid it down in, I believe, 18 months.

Okay. Now is there any other debt related to the Fresh Made open?

There is, but it's all -- it's not long -- it's not like a note payable; it's just that debt was collateralized against our real estate. So we pay it off like a traditional mortgage over 20 years or whatever. So we pay like a $42,000 -- it's actually, I think it's discussed in Note 9 of the financial statements, but we pay -- we have a term note, so we pay like a $42,000 payment every month, plus some interest on it, et cetera. But there's no other really outstanding debt in terms of, like, structured like that.

Now, the juice company that you acquired all the assets, what kind of revenues are you looking for in 2011 from it?

Yes, so 2011 -- we're really discounting the fourth quarter because the brand was kind of left in shambles for the last six months. Obviously, it's one of the reasons that we were able to, I think, get a good deal on it. But when the Company is healthy and running, and the brand is being cared for and how it should be, it's able to generate $1.6 million, $1.7 million. That's what its 2009 numbers were.

And so we think we can get back to that fairly quickly. And then we're going to look to increase that line. We think it's a great product. The formula is great. It's got a patented sippy top lid, which cost a lot of money to produce for the previous owners. So we're looking to do different things. We might add some probiotics and extend the line that way. And it will be one of the first, call it, kid's juices with probiotic in it. So there's a lot of different things that we can do with that kind of brand that we're really excited for.

And again, it gives us an opportunity to sell a health product and call it a probiotic health beverage or food, but that isn't dairy-based. So it gives us a little bit of -- you know, to expand our products and not only staying into one niche of dairy.

Okay. It looks like -- I was concerned when I saw your top-line for this quarter, but it appears for the fourth quarter, you're starting to really accelerate.

Yes, and don't forget for a quarter number like ours, you know, $15 million or $16 million, a couple of customers that, let's say, maybe didn't order in one period or one week that placed double orders the next week, that also can skew numbers from one period to the next. For a small company like ours, $0.5 million in sales is going from one period to another, is significant in terms of a percentage. So that's what happens occasionally.

Okay. The Wal-Mart ones that should go into about 310 or 320 -- now, how many supercenters do they have all over the country that you potentially could have unit-wide?

You know what? I don't have that number off the top of my head. I could look it up. I believe it's -- I believe they have like 1,200 maybe.

Well, I can tell you one thing. We have one in the town that I live and they way-under-order or whether they have it in the warehouse, but they're constantly out of it.

Well, yes, and (multiple speakers) --

(multiple speakers) So what you're seeing is it's just flying off the shelves.

That's the other thing that has also kind of occurred when we went in and they gave us the green light to expand, to increase 30% of the stores. They're also increasing the inventory that they're trying to follow on their existing stores. So exactly -- there's a lot of times they're not ordering enough because, for their own business, they want to keep inventories, obviously, low -- you know, not have too many stock-outs and spoilage and other things like that.

So -- but they're also noticing that the product is selling off the shelf much quicker than they anticipated. So they've also been given the green light to increase their ordering capability for those existing stores. So not only is it existing store sales are going up, they're adding new stores.

Now, is there anything new happening on the Starfruit we haven't heard anything about, possibly franchises and all?

Sure. Oh, and again, going back to the Wal-Mart thing, we're also looking into Sam's Club and some of their other different banners as well. (multiple speakers)

Yes, they do a lot of food in Sam's Club.

Hopefully. Yes, exactly. So we do a great amount of business with Costco in the Midwest and up in Northern California. So I think kind of that -- they do do a lot of food. So I think that's going to be something that's going to come in down in 2011.

And in terms of Starfruit stores, we have our four that are open. The two existing stores that have been open for more than one year had same-store sales increases of about 15%, 18% in the third quarter. The third quarter is what we consider kind of the meat quarter for Starfruit, because it's in the warmest climate of the season. So the two stores that have been open for more than one year have shown about 15% and 18% same-store sales over that time.

Okay. Now what about newer franchises -- your idea what's the franchisees out over the country think about (multiple speakers) --?

(multiple speakers) Yes, I mean, what we wanted to do is we wanted to get several of our stores up and running to where we think that they need to look and feel and operate. And once we had that done, then we can go out and market it, because we didn't want to market, let's say, a store that didn't look good or maybe didn't have the right products coming out of it; or just wasn't operating at full steam because -- when you're showing your franchisees, you want to put your best foot forward. And that takes a little bit of time, especially for such small little footprint stores. We want them up and running and having a good year behind them to show potential people.

So we're definitely in that space or in that area right now where we're looking. And I think if something doesn't happen in 2011 or in the first half of 2012, maybe we'll just say these four stores are in Chicago and they do well, and they showcase our products really well, and maybe we'll just leave it at that. But for sure, the concept to franchise it out is definitely still there.

And something else that we're looking at, which we want to maybe even think a little bit more outside the box, is not just do traditional franchises of stores, of 1,000 square-foot stores somewhere, but to license out kiosks, little Starfruit kiosks, whether it be in a Whole Foods or something, or whether it be at Wrigley Field where they have all the food.

So a lot of these sports complexes, they have beer, hot dogs, popcorn and nachos. And we think that it's a great place to have a really cool, unique, and healthy alternative, especially in the summertime when it's 100 degrees out and all this. So, we're also looking at different things like that, putting a little kind of kiosks or store-within-stores that we can license out.

Also, you know, like I see McDonald's is doing a smoothie and all -- what's your -- are you looking at some of these maybe bigger chains where you could put your product in one of those?

Well, we're pitching it everywhere, in a lot of places and I don't want to comment on anything specific right now, unless there's a deal set is like that, then I'll comment. But we definitely are pushing that product out and that concept out -- not just, like I said, to traditional franchise routes, but other places, like, would be McDonald's or whatever.

One other question, I'm monopolizing the call. I understand what you said about the milk dropping the first of the year because of the classification -- where do you see -- where does milk prices appear to be going, as far as the futures? I mean, what are we -- what should we sort of look for, just the general milk price?

Yes, well, I mean, our prices are still low and they're lower than they have been before, but they're also up from historic lows of last year. So they're in a kind of I would say normal range right now. But the one thing that is at the high for sure and that is the butter fat component.

There have been other dairy companies that have reported results recently where they made -- that was like the big culprit, was butter fat prices. And it's a good thing not a lot of our products are high in the butter fat range, but the ones that are, for sure, are affected. So we are seeing butterfat coming down starting in December.

And then milk just really I think is kind of going flat a little bit. And then we'll see that bump come January with the changing in the regulation.

Okay. Well, good. Thanks for the time and the questions, and let's look for a good year next year.

Okay, so we -- we're getting up to about 40 minutes, maybe if we have one or two questions then we can wrap it up at 4.45. If anyone else has any other questions, we have a couple minutes left.

My name is Scott. I'm a private investor from New Jersey and also a consumer of your products for a number of years, but an investor only recently. But I had a couple of questions. A couple are pretty simple, actually. I want to follow-up on the gentleman's question about capacity utilization, you said 50%. Could you define what do you mean by that? Like is that like -- you define 100% as three shifts, five days a week; how are you defining 100%?

How I define -- we have -- we can double our capacity. Whatever we're producing now, we can produce double without having to increase, call it, an extra day or an extra shift. (multiple speakers)

Okay.

That would be under normal circumstances.

Okay. You've got plenty of room for real growth, in other words, without having to spend --?

Plenty of room. Now, we have already -- we've done our capital expenditures for the next three, four years, unless something dramatic were to happen. But, yes, we've already made that spend.

Okay. Second question out of three on advertising, and the gentleman asked the question about the expenditure, the $2.3 million for the third quarter. I guess, to the best of my knowledge, I haven't seen much in the way of, like, national advertising. I mean, things like inserts in Sunday papers, that kind of thing to try to like maybe spur just general --?

We, I mean, we do -- I could sit here for two hours and go over all the different marketing that we do, but we do a ton of different stuff. We're not really so doing the traditional kind of magazines or newspaper or radio, but it's a lot of social media; it's a lot of couponing right now. Couponing is, I think, going to become -- especially with the consumer where they are now and there's not a super large amount of light at the end of the tunnel -- couponing in a variety of different ways is going to be something huge for us.

But we do a ton of different events. We're usually somewhere every week-end, whether it's the Austin City Limit event for 50,000 to 60,000 people, or in San Francisco or whatever -- the Boston Marathon, things like that.

Alright. Yes, I was going to ask a specific question about -- I haven't seen much in the way of print advertising, but you answered the question already that you've [deliberately] shied away from that for your own --.

Yes, we're looking -- yes. We're looking into more, like -- they're turning into more traditional; but online advertising, we've increased our budget three, four-fold, granted from a smaller base, but still -- so I think that's kind of where things are going.

And just a final question, if I could, on the -- how would you assess the Helios acquisition? Has it basically panned out as you intended or --?

Yes, well, that acquisition is already close to five years old at this point. The line is where it is. It's still the number two kefir in the United States saleswise.

Behind your -- behind Lifeway brand. (multiple speakers)

(multiple speakers) Behind our -- the Lifeway, main Lifeway brand, for sure. And it holds an important place in a lot of these natural markets. It's a little bit more of a higher-priced product. It's an organic, 2% milk fat, that whole thing. So it's a little bit more artisan, but the line is doing like the line has always done.

It's given you essentially some economies of scale on the purchasing side, I would assume?

Absolutely, yes. The bottles are similar, the caps are the same and all that.

Sort of like purchasing of milk, buy more of higher volume purchases, you get a better price --?

Not so much on the milk. I mean, the milk is -- if you buy a gallon or if you buy a tanker, you're going to be paying kind of a similar price. But all the other materials, for sure.

Alright, thank you.

Okay. So I think that I'm going to end it there and I'd like to thank everybody. And if anyone, obviously, has any other questions, feel more than -- feel free to contact me at the Company or you can email info@lifeway.net and I'll get any question that's gone in that direction.

And like I said, I'd just like to say thank you for everyone for your time. The next call will be the last week in March to discuss the fourth quarter and full-year 2010 results. That being said, I'm going to end the call.