Neptune Wellness Solutions Inc (NEPT) 2015 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Neptune Technologies & Bioressources third quarter FY15 earnings conference call.

(Operator Instructions)

As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. John Ripplinger, Director of Investor Relations at Neptune Technologies. Sir, you may begin.

Thanks, operator. Good morning, everybody, and thanks for joining us today. As mentioned, the purpose of today's call is to review our results for the third quarter ended November 30, 2014. Joining me today are Mr. Andre Godin, interim President and Chief Executive Officer; Pierre Lemieux, Chief Operating Officer of Acasti; Pierre Fitzgibbon, Chairman of the Board of Neptune and Board member of Acasti; and Jim Hamilton, Neptune's new President and CEO effective February 2, 2015.

Pierre will start off with a discussion of some of the Company's important strategic initiatives, followed by Jim, who will make a few introductory comments. Andre will then review Neptune's operational and financial highlights, after which Pierre Lemieux will discuss Acasti's operational highlights. We will then open up the lines for questions. Given that Jim has not yet officially joined the Company, he will not be in a position to answer Neptune-related questions in the Q&A portion of today's call.

Before we begin, I want to remind you that today's remarks contain forward-looking information that represent our expectations as of today, and accordingly are subject to change. We do not undertake any obligation to update any forward-looking statement, except as may be required by Canadian and US security laws. A number of assumptions were made by us in preparing these forward-looking statements which are subject to risks. Results may differ materially. Details on these risks and assumptions are in our filings with the Canadian Securities Commissions, and with the Securities and Exchange Commission. With that, I'll turn the call over to Pierre Fitzgibbon.

Thank you, John, and good morning, everyone. Let me begin by stating that your Board of Directors is very pleased to have delivered on our most important initiative, when we recently appointed Jim Hamilton as President and CEO of Neptune. His appointment marks a key milestone for the Company.

As you know, Jim has a deep understanding of the nutraceutical space, strong industry connections, and a proven track record for driving business excellence. He brings complementary abilities to the current management team, and he is the right person to lead the Corporation forward into the next phase of growth and success. Jim will be getting out to meet many of you once he officially comes on board in February. We actually have dates lined up for Montreal and Toronto where I will be with Andre and Jim and meet investors, and we will soon book in the US.

Turning to other strategic matters, I would like to comment on yesterday's announcement to merge NeuroBioPharm with Neptune. The transaction will benefit NeuroBio shareholders by giving them Neptune's securities as consideration for their NeuroBio securities. Henceforth they will continue to participate in any value increases associated with NeuroBio activities, and will benefit from owning shares in a public company with larger size, scale and liquidity. The transaction also further simplifies our overall corporate structure, and reduces cost associated with NeuroBio being a separate legal entity.

Neptune holds over 90% of all classes of NeuroBio shares which is a sufficient number to approve the arrangement. We intend to vote in favor of the transaction. In the coming days, NeuroBio will be sending an information circular to all shareholders on the arrangement. All the details will be then divulged in this circular. Notwithstanding this corporate reorg, let me assure you that Neptune will want to build on NeuroBio's past initiatives, while focusing on the nutraceutical side of the neurological application going forward.

Moving along to other matters, our normal course issuer bid, or what is commonly referred to as share buyback program was approved by the TSX at the end of October 2014 as expected. To date, no shares have been purchased in connection with the program. This isn't because we changed our mind, as we are ready to act. However, given multiple strategic initiatives under analysis and Jim coming on board in a few weeks, we felt compelled to wait a bit and conclude on our cash allocation for the coming fiscal year. This will be finalized in February when we will approve our FY15, FY16 budgets.

While Andre will cover the operating and financial highlights later, let me address some of the key elements of our quarterly results. Aside from our ramp-up cost, our results don't have any unusual elements. As stated in the prior press release, we reached an annualized capacity of 150 tons in early November. We expect to incur some additional ramp-up costs going forward, but they will decrease as we complete the sustainability of this production level and introduce production efficiencies.

Finally, we are pleased with our progress on the sales front, as we had increased revenues over the last quarter, and the same period last year. As stated on our last call, we expect continued improvement with increased revenue sequentially in Q4. Our target remains to sell on a run rate basis of 150 tons of premium krill oil by approximately mid year 2015.

To conclude my remarks, let me provide you with an update on our strategic initiatives highlighted during our last quarterly call. You will recall that we had identified five value creation initiatives. We made progress since then, allowing Jim to refine these drivers when he comes, and further plan their execution. On the transition to become a value-added supplier, we made progress announcing new NKO products, and we are analyzing new marine biomass sources. As well, we are looking to further enhance our investment in the krill benefits of our product portfolio.

As an important stakeholder of Acasti, Neptune is committed to offer its full support for the manufacturing of the raw material needed by Acasti to conduct successfully it's clinical development of CaPre, that will translate ultimately in facilitating, legitimizing Neptune's commercial efforts and initiatives to promote health benefit of its krill oil product.

We are also continuing to focus on our go-to-market strategy in the key distribution segments. Integrating our supply chain via commercial arrangement or possibly partnerships is very important to better control our sourcing both from a quality and cost perspective. We are engaged into analyzing alternatives as we speak.

Finally, our optimizing our Sherbrooke manufacturing facility is necessary to deliver adequate profitability. Now that we are producing at the targeted 150 ton level, we will focus on reducing our process costs under the current production level, and increasing the 150 ton level by an incremental target of 50% with limited capital expenditure. Our focus is to maintain production of high quality krill at an optimal cost while developing additional markets as we increase production. Although our plant configuration can eventually accommodate 300 tons as previously stated with some additional capital, we will build up extra capacity sequentially as increased demand for our premium krill products materializes.

These five drivers are the foundation of our future success. We have accomplished a lot in recent quarters, and our goal is to build on this positive momentum as we prepare to execute on multiple fronts in 2015. We look forward to realizing the Company's full potential in both the near- and the long-term. With that, I will turn over the call over to Jim.

Thanks, Pierre, and thank you for the opportunity to be here today to make a few introductory comments and to listen in. I am very excited both professionally and personally to be joining Neptune in February.

From a professional perspective, I have worked in the nutrition industry for 30 years, first at Hoffman-La Roche, then DSM, and have a great passion for the health benefits that nutraceutical products provide. In this respect, I have a special passion for omega-3s and omega-3 krill oils in particular, which offer a number of differentiated benefits.

Neptune pioneered the krill oil market, and its flagship product NKL offers superior levels of phospholipids and omega-3 combinations. I have watched Neptune over the years and despite some obvious challenges, I have been particularly impressed by the strategic steps they have taken in recent history to enhance their business model. And there is still work to be done, but I believe we are putting in place the necessary ingredients for success.

From a personal perspective, Neptune is a leader in the omega-3 space, and the Company has an impressive committed management team and Board. These were very important considerations for me. I have also known Pierre for many years, and have great personal respect for him. He, along with his fellow Board members, are industry leaders with strong track records of value creation in their respective areas.

And finally, as a Canadian and former Montrealer, I welcome the opportunity to return to my roots. All-in, it has made for a very compelling opportunity. So in closing, I look forward to meeting with many of you in the months ahead, and with that, I will turn the call over to Andre for a discussion of Neptune's operating highlights.

Thanks, Jim. On behalf of management and employees, I would like to personally welcome Jim to the Neptune family. We are creating a strong foundation for the future, and we look forward to building on past successes under Jim's leadership.

Turning to the operation, our business model continues to strengthen, with the Company achieving a number of important milestones during Q3. Most importantly, we completed the ramp-up of production at our Sherbrooke plant, resumed shipment of Neptune manufactured krill oil, and of course, announced the appointment of Jim as our new CEO.

With the plant operating at full production capacity of 150 metric tons annually, and demand expected to be in line with this by around mid 2015, we have implemented a special program to enhance plant output incrementally. This includes looking at increasing plant efficiencies and optimizing processes, using as little capital as possible. On top of this, as part of our ongoing strategic review, we are looking at possibly strengthening our supply chain.

We expect sales momentum to continue to build, which should have a positive impact on future quarter revenues and profitability. Going forward, revenue expansion will be supported by our new condition-specific formulations and expansion into new territories. Production of our new formulation should get underway in Q4, and we should begin to generate revenues from them in the following quarter.

Turning to our intellectual property, the inter parties review proceedings before the US Patent and Trademark Office regarding certain claims of Neptune 351 composition of matter patent took place in fall 2014, and a decision is expected to be rendered by mid March 2015. We continue to believe that we are well positioned to succeed.

As previously announced, Neptune's royalty bearing license agreements with Aker BioMarine and Enzymotec are dependent on the outcome of the USPTO review. The USPTO decision has no impact on our agreement with Rimfrost.

Now turning to the financials. I'd like to remind you that our results are in Canadian dollars, and today's remarks may contain forward-looking statements. As well, the Sherbrooke incident render [as realized] difficult and allocable comparisons between year-over-year results. As usual, my comments today will focus on the quarterly results for our nutraceutical business. Consolidated information can be found in our press release and Neptune's consolidated financial statements and related MD&A available on SEDAR, EDGAR, and the investor section of Neptune's website.

Turning to the results. Nutraceutical revenue for the third quarter were CAD4.7 million, up from CAD2.6 million in the prior quarter, and CAD4.4 million in the prior year. Revenues for the current quarter were largely derived from the sales of Neptune's manufactured krill oil, and partially through the sales of oil obtained through Neptune's third-party supply agreement.

The adjusted gross margin as a percentage of revenues was 27% for this quarter, up from 14% in the prior year when sales were derived entirely from the sales of commodity krill oil. The adjusted margin for the current quarter excludes incremental costs related to the plant ramp-up of CAD854,000. We expect plant ramp-up costs to continue to decline going forward, in line with us reaching the 150 ton level, and through the introduction of production efficiencies.

Year-over-year quarterly adjusted EBITDA also improved, coming in at negative CAD2 million, versus negative CAD4.2 million in the prior year. The improvement is largely due to the lower professional fees of approximately CAD1.7 million relating to the protection of the Company's IP.

Neptune recorded a quarterly net loss of CAD3.2 million for the nutraceutical segment, improving over the net loss of CAD6.9 million for the prior year. The improvement is due to the decrease in stock-based compensation expenses and professional fees, along with a foreign exchange gain resulting from the weaker Canadian dollar versus US.

Switching to liquidity, our quarter and the consolidated cash and short-term investments totaled CAD34.6 million. Of this, CAD19.6 million related to Acasti. Now I will turn the call to Pierre Lemieux for a discussion of Acasti operational highlights.

Thank you, Andre. Good morning, everyone, and best wishes on 2015.

During our third quarter, we continue to make progress on our clinical development program. We received full data for our recently completed pharmacokinetic or the PK trial, and final results for our Phase II TRIFECTA trial are expected to be available by the end of February 2015. The receipt of full TRIFECTA data in February will not impact our clinical program, with the TRIFECTA results already known.

In short, CaPre successfully met the trial's primary endpoint, achieving statistically significantly mean placebo adjusted decrease in triglycerides from baseline in patients with mild to severe hypertriglyceridemia without any safety concerns. With an expectation of full TRIFECTA results being available soon, we have gone ahead and asked the US FDA for a meeting to discuss next steps, leading towards a pivotal Phase III trial in North America. The meeting is expected to take place in Acasti's first quarter ending May 31, 2015. Following this, we should be better placed to provide the details on our next steps defining the path forward.

In anticipation that we will eventually receive approval to conduct a Phase II trial, we are ramping up our production of preclinical material respecting of course, current good manufacturing practices to ensure that the quality product in sufficient quantities is available. This will allow us to avoid any delays due to inventory shortages.

Now switching tracks for a moment, I would like to speak about the NASDAQ notification we received in November 2014 regarding minimum bid price requirements. As previously highlighted, this has no immediate effect on Acasti's NASDAQ listing. To regain compliance, Acasti shares must [close] at CAD1 per share or more for a minimum of 10 consecutive business days.

The Company has until May 6, 2015 to meet the listing requirements. If Acasti does not regain compliance by May 6, it may be eligible for an additional 180 calendar day extension. The Corporation is currently evaluating all available options to result in efficiency, and regain compliance with the minimum bid price rule.

In closing, I would like to highlight that it is well-recognized that developing a new drug candidate is a long-term commitment that is not without challenges and concerns. Moving from the clinical testing stage to the marketplace will require that safety and efficacy is confirmed. Fortunately for Acasti, our clinical trials conducted to date have shown efficacy without any safety concerns in the Hypertriglyceridemia patients. In addition, Acasti is protected by strong intellectual property.

In short, we appear to have the necessary ingredients to reach our final goal, the commercialization of CaPre in the US. We still need to meet a number of significant clinical and regulatory milestones ahead. Fortunately, with an experienced management group and a team of specialists both deeply committed to comprehensive and meticulous pharmaceutical development program, we are well-positioned to succeed. With that, I will turn the call back over to John.

Thanks, Pierre. This ends our formal remarks for today. I will now turn the call over to the operator for the Q&A portion of the call. Operator?

Thank you, sir.

(Operator Instructions)

Robin Cornwall, Catalyst Equity Research Inc.

Good morning, and a special welcome to Jim. I look forward to meeting you soon.

The first question I really have is the plant's expansion. Going forward, when you mentioned that you can first of all, improve the process or the efficiency existing -- of the existing plant, but what about the -- also the steps of going forward to marginally increase production beyond the160 tons?

And also a follow-up to that is, your expectations for margins were at 27%. Are you still comfortable with moving, I think it was to the 35%, 40% level, so correct me if I am wrong there?

Okay. Let me -- this is Pierre Fitzgibbon. Let me start with the answer to your question, and I will turn it over after to Andre to provide a little bit more detail. I think first, let's go back. The planned configuration was build the box, so to speak, was built to provide the capacity for 300 tons. However, the equipment that were put in were for 150 tons, and that has been stated for a while.

We, as you know have reached the 150 level sort of late in the year. And the focus right now is really to work -- now that we have got the production level at 150 tons, is to work the process improvement, try to reduce our costs. Because the focus was to ramp up, and this was in a brand-new plant.

So there are some work to be done. And I would say there is a few months ahead of us, and we've launched under Andre's leadership a program to reduce that cost. Because that's a very important element for your last part of the question. After that, how do we get to the 150 to 300 is a key question, and I think there is an issue of cost of capital and an issue of market.

On the cost of capital, we have discovered through playing with our toys so to speak, that there are some low hanging fruits out there whereby with minimal capital -- and I can't give you the precise answer on that right now -- but minimum capital, we can ramp up this production from 150 tons to over 200 tons, slightly over 200. We don't know exactly the level, and that obviously is going to be done.

Because it's going to provide, A, more volume to be sold. But equally important, allocate our fixed costs over a larger volume, hence reducing our costs. So also we are going to be benefiting from that increased pool.

Now to move from that level, call it now 210 tons, 215 tons, 220 tons, 225 tons, to move from that level to 300 tons will require more significant capital. And I think that is the time where we need to really look at the market, and make sure that we are launching in the market premium oil that we can get the pricing for. And I think that's something that through Michel's effort -- Timperio -- we will be watching very, very closely.

So that's why in my remark, I said that we will build sequentially, but our first focus is to reduce costs to 150. Second, focus to get up as much as we can with low capital. And then after that, we have to really look at the market, because as you know we are rebuilding our market because we were out of the market for a year and a half.

And lastly to your question of margins, there is no question that our oil has unique capabilities. Our USP are unique and that we are working very hard now we are back in the market, to get that premium. And the premium that we think we can get should get us to increase our margin -- the margin we are having right now obviously include a blend of a third-party oil and our own oil. So as we reduce our cost, that will have a benefit of course with increased margin, and as we also find new customers with our premium oil, that will also allow us to increase margins. Andre, I don't know if you want to add to that?

That was a very complete answer. But if I may add, like Pierre mentioned yes, I did put in place a committee that is fully dedicated in working on improving efficiency and reducing costs. So it is a top priority at Neptune, obviously to work on this model.

And in terms of margin, yes, the answer is obviously, yes. We expect to reach 35% to 40% margin when we're going to be fully efficient and maybe a little bit more. But the target is to get back as close as possible to 40%, after everything we are working on is done.

Okay. Thank you. Can you give us an approximate percentage of sales this last quarter that were from NKO, the public sales?

I think that -- and maybe Mike Timperio can correct me if I am wrong, but I think it was about more or less a 50/50% ratio.

That would be 50% from the NKO?

From third-party, and 50% from NKO.

Okay. Thank you, and just a further update on marketing. You had mentioned the marketing of your new -- I guess, products Flex and Beat, et cetera. Can you just give us an idea of what your plan is in marketing?

Yes, Michel, can address that question.

Yes, certainly, we have identified obviously a few players that we think we want to work with. And not to name one, one is a major one, and is only committing to taking possibly two of the formulation in the health food store segment. So and in terms of the mass market, we are obviously contending to meet some key major players.

In terms of our marketing effort, since we are going into production, we needed to wait, because a creating a demand in terms of awareness -- I should say creating awareness on a marketing standpoint, we needed to make sure that we were close to launching before we obviously venture into doing a lot of [spending] on the product marketing-wise.

We are just -- we have started some social media campaign which are very active, whether it be on Twitter and Facebook. As well obviously, we are attending some exhibition, where we are pushing now effectively the product, because the intention is to launch in terms of availability at the Engredea -- Expo West -- used to be called Expo West exhibition in March. So that is when our marketing and action will be even more enhanced at that point.

Okay. Thank you. And I guess, my final question is on Onemia, potentially I guess, for Pierre. Can you just update us on Onemia? We haven't heard about Onemia for a little while, and you did mention in your commentary that you had a plan for Onemia going forward, a new marketing program basically I guess direct commercial in the US. I am not sure that's necessarily new, but can you give us an idea of what your plan is now for Onemia, and possibly if it's going to be introduced into Canada?

Pierre Lemieux?

All right. So first of all, Onemia is already being marketed in Canada with our distributor, our only distributor called XYMOGEN, so this is still ongoing. In terms of update there, we are still depending on XYMOGEN to distribute our products throughout the US, and we are working hard right now to lower the cost of our product. So I think it's a matter of improving our cost of goods, in order to improve sales of Onemia.

I think right now, there is more competition in the market. Price is the name -- pricing is the name of the game, and we need to improve the cost, although Onemia is again, a top-notch product. We use Onemia at Acasti really to pave the way for CaPre -- keep in mind that Onemia is more like a marketing tool for us, to really educate the physicians and this is still ongoing.

So we are still distributing samples of Onemia to let the world know that this product is a great product, expensive product though. It's a niche product. But it makes a lot of sense for us still to carry that product, and educate as I said the physician who are expecting CaPre eventually in the marketplace. So this is what I can say there, for that.

And would you be getting results from these physicians that we can potentially, or you could potentially share with us as to the effectiveness?

Sure, this is what we have done in the past. We have collected some, actually around 50, 75 cases from those physicians, again all testifying of the quality and [efficacy] of the product.

This is something that we have stopped doing to be honest with you, so have -- we didn't engage into a phase IV, so-called a phase IV after post-marketing. But this is something that we keep an eye on. It may be part of our strategy in the future going forward.

Yes, I think that would be very positive to see some of the results for the impact of what CaPre might, or what we expect from CaPre going forward in trials. Thank you very much. I will let somebody else in.

Thank you, Robin.

Rick Schottenfeld, Coyote Capital

Hi guys. First of all, I just want to tell you how pleased I am with the management changes that have taken place. The clarity and professionalism on these calls is a stark contrast to what was going on in the past, and I look forward to the continuation of that.

In terms of my question, you talked in your prepared remarks about initiatives to strengthen the supply chain. And I was wondering if you could elaborate on those comments a little bit?

Yes, and again, we now to add to what I am going to say. I think there are two issues. One is that the quality of the krill we source has a direct impact on our production cost, given the yield that it derives. I think we are working much closer with fisheries, companies to make sure that we have as close to the pond as possible, to the boat access or ability to get the best krill possible.

So that is -- how you do that, well, I guess, you can let your imagination -- you can go through commercial arrangements, facility partnership. And I think we are actually, and Andre has been leading that.

I think we are working very, very closely with these companies to see how can we integrate so to speak better. It doesn't have to be done through a corporate integration, but certainly through commercial integration.

And also linked to that is a price, because obviously pricing of krill is a key component of raw material of our end product. So therefore, it's control --a quality control price, so obviously working perhaps with less people. We have a continuum, in terms of our sourcing allows them to manage their fleet a different way.

So and maybe Andre, you should elaborate a little bit more. But I think we, clearly that is a focus that is paramount to our success. Andre, do you want to explore that a bit more?

Yes, yes. Obviously, in the past the way we source krill, we were using many different companies from many different countries. So we have got closer and closer to a few of them. And like Pierre said, it is critical for us to get the best price and the best quality.

So there is steps that we can work with our fishermen to get that, to get by concentrating our volume, making sure though that we have exclusivity, and we have supply agreements for long-term. Then we can work on price, we can work on mechanics to improve the quality of what we are best.

So there is a lot of discussion going on. Obviously, it's a little bit early-stage right now to elaborate too much on that because of a lot of this information -- it remains confidential.

But there is a lot of efforts towards that front, because it's a big, big part of Neptune's success to integrate these operations to Neptune's future. So remain assured that we are doing everything we can to make sure that we have the best quality, the best partner, at the best price.

And we will do anything we can, but short of buying a boat. We are not going to buy a boat and fish ourselves.

No, we are not going to go that far, yes, exactly. (Laughter).

Okay. Thank you guys.

Doug Loe, Euro Pacific Capital, Inc.

Thank you very much, and thanks for the overview on the quarter, Pierre and Andre. So just a couple of things for me. One, just kind of a housekeeping item, you in your MD&A you did go into some detail on what your critical plans still are for MPL IX in mild cognitive disorder and ADHD. I was just wondering if you had any sort of tangible expectations that you might advance either of those programs some time over the next quarter or two, or is it still just on the to-do list?

Pierre Lemieux?

Well, regarding this trial, I think what is going on with NeuroBioPharm right now, we really need to regroup and better define the plan going forward. So right now, I think we had a couple of proposals and synopses, but we have put that on hold for a while. Just to make sure that with the venue of Jim, that we will have the time to discuss, and really pick the right group to work with and the right program.

Okay, that's fine. And then, just kind of a bigger picture question for anybody who wants to answer, be that from Jim's perspective on this, it is certainly our sense that the overall omega-3 nutritional supplement category experienced a little bit of market compression over the last couple of years. And I think that there is a few factors that could have played into that, including Amarin's FDA Advisory Panel Review on its ANCHOR study, and of course, select data on associating omega-3s with prostate cancer risk I think might have been a contributing factor.

Just sort of wondering, from anyone who wants to answer, just how you think the industry overall has been addressing the elements from those clinical studies as it relates to the omega-3 category? And to what extent, do you think they might continue to still be limiting omega-3 growth overall? And just sort of your sense on how recent clinical data has been impacting omega-3 as the nutritional supplement class would just be kind of interesting for us, just to kind of think about how NKO and EKO revenue ramp could progress, independent of your own manufacturing issues? And I'll leave it there. Thanks.

It's a good question, and I think we will get Jim to work here. So Jim, can you first provide your macro perspective, and then Michel can give more a precise Neptune perspective after, Jim?

Thanks, Pierre. Boy, Doug, that is a really great question. I think from a consumer market perspective, there is the mantra that I have used before, where science leads, market follows. And I think in the consumer nutrition space in particular, the market is very reactive to the news of the day.

What we as an industry, we as a company have to do is sometimes take half a step back, and look at the magnitude of the science. And one of the reasons why, and I said in my prepared remarks earlier, that I love this space of omega-3s because the overwhelming science is -- it is just a wonderful argument there for this market for consumers and individuals.

I think the challenge of the industry in the broader consumer omega-3 business is lack of brand leadership and lack of communications. Now there is work going on right now through industry consortiums, and if you follow this there's quite a number of industry players including Neptune who are contributing to consumer PR efforts. And I think you'll find with continuing that positive science and improved communications, a rebound or more robustness in consumer demand that we have seen in the last -- retrospectively last year or so.

Great. That's helpful. Thanks very much, Jim.

Michel, do you want to add something to this then?

I think on the macro point of view, I think Jim really responded to basically the pressure that the (inaudible) was under based on some allegation from a clinical that was quite disputed anyway, in terms of its protocol and its results. So on that point, I think I don't have anything to say beyond what Jim said.

Good. Thanks.

Dan Trang, Stonegate Securities

Okay. Most of my questions have been answered. But one that is kind of on my mind as you mentioned focusing on reducing process costs. I was wondering when we should expect to see those reductions in process costs be reflected in your P&L?

Andre, do you want to answer there?

I mean, obviously this is an ongoing process and we are expecting to be fully efficient, let's see by -- I would say at the latest by Q2 of next fiscal year. But sooner or -- it could be sooner. I mean, it is a priority. It is obviously even though it's the same process as the old plant, it still an improved process, different equipment, different machinery.

So and we are trying to be more efficient. We are trying to get the best quality oil, so there is a lot of testing going on, that is part of the process to get to the optimal level.

So I expect this to be done as quick as possible, maybe next quarter. But I would say, worst-case scenario, the quarter after that we should be fully efficient.

Okay. All right. Thank you.

Thank you. I am showing no further questions at this time.

Thanks, operator, and thank you everybody for joining us today. I think this ends our call for the quarter then. Thank you.

Thank you for participating in today's conference. This concludes the program. You may all disconnect, and have a wonderful day.