Phibro Animal Health Corp (PAHC) 2020 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Phibro Animal Health Corporation Q4 2020 Conference Call. (Operator Instructions) I would now like to turn the call over to your speaker today, Richard Johnson, CFO. Please go ahead.

Thank you, operator, and good morning, everyone, and welcome to the Phibro Animal Health earnings call for our fourth quarter and fiscal year ended June 2020. On the call today are Jack Bendheim, our Chief Executive Officer; and myself, Richard Johnson, Chief Financial Officer. We'll provide an overview of our quarterly and full year results, and then we'll open the lines for your questions.

Before we begin, let me remind you that the earnings press release and financial tables can be found on the Investors section of our website at pahc.com. We're also providing a simultaneous webcast of this morning's call, which can be accessed on the website as well.

Today's presentation slides and a replay and transcript of the call will also be available on the website later today. Our remarks today will include forward-looking statements, and actual results could differ materially from those projections. For a list and description of certain factors that could cause results to differ, I refer you to the forward-looking statements section on our earnings press release. Our remarks today will also include references to certain financial measures, which were not prepared in accordance with generally accepted accounting principles or U.S. GAAP. I refer you to the non-GAAP financial information section in our earnings press release for a discussion of these measures. Reconciliations of these non-GAAP financial measures to the most directly comparable U.S. GAAP measures are included in the financial tables that accompany the earnings press release.

Before we get into the numbers, let me remind everyone that we present our results on a GAAP basis and on an adjusted basis. Our adjusted results exclude acquisition-related items, unusual, nonoperational or other nonrecurring items, certain other income and expense items and the income tax effects related to any of those pretax adjustments as well as any unusual or nonrecurring income tax items.

And with that, here is Jack Bendheim with some introductory comments. Jack?

Thanks, Dick, and thank you, everyone, who is joining us on this call today. The June quarter was certainly a difficult one for Phibro, as it was for all those who are involved in supply chain to feed the world with healthy proteins.

We did, however, highlight our continuing evolution to a more balanced Animal Health company as despite the incredible challenges we and our customers face across the board, we were able to grow our nutritional specialties for vaccine product lines.

We are happy to turn the page. And while we enter our new fiscal year without the typical visibility we would normally have, I do anticipate the macro trend of our nutritional specialties and vaccine products growing at a faster clip than our MFAs and other products will continue.

We have a number of growth initiatives relating to our nutritional specialties and vaccine product offerings planned for the current year. Already in the first 2 months, we have seen successes executing against these plans, and I'm confident that our momentum will continue to grow throughout the year as we access new customers and enter new geographies.

Over the coming fiscal year, we expect our markets to gradually rebound to pre-COVID levels. And importantly, we also anticipate gaining greater in personal access to our customers, access that will allow us to resume the work on the multiple new initiatives that were paused by the pandemic.

While we are adding a number of new initiatives on top of the ones we are carrying forward from last year, we are cognizant of the need to our -- for our industry to get back on its feet. So we're exercising the strength in a number of projects we have greenlighted.

Finally, I want to reiterate our commitment to stand behind our products assigned. As we stated in our recent press release regarding carbadox, we are deeply disappointed that the FDA has not followed in its own procedures and afforded Phibro the hearing, the law requires, and that the FDA previously agreed to. We will continue to work on highlighting the safety and efficacy of this product, and we will take whatever steps are necessary to make sure the product is judged on the science.

With that, I will turn it back to Dick and look forward to taking your questions at the conclusion of his presentation. Dick?

Thank you, Jack. So let's start by reviewing the results for our June quarter.

Our consolidated sales for the quarter were $186 million, that was a decline of $18 million or 9% versus the prior year. During the quarter, we experienced a short-term decline in demand for our products due to the pandemic. The animal production industry faced unprecedented demand disruptions, production impacts, price declines, plus substantial currency volatility in a number of international markets. We experienced sales declines in all 3 segments of our business, primarily due to lower volumes. In Animal Health, we saw increased sales in nutritional specialty and vaccine products, but those were partially offset by the lower sales of MFAs and other products.

We'll get into further details regarding segment results later in the presentation. Our reported net income was $5.6 million for the quarter, that was a decline of $3.2 million or 36% compared to the prior year.

Income before income taxes improved, primarily due to restructuring costs in the same quarter last year. However, an unusually higher provision for income taxes caused the net income decline. The increase in income tax was driven by the effects of the complex additional federal income tax known as GILTI, that's an acronym, changes in uncertain tax positions and the absence of tax benefits on the operating results of some of our newer international operations. As a result, diluted earnings per share was $0.14 for the current quarter, that was a decrease of $0.08 per share from the prior year.

Now let's look at adjusted results on Page 6. I'll discuss net sales in more detail when we look at the individual segments level. In total, adjusted gross profit was $62.1 million for the quarter, that was a decline of $4.5 million or 7% compared to the prior year. We did see favorable product mix in the Animal Health and mineral nutrition segments during the quarter and that contributed to an improvement overall in the overall gross profit percentage.

In the Animal Health segment, increased sales and gross profit from nutritional specialty and vaccine product sales, partially offset lower volumes in MFAs and other products. Mineral Nutrition gross profit decreased as lower average selling prices more than offset favorable raw material costs, and the gross profit decline in Performance Products was driven by lower overall volume.

Total adjusted SG&A or operating expenses decreased in the quarter, they were $44.2 million, that was a decrease of $1.7 million or 4% year-on-year, primarily due to lower variable compensation and employee-related costs in the Animal Health segment, with a partial offset from the effects of the Osprey acquisition. This is the last quarter where we will see the -- any meaningful impact of the overlap of the acquisition, which we did in August -- beginning of August a year ago. The adjusted provision for income taxes was unusually high in the quarter for the same reasons that I described earlier. And as a result, adjusted diluted EPS was $0.17 per share compared with $0.30 per share last year.

Looking more closely at the Animal Health business. Net sales of $122 million, declined $9.6 million or 7% compared to the same period of the prior year. Net sales of nutritional specialty products were $31.1 million, an increase of $2.6 million or 9%. The Osprey acquisition accounted for the majority of that sales growth.

Net sales of Vaccines were $18.6 million, an increase of $1.5 million or 8%, driven by higher international demand. And net sales of MFAs and other products were $72.6 million, a decline of $13.7 million or 16%. We saw lower demand in various international regions, including China and South America, and the volume decline in China was due to the effects of African Swine Fever, plus a phased regulatory change that took effect in the middle of our fiscal year in January of 2020.

For the Animal Health segment, adjusted EBITDA was $29.6 million, that was a decline of $1.6 million or 5%. The decrease was attributable to the overall sales and related gross profit decreases, partially offset by favorable SG&A costs.

And now looking at our other segments. The Mineral Nutrition had net sales of almost $50 million, that was about a $6 million decrease or 11% due to -- primarily due to lower average selling prices coupled with slightly lower overall unit volumes. The lower average selling prices are generally correlated with the movement of underlying raw material costs.

Gross profit declined $300,000 in the quarter, as the decline in average selling prices was more than the change in favorable raw material costs. As a result, adjusted EBITDA was $3.5 million, down about $300,000 compared with the same quarter last year.

The Performance Products business reported net sales of $13.6 million, a -- also a decline -- a decline of $2.3 million or 14%. We saw volume declines in copper-based in our industrial chemical products, which contributed to lower profitability and overall a $400,000 decrease in adjusted EBITDA. And corporate expenses were comparable to the prior year.

Now turning briefly to our full year performance. This is -- since this is the end of our fiscal year, we not only are talking about the quarter but talking about the full year. So for the full year, we have $800 million of sales, that was about a 3% year-over-year decline. And within the Animal Health segment, sales declined about $5 million. Of that total decline, $5 million was -- approximately $5 million was within the Animal Health segment, and that was a 1% decline. We did report double-digit sales growth for our nutritional specialty and vaccine product lines. However, MFAs and other products declined.

Our nutritional -- net sales of nutritional specialties grew 14% for the full year due to volume growth in poultry and dairy products. And the recent Osprey acquisition accounted for approximately 2/3 of the overall sales growth for that product group.

Vaccines grew 10% for the full year due to strong international demand for poultry vaccines and increasing market penetration. In addition, in the prior year, we had a domestic distribution arrangement for the first 4 months of the year. And so on a comparable basis, our net sales of vaccines would have increased 14% without that unfavorable overlap.

And finally, net sales of MFAs and other products declined 8% due to a $31 million sales decline in China, driven by the effects of African Swine Fever and regulatory changes.

The other segments of our business also saw declines in sales. Mineral Nutrition segment declined $19 million, that decline -- or that was an 8% decline. Decline was primarily driven by lower average selling prices. And Performance Products net sales decreased $3 million or about 5%, due to reduced volumes of copper-based products, with a partial offset from more business in the personal care ingredients area.

Adjusted gross profit overall was $263.5 million, that declined $6.4 million or 2% due to the sales and related gross profit declines. Animal Health adjusted gross profit declined primarily due to the sales decline in MFAs and other products, with some partial offset from the sales growth and the other product groups.

Mineral Nutrition adjusted gross profit also declined as we saw average selling prices being dropping slightly faster than the overall favorable raw material costs and the favorable effect of increased unit volumes. And in Performance Products, gross profit declined due to overall lower volumes.

Total company for the full year, adjusted SG&A increased $11.5 million or 7%, as we continued to invest in product development and strategic initiatives. In addition, the Osprey acquisition and increased public company costs related to strengthening and testing of internal control over financial reporting also contributed to the overall expense increase.

As a result, adjusted EBITDA for the year was $102 million compared to $118 million a year ago and that translated to adjusted earnings per share of $1.08, a 29% decline compared to $1.53 a year ago.

And now briefly looking at capitalization. At the end of June, we had a gross leverage ratio of 3.8x. That was $388 million of total debt compared to $102 million of adjusted EBITDA. We also had $91 million of cash and short-term investments on the balance sheet at that same point in time.

For the June quarter, we used $6 million of cash before financing activities, primarily for our ongoing capital expenditure program. For the full year, we used $30 million of cash, excluding change in short-term investments and that included using $55 million for the acquisition of Osprey. So putting aside the acquisition of Osprey, we generated $25 million of cash prior to the -- prior to any financing activities for the year. And we have paid and declared to be paid the routine quarterly dividend of $0.12 a share.

And now talking a little bit about our guidance. We are forecasting only short-term expectations at this point, given the ongoing difficult conditions in the industry. And as a result, our more limited visibility than we would normally -- if we would normally have. The animal production industry continues to face demand disruption and production impacts. We do believe we are optimistic. We believe the current situation will normalize as we progress through our fiscal year and the industry gradually will return to typical operating levels.

Our guidance for our September quarter is to have net sales of approximately $190 million and that's about the same level as the September quarter a year ago. That will translate to net income of $5 million to $6 million on a GAAP basis, an increase of $2.5 to $3.5 million compared to last year and GAAP EPS of $0.13 to $0.15 per share, again an increase of $0.07 to $0.09 per share.

Adjusted EBITDA, we are guiding to approximately $20 million for the quarter, again, approximately equal to the prior quarter, and that will translate to adjusted diluted EPS of $0.18 to $0.20 per share, a plus or minus change of $0.01 from the same quarter last year.

And with that, that's the end of my prepared comments. We will open it up for questions from the callers. Operator, please?

(Operator Instructions)

Your first question comes from Balaji Prasad with Barclays.

Just a couple from me. Firstly, on the guidance, I kind of wanted to draw your attention to last week's report, outlook report, from the USDA, where it states that it expects poor production of around 7.2 billion pounds or around 7% growth versus last year. So could you please help me understand that outlook with regard to your Q3 guidance?

Secondly, with regard to China, can you give an update on what is the current impact of ASF? And isn't the repopulation or re-herding in China taking up pace enough to start offsetting the impact of ASF?

Thanks for the questions. So first of all, as we all know, we all have read the hog production in the U.S. was greatly disrupted by -- at the processing factories, high level of infection, COVID infection, forced many of these facilities to close down or operate at different rates. So that has pushed back, in this past year, there were a lot of pigs that went unprocessed. There were lots of -- it was a combination of culling, combination of sort of product may move to different markets. I think things have -- the U.S.A. is projecting, things will get back onto normal production. Even though some of these plants are still operating, we understand still having problems of getting people commence to operating with fairly high levels of COVID. So I think this is just a projection, but I think the feeling generally is that things will return to the past, past not being last year, the past being years back -- gone back. So we will all see some level or increase in hog production this coming year.

As far as China goes, there is no ASF vaccine yet in China. So the way the Chinese producers are combating ASF is to very cautiously do a better, better job in biosecurity and sort of moving into some of these larger farms where they can do that.

So yes, there is an increase in hog population, as big producers go on and to repopulate. Prices have been very high, and so it's very profitable. But in many, many of the smaller farms, they are very -- they are still very scared to put pigs on the ground and run the risk of these great losses. So there is some increase. And I don't think they will ever be able to get back to the 400 million pigs they had on the ground in China until there is a vaccine.

Your next question comes from David Westenberg with Guggenheim Securities.

So I know you made some investments in this last fiscal year in terms of new product development. So can you talk about the contribution for new products in 2021, quantitative or qualitatively?

And then how do you feel your position in kind of a new precision livestock farming paradigm? I mean are any of those investments in new products around technology solutions? I have a couple of follow-up.

So let me -- so starting backwards, one of our investments in sort of new technology is a more precision vaccinator, I believe to vaccinate chicks, but -- so we made that investment -- continue to make the investment in that product. I think we've developed it. But the problems of the pandemic is the ability to get on farms, the ability to bring on salesman and our technical teams to demonstrate this product has been severely curtailed. So while we made the investment prior year and continuing doing this past year, the ramp up is hard to project because people on these farms are being very, very cautious of bringing people from the outside. And so I would say it's sort of an answer to sort of both of those questions. So we had made investments, but to bring new products to market will be continually to be slow until there is a vaccine for COVID and then people will feel more comfortable bringing outside events.

Yes. Okay. Got it. That makes sense. So maybe we should think about contribution of products being after a COVID vaccine or at least a little bit more open to the sales channel. And then I do admit, you're one of the only companies that I cover -- or you are the only company that I cover that has Mineral Nutrition as a big contribution to business. Can you remind us kind of the fluctuation in prices, why is there not a way to be kind of opportunistic, given the fact that you are probably a little bit more sophisticated of a buyer than the people -- the companies and farmers that you are selling to?

Well, so I'll take great umbrage of that, not for ourselves but for our customers. There is no one smarter in pricing and in raw materials than a farmer. There was no one -- I mean, the first exchanges in terms of commodity exchanges happen in Chicago. It happens with grains and happen with pork belly and stuff like that. So the farmer gets up -- the poor farmer gets up really early in the morning, and he does his calculation, and he then goes out to feed the animals and then he comes back and he trades on the exchange.

So everyone is very smart. Everyone knows every raw material costs. Everyone knows everything. So if prices change anywhere in the world, believe me, our customers know it. And they are right they are asking for -- to stay current in the prices. So that's why it's quite apparent what happened. Prices go up and prices go down by many other factors in the world, and so that gets translated to the pricing to the customers.

This past quarter -- last quarter, with COVID, it created so many imbalances that what we saw very often is that the shock of farm is not being able to move their animal in the normal course of events, right? You are growing your pigs, and all of a sudden, the exporter assess, "I can't take any. I'm backed up." So now what do you do? And so what happened across the industry is that the farmers said, "Okay, I've raised -- sort of the product has been sold. I sold on the exchange a long time ago, I'm not going to invest more money, literally, if I'm not going to get more money." So they looked to cut back wherever they can cut back -- cut back in animals, which is what they did, cut back in what they can feed. See if they can get away with cheaper feed, et cetera, et cetera. And that created, for the industry, this craziness we saw in the quarter, plus foreign exchange rates and so on and so forth.

But I think we're more back -- as Dick said, we're back to normal. We are very optimistic on trends in the industry. Even right now, without a vaccine, people are managing much better. And again, we'll see a vaccine, hopefully, sometime early in the middle of next year, and then I think things will completely come back to normal.

Your next question comes from Michael Ryskin with Bank of America.

Jack, I want to have a couple of quick ones. One -- or hopefully quick. One, I want to start on the guidance for 1Q and the outlook, and I realize that there's obviously a lot of, as you had discussed, a lot of uncertainty in the market in terms of what's going on, both as a result of the underlying market but especially if you layer COVID on top of it.

But looking sequentially fiscal 4Q versus the fiscal 1Q guide, it still implies, even though it's flat sequentially on a -- or roughly flat sequentially on a dollar amount and on a year-year amount, it still implies there will still be bit of an improvement in the markets.

So I just want to dig deeper into what you see the bigger drivers. Maybe we can get your thoughts on U.S. versus OUS balance as far as COVID impact goes and/or whether it's a particular business line or species that you are thinking about for fiscal 1Q? And then I have a couple of follow-ups after that.

So I think part of it is that in -- we see in our dairy business, the prices of milk has taken great gyration. It's sort of steady to a level that has given the farmers a bit more confidence. And even though it's still, as I said, just in the prior call, it's quite difficult to get on farms. We are getting out and meeting with the customers, maybe not on their farms, and maybe sort of car to car. In the industries, we call belly to belly, but that's not done these days. Sitting in car and being able to talk about your products and what's going on and trying to help the customers.

So we're starting to see a pickup, one, in our dairy business. We're starting to see -- some of the products we've worked on, we've introduced, it's starting to be picked up a lot slower than we had hoped for but we're starting to see pickup in new poultry products that we have entered. We are constantly getting growth in our vaccine business. We had really good poultry and swine vaccines. So again, when we are able to introduce them, we are seeing pickup there. So I think it's the general tone of the optimism that we have. It's slow going because it's -- people are not back to normal. But looking at our customers, they have managed to rearrange their supply chains, and they are selling more to supermarkets today than ever before.

And if you look at it quite interestingly, up till very recently, normally, when you hit the summer and you see lots of sales being offered to move product into the barbecue, which means that there's surplus in the warehouse. But only now, we're starting to see sales being offered in supermarkets. So I think our customers have balanced it. The supply chain is sort of set up. And they have had -- at least the supermarkets have had a pretty good year.

Great. Sorry, I was on mute there. I appreciate that. And then on the international markets, I don't know if you can answer this or not, but in places like South America, Latin America, where you're seeing some of the more recent pressures, is it fair to say that those markets have at least bottomed for you? And it's as bad as it's going to get? Or is it too early to say that too much uncertainty kind of depends on COVID?

Yes, I hate to call bottoms, but I think, overall, looking at the biggest markets in South America, which is really Brazil, Argentina, Central America, Mexico. I think things seem have bottomed out, and markets there -- out of Brazil, a lot of it depends on exports. I think I saw a stabilizing sign to get better. Some of the smaller markets still is unpredictable, like Chile and Peru with COVID.

But where we are seeing still the effects of COVID and it sort of interestingly is at places like most far east, like, Indonesia, Bangladesh, where a lot of those markets, it's just driven by the economy. Their economy has been so badly devastated by the effects of COVID, one, in the country, and two, in the markets they sell normally their product too, might be U.S. and to Europe, is that people don't have the same economic ability to buy protein as they have it a year ago.

So for those markets, it's going to take longer to come out of this COVID-related disaster, right? It's because not necessarily pushed by their own people being sick but being pushed by the amount of people having work.

Great. And then a couple of really quick ones. One is, apologies if I missed it in the prepared remarks, I know you touched on Mecadox briefly, but could you remind me of sort of the next steps, catalysts, time line? How we should think about that situation evolving on Mecadox?

And then the second question is, could you quantify what was the dollar contribution of Osprey for the year? I think it's been almost a full year it's been in your business? So I just want to make sure I got it right in my model.

Okay. Well, as I said towards the end of my prepared remarks, the FDA surprised us a little over a month ago with only some preliminary run. We were proceeding for the last 4, 5 years and answering questions they had, investing a lot in doing the scientific research and proving I think to ourselves and I think also to them that the product is, say -- it's always been effective, but it's methodically safe as used. Something I don't know what's going on in FDA. I know what they are not doing, but what they should be doing in terms of the Animal Health space, it's just continuing on the normal pattern and looking at the science here. And if they are not happy, we could continue to hearing and then proving in sort of a hearing that the product is safe. They decided to withdraw it that NOOH and said, "Okay, forget that, and now we're going to come up with another way may be to remove the product."

So we are protesting that. We most likely will end up in a lawsuit with them. So I don't have a short-term prediction, but I think, again, if this thing would end up in the right procedures, we would win because the product -- we have proven scientifically the product is safe.

Great. And Osprey?

I don't know. Dick, do you have those numbers?

Yes, we say that about 2/3 of our nutritional specialty growth for the year was the Osprey business, and that should -- that's the legacy business. That's not the new poultry product that we developed sort of separately. So that will give you a sense of the magnitude of the Osprey sales contribution.

Your next question comes from David Risinger with Morgan Stanley.

So I have 3 questions, please. First, with respect to China, there is an opportunity for the company to begin to sort of regenerate sales in China. Could you talk about those prospects?

Second, with respect to Brazil, is there anything to watch with respect to virginiamycin regulation in Brazil?

And third, with respect to the tax rate, Dick, could you just -- and maybe you've mentioned it earlier, but is there any way that you could frame for us how we should think about medium- to long-term prospects for the corporate tax rate?

All right. Thank you, David. So in China -- and I think maybe I'll forget. So I'll start with China and go back to Brazil. So in China, like in most markets in the world, virginiamycin, which was our leading product, was used in for growth promotion, was not -- did not have a therapeutic label. So China changed the rules pretty suddenly, as they sometimes do. And the ability for us to have continue in that market as a growth promotion product ended. And we have -- we applied to move that product to a therapeutic claim. And as a therapeutic product, we were selling virginiamycin and we continue to sell it around the world.

So we got held up in China with COVID, that many of the government agencies we needed to deal with shutdown. It's hard to get product tested, et cetera, et cetera, et cetera. We know China, when they shut, they really shut. So what we thought would take we would have by now, I think, will take us another year to get our therapeutic claim and then to start rebuilding the product not at the same level we had before but at a very decent level.

In the meanwhile, we've sort of reengineered our sales force and our product line, and we've begun selling some of our nutritional products that we have selling around the world in China. It's not that significant yet, but we're seeing growth of those products in that marketplace. So going forward, hopefully, a year from now, we will be talking both about MFAs and nutritional specialties in the Chinese market.

In Brazil, Brazil made the change, and we made the change in Brazil from a growth promotion to a therapeutic model over a year ago, maybe even a little longer. So our sales continue and to reuse product virginiamycin, which continues to be used as a therapeutic product there, both in -- across all 3 species: poultry, swine and cattle, and we are seeing decent uptake.

And on the tax rate, David, I would say, before this, I hate to use the much overused terminology of something like a perfect storm, but I would say that in the medium term, even this year, we're looking at a rate to be back sub-30%, so something in the upper 20% range, as an effective tax rate on it, on an adjusted basis.

(Operator Instructions)

Your next question comes from Kevin Kedra with G research.

First, wanted to ask about what you are seeing as far as inventory levels out there within the channel after COVID created some disruption. So over time, if we seen that start to normalize, is there still a lot of movement there?

So you're talking about our customers, right?

Yes.

Right. So the big mystery, and I'm citing around the world, things are pretty balanced. Again, the big mystery and the big -- everyone was sort of trying to focus on -- it was in the U.S., as I started talking earlier, with so much attention put in so many big hogs loaded facilities shutting down and the backup. And the industry had more speculating that looked like about 3 million pigs were backed up, and what would happen with it. So somehow they disappeared, as best we can tell. And they weren't -- I don't think a lot of them were culled. I think a lot of them ended up in the market may be with small slaughterhouses that are not tracked by the USDA. Some of these places maybe even hadn't been worked in a long time because these pigs got bigger, and they really couldn't be handled well on the more automated lines. So maybe some of the older factories with slower lines and stuff like that handled it. But as far as we can tell, we will see a little bit of gap coming up because, in some cases, people culled some of the baby pigs, and so that took it out of the marketplace, and maybe we will see that effect in November, December. But I don't think there's a great overhang from what we see and what we hear in the hog industry. And everywhere else, I don't see it as a problem. The poultry guys respond very quickly, they did. I think things are back normal there. And in the cullings, I think the business is okay.

Great. Appreciate the color. And then secondly, I don't know if I missed this, but did you guys give a revenue number, could you give a revenue number on carbadox? What the contribution was for the full year?

Yes. It's in the 10-K. It was $17 million last fiscal, Kevin, 1-7.

Okay. Great. And then finally, any update on what you guys are doing with the African Swine Fever vaccine. I know there's something that you guys were looking at before. Anything new there?

Yes. So we continue to look, like everything else in China. COVID sort of shut down, one, our ability to get over there and test products that we have in development. It -- we have not been able to get into China now for 9 months. And so we still are doing some development work outside of China, but none of the tests what we've developed to see if it has potential to work in the African Swine Fever were sort of blocked. And we'll, hopefully, hopefully, by the -- maybe by this winter, the end of this calendar -- towards the end of the calendar year, things will open up, flights will start opening up and we can get back in and then move -- flex on moving the product forward.

There are no further questions at this time, I'll turn the call back over to Richard Johnson for closing remarks.

All right. Well, we thank everyone for listening and your insightful questions and comments. And we'll talk to you again when we talk about our first quarter results in early November we should be having that call. And if we don't have any interesting earnings results to talk about, we'll probably be reporting a couple of days after the election, so we can talk about that as an alternative. Thank you, everyone, and talk next time. Bye.

This concludes today's conference call. You may now disconnect.