Alkaline Water Company Inc (WTER) 2022 Q3 法說會逐字稿

Greetings. Welcome to The Alkaline Water Company Third Quarter Fiscal 2022 Earnings Call. (Operator Instructions) Please note this conference is being recorded.

I will now turn the conference over to your host, Jeff Wright, Director of Investor Relations. You may begin.

Good afternoon, everyone, and thank you for joining us for The Alkaline Water Company's third quarter fiscal 2022 earnings conference call. Shortly, you will hear from Ricky Wright, our President and CEO; and David Guarino, our Chief Financial Officer.

During the call, we will be making forward-looking statements within the meaning of the safe harbor provisions of US security laws, and we may make additional forward-looking statements during the question-and-answer session. Forward-looking statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. For additional information about factors which may cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements, please consult the company's Form 10-Q, which was filed today and its other reports filed with the SEC on EDGAR and the Canadian security regulators on SEDAR.

In addition, such forward-looking statements and any projections as to the company's future performance represent management's estimates as of today, February 14, 2022. The company does not undertake to update any forward-looking statements or projections, except as required by applicable laws, including the security laws of the United States and Canada. Actual results could differ materially from those contemplated by any forward-looking statements as a result of certain factors, including, but not limited to, general and economic business conditions, competitive factors, changes in business strategy or development plans, ability to attract or retain qualified professionals as well as changes in legal and regulatory requirements.

The company issued a press release announcing its financial results and filed the Form 10-Q with the SEC. So participants on this call who have not already done so may wish to look at those documents as the company will provide a summary of the results discussed on today's call. In a moment, I will turn the call over to our CEO, Ricky Wright, who will give you an overview of the company's third quarter fiscal 2022 results. Following Ricky's comments, David Guarino, our Chief Financial Officer, will provide an overview of the company's operating results. Ricky will follow David again providing closing remarks. Then we'll open the call for Q&A after management's update.

And now I would like to turn the call over to Ricky.

Thank you, Jeff, and thank you for all attending the conference call today.

We are pleased to announce that this quarter, we exceeded even our own expectations. We are happy to report that our sales for the third quarter were $15.1 million. This represents a 57% year-over-year growth for the quarter. This is the second straight quarter with year-over-year growth in excess of 50%. It is also the second largest revenue quarter in the company's history. Many factors have contributed to the outstanding quarter, including substantial growth in our single-serve format, growth in our convenience store channels through our new direct store delivery partners, DSDs and operational changes we implemented in the fourth quarter of 2021 that have allowed us to avoid most of the supply chain problems of our competitors.

Our ambition has always been to make Alkaline88 water a household brand. Thanks to the efforts of our sales team and the marketing department's excellent integration with our brand ambassador, Shaquille O'Neal and Authentic Brands Group, our brand awareness and our market penetration has never been higher. This past weekend, we had the opportunity to participate in 4 different events surrounding the Super Bowl, where literally millions of new consumers were introduced to Alkaline88 for the first time. And retailers could see how serious we are about our marketing efforts.

As this fiscal year draws to a close, the drivers for next fiscal year are firmly in place for continued growth. Although sales have been excellent, we have seen significant margin contraction as a result of inflationary pressures over the past 12 months. We've already taken a number of steps that will allow us to begin to increase our margins beginning the first quarter of fiscal 2023. These additional steps include the following: first, an approximate 9% across the board price increase, which should be effective across all banners for the entire fiscal 2023 year; secondly, we should have a slight reduction in the current freight costs based on the opening of our new co-packers throughout the country, which will allow us to manufacture products closer to their destinations; third, our buying power has allowed us to lock in many of our raw material costs over the next 12 months, avoiding additional inflationary increases. With these in place, management expects our margins to increase between 3% and 5% in fiscal 2023.

We continue to explore other ways to reduce our operating deficit without hampering our growth. We are reiterating guidance of $62 million for fiscal 2022. Later in this call, David Guarino will have additional comments on this quarter's financial results.

As we continue to grow as a national brand, it's important for Alkaline88 to be a leader in the value-added enhanced water category. Independent third-party industry data confirms that we are outperforming our category and our peers. Just a little over 9 years ago, we sold our first case of water as a company and quickly became one of the fastest-growing value-added water companies in the country. Admittedly, it was easy to show impressive growth when our monthly sales were starting at near 0. Now our monthly sales for the first 9 months of fiscal 2022 have averaged close to $5 million a month. And yet, according to Nielsen data, we are still outperforming the category in growth and outpacing the top 10 brands. This is a testimony to our business plan, our employees and our product.

In the most recent quarter, Nielsen data for the 13 weeks ended January 1, 2022, for all outlets combined, excluding convenience stores or xAOC confirmed that we were the fastest-growing top 10 value-added water in the country. We managed to grow at 46.4% in dollar volume over the last same quarter of the previous year. As I said, this outpaced all other top 10 brands, including the nonflavored brands, smartwater, vitaminwater, Essentia, CORE Hydration and LIFEWTR. Of the over 70 brands listed in the report, Alkaline88 had the third highest year-over-year gain in market share. Furthermore, if you look at the Nielsen data for sales growth over the past 2 years, Alkaline88 has grown 54% based on a 2-year stack, which needs all other brands in the top 10 category. This is almost 2x greater than the overall category growth. Our unit growth on a 2-year stack basis is 47% or more than 5x the category's growth.

As the founder of the clean beverage movement, Alkaline88 has always had a home in the natural food grocery channel and with health-conscious consumers. According to the SPINS data platform, which tracks natural food channels and the 12-week report ending December 26, 2021, Alkaline88 sales ranked second for all brands in the enhanced water category. Our year-over-year revenue growth for the period is 47%, that's more than 2.7x greater than the overall category. Although all our SKUs continue to show outstanding growth within the natural food channel, we're very proud to say that our 1-gallon bottle is the #1 SQU and dollar value in the entire enhanced water category within the natural food grocers reporting to SPINS. The data in both of these reports covering our last quarter indicates a tremendous amount of organic growth since most of the resets are just now starting in this new calendar year, we now estimate that we are in 80,000 stores nationwide, and we expect that, that number will expand to between 90,000 and 110,000 stores in the next 12 months. Our drivers for growth remain the same for the fourth quarter of fiscal 2022 and fiscal 2023, expanding marketing, expansion of our direct store delivery network, e-commerce, club specialty growth, hospitality, functional CBD water, additional co-packer expansion and sustainability initiatives.

All of our sales efforts will be boosted by the expansion of our marketing efforts, which began with the activities surrounding the Super Bowl yesterday and will continue with regional launches in the first quarter of fiscal 2023. Many listening today are aware that last quarter we launched our first-ever marketing program in strategic areas of the country with the Shaquille O'Neal assets that we generated during our second quarter. We delivered over 11 million impressions from a diverse mix of media. These included 30-second commercials on broadcast and cable TV, Hulu Connected TV, YouTube, Yahoo!, Programmatic, digital video and display and social influencers. Our results showed a significant uptick of our Nielsen reported sales within the region during the launch.

We will be expanding on the marketing efforts, utilizing these assets beginning in our new fiscal year. During the week of Thanksgiving, we also launched new ads on an 8,500-square-foot Times Square billboard featuring Alkaline88 and Shaquille O'Neal. We estimate that our billboard will have over 48 million impressions through December 31, 2022, and the largest city in America. It's tens of millions of brand impressions to New Yorkers who can now find Alkaline88 and more retailers like Rite Aid, CVS and now Stop & Shop than they've ever been able to have before.

We've been working diligently to extend the reach of the brand and leveraging our relationship with Shaq Authentic Brands Group. This has included our sponsorship of the Sports Illustrated Award. We were privileged having Shaq present the smooth play of the year and the honor of being the main sponsor for the Muhammad Ali Legacy Award presented to the legendary Billie Jean King. We were the exclusive water for the event and our aluminum bottles were on all VIP tables. The data shows that over 6.8 million viewers saw the show, greater than 2 billion impressions for the events were available on earned media and 500 medium placements valued at $51 million. This is all driving more demand for our product and establishing Alkaline88 as a household brand.

For the past 9 years, we have intentionally built our brand equity through a direct warehouse model in the grocery, drug and specialty retail channels. This allows the consumer to become familiar with our brand and a large store format. Only this year, we have aggressively begun our expansion in direct store delivery networks or DSDs. We know a DSD partner, coupled with a strong marketing team, is a key to success in certain channels. The 150,000 convenience stores in the country for over $4.5 billion in bottled water were sold in 2020, operating almost exclusively through DSDs. We've had a great rollout with Hensley in Arizona, Nevada Beverage and Mahaska in the Midwest with sales exceeding forecast expectations and growing daily.

We expect within the next 2 weeks to be able to announce another top-tier DSD distributor. As we stated in the past, we added DSD strategically in regions where they will have the greatest impact to our revenue growth. Recent major wins in convenience store channels include the addition of over 1,400 stores through our DSD partners alone. Our DSD efforts have also led us to a number of other major opportunities with national C-store chains and military bases that we will be acknowledging over the next few quarters. Our near-term target list includes over 3,100 new stores.

E-commerce accounts were over 25% of sales and more for some of our competitors. Due to cost of ramping up e-commerce and freight costs associated with shipping water, it has never been a significant portion of our sales. We now have a dedicated e-commerce team headed by Chris Pitman, who helped one of our competitors grow to over $40 million in yearly e-commerce sales. He's bringing many of the same tools and skills to Alkaline88. We are achieving new sales records weekly. In October, we announced our entrance into quick commerce space through our partnership with Ohi. This enables us to deliver water within 2 hours in places like New York and Los Angeles. Their distribution model allows us to have the most cost-effective product delivery in the 2 largest cities in America. As they continue to expand into other major metropolitan areas, we have plans to expand with them and to capture e-commerce share of those markets. Chris and his team will be launching a really updated website and optimization of our overall web presence before the end of this quarter.

All the fine-tuning and steady improvement that we are constantly making in this department are allowing us to continue to move more product more efficiently through e-commerce platforms like Amazon, walmart.com and Alkaline88.com as well as other emerging platforms. As we sell more through these platforms, our ability to provide more inventory to their fulfillment centers increases and is driving our cost per unit down and improving our e-com margins, while our gross sales grow. We hope by this time next year, our e-commerce sales will be a reportable segment in our financial statements.

Traditional brick-and-mortar, grocery, specialty retailer, drug stores and club has always been a very important part of our strategic plan. This quarter, we expanded into the club channel with the addition of Sam's Club, and we are furthering that relationship and are hopeful for a major announcement in the near future. We're also looking forward to running regional trials and to the top 10 specialty retailers in the country with hopes of expanding later this year nationwide. We also made our way into GNC the fast quarter, adding 2 single-serve sizes to 350 of their premium retail locations. We continue to see tremendous growth in our relationship with CVS, as they've added a number of new SQUs to their shelves.

We hope to add Alkaline88 in up to 10,000 new locations and new clubs, specialty retailers, groceries and drugstores in fiscal 2023. In addition, we have almost 15,000 of our retailers looking to add new SKUs within the next 6 months. There's room to grow since our all commodity or ACV percentages, which is a way to measure of product availability based on total store sales is only around 50% according to the Nielsen data. Our recent announcement in Q4, the Stop & Shop in the Northeast began ordering Alkaline gallons and 3 liters for the first time, and Lidl adding our 2 liters Shaq Paq next to our 1 gallon SKU are only the tip of the iceberg of what we expect over the coming months for these channels.

The hospitality market for bottled water is almost as big as traditional retailers. We are pleased to announce that we are running our new eco-friendly 750 mil white alumina bottle this month. This product will have a tremendous table presence, both aesthetically and as a premium choice water for venues across the country. It will be a great choice for restaurants, sporting venues, university cafes, hospitalities and anywhere else that is looking to offer a beautiful and deliciously smooth drinking experience to their patrons. Alkaline88 landed in over 100 market kiosks and 9 of the busiest airports in the United States, which serves almost 0.5 billion people combined and as an on-premise choice in hundreds of health hubs in spa. These additions are opening doors with new distributors and new on-premise providers. We expect in another 6 months as summer approaches in restaurants, universities and hotels make their fall purchasing decisions, we will become a significant player in this market.

Finally, we continue to leverage our outstanding reputation with retailers and consumers to bring new products to market. Through the use of our FreshCap powered by Vessl, our deliciously smooth Alkaline88 is now the base water for a number of new functional beverages. Alkaline88, of course, was our first functional beverage as it offers a lead hydration and deliciously smooth taste. This is a major step for our company and that we have the ability to meet consumer demand for almost any functionality. Our new products will combine the elite smooth hydration of Alkaline88 with functional ingredients.

Apart from Alkaline88 water, our A88CBD water was our first true functional beverage with the passing of favorable legislation in California, New York and Texas and elsewhere, we've allowed to include CBD and beverages, and we are now slowly adding products to shelves throughout the country. We expect A88CBD FreshCap to be in over 7,000 retail locations by the end of fiscal 2023. CBD beverages are expected to be the #1 growing product in the $1 billion-plus CBD ingestible market over the next 3 years, with a CAGR exceeding 50%. With all our contacts in the beverage industry, I believe everything is aligned for The Alkaline Water Company to become a major player in this category.

I'd now like to turn the call over to David for a brief financial overview. David?

Thank you, Ricky.

Before I begin, I'd like to encourage our listeners to view the Form 10-Q that we filed with the SEC for a more detailed explanation on some of the quarterly results I will be highlighting today. For the 3 months ended December 31, 2021, we reported our second best quarterly revenue ever of approximately $15.1 million compared to the $9.6 million for the 3 months ended December 31, 2020. This represents a 57% increase in sales. Our gross profit for the quarter ended December 31, 2021, was approximately $5 million compared to approximately $3.4 million for the quarter ended December 31, 2020. The decrease in our gross margin percentage was attributed to an increase in raw material and freight costs. But as Ricky just mentioned, we have taken various steps to mitigate the impact that these costs have had and will have on our gross margin going forward.

Total operating expenses for the 3 months ended December 31, 2021, was approximately $15.9 million compared with approximately $7.6 million in the prior year quarter. Total operating expenses increased primarily due to higher freight cost for our customer, additional promotional expenses relating to our new marketing efforts and general capacity building expenses across our organization.

Net loss for the quarter ended December 31, 2021, was approximately $10.7 million compared to a net loss of $4.4 million in the quarter ended December 31, 2020. Net loss per share in the quarter ended December 31, 2021, was $0.10 per share. Both the net loss and the net loss per share were impacted by noncash expenses of approximately $0.03 per share in the quarter ended December 31, 2021.

Cash used by operations during the 9 months ended December 31, 2021, totaled approximately $25.9 million as compared to $9.6 million of cash used by operations in the 9 months ended December 31, 2020. The increase in cash used by operations is primarily due to our increased net loss and increase in cash used to fund our working capital. We ended the quarter with approximately $3.3 million cash on hand and have a number of available resources to ensure that we have the capital to meet our growth objectives for the coming year. These include, but are not limited to, our line of credit and our sales agreement with ROTH Capital Partners as detailed in our 10-Q.

And with that, I'd like to turn it back to Ricky. Thank you.

Thanks, David.

Looking to the fourth quarter of fiscal 2022 and beyond, the most recent Nielsen 4-week data reported ending 1/29/2022 shows that our momentum continues to grow with 60% year-over-year growth for that period. More shining is for the first time in the company's history, we're arranging this report as the 7th largest enhanced water bottle company in the country after lead bragging several of our competitors. We continue to get a halo effect with many retailers as one of the few suppliers that deliver reliably during the pandemic and during the current supply chain delays. We've announced several recent wins and expect thousands of existing stores to add new SKUs over the next 3 to 6 months. Although lead time for initiatives in some of the new channels like hospitality and e-commerce being extended due to COVID and others such as A88CBD FreshCap that had regulatory hurdles, we now have a clearer picture of the likely prospects and wins for the first half of fiscal 2023. Many of the deals I'm referring to are already at or very near the finish line, and we look forward to sharing news of them with you soon.

Our sales team has worked hard, laying the foundation to open new accounts with premium banners across the country. Our operations team has worked hard to make sure that we have the inventory and operating capacity to meet demand across the country, and our marketing team is just getting started. We look forward to adding tremendous value for our customers, employees and shareholders now and for years to come.

Thank you for your time and patience today. I now turn it over to the monitor for questions.

(Operator Instructions) Our first question is from Aaron Grey with Alliance Global Partners.

First question for me. You mentioned a 9% price increase in the prepared remarks. So just curious, could you talk about relative price gaps for you guys relative to your competitors and whether or not you're seeing similar levels of price increases, maybe you're taking a little bit greater or lesser price increases. I just want to get a better sense of the price gap not you maintain or that might less a nervous increase?

Yes. I would say that we do run -- we have run comparables. I mean the only data that we can really run against is the Nielsen reports in terms of the average retail. So there's probably a little bit of play in that, but we're well within the mean for the industry. And so we feel pretty good about it. Obviously, what we don't know going forward, Aaron, is if there's going to be any elasticity demand. But so far, in the banners that have picked up the price increase and maybe have even added their own private label, we continue to outperform and continue to be very, very strong. So I think the marketing push that we've had this last year and some of the additional awareness we're getting and plus the quality of the underlying product relative to the rest of the market continues to drive consumers to us.

Okay. Great. Thanks for that color, Ricky. And then just in terms of the expanded distribution, you talked a lot in the past about COVID delaying some of the shelf reset at retail. So do you feel now you're kind of more of a normal state of the shelf reset do you anticipate any potential delays in terms of your distribution capabilities? Or do you feel like now that the brick and mortar kind of getting more back on track and feel more confident in terms of those expansion opportunities?

Yes, Aaron, that's -- we look at that almost biweekly here. Yes, we feel very good about our goal of between 90,000 and 110,000 stores this year. We feel that, that is a very achievable goal within our group. And of course, last year, we were at about 75,000. So that's a substantial increase just in new banners and new doors alone. And then we're very excited about some of the announcements we've just made and some of those that are coming. We don't like to announce prior to getting appeal. I mean it's great to have a guy say they're going to bring something in, but we always wait until we actually see the PO and most of the time delivered. So we see up to 1,500 -- 15,000 stores taking additional SKUs. So we've got a lot of our current banners that are now going to take in and have agreed to take in an expansion of our current SKUs. And we feel very good about hitting thousands of brand-new doors as well.

Our next question is from Sean McGowan with ROTH Capital Partners.

I have a couple of perhaps a few multiparts. On first, I'm just trying to get a sense of what in these numbers might be considered not normal or not ongoing? So specifically, when you talk about inflation at the gross margin level, can you quantify how much of that might have been like above expectation or above what you would call normal, same thing with marketing and selling and G&A are those expenses? What do you expect not to repeat going forward?

David, do you want to handle that?

No. Go ahead, Ricky.

We don't -- we've had -- I don't know if we're $1 million or better in additional freight costs the last 2 quarters has been a couple of million dollars easily. And so that obviously is squeezing some of our bottom line. On the marketing expenses, we have spent a tremendous amount of money upfront with a lot of the Shaq initiatives. We will continue to do that as the year goes by. But at least for now, this quarter, we've slowed those down as we gather our information and get a plan together that we know will be effective. We had a very good start on that. It's just we have to get the data down, and we don't want to miss any steps. As we like to say around here, we're a small company that needs to fight above our weight class and punch above our weight class. So we're very judicious with respect to those spends as well.

I think the majority of what happened, we will be continuing to be in the cost of goods, you don't see a lot of inflationary pressures easing at this point, but we've taken really good steps in order to minimize some of that, i.e., open up new packers around the country. So freight in is less, freight out is less. We also have been able to negotiate some longer term contracts where we're locking in for a period of a couple of years, some of the cost of some of our raws, which we had not done in the past. Who knew we were getting fluctuations that were mainly favorable for the last 4 years. And so those are the kind of things that we see as probably stuck, but we see a lot of that getting picked up through the increase in pricing to the retailer. And we figure that's going to be a 3% to 5% increase in our margins just going future 12 months.

Okay. And if I can ask you to clarify that a little bit, I just want to make sure I'm understanding correctly. When you say margin, you mean gross margin?

I mean gross margin, yes. So we see a 3% to 5% additional gross margin increase.

So 3% to 5%, you mean 3 to 5 percentage points?

Correct.

And then the…

From 33, 34 to 36 to 38 and maybe with some product mix, maybe we can get back up to closer to 40.

Okay. That was my last question here. What do you expect the starting point to be for the full year on fiscal '22 about that 33, 34 level?

Fiscal [33] will be up from that. We'll probably be closer to 35 or 36 for fiscal 2023.

Okay. But I mean what's the starting point for basically what I'm saying, what are you expecting for the fourth quarter about the same as what we saw for the period or a little higher or a little lower?

Yes, about 34 because some of the major chains have not taken in the price impact for this quarter. They've agreed to it. They just haven't put it into effect yet. They usually want 190 to 120 days to institute it.

Okay. And I'll squeeze one more in here. You guys have done a great job so far of being ahead of the curve on supply chain issues. Did that continue in the third quarter? And do you think there was any negative sales impact from supply chain issues?

None. I think that we've done a better job. In fact, I would say that our sales guy would agree with that, which is always hard to get in a room of management, where operations and sales agree on how we're doing. And I would say that we've got 0 debt. It doesn't mean that it couldn't occur. We still have only 1 or 2 suppliers around the country in each one of these areas for raws, but we're taking steps every day to make sure and ensure that it hasn't. I think in the last call, I indicated we added about 150,000 square foot of warehouse space as a company for the first time, and that was one of the ways that we combated some of the hiccups of some of our competitors got.

Our next question is from Jaime Perez with R.F. Lafferty.

Also a great quarter. And I just have a few questions. On your deal with Shaquille O'Neal, I mean it's been great. Any opportunity to add other celebrities and the sports figures? And also, what about sponsorship of athletes you're looking into like your thoughts?

So I've got a CMO that's doing an outstanding job for us. And he -- we run down a ton of different opportunities every month. A lot of them are sports related. We should have an announcement here in the near future on some of that, but some of that is just premature yet in terms of getting announced. But in terms of additional celebrities, though in the sports arena, I think my CMO says we've got the athlete pretty much covered in terms of the right guy, the Shaquille O'Neal, the cheers of the Super Bowl other than Michael Jordan. I mean Michael, Magic Johnson, we're sorry about that pulls. Magic Johnson was the biggest cheerers for Shaquille O'Neal. So we know that he is well, well loved and we feel we have that. But there are some sponsorships. We have a tight relationship with Authentic Brands Group, which has the Sports Illustrated franchise. And so we continue to see opportunities to expand our influencers there. And then some of the things we're doing on the CBD and our enhanced beverage area, the functional beverages, there may be some sponsorships and some influencers there that we work that are specific to the particular product.

All right. Now my second question is I know it might be a little bit premature, but what about the international market as far as Mexico and Canada? Any initiative or any thoughts about penetrating those markets?

Yes. We've been in Mexico for a little while now. We're really in the free trade zone. And then in Canada, we did announce a brokerage deal this last, I think, 1.5 quarters ago, that is just beginning to bear fruit. The beauty on both of these is that it's FOB USA, our -- we do have the export license and that they're in place, I think, for another 18 months in terms of with the FDA, you get to renew them every 3 years. So we will continue to get that done. I do expect some announcements, particularly in Canada in the next 3 to 6 months.

(Operator Instructions) We have reached the end of the question-and-answer session, and I will now turn the call over to Ricky Wright for closing remarks.

Thanks, everyone, for entering -- Sean just got back in the queue. You want to take Sean's question?

I'm happy to.

Our next question is from Sean McGowan with ROTH Capital Partners.

Just my quick one for David. Could you spell out the detail on the noncash expenses that were in the quarter?

Yes. It was mostly with -- if you look under the equity footnote in the Q, it spells out we have RSU expenses and stock option expenses. And so most of that noncash for those 2 items and we take a little bit more…

I was a little surprised I didn't see it broken out in the cash flow statement. The repayment whether you're forgiving us rather of the PPP, is that kind of embedded in the number there somewhere?

Yes, it is.

We have reached the end of the question-and-answer session, and I will now turn the call over to Ricky Wright for closing remarks.

Thank you, everyone.

Again, it was a great quarter. I couldn't be happier with my team, that goes from operations to sales to finance to marketing. They've all done a wonderful job this quarter. The momentum is definitely with us. I think the Nielsen reports we got last week, everybody did a little happy dance here, becoming the 7th largest in that 4-week period and passing some of the major majors in terms of brands that were ahead of us in the past. I think it's a testimony to the fact that we continue to grow, and I think the 3 brands or 2 brands that we passed, they actually had a negative quarter.

So for us, it's a big day at Alkaline88. I think one of the things that is most exciting is, and I intimated it earlier was that we are going to see some major pickups this year in terms of new banners, new storefronts and additional SKUs in our current clientele. So we really see this as being an exciting year. Obviously, the DSD networks are working great for us, and we hope to expand those before too much longer. But again, they will be very strategic in their nature and keep our fingers crossed, but we have another great year in terms of some of the products that we're introducing into the marketplace.

I appreciate everybody's time, and hopefully, we'll have a great end of the fiscal year. Thanks, again.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.