TerrAscend Corp. (TRSSF) CEO Jason Ackerman on Q1 2020 Results - Earnings Call Transcript

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TerrAscend Corp. (OTCQX:TRSSF) Q1 2020 Earnings Conference Call May 29, 2020 8:30 AM ET

Company Participants

Jason Ackerman - Chief Executive Officer

Jason Wild - Chairman

Keith Stauffer - Chief Financial Officer

Conference Call Participants

Kenric Tyghe - AltaCorp Capital

Robert Fagen - Stifel

George Anghelache - Clarus Securities

Eric Des Lauriers - Craig-Hallum Capital Group

Glenn Mattson - Ladenburg Thalmann

Peter Ferraro - Ferraro Enterprises

Operator

Good morning, everyone. Welcome to TerrAscend’s First Quarter 2020 Conference Call for the 3-month period ending March 31, 2020. Listeners are reminded that certain matters discussed in today’s conference call or answers that maybe given to questions asked could constitute forward-looking statements that are subject to risks and uncertainties relating to TerrAscend’s future financial or business performance. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are detailed in TerrAscend’s annual information form and other periodic filings and registration statements. These documents maybe accessed via the SEDAR database. I would like to remind everyone that this call is being recorded today, Friday, May 29, 2020.

I would now like to introduce Mr. Jason Ackerman, Chief Executive Officer of TerrAscend. Please go ahead, Mr. Ackerman.

Jason Ackerman

Thank you. Hi, good morning, everyone and thanks for joining us today. With me we have Jason Wild, our Chairman and Keith Stauffer, our new Chief Financial Officer. So, welcome everyone. So today, in this morning, I would like to take a few minutes to discuss our strategic priorities and some of our recent successes and then Keith is going to discuss our financial results and then we will open it up for some questions.

As we discussed in our last call, TerrAscend has entered 2020 with a real solid foundation for growth. This is driven by two ingredients: one, our talent as I feel we’ve really assembled an excellent and effective team, which we do continue to evolve and some very high-quality operating assets. Together, they enable us to accomplish our strategic goal of building a super high-quality customer-focused cannabis business that we believe is capable of sustaining continuous growth and strong profit margins.

So, for Q1 of this year, we generated $34.8 million in sales, which represents a sequential increase of more than 34%. We have also achieved an incredibly important milestone of reporting positive adjusted EBITDA on a consolidated basis and we expect this trend to continue. On that point, Q1 2020 adjusted EBITDA was a positive $4.9 million or 14% margin and this also represents a $10 million quarter-over-quarter increase in adjusted EBITDA, a $9 million of increase in sales. And I believe what this demonstrates is our focus on growing our business and having as trying to control as we possibly can on costs.

As we stated before, our U.S. operations represents the greatest growth opportunity for our business and in the quarter they accounted for 89% of our revenue and contributed 25% adjusted EBITDA margins. We have developed a strong foothold in the United States by focusing on high growth cannabis markets with favorable dynamics in both East Coast and the West Coast. And as a reminder, we are the only North American operator with scale operations in both the U.S. and Canada. And while we see the biggest opportunity in the U.S. today, we still see substantial long-term Canadian market opportunity, but in the meantime we are very focused on rightsizing our Canadian operations to ensure the business line becomes profitable, because that is what we are in business for and we are working hard at that.

In the U.S. today, we are active in Pennsylvania, New Jersey and California and plan to leverage these East and West Coast hubs to strategically expand where the return on investment is justified. In Q1, we completed the tripling of our cultivation facility in Pennsylvania and have begun to see the benefits of that expansion driving our growth in the last month of the quarter and expect to see that continuation of this growth in sales and profitability throughout the rest of this year. We are also progressing well on the build-out of our New Jersey cultivation and dispensary sites and expect to see these operational by the end of the year. I am also pretty excited, but cautiously optimistic about New Jersey rec ballot in November, which could have a very positive impact on the growth of that market.

Since our last call, we have continued to see strong demand across our business despite the current pandemic. And we would like to reiterate that all of our facilities and dispensaries have implemented strict protocols to protect the health and wellness of our employees, our customers and patients during this very difficult time. We have introduced in Pennsylvania a drive-through which has been a great success and curbside pickup at most all of our dispensaries locations. And across the company, online revenue for our retail locations have increased 4x driven by COVID and given my background as an online retailer, this makes me particularly excited, because I do believe that digital is a big part of the future of our business.

Last week, we announced a $30 million private placement that will position us with a very strong balance sheet to complete our investments in the U.S. We are propelling the growth of our business through this investment. And as you may recall early this year, we strengthened our balance sheet through the Canopy loan and the concurrent repayment of the $47 million U.S. credit facility. And we have plans to complete this current fundraising as part of that overall financial strategy to support the completion of our U.S. build out. Some of the main projects included in that is the construction of our 150,000 square foot New Jersey facility, which is scheduled for the end of this year and we plan to open 4 new Apothecarium dispensaries across all 3 states that were active in bringing the total footprint at the end of the year to 9 with added locations planned for early next year.

And lastly before I turn the call over to Keith, I am excited to announce that we anticipate that based on our strong success to-date that our Q2 2020 net sales will be at least $45 million, representing excess of 30% sequential growth as well as ongoing expansion of our gross margins and adjusted EBITDA margins. As I continue to focus on building a world class team, I am very excited to have Keith as our new CFO. Keith has deep CPG experience in highly scaled global businesses and brings very strong financial acumen and rigor to the team.

And with that, I would now like to turn it over to Keith to discuss our financial highlights for the first quarter then we will open up for questions. Thank you.

Keith Stauffer

Thanks, Jason and good morning everyone. Before I start, I’d just like to say how excited I am to be on the TerrAscend team and really impressed with what I have seen so far since joining about a month ago. As a reminder, the results I will be going over today can be found in our financial statements and MD&A and all results are in Canadian dollars.

Net sales increased 139% to $34.8 million in Q1 compared to $14.6 million same quarter a year ago. This growth was driven by our U.S. business, which delivered $30.9 million in revenue in the quarter as Jason said, representing 89% of total company net revenue and really reflecting TerrAscend’s continued focus on this important market. The increase in revenue was driven by the operational scale-up of our U.S. footprint, which the company has strategically expanded through investments in production capacity as well as wholesale and retail sales capabilities as Jason outlined earlier.

In Q1, gross margin before gain on fair value of biological assets was 45% compared to 10% last year. The increase in gross margin is the result of the company’s shift to higher margin revenue opportunities in the U.S. as well as the ongoing initiatives the company has performed to rationalize its Canadian operations to the current market opportunity. And importantly, our Q1 gross margin in the U.S. before gain on fair value of biological assets was 57%. In the quarter, G&A was $14.6 million, an increase of 66% versus last year, but less than half the rate of net sales growth. The change was primarily driven by the 2019 acquisitions in the U.S. The company expects to continue to strategically invest in acquiring the talent and developing the appropriate infrastructure to ensure our continued expansion in the high growth U.S. market, while also driving operating leverage as the company’s operations continue to scale.

In Q1, adjusted EBITDA was a positive $4.9 million compared to negative $5.5 million last year. On a geographic basis, adjusted EBITDA from the company’s Canadian and U.S. operations in Q1 was minus $3.3 million and positive $8.2 million respectively. Importantly, adjusted EBITDA margin from the company’s U.S. operations was 25%. We ended the quarter with $31.4 million in cash and equivalents, including restricted cash compared to $8.6 million at the end of Q1 last year.

As Jason noted earlier, subsequent to the quarter end, we announced a $30 million non-brokered private placement. Based on strong investor demand, we announced this morning has been upsized to $37 million. The first tranche, which included a $20 million lead order from JW Asset Management, closed on May 22 and the second tranche totaling $7.1 million closed yesterday May 28, and we expect to close the remaining proceeds by the end of next week.

Finally, before closing, I just like to say that after 1 month on the job in getting to know the team and the company’s capabilities, I am really impressed with what I have seen so far. However, there is also much work to be done to continue to strengthen the company’s foundation for future growth. To that end, we have initiated a finance transformation effort, which will upgrade, standardize and streamline our accounting, financial, IT and management processes and systems. This effort will be a key enabler to future sustainable and predictable growth and I look forward to reporting our progress in future updates.

With that, I would now like to turn the call back to the operator to open the call up for questions.

Question-and-Answer Session

Operator

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Kenric Tyghe from AltaCorp Capital. Please go ahead.

Kenric Tyghe

Thank you and good morning. Congrats on the quarter. Very strong performance. Nice to see a positive surprise in the space. Jason, could you speak to the momentum you are seeing in your East Coast versus West Coast operations, how to think about the progression of that momentum through the year? And if you could also then just sort of line that up with the cost discipline and cost controls we saw in quarter and how you will execute against that for the balance of the year as well please?

Jason Ackerman

Sure, Kenric. So, if you look at how we are growing right now the largest increase in our throughput and capability was in the East Coast operations by tripling our cultivation capability and manufacturing capability. And as I said as that came through the end of the first quarter and will be fully realized on the second quarter that will be our largest propelling of growth into the second quarter And given the profit margins that exist within the vertical integration operations that will continue to put positive momentum in our overall earnings capability as that expands. On the West Coast operations, that’s a relatively mature market and the growth will continue to be shown through the opening of – largely through the opening of additional dispensaries, which we have in the pipeline at the moment and we continue to work with the local governments finding additional locations. We have a nice pipeline there. And as well as throughout the year as you recall we are expanding and have spent the money mostly ready to expand our high-quality cannabis growth in the West Coast for a vertical as well as our Bahala operations, we opened a new facility to expand that. So, we expect to see that show up more towards the middle to back of the year. And then of course New Jersey which will then be following up behind it, which largely will be seen into the following year, which we think is – will be a great accelerant as continued growth for our business.

Kenric Tyghe

Thank you. And Jason, just a quick follow-up on the East Coast or Pennsylvania specifically, could you remind us how many dispensaries you would expect to have opening in the second quarter and separate to that how the performance of Pennsylvania business both in quarter and dependent on whatever dispensaries you are opening in the second, how that margin performance is tracking relative to your prior comment, your level of confidence around that opportunity set? We realized it remained supply constrained and the margin profile is attractive, but any color you could provide there would be fantastic? Thank you.

Jason Ackerman

Sure. So, we have three licensed dispensaries in the state of Pennsylvania, three licensed in New Jersey, so that third and second one has opened up about 6 weeks ago and the third will be opening up sometime during this second quarter probably towards the back end. And dispensary margin operations have been strong and interesting about this you know online has been a larger part of the business in COVID and COVID has continued to provide strength, we are seeing very strong margins at our dispensary level and we also as you can imagine with the scaling up of our operations in cultivation and manufacturing that tripling has also provided some substantial scaling opportunities. And I believe that we are a very effective operator and then I got to tell you the team there is just knocking out of the park there really a strong team and they are very super cost conscious and this expansion has given us substantial leverage in our operations.

Kenric Tyghe

Thank you. And just a quick final one for me if I could the non-brokered private placement upsize and oversubscribed could you speak to what flexibility that provides with respect to your current operations or opportunities perhaps outside of your current operations and geographies what's that most recent capital raise?

Jason Ackerman

Sure. So the raise is the dollar raise we did have a substantial over subscription for it so we have well over funded our capital needs so this amount is in excess of the needs for us all the way through into next year so with just as a little bit of powder so we will continue to do and be opportunistic on outside of our current capital plan to look to be opportunistic so yes at the moment it's not your mark but I know we'll use our disciplines but we'll be opportunistic.

Kenric Tyghe

Great thank you. I will get back in queue.

Jason Ackerman

Sure.

Operator

Thank you. The next question comes from Robert Fagen from Stifel. Please go ahead.

Robert Fagen

Thanks guys for taking my questions and congrats on the strong profitability there.

Jason Ackerman

Yes thank you.

Robert Fagen

Yes thanks. So Jason if I could ask you maybe to give us a bit of color whatever is available for the performance in California in this quarter which is obviously I guess strong performance on the East Coast division where could you give kind of like an order of magnitude of relative performance for the West Coast kind of retail operations in comparison that would be great?

Jason Ackerman

Sure. So the dispensary operations in the West Coast, good performance but the level of overall growth that we're seeing on the East Coast with the large expansion so it’s a smaller. as we said California as a market is more matured so you would expect to see more matured growth rates overall in that marketplace and so for the first quarter that's what you would have expected but again I'll reiterate that there were no additional dispensaries opened in our channel in the West Coast we have a pipeline that we are building of the new retail opportunities and we've been investing substantially which most of that money has now been spent to increase our grow and increase our manufacturing capability which will be seeding future growth for that West Coast operation.

Robert Fagen

Okay, great. Thanks for that color. And if I could ask another one on shifting gears to Canada, so there was I guess a good sequential growth in Canadian revenues but they are still a quite a bit below the kind of quarterly run rates we saw historically what do you think is the possibility to recapture some of those kind of higher sales levels in Canada is that something you guys envisioned and if not or maybe if not what kind of growth trajectory should we expect going forward in that business?

Jason Ackerman

Yes great question. So in Canada, sales to me are less important than profitability and so as we kind of dissected or where we were it's my assessment overall is that we need to make sure that we were going after profitable growth not just growth so to the last 4 months we have done a complete top to top review of every product we have in the marketplace our costing our processes and so forth. So I have intentionally kind of pushed them backed off things that are not what I think making sense for the long term so what I would say is that we are we are resetting our portfolio in a way that will position us to have sustained supply and sustained product and sustained margins and we're in the middle of that. So I expected that overall growth as you saw come down and I believe that we've built a foundational base largely after that it takes a little bit of time to work away into the market with new skews that we are launching and changing some of the profiles that I think are more logical related to the demands in the marketplace. So I think we'll see those come in towards the back half of the year but we are in a transition. As you also know and I stated in the last call, we have done a substantial cost reductions in the Canadian operations which will begin to show up soon and rightsizing that business. So I really feel that, that opportunity sits more in the back half of this year.

Robert Fagen

Great. Thank for that as well. And I guess if I get one more in, insofar as your U.S. kind of EBITDA margin for the quarter 25% very respectable, is there some kind of indication you could give us about whether the CBD or Arise Bioscience business unit is a drag or kind of augments a little bit that profitability profile, I can imagine it is not as strong as what you have in PA, but is it – are we looking at kind of EBITDA losses there as we are in Canada here?

Jason Ackerman

While we don’t give specific guidance on any particular asset what I would say is that similar to Canada, the CBD business did have some profiles of products that had lower margin and some at higher margins. And we have re-jiggered the team. We have got great leadership there right now. So, into quarter one versus the previous quarters, we did have a increase in our margin structure as again that top-to-top review of all of our SKUs and how we are going to marketplace, we made some great progress in our margin profile, but I think as you have seen broadly across the CBD spectrum, business as a whole doesn’t have a lot of momentum relative to THC. So, that business as a market as a whole is more challenged and it’s harder to drive growth, but overall, our gross profit margins did see some improvements and I believe that business is setup for success in the future. And just as a note, COVID has had an impact on the CBD business, because a large amount of the stores are not considered essential, which will also have an impact, but I do believe that, that business has good potential, again kind of hopefully seeing that more towards the back of the year than at the moment.

Robert Fagen

Okay. Thanks Jason very much. Great color and congrats on the quarter.

Jason Ackerman

Thank you.

Operator

Thank you. The next question comes from George Anghelache from Clarus Securities. Please go ahead.

George Anghelache

Good morning, guys. This is George dialling in on behalf of Noel. Congrats on a great quarter as well. Just a couple of questions here from me. Can you give us a sense of the wholesale competitive environment in Pennsylvania at the moment?

Jason Ackerman

Yes, sure. So, what I’d say is it is evolving. It is a relatively new marketplace. So the way I would characterize it is that the markets started at being an undersupplied marketplace. So, if you had cannabis, then you could sell cannabis and that’s in its typical cycle. I remind the one thing I love about Pennsylvania it’s relatively in balance between the Canopy that’s under growth and the relative growth in retail stores. So, as we continue to see the retail dispensaries now at 80 out of the 150, those dispensaries keep on opening up and even as cultivation, which I believe I have considered to be now close to balance as opposed to being undersupplied, we finally reached a point where it’s a bit in balance. But we still see relatively firm pricing. Other people are also coming along with capacity, but if you look at the 80 dispensaries going to 150 and strong patient growth in that marketplace, I believe that, that market has lots of room to grow and that the additional capacity brought on by us and others will be continued to be taken up by the growth in overall consumer demand. So, we feel good, but I characterize it as moving from undersupply to being healthy, but competitive.

George Anghelache

Got it. Okay, thank you very much for the color. And just the last question here, on the New Jersey front, what are the key milestones that you guys would need to reach to be able to open your first store there and also do you have any additional store locations identified in the state at the moment?

Jason Ackerman

Yes. So, our Phillipsburg location is under construction and that is slated to open in the third quarter. We have signed letters of intent on one location and a second letter of intent that’s being finalized right now. So, we have identified the locations. So, we still have to go through the normal course of process to see those to fruition, but we do in my mind have the identification of those three locations, where we are. And New Jersey construction is moving along nicely. During COVID, getting construction permits was a little bit challenging, so that was a bit frustrating, but we have got a good construction team over there, guys I have worked with in my previous life on top of it and so that's all moving on nicely.

George Anghelache

Okay perfect. Well thank you. Thank you very much for the color. Yes, thank you.

Jason Ackerman

Yes my pleasure.

Operator

Thank you. The next question comes from Eric Des Lauriers from Craig-Hallum Capital Group. Please go ahead.

Eric Des Lauriers

Alright, great. Thanks for taking my questions guys and all of you my congrats on the strong profitability as well. First question for me I was wondering if you could just talk about the M&A pipeline and how JW Asset Management could sort of leading for you guys and just sort of how the deal flow from JW Asset Management could potentially be active acquisition for you guys a little bit color there would be helpful? Thanks.

Jason Ackerman

Yes, sure. It’s a good question, because one of the compelling reasons for me to join the team honestly is the partnership with Jason Wild and the firm, because as JW has been a long term investor in this space and is in the pipeline that pretty much all deals that are coming through which for me it takes a lot of pressure off and making sure that we are worrying about the deal flow purpose on the business. So we are seeing a ton of stuff is what I would say that’s what I love about the partnership. So we pretty much see everything that comes across, but at the same time I would say that we are not just looking to grow for growth’s sake. We are very focused and have a lot of strategic filters to our process and Jay and I speak about a hundred times a day so that filter is known and understood and so we're just we're focused but the pipeline is good and I think as it's an interesting time I think love about this space at the moment is theirs it's a musical chairs that stopped in large part in the markets around funding is little tougher these days but does present some great opportunities which I'm pretty excited about but we will maintain our disciplines.

Eric Des Lauriers

Yes, it’s great to hear. And then just last one for me, I will try another one on PA wholesale strategy, looking at menus online it looks like that more SKUs in third-party dispensaries than any other brands. Are there any market share numbers that you guys can share and do you have any SKU expansion or SKU rationalization plans that go along with your tripling of cultivation capacity, are you guys comfortable with your current SKUs and now it’s really about increasing volume?

Jason Ackerman

So market share, gosh I have heard so many different numbers. I think I know what the market share numbers are, but I am a little cautious to quote them. But I would say as a primarily wholesaler, if we are to quote market share we will be focusing on the wholesale market share, because as you know with having 3 dispensaries out of the 80, 85 that are open right now that you can just say 3 areas of the market share at retail. But on a wholesale basis with our capacity, I would say we are certainly about 20% share of the wholesale level, if not high will be my estimate. And so I don’t know where we rank relative to exactly the other top players, but I would say we are right up there with them. And with respect to products, listen at the end of the day, we are in the business plain and simple of making customers and patients happy and satisfied. And if you are going to do that, you can’t just have products available, you have to have great products available and the products that are evolving with the needs of the marketplace as Pennsylvania continues to increase the counts of patients, the demographic of those patients will evolve and therefore the taste of those patients will as well. So we have a great product development cycles the answer is no we obviously have some killer skews that are running through the system but make no mistake product development is a critical part of the life blood of this business and they are really great we got a great group of sciences we need all the time where they need all the time so product development is a big part of what we continue to expect but given the velocities that we're moving for the facilities we continue to see scaling efficiencies and all the stuff that we produced and just note that we are not just a flower business a large percentage of our revenue just come from manufactured products and I believe that’s a very important continuation of our strategy.

Eric Des Lauriers

Yes, that’s excellent. And then just one last follow-up for me on PA side of things, so it’s great to hear that you guys have completed your expansion in Q1 I'm just wondering is that expansion fully planted or are you planning on kind of scaling that the amount that planted throughout the year?

Jason Ackerman

We do have the ability to further expand capacity another 15% and we do plan on putting that in place during the course of the third quarter, which can become available into the fourth quarter of this year.

Eric Des Lauriers

Okay, great. Alright. That’s it for me. Thanks, guys.

Operator

Thank you. [Operator Instructions] The next question comes from Glenn Mattson from Ladenburg Thalmann. Please go ahead.

Glenn Mattson

Hi, thanks for taking the questions. So, just curious on I think you guys have quoted few different times that Ilera had 59% EBITDA margins prior to the acquisition. So I am just curious as to what do you think those margins might look like as you scale like I mean – I am assuming you are going to come in a bit, but just kind of ballpark range for how we can think about it since it’s going to become likely a large percentage of the business by the fourth quarter even larger so?

Jason Ackerman

Yes. So, we are not quoting margins by department at the moment, but what I would say if you look at our 25% contribution this month and that largely did not fully reflect the growth of the expansion with that $10 million flowing through the operation from quarter-to-quarter, you can kind of extrapolate on how that will play through into the numbers going forward. The East Coast vertical operations are what I would say at the upper end of the more profitable side of the business, particularly as the market maintains a generally healthy equilibrium between supply and demand. And as we continue to increase capacity, we are growing sales in excess of growing our costs in that marketplace, which not to say that will expand our margins, because we are very focused on being the highest quality and lowest cost producer. So to the extent that we see any price compression, we are going to be right there and we believe we can kind of hold the margins as we drive growth and competitiveness.

Glenn Mattson

Great. Thanks. And in California, I think I am not sure if you have updated when exactly you think the Berkeley store will be open and then perhaps you didn’t understood, but any insight as to what the further expansion will look like as far as geographically speaking in California? That’s it for me. Thanks.

Jason Ackerman

Yes. Berkeley actually was scheduled to be open by COVID, so construction is done. I believe that we will be opening up Berkeley in the month of July now coming for the summer, COVID still is affecting the College Town. So, we are kind of using our judgment on that. Capitola is under construction, so that will be largely a fourth quarter opening. And the team has since TerrAscend has been involved has been supporting the efforts with that they have done to support finding additional locations with clients applying for licenses. So, we are very active, so not to announce that the things we do have what I call seeds out there in the marketplace which we are encouraging hope to continue to be issued additional license opportunities. In terms of focus, we are really focused on Northern California right now. California is a big place. I am a big believer in scale line of sight eyes on price management. So, we are very focused in the generally kind of northern part of California so that we get leverage on our team’s consistency, customers’ brand, marketing, delivery and so forth. So that’s really where our focus is at the moment.

Operator

Thank you. The next question comes from Peter Ferraro from Ferraro Enterprises. Please go ahead.

Peter Ferraro

Hi, Jason. How are you doing? I just got two questions. Can you talk about a little bit about Heather Molloy and what she means to TerrAscend? She was instrumental in getting the Ilera deal done? And then my second question would be when do you think the State Flower acquisition is going to close?

Jason Ackerman

So, Heather runs business development. So this does incredibly important part of our operations today. In terms of, I think you asked – sorry the second question was future acquisition, sorry, can you repeat that one?

Peter Ferraro

With State Flower, that was close to I believe, yes…

Jason Ackerman

So, the general, it’s now in our numbers and there is an earn-out payment based upon the years, revenue post expansion. So we have been funding and finished funding and they will be opening soon the further expansion. So, I believe that will close officially during 2021, probably the middle and end of ‘21. I could be wrong exactly on those dates, but I am pretty sure that’s roughly it.

Peter Ferraro

Okay. And just one more quick question, do you still like the Massachusetts market right now?

Jason Ackerman

Not during COVID, but yes, it’s interesting that marketplace, I think it has some – there is definitely strong demand. There is a lot of players that said if we could find the right entrance into that marketplace with enough scale I do. I wish you can get more than 3 dispensaries into that marketplace, but I think there are some good margin dynamics. The state has been a little bit rough at getting locations up and running, but I do believe if you can find the right positioning there, there is good money to be made and there is good consumer demand. So I would say, yes, but cautious, but it’s got to be exactly the right spot. It’s not just being there for the sake of being there.

Peter Ferraro

Okay. That’s it for me. Thank you, Jason.

Jason Ackerman

Thank you.

Operator

Thank you. There are no further questions at this time. You may proceed.

Jason Ackerman

Okay. So if there is no questions, I just want to thank all of you for covering us and for listening. And that said we look forward to speaking to all of you the next quarter hopefully with even better results. Have a good weekend. Bye.

Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and we ask that you please disconnect your lines.