Eastside Distilling, Inc. (EAST) on Q1 2021 Results - Earnings Call Transcript
Operator: Good afternoon, and welcome to the Eastside Distilling First Quarter 2021 Financial Results Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Amy Brassard, Corporate Affairs Director. Please go ahead.
Amy Brassard: Thank you so much. Good afternoon, everyone, and thank you for joining us today to discuss Eastside Distilling's financial results for the first quarter 2021. I'm Amy Brassard with Eastside Distilling, and I'll be your moderator for today's call. Earlier, Eastside issued first quarter 2021 financial results in a press release.
Geoffrey Gwin: Thank you, Amy, and good afternoon and welcome to our first quarter earnings call. We achieved a number of milestones in the first quarter, all of which were key in our business transformation plan. As we reported in our fourth quarter call, in Q1 we closed the Redneck Riviera termination and asset purchase agreement. We received forgiveness for the two PPP loans and finalized the Azuñia purchase consideration. These events all had an impact on both the income statement and the balance sheet, which I will detail in a moment.
Paul Block: Okay. Thank you, Geoff. And thank you all for taking the time to join our earnings call today. While it's been a short time since our last call, we do have some substantial progress to report as Geoff mentioned. In the last call, I discussed Eastside Distilling’s turnaround focus on fixing, building and growing along with the five value creation initiatives of focus, proficiency, accretive growth, brand differentiation and product innovation. Today, I wanted to share the results we have achieved in Q1 relative to these areas of focus and initiatives, specifically the key initiative of growth.
Operator: We will now being the question-and-answer session. Our first question is from . Please go ahead.
Unidentified Analyst: Hi, there. Congratulations on the amazing quarter. I can see that the cost has come down and you guys are right on track. I just want to ask two questions with the cash infusion of $3.3 million from the private placement, does that accelerate anything in the company? And what are some of the unique opportunities we are going after? And do you foresee us needing to raise more capital bid from banks or other process?
Geoffrey Gwin: Great. This is Geoffrey. I'll take that question. And Paul, if you want to jump in, please jump in afterwards. The $3.3 million actually was raised to primarily to refinance notes maturing here in the end of April and in May. And those notes were about $2.3 million and then we had – so we had an incremental $1 million that in addition to the proceeds to refinancing those. For that $1 million we obviously paid some transaction costs that you'll see in the second quarter. So we didn't get the full – we're not going to get the full benefit of the $1 million, but we did add the liquidity in the balance sheet. Now to your second part of that question, as Paul alluded to, the company has a tremendous number of opportunities to grow. And even with our stock here, we think there's an opportunity to possibly raise a little bit of capital and fuel growth here as we go through the year. But as Paul mentioned, we're building a three-year plan and we're going to be very thoughtful about coming to the investment committee and showing them how we're going to make any investment from external capital work for all the investors – the company. We're not looking to do a very large diluted capital raise. Paul?
Unidentified Analyst: All right, Geoff. Amy, I just wanted to check with you from the 8-K I saw that there was a $2.2 million of other income this quarter. Could you share with us some color on this $2.2 million? Are they incoming? Would it be one-time or would it be recurring?
Geoffrey Gwin: Yes. If you down into the press release, we break out the flow-through of some of the one-time items down to adjusted EBITDA and it's important to take a look at that. As I said in my prepared comments, we had a lot of one-time items. So we had a gain on forgiveness of the PPP loan, that's about $1.4 million. We had a gain from the termination of the license agreement with the Redneck Riviera, that’s about $2.8 million. And then we also sold some inventory associated with that transaction that was $1 million. And then we also, we talked about this, we've been working with Intersect to finalize Azuñia earnout. And Azuñia, it was again, the tequila business we bought a couple of years ago and 18 months ago. And that reevaluation at the end of the year and adjustment of the final earnout was another called $750,000 of a one-time item that entered the income statement. So you'll see those all in that bridge at the bottom of the press release.
Unidentified Analyst: All right. Thank you so much. I have one last question. I've been analyzing the canning landscape for a while, and I agree that there's a scope for growth. Are we looking to grow our canning operation by investing in more trucks in FY 2021? And is the market size big enough to double our current canning operation? If yes, what are the steps we are pursuing to scale into that?
Paul Block: I can respond to that. This is Paul. Just to start with your last question. Yes, the market is I think it's in the billions of dollars, the entire beverage manufacturing industry in the United States and contract packing is a significant size of that. So the size of the prize is enormous. The challenge is to strategically pick off accretive opportunity. As I mentioned in my prepared statements, we think that there's not just opportunity in mobile. Mobile is good and mobile can be expanded and there's significant opportunity to expand there and we will, but there's also opportunity, as I mentioned in fixed locations. And when I say fixed locations, what do I mean? What's the difference? Well, with mobile canning, it's impossible to pasteurize products because it's very – it's impossible to really put a pasteurizer on a truck. But if you have a fixed location, you can then get into pasteurization and pasteurization is in high demand. And we would, as I mentioned on previous calls, with a $500,000 investment, possibly convert that into $3 million of incremental sales, and then obviously have the cash flow proportionate to the margin there. So that's number two. And then number three, as we get better at manufacturing bottles for spirits, there could be opportunity to actually do contract manufacturing in bottles, as well as cans because we will then become more capable and more confident. And so what does that do for us? Well, it's great to expand canning and be focused, but it's also very good to be diversified so that if mobile canning is a little soft, your fixed locations may be up and pasteurization may be in demand. If canning in general is down a bit, bottles may be up. So we really are looking this beyond just mobile, trucks and we're looking at more as a comprehensive alcohol beverage contract manufacturer.
Unidentified Analyst: All right. Great. That's all for me on my end. Thank you.
Paul Block: Thank you.
Operator: The next question is from Bjorn Ng with 10x Capital. Please go ahead.
Bjorn Ng: Hey, Paul. Hey, Geoffrey, good evening. Thanks for such a detailed turnaround business plan for Eastside. I think that you guys have got the right team to propel the Eastside brand forward, and I'm excited to be a shareholder of Eastside. So I just got two questions here. As consumers of whiskey, tequila and other spirits, we do see branding and marketing playing an important role in creating a consumer mindset, which translate to our ability to earn certain margins. Could you elaborate on the competitive advantage we currently have over our competitions? And how can we carve out a niche for ourselves?
Paul Block: Yes, Bjorn, that's a great question. And I would say probably the one single competitive advantage we have, which is a great one is we have absolutely best-in-class products. Whether it's, as I said, the Eastside products just won some gold medals. Azuñia is phenomenal product. It's organic. It's batch made, handmade and everyone who tries it loves it. Burnside premium products; Goose Hollow, Buckman, and the new Burnside Black. So PPV, we're just talking about that the other day, four time distilled potato vodka very unique. So I would say our products are one of our most important differentiators. The second thing we're working on is our identity because there's two things that make up a brand; product attributes and consumer values. So we're thinking our brands to consumer values and experiences. For example on Portland Potato Vodka, we've decided to link Portland Potato Vodka to the beach, and we're going to the beach communities. We're starting out with surfing and wind surfing. So that has a differentiator of identity. For Burnside, we're doing a more style oriented approach, which is black and white. And we're looking at a new RTD for Burnside, that's a black and gold can. So it's as much as the product as it is the identity. I think the other one point of difference for us, not to go on too long, but is the fact that we are in between the local craft distiller. They are small, very smart, but artistic, as I mentioned in my prepared comments, and we're below the big guys with a very smart, experienced team. It’s built brands, it knows how to sustain velocity per point of distribution and can really bring energy and oversight to our distribution network. So I think that's kind of unique too. So I would say product for sure, identity we're building, and we've built this team to actually kind of be like a sleeper cell almost above the craft distilleries, but below the big guys. So very smart, very analytical, but extremely entrepreneurial. So I would say those are the three things. And the one thing that we do need and we don't need a lot of it. We're not looking to create dilution, but we do need some capital. And we want to continue to demonstrate that we're performing, that we’ll deliver results, we're consistent, what we say we'll do, and then being trusted with some investment capital to get the company growing. We don't want to be $20 million, we want to be $200 million. And it will take a little bit of extra capital, especially on the craft side, where we'll acquire a small bolt-on operation. In the spirits side, we will invest in the branding. We're not looking to buy more brands per se. We've got plenty of opportunity within our current portfolio. So I hope that answers your question and thank you for that.
Bjorn Ng: All right, Paul, thanks a lot for the details. So I just got one question on the ready-to-drink cocktail. So I just heard you were sharing about the new Burnside black and gold RTD drink. So I'd just like to get your thoughts on what do you think on creating more can RTD cocktails for the off-premise market as we see that the on-premise market is still affected by COVID and more. We have actually witnessed the success of brands like Celsius Holdings, Monster Beverage, where they have different flavors for consumers to try out, which attracts more variety and customer curiosity for the brand. So do you see potential in the RTD segment? And do we have plans to invest in that segment? Could you walk us through the revenue potential of this?
Paul Block: Yes. Well, first, yes, there's tremendous potential in our RTDs. We just did an audit at one store, and I think we had somewhere about 30 to 35 RTDs in the store. We're looking at alcohol by volume and price points and product type. So the opportunity is enormous. People want convenience, they want flavor, they want colors and they want it now and they want high alcohol content. So the market is ripe. It's very crowded though. So when we come in, we have to be, as you asked your first question, very differentiated, and we think we can do that at the premium level with high-quality product and maybe shooting for maybe a more expensive product, but a higher quality product so giving values for that expense. Yes. So we're looking at right now we tested probably 10 different new products, three rose to the top in our first concept store. Flavored whiskey, Azuñia – flavored whiskey just in a bottle in a 750 cherry flavored and then the Marionberry both tested very well. And then for RTDs, what really tested well was an Azuñia organic margarita and a Burnside – and Cola and a Burnside honey and lemonade. So what do we think the revenue could be for RTD for Eastside? It could be fairly significant. I mean, right now it's an extraordinary lucrative space. We just need to get out there and we need to differentiate. So I don't see any reason it can't be $10 million, $20 million, $30 million for Eastside, but that will require some investment in marketing and it will require us getting out there with a very unique product. And I think both the Azuñia and the Burnside could be a unique and could deliver on the product. And right now what we're doing is we've already concept tested and they both tested very well in terms of purchase. Now we're building product and we're evolving the business case scenario. So we'll have more to report back on that, but we're with you. We think that's very interesting. We just need to be careful. There's a lot of big players spending a lot of money. So we want to be methodical and we want to be fast, but as I keep saying, we want to be focused and deliberate.
Bjorn Ng: All right. Thank you so much, Paul. I like how you are always so methodological in your answers, and I appreciate you. And it's a lot of useful details. It's definitely our privilege to be your shareholder and we are supporting you all the way. Thanks a lot for the hard work and I'm looking forward to chatting more with you and Geoffrey.
Paul Block: Well, thank you so much for your support.
Geoffrey Gwin: Thanks so much. I appreciate it. Yes.
Operator: The next question is from Kelvin Seetoh with GIM Partners. Please go ahead.
Kelvin Seetoh: Hi, Paul. This is Kelvin, calling from Singapore. We care a lot about return on investment capital and everything. Brand building is absolute must. And I just want to say that you’re nearing on this to expect. You have a strong game plan for Eastside, and you're always honest, which makes you very different. We are blessed with someone of your caliber along with Geoffrey and Janet to guide a company. So my first question is given that our Azuñia sales were mostly affected because of on-premise dining was closed. And even right now, I think in quarter one 2021, the number of cases that we have shipped out is still lower than quarter one 2020. So how are we able to do a more resilient business around Azuñia and lead sales during a difficult period like this? And I just wanted to know if e-commerce is also another possibility that you guys may be considering. Thank you.
Paul Block: Yes. Hey, Kelvin. How are you doing? Two very good questions. First on Azuñia, I think Azuñia, the way to think about it is going to be we might have to take a step back before we take two or three steps forward. And what we're finding on Azuñia is the brand has really been driven on price. And there's a lot of accounts that we've identified where we're actually give providing deep discounts that are causing us to lose a profit and lose money per case. There was one account in Florida where we were giving $117 discount per case, and we were losing $70. So when we stop that discount, obviously the account may interrupt some business. But we're also stopping a loss of probably $15,000 on an annualized basis in just that one account. And we've identified a number of these accounts. So the first step is to really get our pricing and our price promotion strategy in place. And we're working on a pricing model, working with our distributors and we're recalibrating our frontline and our promotional prices. We're looking at distributor margins and we're working with our distributors. And in fact, our distributors have been very supportive of us. They've said, look, you guys have a lot of work to do there. We'll work with you. But a lot of the volume has been pushed out through low price points, which is the antithesis of the Azuñia product. So what's the opportunity for Azuñia? The opportunity is to really market this phenomenal product. And you don't do that by pricing it as the lowest tequilas. You do it by pricing it as a tequila that deserves a price point for this batch made handcrafted organic product that's some of the best tasting tequila available. And then we need to get that message out, and we need to merchandise the brand at the point of purchase and get it off the shelf and get it in front of consumers. In the near-term, we're going to be focusing on the Azuñia Black, which has a frontline price gross margin of 60%. So that's not an issue, great tasting product, it retails for $109 frontline, and we can discount it down to below $100 and still have a great margin. So in the near-term, it's to really focus on Black; in the long-term – in the mid-term, it's to get the pricing right. And in the longer-term, it's to reposition, repackage and refocus the brand for more exponential growth. So in the near-term, yes, it's going to be tough to see a little bit of volume decrease on Azuñia, but we're fixing it for long-term growth and for sustainable growth behind the great product. And then your second question on e-commerce is very salient. We're all over the e-commerce as much as we can be with our evolution because we're just now fixing so many things in the company, but e-commerce for spirits is a great platform. So with Eastside’s brand, we're looking at whiskey clubs online, we're looking at selling the limited edition online and for that matter, we're looking and trying to have all of our products available online, through as many outlets as possible. So we really appreciate all your questions and all your support, and thanks for communicating with us on an ongoing basis.
Kelvin Seetoh: All right. Paul, I liked the exact steps you are taking. I think discounting is a dangerous downward spiral which tightens the brand, but now we have proper pricing in place, I think as you know, it will be perceived differently. And I just wanted to say that the amount of things that your team is executing in a single quarter, I think it's just really amazing. My last question is this, when we acquire Azuñia, I think the previous CEO, Steve, believe that this is a brand –this could be a brand that could do roughly $5 million of sales or more in his previous acquisition call. However, I think it is important to recalibrate expectations and I'm not holding you to it, but just out of curiosity, does it still hold true in your understanding of the brand or rather could you speak about how your belief about the Azuñia’s potential? Thanks so much.
Paul Block: Yes. Well, Geoff can chime in too separately, but I believe the brand has tremendous potential. And I believe it could be a $5 million or $10 million brand, but it needs to be properly positioned, marketed, and priced, and then it can be a brand that can grow. When you try and grow a brand by reducing price, what happens is you get price sensitive consumers that bridge by, and you don't create a loyal consumer base. So yes, I think maybe he was looking – didn't know the underlying fundamentals of Azuñia when he was acquiring it. But we do need to change those fundamentals and I think if they're changed, the brand can have tremendous opportunity and could be 5 million absolutely.
Geoffrey Gwin: Yes. I was just going to add one other thought about that, I think Azuñia has a tremendous amount of opportunity. Paul mentioned, we're focused on the black and if you've ever had a chance to taste it, it tastes more like a bourbon, it tastes like a Tequila it's pretty phenomenal, it's not a tequila that you approach and you put it in a category with all the other fields. This is a super premium product. And we think that, when people have a chance to trial it, then there's really a huge amount of upside and you have the margin mix that Paul was referring to in the margins. But the point that I wanted to make is, I actually think that all our brands are superstars. I mean, look at what happened to Portland Potato Vodka last year, in the pandemic, in Oregon when former salespeople that were on this brand were saying, oh, it's tapped out. It can't go anymore. It's accelerated. It was a couple of – Paul mentioned it in his script, he had repositioned it with a couple of changes and there's more to do there. And this brand has really accelerated it and as it spreads out of the region, I think it could be a super regional brand. And I think Burnside is also a brand that can be extraordinary and it wasn't marketed well. I mean, if you think about the way that we approached in the past with multiple colors, it was kind of hard to understand what – which one are you buying at, what price. And we lost track of the fact that on super premium bourbon and one of the hottest millennial markets in North America, Oregon and Portland. And so I just think your comment is pointed towards Azuñia, but frankly all these brands could be very large at some point,
Paul Block: Well to Geoff’s point, what we promised is that we would be more quantitative and we brought in Janet Oak, who is our Chief Branding Officer. And we test it for the Potato Vodka in a new bottle. And the research said it would grow 30% – the purchase intent was up 30%. And when we changed the market volume was up 20% to 30%. So we're taking fact-based research data and we're converting it into market and we're seeing the results. We have done no research on Azuñia. We've just been trying to kind of fix the pricing and adjust our focus. So when we really get into the research and the methodology, I'm sure we'll find significant ways to create more upside, kind of in vitro that we can take into the market. And so we're creating a methodology that works and we can replicate it. And what that allows us to do is not waste money. And that's the other thing we're promised, because we're going to test things. We're going to go out into the market and ensure that they work, then put some allocation of funds behind it and spend millions and millions of dollars and not be able to report back the results. I just wanted to throw that into, but thanks.
Kelvin Seetoh: Thank you, Geoffrey and Paul for sharing so many ideas about your brands. And I think, earnings call is one where it makes shareholders want to drink,. try our drink, so that's really exciting. I just like to squeeze one more question if I may, before I hop back to the call. CDC, just announced fully vaccinated people can remove mask in most places. So on a broader level, what does it mean for us in terms of how we can execute on our marketing or reactivating the demand from our customers? So that's my last question. Thank you so much.
Paul Block: Yes, well, you're right. I think New York is going to open up entirely this summer and I think the whole country is going to be following, so what that makes possible is, is people will be gathering at parties and entertaining more. They've been kind of drinking alone. I know I have, but there's no opportunity to socialize. So the social setting will increase exponentially and people will be enjoying other's company. And of course there's nothing, what's among millennials especially is the cocktail culture is just been on fire. So young people will be organizing and partying, and socializing as well all ages and demographics. So I think that will reset the playing field for us. Of course, on-premise will start to come alive again. And that will be helpful for us because that's really, as I said in my prepared statement where we can link the brand experience with the consumer experience and we're going to do it very differently than we did it before. We're not just going to go in and price low to get in the well chain accounts, that doesn't do a lot for us. It's great to get on the menu, but it's really great to interact with the consumer while they're with their friends, while they're drinking your product and while you're promoting your brand. So that's going to give us a great vehicle to do the experiential marketing that I've been talking about. That's the place where it can happen. And we're going to be focused and we're going to be – we're going to be pivoting to on-premise promotions, not deep discounts to get in the well.
Kelvin Seetoh: Thanks so much. I can't wait to journey with all of you and thank you for providing your leadership. We do appreciate your efforts every quarter. Thank you so much.
Operator: The next question is from Ross Taylor with ARS Investment Partners. Please go ahead.
Ross Taylor: Thank you. Most of my questions have been answered, but I do have something I'd like to further explore, it strikes me when I'm listening to you talk that the idea of the experience, the high-quality of the alcohol and the like, it strikes me as social media and influencers and the like are going to be influential or even key in driving this. I look at the space and I noticed the other day there was a sale of an Irish – a couple of weeks ago an Irish whiskey brand sponsored or founded by a WWE personality. And so I'm seeing this, what are social influencer, social media strategy, and how are we going to get people's that basically force multiply the Eastside opportunity? Because I find the hardest thing with alcohol is that when the more expensive it gets, the harder it is to buy it without some reference point out to the quality that you're getting in, someone telling you that you were set really good.
Paul Block: I think that's a great question. Our team all of us combined have had experience with that before. We've been so focused on blocking and tackling that, we really need to get to the fun part which is the marketing and merchandising and tie-ins with celebrities. So the opportunities are probably as many as we'd like, we've had a number of calls from agents wanting to align their celebrities with our brands. We also have probably a number of opportunities for product placement and we've also honestly intentionally underutilized our social media until we can really get our positioning and our focus and our marketing, right. So I think the opportunity is wide open, our strategy is all about guerrilla marketing and all about influencing the influencers to your point. So we understand that we haven't done it really to-date because unfortunately I spent most of my day working on cost of goods, it's standard for the May forecast and working on a lot of the price modeling. So when we get a lot of the fundamentals finished, which were really, I think like one or two months away, we are really going to be able to turn all of our attention to what we have done in the past and what we've done, that's been successful, which is influencing influencers, which means finding people who have a high influence among others. So we're constantly looking for people on social media, that have 50,000, 100,000 followers, but I think we can do a much better job, not that we're not doing the job, it's just, we're not focused on it for the time being, but we can bring in celebrities, we can get product placements, we can increase social media and that's going to be a big discussion at our June strategy session, which we're having a couple of weeks from now, where we'll bring the entire executive team together. We'll plan out the rest of this year and we'll plan out the next three years. And I think now it's time to kind of turn the conversation there. I wish I had more to tell you, but honestly we've been doing a lot of fixing. I'm feeling really good, like just said about the fixing part and now we're ready to start to build. So you'll see more there and we'll report more on that area for you going forward.
Ross Taylor: Okay. The second question I have is you've mentioned the potential or possibility for a capital raise. It would strike me as obviously given the size of the company and the uniquely undervalued nature of the equity that any raise you do would be best done if it was done as a private placement and perhaps to a strategic player or someone in the space or someone who has a real importance or interest in what you're doing. So I'd love to hear you, assure me that you're not going to actually get on the road and try to market and try to find people to raise. I don't know how many millions of dollars you wanted to raise, but rather if you do need to raise capital, when you do need to raise it to a small handful of people throughout deeper pockets and perhaps strategic, who might actually pay you a premium rather than a discount for it, because I feel having waited for awhile with work, and I think I'm not alone. I hate the thought that we're going to be sitting here handcuffed to another three, six months waiting out of a fear that you're going to drop a secondary into the marketplace?
Geoffrey Gwin: I will jump in on that one, Ross, I appreciate that. And we're all shareholders along with you guys. And the last thing we want to do is do something that's destructive for people's confidence and our intention to build shareholder value. I mean, in the end of the day is really what we're thinking every day is how do we move the stock up? How do we move the stock up for existing investors? And I think the bigger capital transaction in – too is an example of that. I mean, it was an example of taking advantage of the place in the capital structure where we could maximize – the fact that we had paid down a lot of senior debt, offer an option and value the option and raise some cash or having to do a very diluted transactional refinance, a couple of million dollars of notes. So I think that's what we're thinking, just to try to find the best foot for now, having said that, I think it is important for us to go out and talk to people and I'll tell you why, because you know this and you've been on a number of the calls as that, the company has transitioned so significantly from what it was before to what is today. If I were to describe, we can walk through the income statement and you can see transformation everywhere. The balance sheet transformation inside the company itself, the entire executive team said my script is completely new. The ideas are new, some of the products while they haven't changed, the way that we're going to market is new. So I think there's something that has to – we have to do a pretty good job of walking people through what the plan is. Be very transparent about the plan, the plan this year, the plan for the three year growth plan that Paul's referred to and how we get there. And one investor at a time give people confident that we can be good stewards of their resources. And so I think it's important that we go, that I get inundated with calls for people wanting us to hire a Investor Relations group and go out and drive the stock up. But I think the more effective way to do it is to bring you guys along and have everybody who's interested in the company, learn about how we're going to make the $200 million company. And that's going to take a number of conversations and it's going to take some creativity and it's going to take investors part too. I mean, they have to believe in this and we have to see people start to value the company that way, more so than a discount to what a liquidation value is, which is where it's still like we are here. But I think your point is well taken and we have a lot of work ahead of us and we're going to be awesome and on track here this summer, once we get through the annual meeting and had done that road of growing the company.
Ross Taylor: Yes. So I would say that I – the steps you've taken so far have been fantastic. I don't think they've been really recognized by the market. I would agree you're trading under liquidation value at this point in time. And I think that the idea of getting in front of people and honestly just kind of pushing it through proof and execution is a very valuable one. And I do think that part of the problem has always been that people have been waiting around thinking that they're going to get a chance to buy you cheaper in size, and therefore they step-off and kind of just wait, because their assumption has been, you're going to need to do a deal. What you did with the refi was fantastic. And I think it lays a template for what you could be doing going forward and just keep pushing that way you execute operationally. And honestly it builds the brand awareness as we’re talking about. And I think you could find inside your holder base people who might be willing to provide capital if you needed it, particularly given your demonstrated ability now to generate returns on what you went up.
Geoffrey Gwin: Thank you Ross. I could just chime in on that, just to really say, I agree with you. We're going to focus on results because at the end of the day, results will drive value and value will drive the share price up. We're going to be patient. We get calls every day, not that we've got a lot of shares in the shelf, but we had even a few to discount shares to do overnights, we've resisted all of that, plus that's – our strategy is what you're articulating is to be oriented towards the premium price and be focused with our investors as opposed to seek a discount, just to get cash in and be broad in our approach. So I think we're aligned with you on that. We'll seek your guidance and we're happy to work with our current investor group. We just – all we want to do is deliver results, prove that we can do more and get some investment to do more, because I think a little bit, I think we're demonstrating, we can take a little bit and go a long way.
Ross Taylor: I would agree to and I think that's where I would argue with make sure that you don't sell yourself short. I think you have proven all that. It's just a matter of getting the market to recognize, getting your investors to recognize that. And I'm confident that the team you have in place will get there. And hopefully I think there's a lot of things here that should stick in very rapidly. I think the pace of change should accelerate from here and as it does. I think that we should change a year from now. I think we're going to be looking hopefully at a very different environment, very different stock price and very different opportunities for the company.
Paul Block: We agree.
Geoffrey Gwin: We appreciate your support Ross. Okay, thanks.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Paul Block for any closing remarks.
Paul Block: Well, I'd just like to thank everybody for joining today. Thank you for your interest and all the good questions. And Geoff and I and the team we're going to go back to work. And as we said, keep accelerating forward. Again, appreciate your confidence and thank you for joining the call. Have a great evening.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
