TILT Holdings Inc. (TILT), a provider of cannabis solutions, held its third-quarter 2024 earnings call on [date], reporting a significant decrease in revenue and gross margins. CEO Tim Conder and Interim CFO Brad Hoch outlined the company's financial results, strategic shifts, and future prospects during the call.
TILT's revenue dropped to $27 million from $44.6 million year-over-year, mainly due to its Jupiter hardware business and cannabis operations facing market challenges. The company's net loss for the quarter was $12.6 million, with a decrease in gross margins to 14%. Despite the setbacks, TILT is focusing on its Jupiter Research segment and exploring strategic alternatives for its plant-touching assets to improve its financial position.
Key Takeaways
- TILT Holdings reported a decrease in Q3 revenue to $27 million, down from $44.6 million year-over-year.
- Jupiter hardware business revenue fell to $16.8 million from $32.8 million, while cannabis operations generated $10.1 million.
- Gross margins dropped to 14%, and the company reported a net loss of $12.6 million for the quarter.
- TILT is exploring divestitures and partnerships, focusing on the Jupiter Research segment as its core business.
- Leadership changes include Ken Yuan as COO and Khalid Al Naser to lead commercial efforts.
- The company remains optimistic about growth in the European market and the success of its Voca Pro live rosin vape carts.
Company Outlook
- TILT aims to unlock value through strategic alternatives for plant-touching assets amidst competitive pressures.
- Optimism for future growth, particularly in the European market, is a key focus for TILT.
- The company is restructuring to improve balance sheet and operational efficiency.
Bearish Highlights
- TILT is facing challenges in its Jupiter hardware business and cannabis operations.
- Competitive pricing pressures and market saturation are impacting plant-touching assets.
Bullish Highlights
- The Voca Pro live rosin vape carts won first place at the Harvest Cup in Massachusetts.
- Jupiter's strong customer relationships and retention are attributed to excellent service and technology.
Misses
- Q3 revenue and gross margins fell year-over-year.
- Net loss reported at $12.6 million for Q3, an increase from the $8.7 million loss in the year-ago period.
Q&A Highlights
- CEO Tim Conder discussed the current market cap of approximately $3 million, with a share price of $0.008.
- The potential for divesting plant-touching assets was addressed as a means to enhance investment opportunities and align resources.
TILT Holdings is undergoing a strategic transformation in response to the challenges faced in the third quarter of 2024. The company's focus on the Jupiter Research segment and the exploration of strategic alternatives for its plant-touching assets indicate a shift towards a more streamlined and potentially profitable business model. As TILT navigates these changes, stakeholders will be watching closely to see how these strategies unfold in the coming quarters.
InvestingPro Insights
TILT Holdings Inc. (TLLTF) is facing significant challenges, as reflected in both its recent earnings report and the latest InvestingPro data. The company's market capitalization has dwindled to a mere $2.77 million, aligning with CEO Tim Conder's mention of a $3 million market cap during the earnings call. This stark valuation underscores the severity of TILT's current financial situation.
InvestingPro data reveals that TILT's revenue for the last twelve months as of Q3 2024 stood at $128.59 million, with a concerning revenue growth rate of -25.55% over the same period. This decline is even more pronounced in the quarterly figures, with a -39.47% revenue drop in Q3 2024 compared to the previous year, corroborating the company's reported decrease from $44.6 million to $27 million in quarterly revenue.
The company's financial health is further strained, as indicated by two critical InvestingPro Tips. Firstly, TILT "suffers from weak gross profit margins," which is evident in the reported drop to 14% in the latest quarter. Secondly, the tip that "short-term obligations exceed liquid assets" suggests potential liquidity issues, which may explain the company's exploration of strategic alternatives and potential divestitures mentioned in the earnings call.
These insights from InvestingPro provide additional context to TILT's current challenges and strategic decisions. Investors seeking a more comprehensive analysis can access 13 additional InvestingPro Tips for TILT Holdings, offering a deeper understanding of the company's financial position and market performance.
Full transcript - TILT Holdings Inc (TLLTF) Q3 2024:
Operator: Good afternoon, everyone, and welcome to TILT Holdings Third Quarter 2024 Conference Call and Webcast. Today's call is being recorded for replay purposes. A replay of this audio webcast will be available in the Investor section of the company's website approximately two hours after the completion of the webcast and will be archived for 30 days. I would now like to turn the conference call over to your host, TILT's Head of Investor Relations and Corporate Communications, Lynn Ricci. Please go ahead.
Lynn Ricci: Thank you, operator. Good afternoon, everyone, and thank you for joining us. Earlier today, we issued our third quarter 2024 earnings press release. The press release, along with our report on Form 10-Q, is available on the U.S. Securities and Exchange Commission's website at www.sec.gov, on SEDAR+ at www.sedarplus.ca, and our website at www.tiltholdings.com. Please note that during this webcast, remarks made regarding future expectations, plans, and prospects for the company constitute forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various factors, which we disclose in more detail in our most recent 10-K filed by TILT with the SEC and on SEDAR+. We remind you that any forward-looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent date. While we may update such forward-looking statements in the future, we specifically disclaim any obligation to do so, except as otherwise required by law. As of today's call, we are presenting our financial results in accordance with the United States Generally Accepted Accounting Principles, or GAAP. During the call, management will also discuss certain financial measures that are not calculated in accordance with GAAP. We generally refer to these as non-GAAP financial measures. These measures should not be considered in isolation or as a substitute for TILT's financial results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to their nearest equivalent GAAP measure is available in our earnings press release that is an exhibit to our current report on Form 8-K that we filed with the SEC and SEDAR+ today, and can be found in the Investor Relations section of our website. Joining on today's call is our CEO, Tim Conder; and our Interim CFO, Brad Hoch. Following the prepared remarks, we will open up the call for questions. During today's prepared remarks, we may offer metrics to provide greater insight into our business and/or our financial results. Please be advised that we may or may not continue to provide these additional metrics in the future. With that, I will now turn the call over to our CEO, Tim Conder.
Tim Conder: Thank you, Lynn, and good afternoon, everyone. The cannabis sector is under an extreme amount of downward pressure. In order to address market challenges and to continue to navigate the challenges within our own operations, we must focus. In order to focus, we are seeking to narrow the scope of our business. In our press release earlier today, we announced that we are exploring a range of potential actions, including divestitures, partnerships, and other strategic alternatives related to our plant-touching assets, which will enable us to focus on the largest segment of our business, Jupiter Research. We believe these plant-touching assets hold true value as we have undertaken a great deal of work to reduce our cost structure, refine our product portfolio, and invest in differentiated areas like solventless production. However, our continued investment will cause additional strain on our balance sheet and limit our ability to grow our inhalation hardware business. We need to explore paths to continue to restructure our balance sheet, address our debt stack, and ultimately grow our business. We believe that focusing on Jupiter alone will give us the best opportunity to do this. Over the past year, we have undertaken an aggressive transformation process, dramatically reducing costs while making incremental investments into neglected maintenance CapEx in our plant-touching assets and several other changes previously discussed. That process is still underway. And at this point, addressing our balance sheet has become paramount to continuing our efforts. Exploring strategic alternatives for our plant-touching assets will likely have the added benefit of further reducing our OpEx. As a reminder, in 2022, TILT executed sale-leasebacks of its properties in Massachusetts and Pennsylvania. The capital raised was used to pay down senior debt at the time, but had the adverse impact of increasing monthly operational expenses by nearly $0.5 million. In the current cannabis environment, this creates an untenable cost structure given our current market position. We hope that by exploring strategic alternatives for our plant-touching assets, we will be able to unlock the value of Jupiter. In addition to our operational efforts within CAC and Standard Farms, we have also worked to evolve our operation at Jupiter to regain market share and better leverage our longstanding customer relationships and product development capabilities. Let me share a few of the changes we have made. In early August, we completed a sales reorganization at Jupiter to better adapt to evolving market dynamics. This effort enhanced our focus on further supporting existing customers while creating a dedicated team focused on new business and the emerging markets. We have also made some critical leadership updates that we alluded to on our Q2 call, which support our long-term vision and strategic goals for TILT and Jupiter. Specifically, Ken Yuan has joined our team earlier this year as Jupiter's Chief Operating Officer. Ken has a strong and relevant background in strategic growth, restructuring and financial operations. Ken served as the Head of Strategy at FedEx (NYSE:FDX) Supply Chain, and was an operating partner for various private equity firms, including TPG for over a decade. Ken has been pivotal in shaping our operational framework and evolving our partnership with our Asian suppliers. We are confident he'll continue to add tremendous value as we reshape the organization. Additionally, Khalid Al Naser recently joined to head up our commercial efforts for TILT and Jupiter. Khalid brings deep expertise in cannabis product commercialization and go-to-market execution. Khalid is the Co-Founder of Raw Garden, one of Jupiter's largest customers and a brand that has long shaped advances in the cannabis vaporization space. With Khalid's expertise, we will continue supporting their growth and the growth of all of our customers in the rapidly evolving cannabis market. Welcome to you both. During the third quarter, we advanced our asset-light model for Jupiter, which we initially introduced in Q2. This model emphasizes just-in-time production and shipping, which we anticipate will improve working capital and reduce our trade payable with our Asian supplier. As we evolve Jupiter's operating model, we are also evaluating near- and long-term growth opportunities. We have identified ways to better serve our customers by giving them a unique advantage over their competitive set just by working with Jupiter. To do this, we are evaluating Jupiter services, focusing on those that drive profitability and differentiation for the brands we work with. We have done this by deepening our operations and customization focus while evolving our portfolio to include new devices and technology either directly developed by Jupiter or exclusive to Jupiter. It is critical that we have a robust portfolio of products that meet our customers' evolving needs, particularly on price and innovation. We continue to be excited about the opportunity in Europe, and we hope to have in the short term, positive news on both of our inhalation devices focused on the medical market there, the Liquid Medical (TASE:PMCN) and Que Medical, the latter of which is an exclusive partnership with Curaleaf (TSX:CURA). I cannot underscore the complexity of bringing a device of this kind to market given the rigorous approval process and our understanding that in the case of Liquid Medical, it is the first device of its kind under a revised regulatory structure for the notified body we are working through. As part of the transition plan that we discussed last quarter, our top accounts at Jupiter are now directly invoiced by Smoore, our Asian supplier. We expect this approach will help bring down our trade payable with this supplier in addition to the benefit of alleviating import/export insurance challenges as previously discussed. I'm pleased to report that our customers are experiencing limited impacts to service since the transition as we remain the primary point of contact operation. We're continuing to meet their needs with the same high standards of service that they have grown accustomed to. For the plant-touching side of the business, as announced earlier, we are exploring strategic alternatives to better position TILT with regard to our balance sheet and operational expenses. I want to thank our team and leaders for all of the work they have done over the past 18 months to realign each of these businesses and set them up for success. Our employees are a key stakeholder, and I want to give them the best opportunity to thrive even if that means being separate from TILT. The plant-touching business overall has made positive headway operationally over the past year, but has had its challenges, too. In short, we are deep in markets where we may want to be shallow and shallow where we may want to be deep. Ohio has been a bright spot with the addition of adult use. However, our lack of integrated cultivation negatively impacted us due to the material hoarding that occurred in the market as we prepared for the transition to adult use. Severe limitations on marketing and advertising have also blunted growth. We hope to see a new rules package at the end of this year or the beginning of 2025 that will address this issue and others, so Standard Farms Ohio can realize the full value of adult-use consumption. For the third quarter, Massachusetts continued to experience competitive pricing challenges and market saturation. As we exit the outdoor harvest season, flower prices have been especially depressed. We are seeing pound prices as low as $650 for midrange flower and only a couple of hundred dollars more for top-tier buds. Despite this, we experienced decent wholesale sales velocity in Q3, specifically in August and September, with September being our best month year-to-date, and an increase in new doors as we start the fourth quarter. Pennsylvania is also seeing market dynamics lead to challenges for state operators. As neighboring states begin to allow adult-use sales and the hemp and delta-9 market grows without regulation, dispensaries are losing sales and revenue. As a result, vertical operators are further restricting shelf space to stand-alone brands in favor of in-house higher-margin offerings. This is particularly true for dispensaries in Philadelphia where New Jersey cannabis ads dominate advertising in the city. However, the third quarter delivered more favorable greenhouse environment growing conditions and continued our increase of rosin production. Our rosin production has been received well in Pennsylvania and Massachusetts. We are continuing to expand our solventless offerings across vape and concentrate categories with offerings like a 3.5 [baller] jar and half and full gram live rosin vape carts and all-in-one devices. Again in this year, our live rosin Voca Pro won first place at the Harvest Cup in Massachusetts. These plant-touching assets have come a long way, implementing improvements and expanding relationships within their respective states. Although I am encouraged by their teams and future growth outlook, we have chosen to explore strategic alternatives as we believe it is the best path forward for our balance sheet for Jupiter as our core business and ultimately for all of our stakeholders. Again, I want to sincerely thank our employees for all of their efforts, and assure them that our exploration and subsequent actions will be done with as minimal disruption as possible and with thoughtfulness and transparency. With that, I'll let Brad take us through the quarter's financial highlights.
Brad Hoch: Thanks, Tim, and good afternoon, everyone. As a reminder, all results today are presented in U.S. dollars and are on a year-over-year basis, unless stated otherwise. Jumping into our results. Revenue for the third quarter was $27 million, slightly up from Q2 and down from $44.6 million in the year-ago period. The decrease in year-over-year revenue was primarily driven by our Jupiter hardware business. For Jupiter, revenue increased sequentially to $16.8 million from $15.7 million in Q2 and decreased from $32.8 million in the year ago period, mainly driven by lower sales volume related to delays in shipping from our primary supplier as well as a result of the new direct invoicing model, the Smoore. Additionally, cannabis operations revenue, which includes Massachusetts, Pennsylvania, and Ohio, in the third quarter, was $10.1 million compared to $10.9 million in Q2 and $11.7 million in the year-ago period. Gross margin in Q3 was 14% compared to 16% in Q2 and 18% in the year-ago period. The decrease in gross margin was primarily driven by increased logistics costs related to shipping delays as well as product mix. Adjusted gross margin, which excludes noncash inventory adjustments in the third quarter, was 15% compared to 17% in Q2 and 20% in the year-ago period. Operating expenses, less noncash adjustments for stock compensation, depreciation and amortization, and impairment charges in the third quarter decreased 15% to $7.3 million compared to $8.6 million in the year-ago period. The year-over-year decline was primarily driven by lower headcount, legal and professional fees as well as lower administrative expenses as part of our cost reduction initiatives. Net loss in the third quarter was $12.6 million compared to $35.9 million in Q2 and $8.7 million in the year-ago period, with the sequential improvement driven by the impairment charge last quarter and the year-over-year decline driven by lower revenue and gross margin. Adjusted EBITDA in Q3 was negative $1.6 million compared to negative $1.2 million last quarter and $2.2 million in the year-ago period. Cash flow from operations for the third quarter was $2 million compared to $1.4 million in Q2 and $1 million in the year-ago period. At September 30, 2024, the company had $3.9 million of cash, cash equivalents, and restricted cash compared to $3.3 million at December 31, 2023. With that, I'll turn it back to Tim.
Tim Conder: Thank you, Brad. As we continue to work through balance sheet challenges and market pressures, we believe that our exploration of strategic alternatives and Jupiter's evolution will give us the best chance to succeed going forward. Building on the foundational steps we have taken and efficiencies that we are implementing throughout the organization, this review and subsequent actions will better align our resources and emphasize our strengths. It is a testament to the size of the opportunity and our approach to capitalizing on that opportunity that we have been able to add key contributors to our team like Ken and Khalid. And while our business has no shortage of challenges, we are working tirelessly to address those challenges. Sometimes success is about survival. That is the moment we find ourselves in. But if successful in executing our plan, we believe the resulting business will be an enduring market leader managed by a team with bonds forged in fire and prepared for anything that may come. Operator, we will now open it up for questions.
Operator: Thank you, sir. [Operator Instructions] Our first question comes from Pablo Zuanic of Zuanic & Associates. Please go ahead.
Pablo Zuanic: Thank you. Tim, can I ask in terms of this, the idea of focusing more on the Jupiter business? So, is this like something that was just announced today? Or have you already been taking inbound calls from bankers? Have you appointed an adviser to help you sell the asset? I'm just trying to get a sense of the response so far. Or is it just way too early to tell?
Tim Conder: So, yes, I appreciate the question, Pablo. And thanks for joining. So this was a directive from the Board when I joined the organization, or rejoined the organization 18 months ago, was to evaluate what opportunities might there be for all of our assets. And as we sort of undertook that process, we engaged with certain advisers, in some cases brokers, in some cases bankers, to give sort of a cursory idea of the potential for the sale of certain assets. And all of that, as we discussed earlier, is in service of addressing the balance sheet challenges that TILT has had for some time. So it's a process that we've been engaged in, in varying degrees of - from varying degrees of aggressiveness, but is now one that we are moving along in earnest. So hopefully, that answers it. We are still engaged with certain advisers, and bankers to evaluate these assets.
Pablo Zuanic: Okay, no, that's good. Thank you. And then, when I think of the Jupiter side, I guess a two-part question. One, sales improved sequentially, but it seems that they were below your expectations that these issues with the supplier had not been expected to be as bad and that the transition in terms of invoicing to new customers, would not be an issue. I'm just trying to - I'm trying to understand the third quarter for Jupiter in terms of sales, was that should we be glad that it improved sequentially and that's good? Or was it well below your expectations, because the one-off issues of the second quarter were not fixed as quickly as you expected?
Tim Conder: No, I wouldn't say it was well below our expectations. We achieved and even overachieved as it relates to our internal sales targets. And yes, still seeing some impacts just from the transition that we undertook over the past quarter or so with our main Asian supplier. But we expected the decrease in revenue with the shifting of invoices - invoicing to those limited number of customers.
Pablo Zuanic: Okay. Thank you. I mean, just two more questions. One, in terms of the balance sheet, I guess it's a two-part question, does Smoore/CCELL get it in the sense of how bad things are? And could they take a stake in Jupiter at some point, just to help the balance sheet issues? Or that's just out of the question? Thanks.
Tim Conder: I mean I can't speak for them as to whether or not they take a stake in Jupiter. What I would tell you is there - we are actively working with them to address the balance sheet issues that have existed for TILT for a few years now, right? So when I joined the organization 18 months ago as Interim CEO, the trade payable with Smoore was roughly $36 million. Today, it's $32 million. So it's been reduced. And we have entered into a series of agreements - since February of this year, to really outline the path to reducing it to a place that ultimately meets their expectations, and our collective level of comfort. And they understand that it's important that a healthy Jupiter means a healthy and growing CCELL. We're still the largest distributor in the CCELL network by far. And one of, if not the largest, distributor of hardware devices in North America. And so, we see a massive opportunity together, but Jupiter is very important to their long-term success. And so, we're working collaboratively to address the challenges that we inherited, and this is the next step in that process.
Pablo Zuanic: Okay. Thank you. And just one last one maybe, down in the weeds in terms of the Vape segment. We continue to see the decline of 510 cartridges, and a very strong growth of all-in-ones in most geographies. Just remind us of how is CCELL positioned for that? How are you adapting to a new trend? Thanks.
Tim Conder: Yes. I would say Jupiter and CCELL together, right, recognize that trend. Our business from an all-in-one standpoint has grown dramatically over the past year. We're excited about some of the new products that both Jupiter and CCELL are bringing to market to meet the sort of rising shift to all-in-one devices. And I think we're going to see sort of continued evolution and even sort of some cyclical return. Whether it's in pod devices or even in the 510 threaded segment. So I think lots of interesting technological evolutions and advances that ultimately expand the category, but the most near-term growth opportunity is absolutely in all-in-ones.
Pablo Zuanic: And then, look, I'm going to ask one more. I know it's too early to tell what's going to happen with the tariffs, right? But how are you and how are CCELL thinking about that in terms of how you adjust to that?
Tim Conder: Yes. We feel like we're well positioned. It's an area that we have sort of aggressively moved our partners to expand into their manufacturing operations outside of China. CCELL, as an example, manufactures a large number of devices in Indonesia, and is looking to increase that for the next year or so, and ultimately have the lion's share of their production happening in Indonesia. A number of other suppliers, whether it's from companies that we work with for accessories, et cetera, are also making a similar shift.
Pablo Zuanic: That's good. Thank you. Understood. Thank you very much.
Tim Conder: Thank you, Pablo.
Operator: Our next question comes from Aaron Grey of Alliance Global Partners (NYSE:GLP). Please go ahead. Aaron, your line is open. You can ask your question. Aaron, unfortunately we're not hearing you. Going on to the next question, which comes from [James Cook of Cook Capital]. Please go ahead.
Unidentified Analyst: Good evening, gentlemen. How you doing?
Tim Conder: Good, James. Thanks for joining.
Unidentified Analyst: Guys, I'd like to ask you, what is the current market cap of TILT Holdings?
Tim Conder: In U.S. dollars or in Canadian dollars?
Unidentified Analyst: U.S. dollars, please?
Tim Conder: One second. I'm pulling it up as of today. Current market cap is roughly $3 million.
Unidentified Analyst: And what is the current price per share?
Tim Conder: The current price per share is less than $0.01, so $0.008.
Unidentified Analyst: My question to management is, how does that make you guys feel?
Tim Conder: Obviously, it makes us feel like we have a lot of work to do.
Unidentified Analyst: Do you have anything to say to your shareholders?
Tim Conder: Absolutely. I would say to our shareholders of, which I am also one that you have a team that is committed, to working on behalf of stakeholders very diligently, to address the challenges that in many cases we inherited, but signed up to rectify. And I think that it is going to take time, but I sincerely hope for all stakeholders, including shareholders, common shareholders like myself, like our employees at TILT, like members of my family, that we're successful in that objective.
Unidentified Analyst: And how come there's been no….?
Tim Conder: I'm sorry, you cut out. What was that?
Unidentified Analyst: How come there's been no insider buying at these rock bottom below penny prices?
Tim Conder: I mean, I can't comment on behalf of the rest of the management team, but I can - but I mean, I think one reason is that we are privy to certain information like we announced today, the exploration of certain divestitures, or other strategic alternatives that may preclude us, from those types of purchases.
Operator: Thank you, sir. Our next question, we've been rejoined by Aaron Grey of Alliance Global Partners. Please go ahead.
Aaron Grey: Hi, good evening. Thank you for the questions. Apologies for before, my phone must have gone out. But I want to circle back in terms of the strategic alternatives for the plant-touching assets. Just in terms of how we think about the pro forma company if you were to divest all the plant-touching, I know this is something that you guys evaluated back in early 2020, I believe. And at that time, you still would have had Blackbird, so there still might have been some issues in terms of being fully non-plant-touching at the time. But now in the case of just having Jupiter, if you were successful in divesting the plant-touching. Could that offer more opportunities for you, be it from a listing perspective, being joined with other ancillary companies that are on larger exchanges? Just what are your thoughts on that? And how did that work into the equation with evaluating these strategic alternatives? Thank you.
Tim Conder: Yes. Thanks, Aaron. It's absolutely an important and critical part of the calculus, right? I don't think it's any secret that plant-touching assets, one, preclude a large number of investors, et cetera, from supporting TILT as a whole, right? And so in the absence of plant-touching assets, we think there is more opportunity for Jupiter from an investment standpoint, from a listing standpoint, et cetera. So that was absolutely an important part of our calculus.
Aaron Grey: Okay. Great. Appreciate that. Next (LON:NXT) question from me. Just in terms of the competitive dynamics that you're seeing within Jupiter, just if you had some issues over the past two quarters, be it supply or otherwise, can you just talk about the customer retention, how strong has that been? How they've been receptive as you kind of communicate you working through some of these issues, and hopefully keep that retention, essentially grow with them via new SKUs, whether it be all-in-one or otherwise? Thank you.
Tim Conder: Yes. Thanks, Aaron. So I would say our relations with our customers are strong, and it's really a testament to the team that we have with Jupiter, and the service that we provided, in some cases, for seven-plus years, right? And so, the reason that we've been able to retain those customers is, because Jupiter has great service and is supported - by our primary supplier with fantastic technology, usually market-leading technology. I think we both, meaning us and our supplier, recognize that there's an opportunity to compete, with our competitive set more directly on price and portfolio. And so we've been working aggressively to ensure that, as I always said, our team, we have the right product at the right price for our customers as they evaluate new product lines, et cetera. And so that, I think, is a really important thing to know for Jupiter's business going forward. We service many of the largest MSOs, and brands in the space. Those brands are growing, and are expanding into new markets, and are doing so with Jupiter as the foundation for their hardware growth, and their vaporization segment development. And we don't see that slowing down. And we're bullish on Jupiter's opportunity, because of that customer set.
Aaron Grey: Okay. Great. Appreciate that color there. I'll go and jump back in the queue.
Operator: Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. I will now hand back over to Tim Conder for closing remarks.
Tim Conder: Great. Thank you. Just wanted to thank everybody for joining the call, and have a great rest of your week. Appreciate it.
Operator: Thank you. Ladies and gentlemen, that concludes this afternoon's conference. Thank you for attending, and you may now disconnect your lines.
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