American Vanguard Corporation (NYSE:AVD) Q4 2023 Earnings Call Transcript

American Vanguard Corporation (NYSE:AVD) Q4 2023 Earnings Call Transcript March 14, 2024

American Vanguard Corporation reports earnings inline with expectations. Reported EPS is $0.25 EPS, expectations were $0.25. AVD isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Greetings and welcome to American Vanguard Fourth Quarter and Full Year 2023 Conference Call and Webcast. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bill Kuser, Director of Investor Relations. Thank you. You may begin.

Bill Kuser: Thank you very much, Diego, and welcome everyone to American Vanguard’s fourth quarter and full year 2023 earnings review. Our speakers today will be Mr. Eric Wintemute, Chairman and CEO of American Vanguard; Mr. David Johnson, the Company’s Chief Financial Officer; assisting in your questions Mr. Bob Trogele, the Company’s Chief Operating Officer; Mr. Don Gualdoni, the Chief Transformation Officer; and Tim Donnelly, the Chief Administrative Officer. Before beginning, let’s take a moment for our usual cautionary reminder. In today’s call, the Company may discuss forward-looking information. Such information and statements are based on estimates and assumptions by the Company’s management and are subject to various risks and uncertainties that may cause actual results to differ from management’s current expectations.

Such factors can include weather conditions, changes in regulatory policy, competitive pressures and various other risks that are detailed in the Company’s SEC reports and filings. All forward-looking information represents the Company’s best judgment as of the date of this call and such information will not necessarily be updated by the Company. Additionally, bear in mind that, financial information that we discuss today is subject to the completion of a full year 2023 audit process. With respect to the filing of our Form 10-K, we are still in the midst of completing documentation and will likely be filing with the SEC for an extension to the due date under Rule 12b-25. Thus the 10-K will be filed within 15 days after March 15, 2024. With all that said, I turn it over now to Eric Wintemute.

Eric Wintemute: Thanks, Bill. Hello, everyone, and welcome to American Vanguard’s full year 2023 earnings call. I appreciate your continued support and interest. Today, I would like to cover four topics.

Operator: You might have mute yourself.

Eric Wintemute: Pardon me? Sorry. First, as you’ll see on Slide 4. First, our full year performance with particular note on how we rebounded in Q4. Second, current market conditions, which are stable. Third, our sound business fundamentals. And fourth, our initiative to unlock American Vanguard’s full value. Before I get to the last point, I will have David give us an update on our financial performance. When we last spoke in January, we gave you performance targets for 2024. For the reasons I will outline today, we are still targeting 2024 net sales to increase by 8% to 12% over 2023. However, we are now raising our target for adjusted EBITDA to fall between $70 million and $80 million. With that kind of performance, we should receive a higher valuation than what we are currently seeing in the market.

As you well know, our stock has historically traded at over 10x EBITDA. Now if you use net debt plus market cap and divide it by $75 million the midpoint of our ’24 EBITDA target, we are currently trading at under 6x. With a strong balance sheet, stable markets and after having de-risked supply issues, we are poised to enhance shareholder value this year. Further, I’m pleased to report in summary that we’re able to accomplish in Q4. At this point, I can say definitively that Q4 was in fact a rebound period for us as you will note on Slide 5. Due to global destocking activity, a glut of generic products from China and supply issues of two of our leading products, Aztec and Dacthal, our performance for the first nine months of 2023 was below expectations.

With the supply chain mended, two of our high margin products in hand and a subsidence in destocking, we were able to record 8% higher sales in Q4 as compared to the prior year. I will also note that with respect to Aztec and Dacthal, we have dual sourced the supply of raw materials and intermediates, thereby ensuring continuity and availability going forward. Over the course of Q4, our working capital balance sheet improved towards more normal levels. With higher sales, we reduced inventory to $220 million, generating cash from both sales and customer prepay, reduced net debt to $128 million and increased borrowing capacity to $112 million. In the process, we improved our debt to EBITDA ratio significantly to land comfortably below our target of 2.75x.

In the short-term, this will reduce our interest rate by at a minimum 0.5%. Further, stronger balance sheet and improved liquidity both enable us to allocate cash judiciously and provide a firm foundation for operating the business in ’24. That brings up the second area of focus, current market conditions. Cover this on Slide 6. As you know, grain, particularly corn and wheat, also soybeans are global commodities and their prices are influenced by global factors. In 2023, Brazil passed the U.S. as the largest supplier of corn and soybeans in the world. With good yields and increased supply from Brazil, prices for these crops have declined. For example, the price of corn in the U.S. has dropped nearly one-third since early last year from 6.38 a bushel to about 4.25 per bushel.

That said, the farm economy has been strong for the past two years and demand for crops and crop inputs remain stable even as commodity price levels issue. At the same time, biologicals are continuing to gain traction with growers. These inputs typically contribute to soil health and appeal to growers as a sustainable long-term investment in their most valuable asset that is their land. We are also seeing continued interest in products that have a softer environmental footprint. With respect to distribution channel, the destocking frenzy of 2023 seemed to have worked itself out. Growers still need inputs. It’s just that they will tend to buy them closer to season in order to minimize carrying cost. This is true over the length of the distribution channel.

Also, as evidenced by our Q4 sales, distribution can and will purchase crop inputs even in advance of the planting season. Further, demand for our end use products in the U.S. was stable in ’23 on a full year basis. That said, we’re seeing a higher level of sophistication and discipline in inventory control at the retail end of the distribution. Some of our competitors have softened their guidance for ’24, noting an inventory overhang of their products in the distribution channel. The state of oversupply largely affects South America, particularly Brazil and Europe. By contrast, we are not facing blood within our major markets. We are a niche player in Brazil and our sales into that country are minimal. Further, as I mentioned on our last call, ag-chem sales in Brazil dropped by an average of 33% in 2023, while ours declined by only 4%.

Similarly, we do very a little business in Europe. Let’s turn now to the third element of our discussion on Slide 7 that is American Vanguard and its business fundamentals in light of the market conditions that I just outlined. With respect to last year’s destocking and our industry’s poor performance, it bears repeating that, even with the unavailability of two of our high-margin products, we outperformed the ag-chem market as our net sales were down 5% year-over-year, while the industry average was closer to 13%. In other words, we were not affected as materially by destocking or for that matter Chinese generic pressure. And as I say, procurement has been rationalized by the channel. Also, we did not oversupply the market in ’23 that is we sold what the market demanded without price reduction.

In fact, we have maintained brand value and legitimacy in the eyes of our customers. This confidence is reflected in their continued commitment for the significant prepayments that many of our U.S. customers made in Q4. Given our favorable inventory position in the channel, distribution, current sales activity and our customers’ outlook, we are targeting a sales increase of 8% to 12% and adjusted EBITDA of $70 million to $80 million in ’24. At this point, I would like to turn the call over to David for his comments on our financial performance. I will then return and give my thoughts on unlocking value of American Vanguard. David?

David Johnson: Thank you, Eric. I will begin my comments with a recap of full year 2023, during the course of which I will present important metrics for Q4 as well as working capital and liquidity analysis. As you will see from Slide 8, our overall sales for the full year declined by about 5% from $610 million to $579 million for the reasons that Eric has already outlined. You can see from the graphic depiction that U.S. crop with the unavailability of Aztec in the first half of the year and DACTHAL for most of the year declined by 7%. While both U.S. non-crop and international declined more modestly, during the Q4 with respect to U.S. non-crop, we are observing a more stable sales trend following the destocking efforts of retailers that began in the beginning of 2023.

With regard to international, the bar graph tends to bear out the fact that oversupply of generic products did not materially affect our business in the regions that we serve. Turning to Slide 9. With the sales decline of 5%, our gross profit declined by about 7% and gross margin percentage decreased from 32% to 31% year-over-year. As you may know, for our U.S. crop business carries our highest margin product, many of which we manufacture in our factories. The drop in sales of high margin products such as Aztec and Dacthal would necessarily put pressure on gross margins. As you will see on Slide 10, our operating expenses in 2023 edged up about to about $156 million from about $151 million in 2022. This was due to increased selling expenses both in South America to support our new business in Ecuador, the largest banana growing country in the world, and increased travel coupled with additional R&D and regulatory cost, which represent a continued investment in our future with the concurrent defense of our registrations.

These increases were partially offset by a decrease in G&A expense, largely due to reduced incentive compensation as a result of overall financial performance. With respect to cash flow as per Slide 11, despite a negative change in working capital, which occurred due to slower sales and expansion of working capital primarily driven by the accumulation of inventory, we closed the year with net debt of $128 million. I will cover liquidity in a few moments. Looking at our statement of operation on Slide 12, you will note that our drop in sales with slightly higher OpEx translated into lower operating income, lower income before tax, lower income tax and a consequent net income of about $7.5 million or $0.26 per share. Bear in mind as Eric has intimated for the first three quarters of 2023, we generated very little net income.

Thus, what you’re seeing on Slide 12 as far as net income and EPS is concerned was generally was generated in Q4. Turning now to working capital. On Slide 13, you will see our inventory trend on a quarterly basis since 2021. Note that as compared to 2022, we took a step up in inventory during 2023. Here again, with unavailability of certain key products and lower demand due to destocking in the distribution channel, we ended up accumulating inventory at the start of the year. We turned the corner in Q4 as more normalized market conditions returned. At 38% of net sales, our ending inventory is higher than we would like. We’re targeting to get inventory levels down to $195 million by the end of 2024. Now let’s take a quick look at debt and liquidity as per Slide 14.

The early strain that was apparent in the first nine months of 2023 took a turn for the better in the fourth quarter, where we recorded a significant drop in borrowing from $218 million in Q3 to $139 million in Q4, and a concomitant increase in borrowing capacity from $29 million to $115 million. Year-end numbers are approaching historical averages. However, with our targeted performance in 2024, we would expect to have an even stronger liquidity position at the year-end. That sums up my detailed comments. On the whole, while 2023 started quite slowly in the face of adverse market and supply conditions, I’m pleased with the progress that we made in Q4 during which we significantly improved the balance sheet. This gives us a great foundation for 2024 and beyond.

With that, I’ll turn the call back to Eric. Eric?

Eric Wintemute: Thank you, David. Let me now turn to the fourth part of my comments, namely unlocking American Vanguard’s full potential as seen on Slide 15. You may recall in our January call that Coe Street Capital has made effect, where do you go after you have returned to more normalized historic performance? What’s next? Similarly, one of our analysts posed the question, how do we unlock the elusive value that is inherent in the Company? Let’s discuss the answer on Slide 16. Along with our advisor, [Carnie], our team is driving a business transformation initiative to improve operating leverage and move adjusted EBITDA to 15% of net sales by 2026. Recall the process of defining the target, Pathfinder, as you see on the slide.

This initiative should translate into $15 million or more in additional EBITDA on an annualized basis. This is not a new endeavor. As you may recall, we announced the transformation initiative at the end of Q2 last year. At that time, we had also identified we could achieve a $15 million benefit through operational and commercial changes. With [Carnie’s] help, we are validating the initial assessment and defining a plan by which to obtain this improvement on operating leverage. As per Slide 17. We expect that about 60% of this benefit will come from operational changes in manufacturing, planning, inventory and procurement, including freight. About 30% will likely come from commercial areas, such as pricing, sales expenses, product portfolio and R&D funding.

And another 10% will likely come out of G&A. We’ll implement these changes over the course of the next two years. And as I say, should realize the full benefit in 2026. In short, we’ll be applying sound business principles to all that we do with the intention of returning value to our shareholders. That is our first priority. Turning to Slide 18. As part of the transformation initiative, we are reassessing our working capital allocation including with respect to our three growth platforms, Core, Green Solutions and SIMPAS. I’ll pause to note that with respect to our Core business, our team continues to launch new formulations and mixtures. For example, our ZALO and [indiscernible] herbicides. In the domain of Green Solutions, we reported a 10% increase in sales year-over-year with new products like BioWake, the seed lubricant that is being used currently in corn, soybeans, peanuts and cotton.

And now BioWake corn, our first corn rootworm bio insecticide. In connection with SIMPAS, we have validated this technology and proven its mechanical functionality, its use with both solids and liquid inputs, its potential in both the U.S. and Brazil markets and most recently, as a yield enhancement tool in field trials involving prescriptive versus conventional application. The SIMPAS platform is ready. Our product portfolio is continuing to increase. At this stage of maturity, we expect that we will incur reduced development cost for SIMPAS going forward and are now positioned to capitalize on market demand as grower appetite for equipment and prescriptive application technology increases. In closing, we have a solid business with a strong balance sheet, broad geographical reach and three growth platforms.

We are poised to return to greater profitability in the short-term and with our initiative to unlock American Vanguard’s full potential we are investing and returning greater value to shareholders. This is an exciting time for the Company. And again, we thank you for your continued interest and support. With that, I’ll turn it back to the operator for any questions. Diego?

Operator: [Operator Instructions] And our first question comes from Scott Fortune with ROTH MKM. Please state your question.

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Q&A Session

Scott Fortune: Wanted to step through, I know you’re kind of focusing on looking at the growth platforms going forward here, and you’ve highlighted that for the near-term. Just want to get a sense for now where, guess, specifically focusing on SIMPAS and the confidence there of this really starting to get take the adoption, where you’re at as far as the number of SIMPAS is in the fields now and that ramp of you mentioned new products and productions for the SIMPAS going forward here? Just kind of step us through as you look out over the next couple of years the opportunity, SIMPAS has taken a while to get here, but the opportunity now for that going forward that would be helpful.

Eric Wintemute: Yes. And as far as the numbers, we’re still delivering the equipment now, but I think we’re somewhere in that 240, 250 systems that are in play frankly. And as you know, we’re growing our platform. We did get some have some approvals from EPA for this season that we were looking for. We have some products that we’ve got chewed up for ’25 that we think we’ll have in place. One of the things we were able to complete in ’23 and have just gotten and have received the results from was specifically with counters of prescriptive application within ourselves. And what we’re seeing kind of average 10 to 12 bushels increase in those areas where nematode pressure was present. And then we also tested the product to see where there wasn’t nematode pressure and found what you might expect was essentially a very pivotal benefit.

So modeled out mapped out different fields and we’ve seen the results that we would expect from prescriptive application. Similarly with zinc and not just we’re remodeling, but we’re modeling on soil type as well as kind of nematode count. As you might imagine sandy soil has the highest level of sandy at home, highest levels of damages. Within zinc, we also found that there are certain soil types where zinc deficiency is an issue and we’ve seen again team type increase in kind of mid teen bushel on micronutrient, which is relatively inexpensive compared to the insecticide application. We think we’ve got some potential pickup value on zinc. Iron, we didn’t have not figured out exactly where the benefits are, at least for the 1,000 acres that we did.

So, it’s a part of this process has been convincing growers through their agronomist to write prescriptively applications. And to demonstrate the return on investment is kind of what is the important part to convince you in corn. In Brazil, we did get material [indiscernible] encounter some of the prescriptively this year. [indiscernible] is at a pick site for us there because it is registered not only for corn but also soybeans, sugarcane [indiscernible] for SIMPAS and adoption kind of moving forward, we are looking to ramp up faster.

Scott Fortune: Okay. I appreciate that color. And then one more for me, just kind of stepping through the transformation plan. You’ve kind of unpacked that a little bit. You were going to provide more color on the KPIs and targets of focus for that. But just one clarification, the additional savings, additional $15 million that cadence you mentioned timeline through 2026 to fully optimize all that. Is that $15 million on an annualized basis or that’s going to be taken over time through ’26? Just kind of clarification there. And then just kind of a little bit more color on the transformation plan around the KPIs that you guys have been suggesting?

Eric Wintemute: So, what we did is kind of looked at ’24 and said what’s our gap to getting to 15% and there’s no ’24 had improvements that we baked into it. And it came up with this gap of $15 million to $17 million. And so, what [Carnie] is doing for us is creating that pathway as we said to getting us to that level. What we identified in the ’24 here should be opportunities to expand that number in ’25 and ’26 with the target again of moving us up to getting to that 15% of net sales. Obviously, we expect 25% and 26% to grow and therefore that’s what we’re saying 15 or more, but we’re tying it to the year that we have in front of us to 2024. With regard to KPIs, Don, if you want to just highlight where we’re at with our KPIs that you’ve unleashed on the team now. And I think you’re getting ready to get ready to put those in play.

Don Gualdoni: We are. Thanks, Eric. Thank you for the questions. This is Don Gualdoni. On KPIs, we are looking at both financial and operational KPIs. The financial ones are certainly the ones that you would expect, gross margin dollar performance of the business as a whole, EBITDA and varying forms of operating expenses. Now we take those and then we want to push those out into the business units, that’s done normally and always through the budgeting process. And then, we want to go one double click further on that and then cascade those business unit targets down into key roles so that each individual that has the responsibility for driving the performance of the business knows exactly what their targets are. Again, this is not new into the business.

We have done that historically, but we haven’t necessarily done it as thoroughly, as we’re going to do it in this past. Another type of KPI are the operational KPIs. Raw materials for manufacturers, so the raw material efficiency is very important for our business and is a lever of driving profitability. So, we are going to do — we’re going to have an approach for how we measure the raw material efficiency in the business. And it already is part of our continuous improvement process to get better in that regard. But marrying up those KPIs across our top, say, 10 products and a continuous improvement effort allows us to know where we need to be focusing more of our attention. There’s also improvements that we’re seeking to make on forecasting, both on the manufacturing side and the commercial side of the business.

So, making sure that we’re manufacturing to the plans that we intend and that those plans are informed by the commercial forecasts of the business. Those are some examples of KPIs that we’re working on. And then also as I said, driving these KPIs to the business units and from the business units into those key stakeholders, the roles that in the organizations that are responsible for each one of those. Not something necessarily that’s new, but certainly much more exhaustive process. And it is something, as Eric just mentioned, that I’m working on with the presidents of the business presently.

Scott Fortune: And then one last quick one for me. Sorry about that, but just wanted to step through, provide a little bit of color. I know you said the different geographies, the U.S. is doing well here. You mentioned much in Latin America. Just kind of unpack 2024 as some of the pressures still remain in South America and Latin America, which doesn’t affect you as much, but just kind of help us understand the strength in different geographies and where there might be some pressure still?

Unidentified Company Representative: Eric Wintemute Yes. So Mexico is very solid. Certainly there is generic pressure in all the markets. But we do have some kind of unique products in the Mexico. And there were inventories, I mean, particularly kind of globally if you look at the broad application of herbicides, I think that probably a big flood. There were certain insecticides that I think were loaded up, got into the generic world. Central America, we probably had more generic pressure there where we saw products that as the Chinese price of a lot of the commodity products came down, we saw some pressure certainly on inventories that we had. And not as much in Brazil, because Brazil we have predominantly was kind of fruits and veggie business that expanded into corn and soybeans with counter, but they are not sitting with generic pressure as much.

From a timing standpoint, the destocking, that I think was universal. I think every market that people were definitely have been sort of watching the inventory that we’re selling. But again, as we said, [indiscernible] question.

Operator: And our next question comes from Chris Kapsch with Loop Capital Markets. Please state your question.

Chris Kapsch: I have a few questions. So, one regarding the outlook for 2024. Given that you had these two key products, Aztec, Dacthal, that were impacted by absence of availability of actives last year. Just curious about what the expectation is for those products baked into your overall ’24 expectation? Would you expect just a normal demand environment or will you see outsized growth because of restocking of those products throughout the channel in 2024? Any color there?

Eric Wintemute: Both, I mean, we started selling Aztec in Q3 and Q4. Part of that was building back some inventories because inventories were down 5% or somewhere in that range. We did have good demand. We continue to have good demand now as the season is unfolding. We are not seeing any inventory build. We would expect to have strong second half of the year as well. That goal was pretty much completely gone. We did and do have ongoing orders. We haven’t filled all the orders yet, but we did have been supplying between fourth quarter and first quarter, a fair amount. We are expecting demand does look strong going forward. The product was growing for us. And so, outlook looks good certainly so far. I think we are looking at normalized volumes as we move forward. That said, as corn root worm pressure, I think the Aztec is kind of the key product where pressure is heavy. And so, we have grown, we grow, I guess, with the corn rootworm pressure that’s in the field.

Chris Kapsch: Got it. That’s helpful. And then on the Pathfinder and the focus on 15% EBITDA margin 2026. Curious if that bogey, if you will, is based on the portfolio as it exists today? Or is there any instances where you’re looking at a product line or a suite of products that you just structurally can’t see us getting there and therefore might be subject to, I don’t know, rationalization? Or is this sort of improvement expected to be kind of across the portfolio by 2026?

Eric Wintemute: We’re did not bake-in any acquisitions per se into the model. We do have ongoing projects that we do in our core business, both through licensing and combination products that are part of that. Of course, as we expand the products in the portfolio for SIMPAS, those are targets that we’ve identified going forward for the next couple of years. But as I said, we did not bake into the model.

Chris Kapsch: Just as a follow-up, what about rationalizing products, meaning, like just products that are lower margin dragging on the overall mix and don’t really see a pathway to get to that or to help the overall company get to the 15%? And then what also is embedded in the growth rates of your the more novel growth platforms and maybe just more generally, when might you expect to update the growth targets for those product suites? Thank you.

Eric Wintemute: So, with regard to product rationalization, yes, I mean, we are as part of what we’re identifying, we’re identifying quality of business, return on working capital. So those products that do have lower margins are won’t be emphasized the way we want to focus our team on our higher margin products and grow those. So that is part of the process that we’re going to improve both our manufacturing outputs as far as yield and then combine that with working on purchasing power to lower our cost of goods. And right now, it is pretty good time as we saw prices spike in ’22 during the pandemic. We are seeing a softening back on a number of these core intermediates that we use and with that, that’s part of improving our margins as well.

With regard to as far as the growth platforms, we’ve done an initial pass with that as far as over the next couple of years. We do want to get through this process with finding kind of identify what just as we were talking about some rationalization if that’s what it is, how we improve as I mentioned and 60% coming that would come from the operational side and then 30% maybe from the commercial side. But once we’ve baked that and put a direction, I want to be in a better position to assess how that affects each of the three platforms.

Chris Kapsch: And then the last one for me just is related to sort of an industry issue that seems like it’s becoming pretty acute or leaves some uncertainty and that is around the herbicide dicamba and the fact that the EPA’s registration is could be, I guess, up in the air or uncertain given the lawsuit. And then I guess there’s the ability for growers to use it this year, but next year is in jeopardy I suppose. So, I don’t know if you have a view about how that may play out, Eric, and what the implications might be if that’s further, if there’s further restrictions on dicamba, does that represent any opportunities for AVD?

Eric Wintemute: Yes. From the dicamba side in the marketplace, I think it’s up to the basics that have platforms on dicamba to decide whether they want to challenge that ruling. So that would be a decision for the courts. I’m sure there would be fair amount of support for that challenge, but it’s not nothing that we would be involved in. From an opportunity standpoint, I mentioned [indiscernible] and ZALO and other kind of herbicides that we put together are [indiscernible] which is kind of topramezone plus fosinate. We’re ramping up our portfolio of herbicides and as such, maybe some opportunities there. But Bob, maybe from your side?

Bob Trogele: Yes, I think that the opportunity is being discussed with customers now. The news is pretty recent. We’re in the middle of the season, so there’ll be really, this is a 2025 discussion as the crop season ends. One of our key initiatives as far as innovation has been our ProLease formulation technology, which is in ZALO and allows a good solid solution into windows of herbicide resistance, but also if technologies like the dicamba do not survive the regulatory process, that will open up a window for AMVAC technology.

Chris Kapsch: Got it. Just one quick follow-up on that Bob. I appreciate it. The ProLease that formulation, is that the one that’s associated with AMVAC or different chemistry?

Bob Trogele: No, that comes out of our formulations team here in California. It’s a technology where we can put multiple chemistries together with the basic chemistry of glufosinate ammonia and stabilize it and deliver it to the end user. It broadens the acre opportunity for us as far as value extraction, and it targets any resistant weed issues that the grower may have as far as timing. It enhances his ability to be more flexible as far as application. So, it’s something that we’re very excited about going forward. We have a family of products that are coming with that basic formulation technology.

Unidentified Company Representative: The different chemistries that don’t mix well together like oil and water and having a great classifier that suspends for long duration periods of time. That’s been a drawback on a number of products is just compatibility with other products.

Chris Kapsch: Got it. And this one is sort of centered around glufosinate it sounds like. Thank you.

Bob Trogele: Yes. Correct glufosinate, but we see potential in other uses also.

Operator: Thank you. [Operator Instructions] Our next question comes from Andrew Lester with Harla Capital. Please state your question.

Andrew Lester: Hi. Thanks for taking the question. Last quarter in light of different market conditions, the Company had to borrow bank debt that they thought would be short lived. In light of better results, could you state how much of that debt has presently been repaid? How quickly you expect to be able to pay down the balance? Thank you.

Eric Wintemute: Yes, you can tell.

Unidentified Company Representative: Yes. There’s a that multiple interventions the bank did before the end of Q3. The reason we mentioned the 2.75 target is this amendment stays in place for a year and has kind of graduated back to normal to 3.5x. But if we got to 2.75x, which we did and feel we can maintain at that level. We have the ability to determine that.

Andrew Lester: And just an additional — just suggestion for the future. I know you released the news that the earnings call would come out via Bloomberg. I would just make a recommendation that it’s sort of more broadly be disseminated because it’s very easy to miss for somebody who didn’t have Bloomberg, whether it be Reuters or Dow Jones or Yahoo Finance something like that, I just think would be helpful for shareholders. Thank you.

Operator: Thank you. [Operator Instructions] And there appears to be no additional requests for questions. I’ll hand the floor back to Eric Wintemute for closing comments. Thank you.

Eric Wintemute: Okay. Well, again, appreciate everybody taking the time to listen to the presentation. Again, as I said, it’s exciting time for us. We’re making a lot of improvements in our organization going forward. We feel very bullish about the outcome for ’24 and beyond and look forward to giving you additional updates on our next call, which is not all that far away as we get through Q1, and I appreciate your participation. Thank you very much.

Operator: Thank you. That concludes today’s call. All parties may disconnect. Have a good day.