Draganfly Inc. (NASDAQ:DPRO) Q3 2023 Earnings Call Transcript

Draganfly Inc. (NASDAQ:DPRO) Q3 2023 Earnings Call Transcript November 10, 2023

Rolly Bustos: Greetings and welcome to all shareholders and stakeholders to today’s Draganfly 2023 Q3 Earnings Call. My name is Rolly Bustos, and while I know most of you, I remind all others that I am the internal Investor Relations representative here at Dragonfly. We appreciate you joining us today. We will start as usual, with our with our CEO and President, Cameron Chell, discussing the third quarter operational highlights. From there, our CFO, Paul Sun, will discuss the financials and as always we’ll conclude with our Lead Director, Scott Larson, facilitating the Q&A portion. You are welcome to reach out to me individually after the call at investor.relations@dragonfly.com. Once again, I remind everyone that this presentation may include forward-looking information and statements.

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These statements are not guarantees of future performance or financial results and undue reliance should not be placed on them. Any future events or financial results may differ from what might be discussed here. The full forward-looking disclaimer can be found on Page 2 of this presentation and I’d be happy to send that to anybody upon request. So, Cam, please go ahead.

Cameron Chell: Thanks, Rolly. Thanks to other members of the management and executive for being here. I know we also have multiple customers, partners attending and most prominently, thanks to our shareholders for being here today. I’m pleased to announce that we have just had a record quarter in 2023 on revenues of $2.138 million with product sales of $1.6 million and provision of services of just under $0.5 million. Also exciting to report is our gross margin of just under 2%. So, we had a gross profit this last quarter of $894,000. Our cash balance at the end of the quarter was $2.4 million, and we did a subsequent financing of $4.5 million, which closed on October 30th. I think most notably, in this as it relates to the revenue is that our two plants are now up and operational.

We finished the second plant and just turned it on in Q3. And I think we’ve started to see that now production flow of off of the benches and off of the line and we feel really good about how we’re now going to be able to satisfy the order book and start to see scale. I think it’s really important to note the world and geopolitical situation and really what’s happening in the drone space as it relates specifically to scale. So, we have, in the past, talked about the scaling of the commercial industry and how it’s really starting to come into its own with first the advent of many regulations, but most prominently beyond visual line of sight. But a little around two years ago now as the Ukraine conflict broke out, the reality is that small UAVs have proven incredibly effective in the theater of conflict and defense, so much so that the entire strategy and tactics around air dominance has shifted.

So, previously, air dominance was all about large manned systems, integrated communications, AWAC, integrated data analysis, and real-time impact analysis. And today, from 5,000 feet down, air dominance is all about small UAVs. So, almost regardless of the mass and the size of demand and large infrastructure air dominance that we’ve known or come to know in the defense field, if in a given area, you’re putting up multiples of small UAVs you will have a strategic advantage and tactical dominance on your area of operation. And that is a significant change. Now we’ve kind of been preaching that this would happen for years but it took the unfortunate conflict in Ukraine for this to become completely understood. So we’re now seeing budgets, massive budgets from the NATO countries, those longer ones that we have visibility with NATO and friendly countries — are now moving not just to autonomy, but certainly through autonomy, but predominantly within that autonomy, moving to air autonomy because again, that is where you can establish dominance for the most part.

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Q&A Session

So whether it’s Eastern Europe, whether it’s the unfortunate circumstances in the Middle East, whether it’s the incredible emerging market of border security in Africa, that now can afford to do border security because they don’t have to build air forces or satellite comms or a satellite observation to be able to do it. So we see huge opportunities now in that market as it relates to border security and small UAVs or the Southeast Asia theatre, including Taiwan and the potential challenges around territorial disputes and such with China it is absolutely being dominated by UAV discussions. To speak to this a little bit, approximately, they’re looking at about $20 billion of growth between now and 2030 in the small UAV market. This is being led by defense.

So rather than large infrastructure systems, defense is now looking to put in tens of thousands of swarms of drones in order to counterbalance the threats that may be out there and the efficiencies that come along with the small relatively inexpensive units. So Defense Innovation Unit announced the Replicated Program, this is the Pentagon Program dedicated to basically deploying tens of thousands of drones in the next couple of years of various sizes. So these will range from the Category 3 all the way down in the Category one, probably more focused around Category 2 and Category 3 which we play in. And we’re really excited about what these opportunities are. And we have seen a marked increase in pipeline, which we think will be adding to our order flow here shortly.

I think it’s a really important note within the space. So you can see by our product — the products that we have built historically is that we have in market now and the type of work that we’ve done with our contract engineering division and the personnel that we have up and to the right, that’s AI and military type of operations down into the left is consumer Toy type drones. And so you can see that our Dragonfly 3 XL drone, our Search & Rescue Drone, our Heavy Lift Drones they’re all skewing up into the right. And so of course, we don’t play in the pure military space. We play in the Commercial/Military space. Now whether by that design or by luck this is the space that the military is looking to pull from, right? It’s from the consumer space, the ability for — not the consumer space, the commercial space.

The ability for militaries is to tap into the commercial manufacturers who we’re now starting to gain some scale, including Dragonfly. In fact, I would say, led by Dragonfly that have the ability to field and deploy the type of equipment and do rapid innovation iteration and production in order to meet the demands of this market. This is what’s on the day in the Ukraine theatre. This seems to be what we’ll be pushing for — on the agenda in the other theatres as well proven by data and proven by actually what we’ve seen happen in the Ukraine, where again, Draganfly’s had a fortunate opportunity to be very active. Just taking a quick look at our products here. Here we’ve got our heavy lift drone. This is about a 9-foot across drone, carry 70 pounds.

It’s got a 50-minute operational flight time, it can be used for multiple types of operations, whether it’s sensor, ISR, delivery even in the commercial space, this is being used in wildfire type of situations to carry in equipment, carry in chainsaw as is the 3XL to the first to the right there. Now this last quarter, we did introduce 3XL hybrid. We have got incredible demand on this hybrid. So basically, what happened is we built the 3XL and our customers, particularly military pipeline came back and said, we need this drone, but we needed in a format that can fly for three-plus hours. And so we designed along with a partner, a 70cc engine that integrates onto the 3XL and to provide up to three-hour flight times with an additional four kilograms, that’s just under 9 pounds of payload.

So it’s got lots of sensor capability. It’s got lots of payload and ordinance capabilities still at that way. It can actually go longer than that if you take the payload gasoline as well. So you could fly this thing for eight-plus hours. So it’s potentially everything from a loitering ammunition to a very sophisticated ISR platform. The Precision drop-down, which system we introduced that in Q2, we now see orders happening in Q3 for pushing into Q4. This has got lots of applications, both commercial and military right below that is a quick delivery – quick release delivery box. Important to note on this block, it’s really the innovations around this blocks that allow for a number of other military applications to happen, but this is built on top of the medical delivery platform that we introduced into the market about 1.5 years ago.

The starting X2 drone is getting terrific traction. There are a number of pre-orders coming in. We have not officially recorded on our books any of those orders as of yet. But we’re basically in a position now to start the production on those and a great work to the Promo Drone, this will have an impact for us come Q1 and Q2. And then obviously, the Commander 3 XL, this base platform that was designed by our product team and engineers really is in a category by itself. It’s not that small type of ISR drone, it’s a very competitive market, not that we don’t make those on our work ventures. But on our production line, this is the area that we’re focusing on, a bit more category 2-ish and up and above between this and the heavy lift drone o be able to provide longer battery life, multiple different sensors.

We’ve got dozens and dozens and dozens of different integrations that are built for this drone. It’s really that multipurpose drone that can be used for anything from ISR through its delivery of any type of almost imaginable payload that you could think through. And it’s really just a big flying battery. That’s really — everything ends and begins and ends with your design of the battery. So lots of other product initiatives that are happening, they’re all customer-driven. But this platform is really what’s launching us right now. Some operational highlights for the last quarter, we secured the first defense orders for the Commander 3 XL with the US military, and it’s being utilized to enhance mission success in particular, in GPS-denied environments.

So incredibly important and incredibly tact and you need a very robust platform in order to house all of the additional equipment sensors, radio shields, antennas, et cetera, in order to operate in those environments, so really thrilled that we were selected in this regard and we are engaged at multiple levels with multiple militaries and divisions of – at our training center going through testing and preparing for the specs to on production. We were also selected by a state geological survey. Now this is important on lots of reasons because that geological survey is a heavy lift in terms of the battery requirement and the sensors that they are using. And it is helping standardize this drone for this type of work across the other state geological survey organizations.

Now again, in order to do this, you have to be an NDAA compliant drone. You have to have met stringent testing requirements, cybersecurity requirements in order to demonstrate that you don’t have the security breach and such. I know there’s a lot of talk about, oh, you have to be through UAS. You have to be this. We’ve been selling into these environments, not necessarily the military, but into agencies for years. So though we’re not necessarily on the Blue UAS means, we are able to sell into these markets because of our past history and because of our NDAA compliance and because we have that proven track record. That said, we are working diligently as it relates to Green UAS and expect those types of certifications to follow as well. But we had a very significant sale this last quarter into the Department of Corrections.

And as many people would know, the corrections market for the growing industry is significant. We do believe that this is probably the largest sale of equipment into the corrections industry to-date. And our pipeline, though it’s not represented yet in our order book, our pipeline is very, very robust in the corrections market. And that would be both drone and counter-drone technology as well as our vital intelligence technology, which provides health monitoring simply through the camera for prison populations and intake protocol. We also, this last quarter went to work for the Canadian Government, in particular, provincial government that had over 300 wildfires ranging at one particular time. And so we have signed a multiyear contract with that province where we’re providing crews and our drones in order to provide visual oversight, hot spotting, thermal flights at night to check for ground fires.

Next year, we’re moving into equipment delivery. Really have quickly become a leader in the space with operational experience and setting a standard — the standard operating procedures in order to expand this to other provinces as well as several states that we’re in discussions with. So we do expect, unfortunately, a very robust fire season next year with multiple engagements happening throughout North America. We are a leader in the energy research industry and has standardized – and association has also standardized on the Commander 3XL drone and this is really important because this particular customer is responsible for making the recommendation of how they inspect their infrastructure nationwide and having them have standardized on the Commander 3XL drone.

This is a significant win for us because as we prove that platform out with them over the course of this next six months or eight months. It presumably, I hope we will become that recommendation. I think we’re well down that path for the rest of the industry in this particular energy industry, which has a potential to thousands of drones annually. A couple of the last few operational highlights that I will just mentioned, is certainly the unveiling of our Commander 3XL hybrid. This is the first time we’ve got into the gas engine business. It’s not the first gas engine drill that we’ve made. But in terms of doing it at scale, this is the first side that we’ve done, and we’ve really, I think, nailed this particular product. And again, the pipeline is not quite yet the order book yet, but the order book is significant.

But that pipeline is much bigger than we expected on this thing. The other thing I wanted to mention here is we had our first customer what we call the Draganflyer Xperience. So our first user event or our first customer event at our Joint A.I.R Center down in Texas. And Joint A.I.R Center has become a real strategic differentiator for us, it’s allowing us to bring in multiple groups and give them time on the stick, give them time with the software, run use case scenarios, do everything from land mine detection right through to hostile situation, right through to combat scenario, right through to the leasing scenarios, mapping survey, energy inspection. It is really a differentiator for us. And it’s anything of size, we’re actually pushing people to go through to use the equipment and to take the training there even ahead of time, because it really allows us to build a relationship with them, it really gets their confidence up in terms of what this product is, how it’s been built, how it’s really been thought about as pilots doing the designing and actually coming up and working with these use cases and our customers.

So we look forward to that having a very, very busy year at the Joint A.I.R center in Texas. But I can’t stress enough the new manufacturing plants. I was ask the question today, when are we really going to see this industry scale and who is scaling in the industry. And I’ve talked about a number of companies who have some fantastic products, but the fact is nobody is yet in North America has scaled. It has got nothing to do with the demand signals are all there. There’s no question about it. The issue is that the manufacturing base has still been so young and immature that it has not had been able to be at the point of where it can commit to and guarantee the demand signal that is coming. So you don’t get a government customer that comes up and says, hey, we want 100 or 200 or 500 of these things, can you produce them?

Anybody can say yes, but the next thing they’ll do is they will go and they will check out your facilities, check out your infrastructure, your processes and ensure that you can produce 500 in the next month or two. And if you don’t have that capacity, you don’t get the order, no matter how good your equipment is, so right now, the industry is all about who can produce. And so I really want to stress it again, just how impressed I am with the team that have put the new plan together where we stand on them and the capacity that we’re now able to meet. On that note, I’m going to turn it over to Paul Sun, our CFO, to review the financials. Paul?

Paul Sun: Yes. Thanks, Cam. Thanks, everyone, for joining. Yeah, this is a quick snapshot for Q3. As Cam mentioned at the outset, Q3 revenue did represent our best Q3 to date. Revenue for the third quarter was up 14% to $2.1 million, up from $1.8 million in the third quarter of last year. Third quarter revenue comprised of $1.65 million from product sales with the balance coming from drone services, and the increase in revenue is due primarily to higher product sales versus a year ago. Gross profit, Cam mentioned $895 million, actually would have been a bit higher at $903 million, excluding a small onetime cash write-down of inventory. Gross margin as a percentage of revenue was 42% and would have been a little bit higher than that, 42.2% this quarter, up 44.1% from Q3 of last year.

The increase in gross margin as a percentage was primarily a result of the sale that was using inventory that had previously been written off, which made the margin higher. Total comprehensive loss for the quarter was $5.5 million, compared to a comprehensive loss of $5 million in the same quarter last year. This quarter includes a non-cash change comprised of a small write-down of $8,600 of inventory and an impairment of note receivable of $105,000 and would otherwise be a comprehensive loss of $5.4 million. In Q3 of 2022, there was a loss that included a gain in fair value of derivative liability of $305,000 and we otherwise been a loss of $5.3 million. So as a result, the year-over-year change in loss was minimal and mostly driven by the benefit of an FX translation from last year, as SG&A expenses this year was down this quarter year-over-year.

If you can go to the next slide on Slide 10, so yeah, we just went through year-over-year changes. So now we look at quarter-over-quarter. Again, for Q3 revenue was $2.1 million, increased by 12.6% compared to $1.9 million for Q2, due both to higher product sales and services. Gross margin percentage for Q3 was 41%, due to a small inventory write-down and otherwise would have been 42.2%, compared to 24.6% in Q2 of this year. So on an adjusted basis, gross margin would have been up 71.5% quarter-over-quarter. The increase is primarily due to sales that used previously written-off inventory, as we just mentioned. Total comprehensive loss, again for Q3 was $5.5 million, compared to a comprehensive loss of $6.9 million in Q2 of this year. And again, we’ll recall that there was a small non-cash write-down of inventory in Q3 and a write-down of not receivable.

So if we excluded that, loss would have been 5.4% while in Q2, we had a write-down of inventory of $122,000. So if we excluded that, so it’s a fair comp, Q2’s loss would have been 6.8%. So our loss this quarter was quite a bit better quarter-over-quarter primarily due to higher revenues and lower operating costs. And then on the next slide, looking at our balance sheet, you can see our total assets decreased from $14.6 million at the end of 2022 to $9.1 million, which was largely due to the use of cash. Working capital surplus at the end of this quarter was $2.7 million versus $10 million at the end of 2022. And you can see we continue to have minimal debt. Company’s cash balance, it was at $2.5 million compared to $7.8 million, compared to December 31 of last year.

And as Chad mentioned at the outset, we did complete financing for $3.5 million. And with that, I’ll pass back to you, Cam.

Cameron Chell: Thank you, Paul. Scott, I’ll turn it over to you, if that’s okay.

A – Scott Larson: Yeah. Thanks. We have had — as is kind of typical for us to get a bunch of questions that come in prior to this. And so we have a number of questions here will try to get to as many as we can. Of course, — can has already answered, I think, several of them as Paul with regard to the numbers and the results and so forth. So — but there’s a few here that are different. Cam will start with you. What are the new areas that we’re seeing most opportunities and kind of large opportunities in the pipeline? Where does that come from? What is it within corrections, facilities, energy, scanning just a little color maybe on some of the new opportunities that we haven’t seen in the past?

Cameron Chell: Yeah. So I think the thing to note is that most of the opportunities are coming from government, one form or the other. So we certainly have a nice flow of inbound commercial that are working through the system that we’ve obviously closed a few of them. But if we look at the systems that we have closed, and if we look at our order book that we know that we have and those very sizable needle movers now that we’ll be pushing through on production, they’re all government — I’d just say, they’re 90% government-based. So that wasn’t as predominant before in terms of the pipeline, but that’s what is coming through on the close. And from that, it’s lots of agency work and the vast majority of it now is military work.

So whether it’s airborne or Army or Air Force or marine or like all of those different groups and they all have sizable orders. They really like utilizing the air center that we have. And yeah, that’s — it’s — again it’s not uncommon to history where we see that the military adoption really set the tone and build the use case for what that also that comes in the commercial sector as well.

Scott Larson: Okay. Can you provide a little bit of an update on the production facility in Saskatoon. You did talk about it, but maybe a lot more color what’s the capacity supply chain issues that have come up in the past, maybe a little more commentary on some of those issues?

Cameron Chell: Yeah. So I think Paul Mellon [ph] and team have done an excellent job in terms of the design of the product right from the ground up from a few years ago when we started working through our plan and around the design that we had to have so that we ensure that we weren’t going to be in a situation where we were already dependent on supply chain that we didn’t have some sort of management influence or swappable equipment for processes, too. So with the advent of the new plant in Saskatoon in particular, we’ve now even eliminated that more because of the actual manufacturing additional capabilities that we’ve built in there. So our plans organically should be able to do $45 million a year worth of production. And beyond that, we can push everything up to contract engineering you need your initial couple of plants at least to be able to do those types of numbers and get your certifications of our ISOs and build your prototypes and get your initial production runs off before you could be in a position to put it out to contract engineering.

So we feel we’re at that spot now where we can scale. At least me personally, I have confidence that we’ll be running at full capacity this coming year.

Scott Larson: Any more news or updates on Ukraine is it still a focus hasn’t been a whole lot in the last little bit. Where do you see the next three to six months look like both from a UAV standpoint and perhaps how Dragonfly fits into the mix?

Cameron Chell: Yeah. So initially, we were quite focused on humanitarian efforts and very pleased to do that. As that conflict has matured, the type of drone that is in theater there has also matured significantly. So a drone that we would have put into that environment within the first few months or even six months of that scenario. It wouldn’t last 10 minutes there now. I mean, it’s just the level of sophistication around jamming and radio frequencies keeping a GPS-denied environment and such like that. So I think Ukraine potentially in terms of the news factor has been overshadowed as of recent, because of the unfortunate events in the Middle East. But the demand for drone is actually increasing. And the amount of people that have a level of sophistication to know what they need to buy what they want to buy is increasing significantly as well.

The testing environments are being standardized. So we see things like the mining being a multi-decade opportunity for Dragonfly there. ISR work is something that we’re very active within that market is absolutely growing. But utilizing the commander, 3XL for a dual purpose so that it’s ISR as well as other potential combat scenarios is really a big feel for that market. So we’re very active. We’re a little quieter than we have been over there for probably some good reasons. But there’s — that is still the biggest immediate drone market in the world that we’re actively engaged in.

Scott Larson: Any plans on reducing cost expenses going forward?

Cameron Chell: Yeah. Absolutely. It’s — we actually have gone through a cost reduction exercise, it started a bit last quarter, and we saw that in the numbers. We were able to implement that on many levels here very recently. And a big part of why we were able to do that, I believe, without losing any operational efficiency is because we have very clear visibility with our order book now. So let’s talk about a year ago. A year ago, there are 15 markets or 15 verticals that you’re all — you’re trying to capture, which is going to be the biggest, which is moving the fastest, which has the greatest opportunity, which is regulatory has regulatory impact, et cetera, et cetera. And so you’re moving through those. At the same time, we’re building out plant capacity and trying to be very careful about where we place the specifics of that back capacity in terms of resources because we’re not sure exactly what — which one — eventually five years now, these will all have tapped and been incredible markets.

But as you’re working through the start-up phase and into the scale phase, where do you actually put those resources to make sure that you’re not trying to do everything to everybody. Well, we’ve gone through that in this last year, and we now have a very clear idea because we have the order book to support it, as to where we can put those resources. So what that’s allowed us to do is get prudently going through some cost reduction exercises, but actually be able to do it in a way where we go. Okay. We can make a rational judgment here that this cost is okay to that goal right now because the opportunity over here doesn’t cost us by not going after it a bit more aggressively. So we’re able to measure opportunity costs now and be more focused in the approach that we have in the very specific markets that we’re going after.

Scott Larson: A few more here for sure. A few more good ones actually. Comment on current business with windfall. We mentioned it this on the last earnings call, things are moving up ahead. Any updates there? What does it look like? Obviously, not giving guidance here, but maybe a couple of thoughts or comments on some of the downstream stuff, particularly within the mining sector that we do with windfall Geotech.

Cameron Chell: Yeah. We’re absolutely committed and understand clearly that we are an important player in the data world. And in fact, I would suggest that over time, Draganfly is will be a data company. I mean we’ll always be known as a drone company. Our advantage being is that we can customize drones and sensors in order to collect data for our customers that maybe others can’t, right, which is really the strategic differentiator for our customer. Again, whether that’s a commercial and energy government, military, it’s all about in many respects to the quality of that data. And so because of our integrated approach and capabilities that is a major strategic differentiator for us going forward. So mining is one of those first areas that allows us to collect data and provide it back to the customer that other people necessarily haven’t been able to collect.

So I’m not at liberty right now to speak specifically about windfall. But I can say that it is a very robust market, and it is an absolute focus for us in the commercial market, mining, in particular, and mining data. It will be a template for how data is collected and used and how AI is employed into other markets. Mining will be that way. Windfalls got an incredible platform that we’re building on. And again, where last quarter, I could have talked about an order book — excuse me, last quarter, I could have talked about a pipeline with windfall. Next quarter — the quarter we’re in, we’ll be able to talk about our order book. So we’re really excited about what was happening there.

Scott Larson: When Draganfly goes to Drone conferences and UAV shows and things like that, how do you see the competitive mix between Draganfly some of the other drone companies? Where do you — where do we see that the company fits into this? What are some of the other things that other companies are doing that Draganfly might want to emanate in the future — a copy in the future. Maybe give a little color and context in terms of how we fit into the market?

Cameron Chell: Yes. There is incredible, incredible creativity and great power in this space and I never want to profess very closest to the smartest folks out there. Every time I go to a show or I get to meet other folks in the Drone space, it’s just like, wow, where did you come up with that? And how did you think about that? Like really, really stuff that just like grab you is — that is — it’s really impressive. I think some of the differentiator, in particular, around Draganfly having been around so long is that the objects that we chase are customer-driven. And so, there’s a lot of shiny objects that we don’t go after. And because we know that they’re not going to have a production capacity either in terms of being able to be produced or have a demand signal where it might be the coolest thing in the world, but it might be a $2 million market, right, or it might be a $20 million market, but that’s five years from now.

So I think we really — over the last number of years, one could have argued five years or six years ago, that our drone capability was minimal. And the profit is certainly compared to what it is today, it was. But we were still in the drone business, producing drones where no other North American manufacturer to speak of was there. But we were doing contract engineering for the military contractors. We were doing really interesting projects in academia and getting paid it. So we’ve been able to move with the market. And now what we see is that the market is ready to scale and add production. And I think that we’re meeting that right there where it’s at. So I also think that we’re very focused on utility type drones as opposed to on the coolest latest thing or kind of like the smaller backpack type drone.

I think it’s a very competitive market. We do build those off of our work benches, but off a production line, that’s a pretty tough low-margin business to be in, unless you’ve got something really strategic. And we think we do and some of that will happen in time, but the demand signal is just not quite there yet.

Scott Larson: There’s been another — a number of other drone companies that have closed down. We keep hearing reports about that in the market. Are we getting to consolidation? Would does Draganfly fit into that mix? Are we looking at other kind of opportunities for companies that have wound down, close down, side technology? What does that look like? And I think this is the last question, by the way. So go ahead and answer that.

Cameron Chell: Yes. Walking the floor the last CUAV show, it seemed to be kind of like a reoccurring theme. It was like half of these companies aren’t going to be here next year type of thing. So yes, there’s definitely consolidation in the industry. The commercial market has taken longer to adopt and get there again, right, for about the fourth or fifth time in the cycle. And the difference here is, though, is that the regulations are much further along, and we are seeing commercial adoption. The second and the bigger difference that’s come to the forefront is the fact that the military market is not just prevalent, it’s just overwhelming. The challenge for companies that generally not all, but generally haven’t been around for a long time or gone through a bunch of the rigor that’s required in order to sell into government-type customers military in particular, is that it doesn’t matter if you’ve got the greatest whizbang.

If you can’t get the production, if you can’t — like I mean sizable production and all those types of things, it’s just not a viable product for those types of customers. So, we’re going to see consolidation. We’re very focused on organic growth right now. Our hands are full. Like we don’t need to do an acquisition. We don’t need to bolster sale. We don’t need to any — we just need to execute on what’s in front of us right now and we’ll be a standout in terms of scale. And I think likely, there’s a couple of others out there that might be in that same position. I’m speculating a little bit. But I could speak with confidence that that’s where we’re going. Not that we’re opposed to acquisitions at all. But given where some of the valuations are right now and given where the market is going and given what we need to do organically, just to meet demand, we’re probably not looking at acquisitions at the timeframe.

Now, that said, something is going to come up, which of course, we’re going to announce it. But we don’t — but there’s nothing imminently that we’re on right now about.

Scott Larson: Okay. Well, has a list of questions. I’ll send it back to you to adjourn the meeting, wrap it up, and then that will be it for this shareholder call.

Cameron Chell: Thank you, everybody, for taking the time. We went this time without taking the live questions as we got a bunch of feedback that it seemed quite distracting, actually. So, we really encourage — I love the live question piece of it. So, we look to see some feedback and if we revert back to that next time. But by all means, don’t be afraid to reach out to us. Rolly is always available. The rest of the executive will certainly do their best to respond quickly as well. First and foremost, I’d like to thank our employees for sitting with this. It’s been a real grind and we’ve gone through some cost reduction stuff as well. At the same time that we’re scaling the business. So, thank you for your time, trust, and patience.

To our customers, our business is all about you and so thanks for your time, trust, and patients and our shareholders we’ll look to work hard to create shareholder value for you. So, thank you for your time today, and we look forward to your great quarter coming up.