GrowGeneration Corp. (NASDAQ:GRWG) Q1 2024 Earnings Call Transcript

GrowGeneration Corp. (NASDAQ:GRWG) Q1 2024 Earnings Call Transcript May 8, 2024

GrowGeneration Corp. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Hello, and welcome to GrowGeneration’s First Quarter 2024 Earnings Conference Call. My name is Juana. I will be coordinating your call today. Following prepared remarks, we will open the call to questions from analysts with instructions to be given at that time. I will now hand the call over to John Mills with ICR. Please go ahead.

John Mills: Thank you, and welcome everyone to the GrowGeneration’s first quarter 2024 earnings results conference call. Today’s call is being recorded. With us today are Darren Lampert, Co-Founder and Chief Executive Officer; and Greg Sanders, Chief Financial Officer of GrowGeneration. You should have access to the company’s first quarter earnings press release issued after the market closed today. This information is available on the Investor Relations section of the GrowGeneration’s website at ir.growgeneration.com. Certain comments made on this call include forward-looking statements which are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements.

Please refer to today’s press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any of the forward-looking statements made today. During the call, we’ll use some non-GAAP financial measures as we describe business performance. The SEC filing as well as the earnings press release which provides reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are all available on our website. Following our prepared remarks, we will take questions from research analysts. We ask that you please limit yourself to one question and one follow-up. If you have additional questions, please reenter the queue and we will take them as time allows.

Now, I will turn the call over to our Founder and CEO, Darren Lampert. Darren?

Darren Lampert: Thanks, John, and good afternoon, everyone. Thank you for joining us today to discuss our first quarter 2024 financial results. As always, I want to extend my gratitude to each one of our employees across GrowGeneration for the dedication and hard work. Commitment is fundamental and the backbone to our success. I am pleased to announce that our first quarter results are in line with our expectations with revenue of $47.9 million and adjusted EBITDA of a $2.9 million loss. Encouragingly, our retail stores in isolation are positive on a same-store sales comp basis in the first quarter, which represents the first time we’ve seen a positive same-store sales comp for retail stores in nine quarters. This indicates a stabilization of sales, affirming the effectiveness of our strategic adjustments over the past 2 years.

Our proprietary brand sales also continued to grow, supporting sequential gross margin improvement from fourth quarter 2023. Lastly, through our continued focus on cost controls, we’ve achieved the lowest total expense base that the company has reported in 3 years. Based on this quarter’s results, we continue to believe that our business is strong and poised for growth. And you have seen that confidence reflected in our stock repurchase program, which we announced last quarter to help support long-term shareholder value creation. Looking ahead, our strategic focus for 2024 remains on expanding our brand portfolio, growing and broadening our customer base and prioritizing profitability through rigorous cost control and margin expansion. I’m excited to discuss several key points today that underline our strategic direction and future growth.

We continue to see accelerating adoption of our proprietary brands, including Charcoir, Drip Hydro and the Harvest Company. In the quarter, 22.6% of our total gardening and cultivation sales are generated from our proprietary brand portfolio, the highest mix in our company’s history and above the 18.8% we reported for full year 2023. We’re especially excited about the early signs of momentum within our Drip Hydro powdered nutrients, which are now in over 300 active trials with licensed cultivators around the country. We expect these trials to begin transitioning to sales and benefiting our P&L beginning late in Q2. Our margin expansion strategy continues to focus on increasing sales of higher margin proprietary products and forging close strategic relationships with key [indiscernible] breed manufacturing partners.

We’re also working to develop new vertical markets within our existing offerings, including the marketing and sales of the Harvest Company line of proprietary products, which is targeting the home and edible gardening markets. Within the Harvest Company, branded products include raised garden beds, organic seeds and various gardening tools and accessories that are now available for sale online and in our stores. We’re also actively seeking opportunities to enter the high value greenhouse nursery and floriculture verticals with our proprietary products later this year. Lastly, our commitment to investing in our customer success remains unwavering. We continue to offer a complete suite of industry leading products, competitive prices, and opportunities for financing and comprehensive inventory management and logistics solutions.

Additionally, our soon to be launched digital platform will enhance connectivity to our B2B portal, further empowering our customers ability and convenience to do business with us. Now before turning to guidance, I want to briefly mention two additional points. First, I’d like to address the significant news last week that the DEA agreed with the Health and Human Services and FDA recommendation to reschedule cannabis from a Schedule 1 to a Schedule 3 controlled substance. This critical shift in a regulatory landscape is expected to ease restrictions on cannabis research and to strengthen the cash flow and balance sheets of state legal cannabis operators by allowing them to take federal tax deductions for the business expenses. While additional steps remain an additional challenges, such as litigation may arise, we ultimately expect these developments to strengthen investor sentiment and broaden market opportunities for our products, as cultivators will have more capital available to invest back into their businesses, including in building new facilities, and refreshing existing ones.

Regarding next steps, we expect a formal announcement by the DEA soon, following which the proposal will go to the Office of Management and Budget for review, and then to public comment period before being finalized. We are actively assessing how this regulatory change will impact our operations and strategic opportunities, and we will keep our stakeholders informed in future earnings calls as things progress. Second, continuing from our year end discussions, we’re continuing to seek opportunities to monetize our Storage Solution segment, MMI which remains a leader in providing mobile shelving and racking solutions. While we did not have any news to report this quarter, should a material update become available as it relates to the MMI business.

We issue an announcement accordingly. Moving on to our guidance. We are reiterating our previously communicated guidance for full year 2024. We anticipate net revenue to be in the range of $205 million to $215 million, adjusted EBITA expected to range from a $2 million loss to a $3 million profit. This guidance underscores our confidence in our strategic direction, and the underlying strength of our business model. I’m proud of the work and effort our team has put into getting us where we are today. As we look through the balance of the year, we are optimistic that GrowGen is on a solid platform for growth in 2024 and beyond. With that, I’ll turn the call over to our CFO, Greg Sanders. Greg.

Greg Sanders: Good afternoon everyone. Starting with our first quarter results GrowGeneration is pleased to report revenue at $47.9 million versus $56.8 million in the first quarter of 2023, representing a decline of approximately 16% year-over-year. On an absolute basis, this measurement includes the impact of 15fewer retail occasions. Our same-store sales for the Gardening and Cultivation segment in the first quarter of 2024 was $38.2 million compared to $38.6 million in 2023, representing a 1% decline to the comparable year ago quarter. Our same-store sales metric includes eCommerce. Excluding eCommerce, retail in isolation was positive on a same-store sales comp basis for the first time since the third quarter of 2021. Our storage solutions revenue was $4.8 million for the quarter compared to $7.7 million in the year ago period, representing a decline of 37.9% year-over-year.

But our storage solutions revenue did not perform to ply [ph] in this quarter. We expect some pickup in the second and third quarters for this reporting segment. To offset gardening and cultivation sales were higher than planned, which is an encouraging development and in consolidation. First quarter revenue reported at the high end of guidance. Gross profit margin was 25.8% for the first quarter of 2024, a sequential improvement of approximately 230 basis points, compared to our fourth quarter 2023 results. Although gross margin improved on a quarter-over-quarter basis, we observed a decline on a year-over-year basis, partially due to higher freight expense in plan relative to cost associated with relocating inventory from store closures. Further, we observed some impacts from segment reporting mix.

More specifically, storage solutions, which boasts a 43% gross margin profile reported that approximately 10% of total company sales in the first quarter compared to an average of 14% of sales in 2023. As we look forward, we expect sequential improvements in consolidated gross margins in the second and third quarters, resulting from higher plant storage solutions revenue as well as less impact from store closures. The company’s total expense base was 21.8 million in the first quarter, compared to 23.7 million in the first quarter of 2023. Withstanding any further improvements, that management executes over the remainder of 2024,this was the lowest total expense base that the company has reported since Q1 of 2021 We believe that the current cost model is sustainable going forward, and it highlights our commitment to driving a more nimble and profitable business long-term.

Your operating costs and other operational expenses declined to $10.6 million in the first quarter compared to $11.8 million in the fourth quarter of 2023. The company closed and consolidated four locations in the first quarter of 2024, of which one-time closure costs were included in our first quarter results. We believe that the closures and consolidations align our operating model to future strategic priorities and allow for stronger operating leverage. Selling, general administrative costs were $7.9 million in the first quarter, compared to $7.9 million in the fourth quarter of 2023. Within our first quarter SG&A results, were a few significant non-recurring expenses, including $900,000 in severances and legal settlements and $250,000 in marketing samples, primarily attributed to the nutrient powder launch from our proprietary brand, Drip Hydro.

Depreciation, and amortization of intangibles was 3.7 million in the first quarter of 2024, compared to 4.1 million in the prior quarter. As it relates to income tax, with a full valuation allowance in place, we did not recognize a significant tax benefit or expense in the period. Net loss for the first quarter of 2024 was $8.8 million, or negative $0.14 per share, compared to a net loss of $6.1 million, or negative $0.10 per share for the comparable year ago quarter. Compared to the fourth quarter of 2023, the company improved net income from a net loss of $27.3 million to a net loss of $8.8 million. Adjusted EBITDA, as defined in our press release was a loss of 2.9 million for the first quarter of 2024, compared to a loss of 1.8 million in the first quarter of 2023.

The change in year-over-year performance is primarily related to a $3.9 million decline in gross profit dollars compared to the fourth quarter of 2023 the company improved adjusted EBITDA by approximately $800,000. Moving to the balance sheet. As of March 31, 2024, the company had total cash, cash equivalents and marketable securities of $61.3 million, a decrease of $3.6 million from December 31, 2023. Within working capital, inventory increased by $1.1 million, driven by first quarter bulk inventory purchases to support Q2 sales demand for which we expect favorable seasonality. We believe that the cash position of the business is in strong health, which was evidenced by our recent announcement of the company’s share repurchase program. As Darren mentioned earlier, we are reiterating our full year 2024 guidance with revenue to be between $205 million and 215 million and full year adjusted EBITDA to be in the range of a $2 million loss to a positive $3 million profit.

Our guidance assumes higher second and third quarter revenue from a seasonality perspective, along with stabilized improvements in our operating expense base from our strategic operating initiatives. That said, we are optimistic about the 2024 fiscal year, and how our cost control initiatives have translated into the lowest expense base that we have reported in several years. Our balance sheet remains strong with a healthy cash position from which we see opportunities to deploy resources towards customer growth initiatives, product development, market expansion, and accretive pathways such as the share repurchase program to drive shareholder value. Our daily mandate remains centered on executing the business strategy to drive future growth and profitable executing the business strategy to drive future growth and profitability.

With that, I will turn the call back over to Darren for closing remarks.

Darren Lampert: Thank you, Greg. As we continue our journey through 2024, our commitment to operational excellence, strategic market expansion and profitability remains unwavering. I am immensely proud of what our team has achieved, and I look forward to our continued growth and success. We remain optimistic about the future backed by our robust business model and strategic initiatives that are set to drive our growth in the evolving market landscape. Thank you all once again for your continued support and interest in GrowGeneration. We will now take your questions. Operator?

See also 20 Things People Waste the Most Money On and 16 Best Dog Breeds for Apartment Living and Small Spaces.

Q&A Session

Operator: [Operator Instructions] First question comes from Brian Nagel from Oppenheimer. Please go ahead.

Brian Nagel: Hi, good afternoon.

Darren Lampert: Good afternoon, Brian.

Brian Nagel: My first question, Darren, I know you’ve talked a little bit about this in your prepared comments, but with regard to the, I guess, let’s just say, potential rescheduling here, that’s something we’ve talked about for a while. But — is there any recognizing it’s early, and there’s still a lot of unknowns. [Indiscernible] think about that and your GrowGeneration business? I mean, is there any parameters, you’d give us how we should think about the size of the potential positive or even how this would play out for GrowGeneration?

Darren Lampert: I think the simple part is Brian, with rescheduling 280 egos away, and that is the tax penalty on licensed cultivators. Basically [indiscernible] saying almost between a $1.5 billion to $2 billion will come back to the balance sheet of the cultivators which we’ll go to shoring up balance sheets, and also going into rebuilding facilities, updating facilities and going out and getting new products that are coming to market. So there will be a tremendously different view with our customers with money coming back in. Our customers will be making money, reinvesting in their businesses. Over the last 3 years, with Wall Street pretty much pulling funding from most of the cultivators, most of the public companies, also the large private companies, these cultivators have not been able to refresh their facilities.

They haven’t put money into facilities. And so we’ve been in this place where our durable sales have been tremendously lower over the last couple of years. But in the first quarter, we did see a little up — we did see a little uptick in durables, and we are starting to see much more bidding out there. And we do believe that you will see the other part of our business, the durable side of it start picking up and again, everyone still is waiting. It’s a waiting game out there, Brian. We’ve been waiting 10 years since we started GrowGen. It is still the process is not complete right now. The DEA has agreed with the Health and Human Services to reschedule what it could be another 4 to 6 months. And that’s probably as quick as it can go, and that’s of litigation and other issues don’t arise.

Greg Sanders: Got it. It’s very, very helpful.

Brian Nagel: Second question, back to your business. But what you’ve done a very nice job of streamlining the model over the past several quarters, closing stores where appropriate. So as we look at the business now from a store perspective, is the base of stores appropriate.

Darren Lampert: Right now we’re happy with our portfolio. We probably will be closing three stores this year. But our business has changed dramatically. We’re seeing much more business to business opposed to business to consumer. We just opened up 100,000 square foot warehouse in Ohio. As your business evolves, our stores are both marketing tools for our private label brands and also brands of our — some of our top vendors. And the stores are a place for people to go, our customers to go and learn and also purchase products from us. But we believe that we can service most of our customers from our distribution centers and our largest stores around the country. So right now we will not be investing in new stores this year and we probably won’t be in the market buying stores.

But right now GrowGeneration is investing in supply chain distribution of B2B portals. We’re investing in our proprietary brands, which [indiscernible] growing very quickly. We’re investing in our customers. We’re using credit right now. And I think we’ve given out more credit in the last month to customers than we have in some time. And we’re investing in growth and we’re investing in stock repurchase plans. So I think we’re starting to see different use of our capital. And we’re investing in getting GrowGen into the IGC world, the one in garden space. Also GrowGen is definitely morphed into a different kind of company over the last couple of years since you’ve seen the slowdown in the cannabis space?

Brian Nagel: No, it’s very helpful. Appreciate it. Best of luck. Thank you.

Darren Lampert: Thank you, Brian.

Operator: Thank you. The next question comes from Scott Fortune at ROTH MKM. Please go ahead.

Scott Fortune: Yes, good afternoon and thank you for the questions. Just kind of following up, you put [indiscernible] on the proprietary products and the success of that segment moved up very nicely here in the quarter. But just want to kind of get a sense for the potential for your Drip?, Drip Nutritional product that you’re rolling out here. It sounds like a good interest from that level. And then just remind us the target at proprietary brands, which you are targeting your own brands for the overall business segment and mix, I believe there’s about 30% work in that target potentially go here.

Darren Lampert: We believe you’ll see anywhere between 30% and 40% on private label proprietary brands at GrowGen in the future. We believe we end this year somewhere in the mid to high 20s, which is pretty aggressive. And that is dependent upon the Drip launch. Taking — when you look at the amount of trials that we have around the country right now those turning into sales in the future. And we do believe you start seeing those late in the second quarter. We believe that the Drip, the drip powder brand could anywhere from a $25 million to $50 million business for GrowGen in the future. We will keep you posted as sales turn — that trials turn into sales.

Scott Fortune: Got it. I appreciate the color there. And just kind of from a geography interest and you mentioned stores [indiscernible] Just want to see you mentioned you’re seeing stabilization in the market overall. But can you provide a little more color on kind of the regions or the areas outside California Michigan still seem pretty weak there. Just a little more color on certain states as they’re driving the strength fear and the 2Q trends as is going forward here.

Darren Lampert: We are seeing strength from California right now, Scott, contrary to what you are hearing. We are winning a lot of new business in the California market. We are also seeing strength in Michigan right now. We’re seeing considerable weakness out in Oklahoma, and Back East in the main in Massachusetts markets. But there’s tremendous strength of that GrowGen right now in California.

Greg Sanders: I appreciate that. I will jump back into the line for queue. Thanks.

Darren Lampert: Thank you.

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

Eric Des Lauriers: Great. Thanks for taking my questions. First one is just on the proprietary brands. How to think about margins here going forward. It’s nice to see the increase in mix. Here obviously, margins were down year-over-year. So just wondering how to think about the overall margin profile of proprietary brands. And then if there’s anything to comment on, sort of the sub segments within that, like if Drip Hydro has a significantly different margin profile than some of the other proprietary brands. That’d be helpful as well, just kind of looking to get a sense of the margin profile of the proprietary brands. Thanks.

Greg Sanders: Yes, I’m going to keep it kind of basic for you, Eric. We’re seeing anywhere from 40% to 50% average within our proprietary brands. You will see the highest margins coming out of the Harvest Company. And usually the lowest margins you’ll see coming out of our ion brand which is a lighting brands, and are nutrients and cocoa chocolate brands fall somewhere in between. That’s very Helpful. All right, that’s very helpful. And then

Eric Des Lauriers: I’m wondering if you can comment a bit on some of the difference in dynamics between eCommerce revenues and brick-and-mortar, you called out eCommerce comps that sort of masking the positive same-store sales growth that you saw at retail. I’m just wondering, how the sort of demand dynamics within those channels differ. And maybe how to think about those going forward as you are investing more in B2B.

Darren Lampert: I think as you see the cannabis space turning more B2B than B2C. And what we’ve seen with our eCommerce division, is some of our larger customers that started out in the ecom division, have switched over to a commercial team in some of our stores where they get white glove service where they’re looking for credit. They’re looking for account reps with more skills, as opposed to just going on websites and buying. So it’s not that our ecom division has been slow. It’s just again, it’s just a mix of business its much smaller. And again, a lot of our largest customers that were — that did come in through ecom, that shopped on ecom have changed over to a different division of GrowGen. We have definitely pulled back expenses.

On our ecom division, we pulled back on advertising, a lot of it is very price sensitive opposed to service sensitive. So again, we will continue to monitor. We are starting to open up some B2b portals for our proprietary brands, which will go through the ecom division, which should help drive sales through that division.

Eric Des Lauriers: All right, great. Thanks for taking my questions.

Operator: Thank you. The next question comes from Mark Smith from Lake Street. Please go ahead.

Mark Smith: I guess, I wanted to ask for — just about inventory, came up just a little bit here, but looks good year-over-year. Just give us your thoughts around comfort levels, and kind of the quality of your inventory today.

Darren Lampert: Greg, I’m going to send that over to you.

Greg Sanders: Yes, yes. Hey, Mark. Today, we reported inventory at $66 million for the first quarter, which was up just incrementally to the fourth quarter, primarily due to Q2 sales demand as we look at things. As we get through the year, we see opportunities to continue to take down inventory throughout the course of the year. I mean, that might be 5 or 10, when you’re working through, more optimized model on the inventory side of things as we progress throughout the year. But we want to make sure we have the right inventory in the right locations for Q2, which is from a seasonality perspective, our best performing quarter. So that’s a little bit around inventory. And to the quality of the inventory, we still have decent reserves on what we have in place. We feel very, very comfortable with what we have from a quality standpoint and a mix perspective.

Mark Smith: Perfect. And then second, just big picture. Darren, just as we think about getting capital allocation, you’ve got a good balance sheet with the cash here. How you’re kind of way and think about investing back into business, in stores or brands versus share repurchases, or potentially acquisitions. Walk us through kind of how you think about capital allocation today.

Darren Lampert: Yes, I think I started off when I went to want to answer the question from Brian Nagel, but we’d go over it again. There’s five different buckets that we look at right now, especially for 2024 as we go into to 2025. And it’s mostly organic, it’s investing in grow, Jenna posted growth, investing outside of [indiscernible]. In our first bucket is investing in the business. That’s our supply chain, distribution, where we just built out 100,000 square feet in Ohio. And we’re just in the midst of also building a B2B portals for our proprietary brands so people can go online and purchase on different portals. Secondly, we’re investing in proprietary brands, launches, as you saw the private label went from 18.6 last year, up to 22.6 this year.

We have 350 — over 300 active trials right now a Drip, they’ve given out over a quarter of a million dollars of product last quarter for our Drip launches. Also, we have a full team of sales people for Drip right now. We’re also investing in new products coming out of [indiscernible], some we believe will be the IGC world and also new products coming out of power assign a harvest company. The GrowGeneration spending an enormous amount of money on these product launches, developing new products that we believe will be the future and grow jet. Thirdly, we’re investing in our customers we’ve increased credit to a number of our customers right now. They’re starting to investor certain build outs for our customers. We are opening up credit as we see the industry starting to churn.

And we believe the days waking up and the side as we want to become [indiscernible]. The individuals that have made it through the harder parts of this market, but the last four years. We believe we are going to be here for a long time to come and be wonderful customers of GrowGen. And we are starting to open up credit at GrowGen, and bringing in new customers and also helping old customers. We’re also investing in GrowGen. We just announced the $6 million share repurchase that started on April 1. We will update Wall Street in our second quarter to second quarter event. But we have been in the market buying back stock. And with that, we are always looking at acquisitions. Again, if we find something that we believe is accretive, and in the best interest of our shareholders, we will take a hard look at it.

And if it’s going to work for GrowGen we’re a buyer. So we are always reviewing different products, stores out there, and looking what’s in the best interest of GrowGen. So it’s a five step process that we are looking at on a daily basis.

Mark Smith: Excellent. Thank you.

Operator: Thank you. [Operator Instructions] Next question comes from Aaron Grey at Alliance Global. Please go ahead.

Remington Smith: Hi, good evening, and thank you for the questions. This is Remy Smith on for it and Greg. So my first question, can you provide commentary on how to accuse looking quarter-to-date. I know it’s historically been a strong quarter for you guys. So any color, and if you’re seeing a typical seasonal benefit would be helpful. Thank you.

Darren Lampert: I think the only color I can give you right now is we’re reaffirming guidance for the year, which is a $2 million loss to a $3 million profit. And as you saw our first quarter EBITDA, loss was 2.9 million. So we’re looking for a positive back half of the year starting in the second quarter. We also reaffirmed our revenue guidance that was when we did $47.7 million for the first quarter. So if you took that [indiscernible] you times that by three, you’d see that many times by four. We’re considerably behind our guidance numbers. So we are looking for a tremendous pickup in the second quarter. Third quarter and for the remainder of the year.

Remington Smith: Thank you. That’s helpful. And then my second question, call out pricing pressure weighing on gross margins in the quarter. Can you speak to how you seeing pricing in the segment going forward? Do you expect it to continue to weigh on margins, and offset the benefit from increasing private label mix? Or do you see this as transitory, the back pack to higher gross margins? Greg [indiscernible] over to you?

Greg Sanders: Yes, I think when you look at the first quarter margins improved compared to the fourth, which was a positive, but they’re down year-over-year. And I think there was two primary drivers that I’ll try to unpack. The first was storage solutions revenue, which came in less than plan. For the quarter storage solutions was about 10% of revenue. If we look at it, as you know, 14%, which is kind of where we were for the duration of 2023. That brings us up to a mid 27% gross margin profile on the business. Just at the revenue levels that we’re at. So that’s a big lever that we’re expecting continued improvement from in the second and third quarters. And the other piece is we closed six locations in the fourth quarter. And four more in the first.

And with that you get a certain amount of inventory that you have to move around the country, move from the closures to stores that are open in those costs had an impact on our results as well. So when you factor in those different pieces, that kind of pushes us up into that 28 to 29 range. So that’s kind of the area that we’re looking at. As we look through the duration of 2024 from a margin perspective,, we’re hopeful that drip powders will really take off for us, as we look at really Q3 and Q4, maybe there’s a small impact in the second quarter yet to be determined. Most of those trials are still ongoing throughout the country. So there’s a lot of bright spots that we believe are out there right now to kind of help drive a stronger gross margin profile through the rest of the year.

Remington Smith: Really appreciate the color there. And then my last question, if I could at that time. With the Canada’s reform in Germany that recently occurred in April, and broader legalization efforts around Europe, do you see opportunity to capitalize on some of those reforms?

Greg Sanders: Well, we believe there is opportunity. We have not taken advantages as of yet. But we are actively speaking with certain distribution companies about getting some of our proprietary brands over into the European market, but again, nothing has been [indiscernible].

Remington Smith: Okay. Appreciate the color. I will hop back in the queue.

Operator: Thank you. At this time, we have no further questions. I will turn the call back over for closing comments.

Darren Lampert: I’d like to take the opportunity to thank all our shareholders for their continued support of growth generation. I wish you all the best for a happy summer and we look forward to updating you on our second quarter in August. Thank you.

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