Kevin Cureton: Good morning, Ron. We — and this dates back to during the pandemic, we were able to get a TGA approval, which is specific to a customer and a product. That TGA approval did end up with the launch of a product in that market. What is continuing to happen in Australia, which has been a bit frustrating is that, you have to go back and reapply and we did go back and reapply, and we are still waiting for their regulatory process to be completed. There still backed up pretty substantially and we haven’t heard anything related to continuation of that second round of regulatory approvals. So I will say in — to that comment about Australia, though, that we do see it as a pretty fertile ground. There’s a large number of or a meaningful number, I won’t say large, isn’t the right term, but a meaningful number of clients that are interested in supplying them in that space.
And we do still — we operate in that space now through a non-regulatory process, which kind of gets into the weeds. But there are still a number of good clients available to us for the regulated side of that.
Unidentified Analyst: So is this second regulatory process more general and further encompassing than the first one?
Kevin Cureton: No. The process that Australia has, it’s not very different than the Canadian process as well. It is company and product specific. So even if a company, we will call them company A, gets an approval on product B, if they want to launch product C, they have to go back through that process again. So it is a pretty tedious and arduous process. It does usually go faster. Canada, for example, goes very fast now for us. But Australia still has some backup in their processes, which is kind of related to the unique circumstances they had related to COVID and the kind of shutdowns that they had, which is backing up not just us, but pretty much anyone who’s looking for drug clearance is there.
Unidentified Analyst: Okay. Now my next question relates to the new facility. When that was promoted, I don’t know, two years or three years ago now, it was going to be your path to increase profitability because all of your different functions would be centered in one location. But to my knowledge, you still have all of your remaining other facilities. Are you soon going to be able to meet your original goals for that new facility and get some benefit from combining everything?
Jess Jankowski: Hey, Ron. We are already getting benefits from the combination. We have all of our warehousing is in that facility and prior to acquiring that facility we actually had four facilities for a little while with multiple warehouses. So we have gotten a benefit there. Our filling and assembly is there, including we have got clean rooms built there that accommodate the FDA requirements. So we have seen some nice efficiencies there, having the crews in a single space and being able to see some growth there. What we haven’t done yet is combined multiple facilities and the — some of this is going to be a question of volume, some of it will be a question of specific product volume and then we also have the concept that the cost of the combination needs to be advantageous relative to the cost of the existing rents, which are fairly small at the other facilities.
So we are in process of working through that. We intend to continue down that path and I imagine next year or two, we will have some consolidation. But we are still kind of looking at that and we are still kind of looking at the various — the impact of the various volume changes to the business and how those relate.
Unidentified Analyst: Okay. I just have two more questions. The next one is it seems like every conference call, every quarterly report, we are going to get further advantages from new hires, new managers, new people with a lot of experience here and there. But it’s always the same story, it doesn’t seem like we — it doesn’t seem like help, like, it helps because it’s always another instance, the same story, new people. And I am wondering how much cost that’s added to the bottomline, I mean is that the difference between profitability if you zero out their profits and/or their salaries and assuming you still make as much money, would you — would we be making a profit?
Jess Jankowski: I think that — I don’t know about that, I mean the biggest single drain on profitability has been the litigation and that’s something that we see hopefully coming to an end relatively soon. Again, I can’t predict it. We have — some of it, I think, the expectations are higher than we had our VP of Operations start in late June. He’s done a good job in four months getting up to speed, but he’s just now starting to contribute. We have also had our purchasing person started in November and we actually have not had a discrete purchasing function per se for a long time. Certainly since Solésence came along, we have been kind of working it. The formulators kind of do some of their own thing as we go through a bunch of different suppliers as we get up to speed.
So I am expecting those two particular additions to have a greater impact on our bottomline than we have seen in the past. Regarding the other things, we have added, we — you don’t see the advantage of, we added a controller. That’s allowed us to certainly spend more time doing some analytical work and responding to changes in our business. I do think and we will talk more about it at the end of the year, we are continuing to look at the operating expenses and a lot of those costs that are variable and trying to work through the most efficient way possible to both keep our cost down or reduce our cost, but also to continue growing. And I think that for 2024, what you are going to see to a greater extent is an increase in profitability and an increase in margins that will be something that we put more emphasis on than we have in the past.
It’s always been an emphasis, but it will be the primary emphasis with growth. As you can see, looking at the customer stats, we have a good amount of, I won’t call it organic growth within the customer base, because we continue to develop new products for our existing customers, but we have a good amount of positive customer feedback and we are seeing that those products are taking hold generally in the marketplace. So I don’t think it’s never — saying it never helps. I think it’s going to help. I think it takes longer. It always takes longer to get people up to speed, familiar with the organization and our organization is still relatively new and we are transitioning from a strictly entrepreneurial organization than we were, say, three years ago to a much more regiment organization, particularly in the operations function, which is something that culturally has required some changes that we are working hard towards.
