Joann Tinnelly: Thanks, Norm. Diving into our results, all variance commentary is on a year-over-year basis, unless otherwise noted. Net sales for Q3 2023 were $11.9 million, compared to $12.1 million in the year-ago quarter. As Norm mentioned, the decrease was primarily driven by delayed seasonal shipments and, to a lesser extent, short order shipments. We expect to recognize the delayed shipments in the fourth quarter of 2023. Gross profit for the third quarter of 2023 increased 66% to $4 million, compared to $2.4 million in the same period in 2022. Gross margin increased 1,390 basis points to 34%, compared to 20.1% in the year-ago quarter. The increase was primarily driven by lower supply chain and input costs. As Norm briefly mentioned, we are expecting a onetime noncash inventory valuation adjustment of approximately $625,000 in the fourth quarter, which will impact our gross margin for the period.
Delivery and handling costs were reduced by 15% to $1.9 million during the third quarter of 2023, compared to $2.2 million in the third quarter of 2022. The decrease was primarily driven by renegotiated freight contracts, improved throughput, and our streamlined orbit distribution model. Delivering and handling costs were reduced to 16% of net sales or $2.98 per case compared to 19% of net sales or $3.38 per case during the same period last year. Selling, general and administrative costs decreased 14% to $2.3 million during the third quarter of 2023, compared to $2.6 million in the year-ago quarter. As a percentage of net sales, selling, general and administrative costs were reduced to 19%, compared to 22%. Altogether, operating expenses were $4.2 million or 35% of net sales compared to $4.9 million or 40% of net sales in the year-ago period.
This reflects our relentless work to right-size our cost structure and consistently find ways to optimize our business. Operating loss in the third quarter of 2023 improved to $0.1 million or a loss of $0.03 per share, compared to an operating loss of $2.5 million or a loss of $1.09 per share in the third quarter of 2022. Modified EBITDA improved to positive $0.2 million in the third quarter of 2023, compared to a loss of $2.2 million in the third quarter of 2022. This represents our first quarter of generating positive modified EBITDA since 2016. For the third quarter of 2023, cash used in operations was approximately $1.8 million, compared to $0.2 million for the same period in 2022. The increase in cash used was primarily driven by higher inventory purchases compared to the year-ago period.
As of September 30, 2023, we had approximately $1 million of cash and $26.8 million of total debt, net of capitalized financing fees. This includes $17.1 million from a convertible note and $9.7 million from our revolving line of credit which had $3.1 million of additional borrowing capacity. I will now turn the call back to Norm for closing remarks.
Norman Snyder: Thank you, Joann. I’m grateful for the hard work the Reed’s team has put in this year, and I’m excited to build on this foundation in 2024 as we return to sales growth, expand margins further, and improve our bottom line. With ongoing efforts to bolster inventory levels and optimize cost structure and continued strong demand for our robust product portfolio, we are well positioned to deliver on these objectives.
Norman Snyder: I want to thank everyone for participating in this morning’s call, as well as our employees, customers and, of course, our shareholders. We appreciate everyone’s support. We have made significant progress on our 2023 initiatives and look forward to closing out the year on a strong note.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
