SunOpta Inc. (NASDAQ:STKL) Q1 2024 Earnings Call Transcript

SunOpta Inc. (NASDAQ:STKL) Q1 2024 Earnings Call Transcript May 8, 2024

SunOpta Inc. misses on earnings expectations. Reported EPS is $-0.0257 EPS, expectations were $0.02. SunOpta Inc. 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 the SunOpta’s First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the prepared remarks. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Reed Anderson with ICR. Thank you. You may begin.

Reed Anderson: Good afternoon, and thank you for joining us on SunOpta’s first quarter fiscal 2024 earnings conference call. On the call today are Brian Kocher, Chief Executive Officer, and Greg Gaba, Chief Financial Officer. By now, everyone should have access to the earnings press release that was issued earlier this afternoon, and is available on the Investor Relations page of SunOpta’s website at www.sunopta.com. This call is being webcast, and its transcription will be available on the company’s website. As a reminder, please note that the prepared remarks, which will follow, contain forward-looking statements, and management may make additional forward-looking statements in response to your questions. These statements do not guarantee future performance, and therefore, undue reliance should not be placed upon them.

We refer you to all risk factors contained in SunOpta’s press release issued this afternoon, the company’s annual report filed on Form 10-K and other filings with the Securities and Exchange Commission for a more detailed discussion of the factors that could cause actual results to differ materially from those projections and any forward-looking statements. The company undertakes no obligation to publicly correct or update the forward-looking statements made during the presentation to reflect future events or circumstances, except as may be required under applicable securities laws. Finally, we would like to remind listeners that the company may refer to certain non-GAAP financial measures during this teleconference. A reconciliation of these non-GAAP financial measures was included with the company’s press release issued earlier today.

Also, please note, in the prepared remarks to follow, unless otherwise stated, the company will be referring to continuing operations portion of the business and all figures are in U.S. dollars, occasionally rounded to the nearest million. Now, I’ll turn the call over to Brian to begin. Brian?

Brian Kocher: Good afternoon, and thank you for joining us today. We are eager to announce our results for Q1 and look forward to providing you more insight into our plan for sustainable revenue and EBITDA growth. In short, we are thrilled by our continued and accelerating revenue growth, encouraged with our first quarter performance, and yet still see the opportunity for future growth and improvement. For today’s call, I’ll start with the highlights from Q1, along with an update on business trends and key priorities. Greg will follow with a review of the financials and our outlook. Then we’ll take your questions. Quarter one’s headlines included 18% revenue growth, supported by improvements in throughput at our plans. That translated to 21% EBITDA growth and adjusted EBITDA of $22.6 million.

For the second quarter in a row, we are growing at a rate approximately three times faster than the categories in, which we serve, and that growth drove the increase in the bottom line. Greg will have more financial details in his section. However, I’m proud of the quarter we delivered, and even more proud of the manner in which we delivered. On the Q4 call at the end of February, we told you we were focused on three key areas, top-line growth, supply chain efficiency, and spending capital wisely. We made progress across every one of our initiatives, as we again delivered top and bottom-line results that exceeded guidance. Let me offer some insights on our key levers for revenue growth. First, the revenue growth you see today is a reflection of our business development activities from 2023 and early 2024, and remains broad-based as we expand with existing customers, reap the benefits of new customer launches, and leverage our TAM expansion capacity in the rapidly growing protein shake category.

Volume drove our excellent revenue growth of 18% to $183 million. A further sequential acceleration from the 14% increase we delivered in Q4 and the 6% increase in Q3 of last year. The revenue growth was also a testament to our broad and diverse portfolio across channels, customers, and products. In fact, our foodservice channel grew by 11% year-over-year. Every product category in which we operate grew in the quarter, and in fact, our top three customers all grew double-digits in the quarter. Secondly, the addressable market we serve is growing. For shelf-stable plant-based milks in tracked and untracked channels, based on the latest publicly available data and our own proprietary sales order data, we estimate the category volume will grow mid-single-digits for calendar year 2024.

Recall that much of our volume is derived from untracked channels, and we continue to see growth in foodservice and club channels. Also, protein shakes continue to show very robust growth in tracked channels, up roughly 20% in volume over the last 13 weeks versus the prior year. Finally, fruit snacks revenue grew 31% from the prior year’s quarter, a 15th straight quarter of double-digit growth. Fruit snacks continue to deliver the highest growth rates among our product categories, as we leverage our expanded capacity while underlying demand remains very strong. In short, we grew in almost every way you can analyze our revenue. Switching to operations, I’ve spent a significant amount of my own personal leadership time, just starting our supply chain excellence initiatives.

As I mentioned previously, improving the effectiveness and the efficiency of our supply chain is a journey of 1,000 steps. We made progress in the quarter, increasing our output by over 20% from the prior year, despite some modest margin leakage in inventory reserves, as we continue harmonizing processes across an integrated supply chain. We have a continuous improvement structure in place, and we see a lot of opportunity for significant margin improvement in the back half of the year. As it relates to our capacity expansion projects, production continues to ramp on our first two lines at our Midlothian facility. We feel really good about the demand environment for utilizing the Texas capacity. Our third line commercially launched at the end of the first quarter, and we expect to see meaningful contribution from this line in the back half of the year.

The focus in Texas continues to be on improving output and efficiency of these lines to fully realize the volume potential in 2024 and 2025. Finally, our oat extraction expansion in Modesto is now up and running, and we will continue ramping up production volumes throughout the remainder of the year. As to spending capital wisely, we continue to evaluate capital projects in a disciplined way and are on track for our 2024 CapEx guidance of $25 million to $30 million. Additionally, we fully expect to achieve a leverage ratio under three times adjusted EBITDA by the end of the year. I’d like to take a minute to highlight a SunOpta strength. We have a fantastic culture at SunOpta. Our people care. They care about the planet, about each other, and about making a positive impact in the communities in which we work and live.

The passion and values of our employees and company culture drive our ESG initiatives. Whether our employees are pushing energy reduction in our Midlothian facility, achieving zero waste status at our beverage plants, or planting trees in Niagara, Canada, during a designated volunteer time off day, our employees live ESG, and we are better for it. I am thrilled that in our model, we make sound business decisions and investments that are also great for ESG considerations, all while managing our capital allocation. I’m excited to share that we just published our latest annual comprehensive ESG report highlighting progress across the business. This report is available on our website and does a terrific job of articulating our intertwined goals of fueling the future of food and living our ESG values each and every day.

Now that we’ve talked about the highlights of the quarter, let’s discuss specifically how all this information impacts our outlook for the balance of the year. As a reminder, we provided and updated guidance for 2024 financial results, based upon what we see versus what we hope, and we are sticking to that communication philosophy. In determining our guidance for the year, we consider our performance to-date, and all publicly available trends in the foodservice, club store and retail channels. In addition, we collaborate with our customers on a regular basis in supporting their innovation efforts, to ensure we are co-developing products to address changing consumer needs and wants and incorporate changing business demands. Most importantly, and certainly most relevant to how we guide our future performance, on a weekly and sometimes daily basis, we work with our customers reviewing actual purchase order volumes on a rolling eight-week period, as well as order forecasts for the balance of the year.

As a result, we feel it is appropriate and have confidence in raising the guidance for 2024, by the amount of our over-performance in Q1. Again, by what we see, not what we hope. Greg will cover the specific details in his section. Before turning it over to Greg, I want to review our priorities for next quarter. In short, our areas of focus will not change, and we remain steadfast in executing, across the three following areas. Number one, top-line growth. We are a growth company in growing categories with a competitively advantaged model that provides multiple ways to win. Remember, our revenue stream has the advantage of diversity. We operate in categories that are growing, and we have a great customer base that continues to win in the marketplace.

We are thrilled to be able to support their growth. We expect the trajectory of our growth, to continue to be driven by growth of our existing customers, share gains with our existing customers, the acquisition of new customers, and TAM expansion. I’m excited about our new business development efforts, and the opportunities on the horizon. Number two, increasing the efficiency and the effectiveness of our supply chain. As mentioned, we made progress in increasing the output of our manufacturing facility. We are simultaneously working numerous initiatives, to improve labor costs, waste, inventory management, conversion costs, and a host of other key operating metrics. Importantly, this is a journey integrating multiple people, processes, and technology platforms, and my highest leadership priority is ensuring we are taking a step forward in operational excellence every day.

To continue delivering strong volume gains, it is essential that we optimize our production to support the demand-side momentum in our business and expand our gross margin. Number three, manage our capital wisely. We remain disciplined in executing our capital allocation priorities, and continue to be focused on deleveraging over the near term. In summary, we’re off to a great start in 2024, and our team is executing well across our strategic priorities. While we are encouraged with our results, we expect to continue getting better. We have a great opportunity to continue delivering strong revenue and EBITDA growth, to drive significant shareholder value, and we are relentlessly focused on accomplishing this goal. We know that SunOpta’s true potential is so much greater, and we are still very early in the operational excellence phase of our transformation.

As we continue to sweat our assets to drive volume and revenue growth, the efficiencies we realize should propel even greater improvements in profitability, and increasing rates of return. I’m confident in our outlook and the direction of our business, and we are on track for delivering our 2024 guidance and midterm financial goals. I am looking forward to updating you on our strategic initiatives throughout the year. Now, I’ll turn the call over to Greg, to cover the first quarter and full year outlook in more detail.

Greg Gaba: Thank you, Brian, and good afternoon, everyone. As Brian said, we had a strong first quarter. Revenue of $183 million was up 18%, compared to last year, driven by volume growth. Gross profit increased $7.7 million, or 32% to $31.7 million in the quarter. Gross margin for the quarter was 17.4%, a 190 basis point increase from 15.5% in the prior year period. Adjusted gross margin was 17.5% down 180 basis points from the prior year period, mainly reflecting 90 basis points of incremental depreciation related to new production equipment, together with an increase in inventory reserves, partially offset by improved plant utilization stemming from strong volume growth. Operating income increased to $10.2 million from $0.5 million in the year-ago period, driven by profitable volume growth and the gain on sale of the smoothie bowl product line of $1.8 million.

Earnings from continuing operations was $3.8 million, compared to a loss of $2.8 million in the prior year period. The increase was primarily driven by the flow-through of profitable volume growth. Adjusted EBITDA from continuing operations increased 21% to $22.6 million, compared to $18.7 million last year. Turning to our balance sheet, at the end of the first quarter, debt was $259 million, resulting in leverage of 3.1 times, down from 3.4 times last quarter. Cash provided by operating activities of continuing operations, during the first quarter was $7.4 million in cash used in investing activities of continuing operations was $4.2 million. Subsequent to the end of the quarter, we completed an amendment to the Series B preferred stock that eliminated dividend rights.

While we could have forced conversion to common shares, doing so would have caused Oaktree to exceed the exchange caps. Therefore, we mutually agreed to this amendment. Now, turning to our full-year outlook, we are raising our 2024 outlook, to reflect the strong performance in Q1. We now expect revenue in the range of $685 million to $715 million, which represents growth of 9% to 13% versus our prior guidance of 6% to 11% percent. From a profit perspective, we now expect adjusted EBITDA of $88 million to $92 million, which represents growth of 12% to 17% versus our prior guidance of 11% to 17%. From a pacing standpoint, we continue to see the back half of the year to be slightly stronger, than the first half with a revenue split of approximately 49% first half and 51% second half and adjusted EBITDA split of approximately 47% first half to 53% second half, reflecting the expected benefits in the second half of the year, from our supply chain excellence program that Brian discussed earlier.

From a leverage standpoint, we expect to be under three times leveraged by the end of this year, recalling that in Q2, we expect an increase in debt as we will have roughly $25 million of debt from the capital lease, related to the oat extraction expansion and Modesto coming online. Given current interest rates and expected debt levels, we expect interest expense of $24 million to $26 million for the year. We continue to expect capital expenditures on the cash flow statement of approximately $25 million to $30 million, and free cash flow of $35 million to $45 million for 2024. In terms of cadence, we expect free cash flow generation to be largely back half weighted. Before opening the call for questions, just a reminder that for competitive reasons, we do not provide detailed commentary regarding customer or SKU level activity.

And with that, operator, please open the call for questions.

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Q&A Session

Operator: Thank you. [Operator Instructions] Your first question is from the line of Jon Andersen with William Blair.

Jon Andersen: Good afternoon, everybody. Thanks for the questions. And congrats on a strong start to the year. I guess I wanted to start by asking about your guidance. It sounds as though your outlook for category growth has not changed. I think you mentioned again, mid-single-digits, which is consistent with, I think what you talked about last quarter. But again, you took the revenue up for the year. So I’m kind of want to get a sense from you on where you saw stronger performance, or what was the source of the upside relative to planning Q1 and what gives you conviction kind of this early in the year given some of the noise out there around consumer trends and particularly in foodservice of late that outlook for the category and the businesses is supportive of a raise at this point? Thanks.

Brian Kocher: Hi, Jon, thanks a lot for joining the call and thanks for your question. Let me try to unpack a couple of different things. If I look at the quarter, we’ve kind of consistently said this shelf stable category in the markets we serving are growing in that mid-single-digits. And I think our performance, which again for the second quarter in a row is probably close to three times what we believe the category is growing. Our performance really is driven by expansion with existing customers, acquisition of new customers and then TAM expansion. And if I look over the quarter about each one of those were equal. We actually grew a little bit more with our existing customers with either share or innovation than maybe in some of the other categories, but it is relatively close to being even when you look at our revenue growth from quarter one of ’23 to quarter one of ’24.

So that’s kind of the revenue growth question. Let me talk to you specifically about our outlook, because I think it’s something really, really important. For the last three quarters, SunOpta has kind of stuck with the philosophy that said we’re going to take what we see, customers, products, timing of new business and current customer orders. We’re going to take and communicate what we see, not what we hope. And I think that’s a really important thing to remember, as we talk about our guidance. Remember, we have a really diverse revenue stream. Channels are diverse, customers are diverse, products are diverse. I mean, our foodservice channel grew 11% in the quarter. Our top three customers, each of them grew over 10% plus in the quarter. So we’ve got a lot of diversity.

And I think that that’s one thing that we’ve gained confidence in. But I think even more importantly, when we look at the balance of the year guidance, certainly the public information and the category trends inform our guidance. I would say it informs our guidance. But remember, we’re having daily and weekly calls with our customers on order volumes, on order forecasts, on customer innovation, on promotion activity. Those are what inspire and generate our guidance. So the category data informs, but what we really base our guidance on is what we can see versus what we hope happens. And I hope that’s a little insight into the balance of the year, and how we feel and think about the year shaping up for us.

Jon Andersen: Yes, that’s very helpful. Thanks for that. Just sticking with the guidance for a minute, it looks like you took sales up about $15 million or so at the midpoint. EBITDA, just a little bit at the midpoint, $0.5 million or something. Is there anything to read into that? Or is it, I mean, anything there around the complexion of those incremental sales and maybe costs associated to serve?

Brian Kocher: Jon, what we really tried to do is be very simple. We raised the guidance by the over-performance in the first quarter. So it just really was simple that way. Again, we look at, I’m really excited about our new business development activities. I mean, we’ve got discussions going on, again, weekly with our customers on new business development, but we really wanted to focus in our guidance on what we can see. Customer, current customers, current products, current timing versus what we hope. And so, what you see in our guidance is we’ve raised it by the amount of over-performance in the first quarter.

Jon Andersen: Okay. And Brian, I know it’s really important to you and a focus area on operational excellence and really getting the most out of the supply chain after a couple of years of really putting a lot of new capacity in place. Since you’ve been there for a few months now, how do you feel about both the progress and the plans on that front, and your ability, I guess, to kind of sweat the capacity that you’ve recently put in place to kind of deliver on those midterm goals? What are some of the initial learnings that would be helpful things?

Brian Kocher: Jon, I think the way I would describe it overall is I’m pleased with the first quarter. We increased output over 20% to satisfy the demand we had on the sales side. You know, that’s good. I think simultaneously, I’m not satisfied. We have multiple simultaneous initiatives we’re pushing on anywhere from labor to throughput to equipment maintenance, to waste reduction. All of those we’re pushing on. And I think we’ve got opportunities to reap improvement in each one of those metrics over the balance of the year. So, we’ve got a ways to go. Pleased, but not satisfied is a phrase I would keep in your mind, because it’s certainly one in mine.

Jon Andersen: Okay. Thank you very much.

Brian Kocher: Hi, thanks, Jon.

Operator: Your next question is from the line of Jim Salera with Stephens.

Jim Salera: Hi, good afternoon, guys. Thanks for taking our questions and congrats on those strong results. Brian, I wanted to…

Brian Kocher: Thanks, Jim, appreciate it.

Jim Salera: I wanted to drill down on foodservice, because I think candidly, a lot of us are surprised at how robust the results were, given some of the commentary and traffic softness at some of the publicly traded comps in that space. Can you maybe walk us through the difference between your strong results and maybe some of the softness, we’ve seen in traffic trends? Is that just a function of you winning more share across foodservice? Or should we think about the plant-based beverages that you sell into that channel as being separate from the overall kind of traffic softness and they’re gaining share, while maybe traditional dairy-based is losing?

Brian Kocher: Yes, Jim, thanks a lot for the question, because we really wanted to have a dialogue with the investment community on this. And I would like to amend your question just slightly to say you were pleasantly surprised with the robustness of our growth. But I think it really focuses in on two areas. Remember, we are wired in with our customers. We’re having innovation discussions with our customers almost every week, certainly monthly with our top 15. And a lot of times those innovation discussions are multiple projects that we’re working on with them. So I think one part of what you’ll see, and if you happen to go to a menu board of one of your favorite foodservice restaurants, I think you’d see a lot of promotion with plant-based products in it.

You’d see a lot of categories, a lot of promoting items that have plant-based beverages in it. And so, I think that’s one thing where it may be a little bit disconnected. We may even over-index with respect to their, in plant-based products at a lot of foodservice places relative to their total revenue line. So, I think that our plant-based products are gaining mix, let’s say, in some foodservice areas. That’s one. Two, we did mention that we were growing share with our existing customers. And that certainly is a component of it, Jim. But I think most importantly, we are constantly working on innovation. Innovation for promotions, innovation for limited time offers. And again, innovation for what we see today, not what was happening three months ago.

Because we’re with our customers. We’re really wired in and we’re with them on a weekly, monthly basis working on R&D. So, we’re already innovating on anything from taste profiles and performance profiles to potentially cost and efficiency initiatives in the store. So I think hopefully that answers your question on why it may be, why our growth may be a little bit differentiated in a positive way from some of the large trends you’re seeing.

Jim Salera: Yes, no, that’s super helpful…

Brian Kocher: Just, Jim, sorry to just hit this one more time. But just to be complete, our foodservice business grew 11% this quarter. And our top three customers were all double-digit growth. So again, it kind of shows up in our numbers.

Jim Salera: Yes, yes, and that’s great. If I can switch and ask a question on the nutritional shake side, can we just get an update for what your shake line utilization rate is at? Because I know that’s a category that’s seen a ton of demand. And if we just think about the incremental upside as the year progresses, can you – is there meaningful upside to increase kind of the throughput on that line and how much you can drive incremental sales by ramping up the shake line?

Brian Kocher: We don’t really disclose utilization on the lines, but here’s what I will tell you to try to give you some perspective. We are on track for achieving the productivity and throughput, and I’m going to use this word, in our investment thesis. And we’re on track to do that let’s say the middle of this year, all right? The reason I say investment thesis is, because we went through a certain set of assumptions to obviously fund the TAM expansion project. We’re on track to reach those. I still believe supply chain is a never-ending journey. I think there’s potentially upside in throughput in our supply chain, not only specifically in our protein shake line, but across our network. And that has a wonderful advantage of doing two things.

One, lowering your overall cost per unit, right? The more units you push through in a fixed cost network, the less your per unit costs. But it creates that non-CapEx capacity and it allows us to fuel some growth without devoting capital assets.

Jim Salera: Thanks guys. I appreciate the color. I’ll hop back in the queue.

Brian Kocher: Thank you, Jim.

Operator: Your next question is from the line of John Baumgartner from Mizuho Capital. I do apologize, Securities.

John Baumgartner: Good afternoon, thanks for the question.

Greg Gaba: Hi John, how are you?

John Baumgartner: Good, thanks. I guess first question, Brian, you sound pretty bullish on the incremental efficiencies in the model for the back half, from what sounds like a number of different sources. And I’m looking to tie it back to the minimal uptick in guidance for EBITDA for this year. Are there any offsets that are sort of contrary to your new efficiencies coming in the model? Are there any intermediate steps you have to take to get those efficiencies that maybe push the realization and the P&L into 2025? I guess, how do you think about kind of the cadence of the realization of those efficiencies coming through?

Brian Kocher: Okay, a couple of things. First of all, there are no big risks that we see out there that are preventing efficiencies. I would say, John, more than anything, supply chain improvement is just hard darn work. And so, we’re out there every single day. I mean, you’re talking about doing things with your procurement arm and when you source product. You’re talking about how you manage water usage. You’re talking about the sequence that you run product to try to eke out a unit here or a unit there. So I don’t want someone to look at the guidance and say there’s a relatively meager uptick, right? That’s not what we are confident. I’m confident in the business development pipeline. I’m confident in our opportunity to drive supply chain growth.

But we’re also sticking to our communication philosophy, which is guide and declare our outlook based upon the customer timing, products and portfolio we see, not what we hope for. And as we drive additional business development efforts, close additional opportunities, the next time you’ll hear me talk about those specifically, it’ll be when they show up in the financials and we update our guidance.

John Baumgartner: Okay. And then a follow-up for Greg. Can you just walk through coming back to that modest margin leakage and the inventory reserves in the quarter? Can you walk through that in more detail and how we think about any associated drag going forward for the rest of the year?

Greg Gaba: Yes, no problem, John. So when you look at it, Brian mentioned that we increased our production 20% versus prior year, right? And it is a journey of supply chain efficiency and excellence. And with that, we did have a little bit of leakage. We do strive to get better every day. And we continue to get better every day. And we’re putting things in place that would hopefully reduce that waste going forward. And no, we don’t consider it to be a long-term issue at all, John.

John Baumgartner: Okay. Thanks for your time.

Brian Kocher: John, I think a good way to think about it and put it in perspective is we’re trying to work on nine different things at once and improving our 10, 12, whatever it is that we’re doing to try to improve our supply chain operations. And we made progress for sure on output. But there’s some others that we didn’t make as much progress. And we’ve got initiatives. We’re happy with our initiatives. We’re happy with our opportunity to drive improvement. But as we said, there’s a lot of complexity in doing this. And we believe this is something that we will continue to show progress with the balance of the year.

John Baumgartner: Thanks, Brian, appreciate it.

Operator: Your next question is from the line of Brian Holland with D.A. Davidson.

Brian Holland: Yes, thanks, good afternoon. So I just wanted to maybe start by — asking about the upside in the quarter. I know the strength was broad-based. Was the source of upside versus your internal expectation on the top line broad-based is well? Or was it disproportionate towards new business development, et cetera? Because it doesn’t sound like the category actually changed or it seems like it was relatively consistent. So just want to make sure I understand the source of the upside versus your own internal expectation?

Brian Kocher: Brian, I would say it was broad-based as well. I mean, if you look at it, we did a little better than we thought, almost whether it was new customer acquisition and the robustness and the timing of that or growth with our existing customers, we had some favorability across the spectrum. And again, it kind of showed up everywhere. It showed up in channels, it showed up in customers, almost any way you could cut this data, we saw growth. And so, we’re excited that a diverse revenue stream can help us in a quarter like this.

Brian Holland: Okay, that’s great. And then maybe just to go back to this, I appreciate all the detail that you went into about how you pull together your forecasting that you communicate to the investment community. That’s very helpful. But just to make sure that we understand what specifically is different? I mean, I think you alluded to this, but I want to ask it anyway. What you’re doing differently versus maybe 12 months ago? Because I think we started out the year strong last year as well, a lot of optimism, and then sort of the bottom fell out mid-year. And I know that we’ve gone through that a bunch of different times. But just understanding any pivots in the way that you approach your modeling at least to the extent that you communicated to the street here?

Brian Kocher: Well, Brian, yes, I think there is a change, and that happened before I got here. I think SunOpta had the benefit of some business development efforts last year, but the timing was off. And so, as they communicated expectations, and then the timing shifted for one reason or another, it led to a disappointment. And it was probably the third quarter results of last year when SunOpta even said, second quarter results, maybe when SunOpta said, look, this is how we’re going to forecast going forward. And I think that to me makes a lot of sense. We want to guide based upon what we know and have visibility to customers, products timing versus what we hope happens. Now, again, timing is always interesting with customers, but I think, look, we’re trying to be consistent there. We’re trying to focus on the things that we have visibility to with respect to customers, products, and timings, and not hope for guidance. Are you still there?