NewAge, Inc.
Q4 2017 Earnings Call Transcript

Published: 17 Apr 2018

[Operator:]

Greetings, and welcome to the New Age Beverages’ 2017 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Sean Mansouri of Liolios Group. Please proceed.

[Sean Mansouri:]

Good afternoon…and thank you for joining New Age Beverage Corporation’s fourth quarter and full year 2017 investor conference call. I am Sean Mansouri with Liolios Group, the investor relations counsel for New Age. I’d like to welcome you all to the call today and to thank you all for joining. On today’s call we will have Brent Willis, Chief Executive Officer of New Age Beverages, and Chuck Ence, Chief Financial and Administrative Officer. I’d like to remind everyone that this conference call may contain certain forward-looking statements reflecting management’s current expectations regarding future results of operations, economic performance, financial condition and achievements of the Company. Forward-looking statements, specifically those concerning future performance, are subject to certain risks and uncertainties. The transcript of today’s conference call will be available on the Company's website, within the investor section at www.newagebev.com. I’d now like to turn the call over to Chuck.

[Chuck Ence:]

For the twelve months ending December 31, 2017, the Company delivered consolidated gross revenue of $56.7 million vs. $27.3 million in 2016, more than double the prior year, and more than twenty-five times the revenue of the firm exactly two years ago. Subtracting discounts and billbacks, at the net revenue level, the Company achieved $52.2 million vs. $25.3 million in the prior year, an increase of 106%. Net Sales as a percent of gross revenue was 92%, and we expect it to be between 90% to 92% of gross sales for the foreseeable future. Within our segments, the DSD Division delivered its 9th consecutive year of growth with organic growth of 6% vs. prior year. The Division continues to be a positive cash generator as a standalone entity, facilitating New Age’s growth and diversification. Within the US Division, the Búcha brand led all brand growth, including sales growth in its largest national retailer of 38%. That growth, which led the category for the retailer, contributed to the chain to expand Búcha to all its banners nationally. Búcha has more than tripled since we brought it into our system 18 months ago, and recently has expanded to virtually all major grocery and convenience retailers throughout Canada, expanded to other markets internationally, and is now rapidly expanding to other convenience and grocery retailers throughout the US. Now, with a 43% gross margin, vs. the 16% when we started, the brand materially contributes to the overall results of the Company. In gross profit, the firm delivered $12.4 million for the year vs. $5.8 million in the prior year, up 114%. Gross profit as a percent of sales, excluding shipping, was 29% vs. 27% in the prior year. The 200 basis points of continued gross margin improvement vs. prior year is a result of concerted efforts on mix enhancement and overall COGS reduction. Importantly, however, the increase in gross margin is before any of the impact of the shift in Coco-libre sourcing, which started in Q1 2018 and is driving a more than 30% improvement in COGS. Shipping costs for the period ending December 31, 2017 were $2.7 million or 5.1% of net sales vs. $1.1 million in the prior year or 4.3%. The increase in shipping costs was the result of the one-time transfers of products resulting from the acquisitions, and the change to three consolidated warehouses nationally. From a model standpoint going forward, 4.5% of net sales is a good number for 2018. Total operating expenses for the year were $18.4 million vs. $9.4 million in the prior year. An improvement of 200 basis pts as a percent of net sales. Of the total OPEX, marketing investment more than doubled, evidence of our commitment to invest in and build brands, whilst still reducing overall OPEX. Importantly, of the $18.4 million in total OPEX, $1.6 million was associated with non-cash stock expense impact associated with the acquisitions. In addition, there were an additional $5.2 million in one-time expenses incurred throughout the year associated with the acquisitions, uplisitng, and integration. Those one-time impacts were validated by an independent 3rd party as part of our quality of earnings analysis done to gain approval on the PNC credit facility. Not including those non-recurring expenses, OPEX was 25% of net sales, a reduction of 1200 basis points vs. prior year. 25% of net sales OPEX expenditure is also a good working model assumption for 2018. Adjusted EBITDA for the year ending December 31, 2017 was $5.04 million, an 1824% increase versus the prior year. Included in that number was a one-time gain on the sale/lease-back of a warehouse of $2.5 million. In summary, here is what is happening, 1) We are gaining scale on the topline. 2) We are adding more than 5 points a year in gross margin improvement. 3) We are reducing our OPEX as a percent of net sales to below 25%. Yes, we had some one-time impacts in 2017 as we were building our platform, but as the business model normalizes in 2018 and we focus on organic top and bottom line growth, we expect a 35% gross margin, OPEX below 25% of net sales, and achieve a 10% EBITDA margin. Turning to the balance sheet and cash flow statements, we continue to operate with very healthy current assets over current liabilities. Current assets for the period ending December 31, 2017 increased 62% to $16.2 million as compared to $10.3 million in current liabilities, not including contingent and lease considerations. That equates to a working capital ratio of 1.6 to 1. We believe the total debt of $3.5 million on a business of this scale is de minimis. Total shareholder equity reached $52.7 million, vs only $4.9 million in the year prior. That represents a 981% increase in equity for our shareholders. Looking at the cash flow, we finished the year with $285 thousand dollars in the bank. In Q3 of ‘16 we finished with $591 thousand, and in Q2 of 1’6 we finished with $279 thousand. Put another way, we have not had any excess cash to invest in the business, outside of what we have internally generated from operations, for more than a year. To address that issue, we went to put in place a credit facility with a new, bigger bank in PNC. We started on this back in 2017, because we knew we had incremental working cap requirements in Q1. We expected the line to close in the beginning of February. As you can imagine with these major financial institutions, it takes time. In March we indeed gained formal approval on the $15 million credit facility from them, but we have still not yet closed. Since we haven’t closed yet, we needed the cash for inventory, really at the end of January. As Brent will discuss, we have more than doubled our traditional retail distribution and expanded to all these new channels. They all need inventory, and we did not have the cash for it, so we had to solve the problem. Did we expect to have the problem? Yes – that’s why we started on it last year. Did we expect to be delayed as much as we were in closing? No, of course not. So, what do you do? You either …alienate your major retailers and major distributors with no product …and lose them forever, and, also miss your 2018 business plan target, or….. you go get the cash to fund inventory. So – we had to put in an interim and immediate capital solution, as we did with an ATM or other equity vehicle. Neither were intended. Neither were planned. …And because we hate any dilution as much as our shareholders, with whom we are in the same boat by the way, we put it off for as long as possible, 12 months in-fact. Let me repeat that. Management is in the same boat as the shareholders, and we have as much disdain for dilution as all of you do. Our interests are 100% aligned. So, we had to obtain the capital to run the business, and di so right at $3.5 million which we believed was all we needed in the interim, and we limited the amount, to just what we needed until our line with PNC goes in place. It is that basic, that simple. And, obviously we raised the cash via a private placement and cancelled our ATM vehicle. Why not communicate the above before, over the past few weeks? Well, as all our investors know, we were in the quiet period right before the filing of our 10K. There was nothing we could say, so we just had to bite our tongue, begrudgingly until today. Had we filed our K on time, for which we earnestly apologize, we would not have had these unknowns, and would have continued with what I know all our investors consistently play back to us, “that the company and management are very transparent, forthcoming and accessible.” Speaking of the K, the primary reason it was delayed was the valuation of the three acquisitions completed during the year, one of which was extremely complex. The new rules for compliance require two separate and independent valuations, from certified valuation experts which takes an inordinate amount of time. Ultimately, we communicated a purchase price allocation in the 10K, which allocates purchase price across brand value, customers, intellectual property or hard assets, inventory, or receivables. Through that process, we have added an incremental $19 million in intangible assets in 2017, and we believe as we commercialize these businesses and brands…and convert our patents into products, that the value for shareholders will be even greater …substantially, greater. To summarize, we had a very transformative year in 2017. We know all our investors want more, and they want it faster, but short-term hits, is just not our business model or way of working. It is why we have not established any guidance until this year, 2018. We knew we had a lot to integrate and build in 2017. With all that building and integration, topline revenue went from $2.1 million two years ago to $27 million at the end of 2016, to now $56.2 million in ‘17. All in less than two years. In gross margin we have gone 16% in June of 2016 to now 29% at the end of 2017. In OpEx, apples to apples, we have gone from 51% of net sales 2 years ago, to 37% at the end of last year, to 25% for the period ending December 31, 2017, whilst increasing marketing investment to 8% of net sales. And in EBITDA we have grown to just over $5 million. Those are the facts and financial results from 2017, and it leaves us at the 58th largest non-alcoholic ranked beverage company, one of the largest healthy beverage companies, and the fastest growing. And with that I'll pass it over to Brent.

[Brent Willis:]

Those are the tangible numbers, and most any company would be proud of that performance. Are we? No. We want more, and we want more faster, and frankly we expected more, faster. Here are some of the negatives. We came from a $2 million dollar, significant loss making, $0.19 cent, OTC company, with no liquidity. We now have an unfettered, and unobstructed runway. But are we unsullied with what we have done so far? No. Our brands that we acquired, everyone one of them, has needed rework, and more lifting than we thought. We have not yet rebuilt them to the levels they were 2-3 years ago, even though it appears that the expectation was that we would do it right away after acquisition. We did take out $14 million of net income loss on these businesses from when they were standalone entities, but that is not why we acquired them. In addition to the timing of our brand and sales execution being a source of frustration, our margins are not there yet also, nor is our true net income from operations… without taking out one-time impacts including sale of a building that benefited us $2.5 million. In addition, we, I.. should have funded basic working capital needs last year instead of now, and I also think I have personally done a pretty poor job of managing down short term expectations to give us the time we need to get the job done. Those are some of my frustrations and I believe the negative assessments on our company and on me personally, on which we are working to improve. On the positive side beyond the tangible numbers Chuck discussed, we uplisted onto the NASDAQ exchange, emplaced an entire new Board of Directors, acquired and integrated three major companies, reduced over 70 headcount from those acquisitions, and gained a significant portfolio of intellectual property. We integrated and changed out sourcing structures, integrated supply chains, and took more than $14 million in costs out of these acquisitions from when they were standalone enterprises. On the commercial marketing side of the business, we developed and launched the new Marley Mate and Marley Cold Brew, developed and launched Coco-Libre Sparkling, the first Sparkling coconut water, and Aspen Pure Probiotic, PediaAde, and Enhanced Recovery. On our brands, I believe I should base …or maybe rebase everyone’s timing expectations. At the time we took the brands over, we paid consideration of less than 1 times revenue vs. an average acquisition multiple over the past two years of 2.4 times. That translates to… there is some work to do on these brands, which takes some time. Rebuilding or relaunching any one brand in a year would be a lot. But we have done it with every one of our brands - all in 2017, and are now launching innovative new products within those core brand franchises. Take Búcha for example. In 2017, we made it shelf stable with 12 months of shelf life, and did a whole litany of things to increase its gross margin from 16% to 43%. Since taking it over, we’ve more than tripled the brand. Take Marley Mate as another example. We launched it in November, exclusively with a major convenience store operator. In its first three months of being out, it is outselling the market leader in common distribution, and also outsells Rockstar’s Mate brand by more than 60%, that launched around the same time Marley Mate did. In Colorado for example, we used to distribute a competitive product. It took us 3 months with Marley Mate, to eclipse what it took us 10 years to do with that other brand. On all the other brands – all the new stuff has come out in late Q4 and in the 1st half of 2018. Anyone that knows the CPG industry, knows retail distribution takes time. First the retailer must yes, and the major ones take about a year to do so, then you must get the products on the shelf chain wide. Knowing this, and the brand and sales and organization and retailer and distributor and integration and systems and financing work we had to do, we knew it would take time. Now however, we are cooking. We are taking those newly developed products within our core brands – and on the commercial sales side of the business, we more than doubled our retail distribution in traditional grocery and convenience channels, adding more than 81,000 new points of distribution. In addition, we struck new distribution partnerships, with major players, and have begun penetration of new channels including international, Foodservice, Alternative Channels, and E-commerce. This is why we needed to fund the inventory. Our retail throughput or …sales per point of distribution, a key indicator of our success going forward is really improving, as I shared with you on Marley Mate and Búcha as examples, but our inventory shortfall really hurt us in Q1. Most of the our biggest new distribution however is coming in April and May, when most of the major national retailers resets occur, so we were hurt, but not irrevocably. To achieve our plan for the year, we need to continue to convert the distribution, and fully roll out of new products. Concurrent, or right behind, we have to drive pull through. To that end, we have significantly increased our influencer and digital and social media, experiential and event marketing, and significantly increased our in-store merchandising, racks, shippers and cooler placement activities. Mind you, what I just went through was only what the team accomplished in 2017. Oh, and I almost left out our health sciences division, don’t forget about that, and I think I will just leave it there so we can surprise on the upside there. That's a lot for any Company, let alone a relatively small one from where we came. I am so proud of our team, their work ethic, and their results. They have really busted their behinds. Don’t forget 18 months ago, we started with 1 person in supply chain and logistics, 0 people in Marketing, 0 people in International, 0 people in foodservice and new channels and e-commerce, 0 ERP systems…and we had a low 20’s gross margin business, with more than $20MM in debt. 18 months ago. I want everyone to understand the key insight or inflection point on New Age’s financial model and how our P&L works, that I am not sure any outsider fully understands yet. If you start off, with 85% of your mix at a gross margin of around 25% of net sales … comprised of XingTea sold at mostly 99 cents and a distribution business, and you have OPEX that starts out at 37% of net sales, ….that is not a good recipe. As an aside, not that it matters, but OPEX greater than Gross Margin is the norm for 100% of the companies in the beverage industry under $100 million, 100% of them. So, here is the insight and inflection point – on our 25% gross margin base, we add in 45% gross margin acquired businesses, launch greater than 50% margin new products, in existing channels and in new channels where profitability is 30% greater. The result - mix shift that takes gross margin to 35%. With the increase in scale with a bit of discipline, OPEX stays at 25% or less of net sales, leaving 10 points of EBITDA margin. That is how our P&L gears. Then, as you take further costs out of the business, and add further scale, you shift into a higher gear with more direct impact on EBITDA margin. No one seems to understand these basics of our model, and, that…the cake is just not baked yet, but the recipe and the ingredients are all there. I must admit though, In our defense, I, we, our whole team in fact, just gets so excited with what we see for our Company, and we see it …so clearly. 2017 was foundation building, integration and development. ’18 is about leverage and execution. Simply put, Driving core brands and new products ….in expanded distribution. Penetrating new channels and markets…and expanding gross and EBITDA margins, underpinned by a focused and committed organization capable of scaling to a very different level. The ingredients for success are there, the brands, the customers, the distributions, the team, the systems, the culture, and the financial model. All our ingredients and our recipe for success is coming together. And with that, I'd like to open it up to questions.

[Operator:]

At this time, we will now conducting a question-and-answer session [Operator Instructions]. First question is with Anthony Vendetti with Maxim Group. Please proceed with the question.

[Anthony Vendetti:]

So I have a couple questions, I don’t want to take up too much time. But just, Brent, as you talk about the heavy lifting necessary with these acquisitions and it took a little longer than you thought, so I appreciate the candidness on that. And I was just curious, do you still feel comfortable with the 2018 guidance at this point or is that the goal but we have to keep in mind that even though this is a year that execution, there still some heavy lifting that might, that may need to be accomplished in order to get there.

[Brent Willis:]

It’s a great question. There is still some unknowns honestly and some of our new major national accounts have to execute on time. And they have to do with they have committed that they are doing, and it would be -- I don’t want to announce their names, because a lot of it comes across in April, May, and even one major national big-box store in June. But we ultimately have to execute there and our brands have to pull through. Do we have all of the pieces in place to be able to achieve our 2018 guidance? Yes. But we still have execution that we have to do throughout the year. So that's the first thing, and actually we still are confident in the plan, both at the top and at the bottom line. First January and February and we started off really strong and then we ran into the wall by not having the line of credit closed as we expected, and basically ran out of inventory. And we have upset some of our major food service distributors, which is all new business for us and some of other major retailers. Now it’s not irrevocable as we mentioned that that put us in a big hole for March and to the end of February, but we got a full year plan. We don't communicate our quarter-to-quarter guidance and most of our distribution is coming on April, May and some in June. So we still need to execute, it’s not a foregone conclusion but in truth we have a lot of confidence, both in terms of how we started off the year and what we're seeing in terms of throughput on the new brands.

[Anthony Vendetti:]

And then just on some of that acquisitions, Marley, Coco-libre. Are those brands -- have they stabilize now and do you expect them to start picking back up in 2018?

[Brent Willis:]

I would say that brands have stabilized. But for me, they are not really as differentiated as they could be. So even though the base Marley franchise, for example, stabilize between Mellow Mood and One Drop, we still need to re-launch that new packaging, which we’ll do in the middle part of the year behind the whole new Marley architecture. So the strategy is to take these core brands and it’s just changing packaging or doing some price offerings, those things never work and I’ve seen marketers do that for 20, 30 years, that's just the way. So the right thing to do is you completely re-architect and you completely change the messaging and frankly, you launch new innovative products within those core brand franchises, that's why we launched organic Marley Mate first, Marley Cold Brew second with some fantastic flavors and within Coco-libre, Coco-libre sparkling first and now new packaging, and now bottled up to stores 100% organic coconut water instead of the from concentrate model and now on Xing, coming out the new Xing Craft Brew collection, which compared to their peers at 20 grams to 21 grams of sugar or more, we have none. And these are in glass bottles called the Xing Craft Brew Collection and these elegant new flavors like Hibiscus Honey Blossom. So have we just changed the can on XingTea or done a little bit of sugar reduction or changed packaging, you don’t turn these businesses around or move them or stabilize them in the right direction, you have to do a lot of those things like we’re doing. So yes, those new products in the core franchises are really working and taking hold and that is carrying along these entire franchises. So I would say we’re margining within the individual brand, and the new brands is what’s bringing in the new news and new life back into these cores.

[Anthony Vendetti:]

And just a last question, because I’ve seen some of the new packaging stuff at natural products expo and that looks great, so looks like you’re moving in the right direction there. I know you want to leave it as upside, but the health science division I think from my standpoint, looks like a big white space with a lot of opportunity. And PediaAde seems like a great product. I was wondering if you could just talk a little bit about where that’s at in terms of that launch and then also any comments on the Enhanced Recovery product.

[Brent Willis:]

Great question that I really don’t want to answer, Anthony, but I will give you a little bit of insight, because we would rather talk about once the revenue really materializes from that division. But I would say we just gained our first purchase order on Enhanced Recovery last week, which we’re really excited about, Enhanced Recovery is in the decision-making process with about 20 major hospital systems across the country, and when I say major I mean like Spectra and Kaiser, and Shriners and all of these major hospital systems. And we’re one-o-one in that space, so that's particularly exciting. And we have new things right behind that, including as you mentioned, PediaAde and the Probiotics for that channel too. So that's one thing. But in addition to product, that's not enough. We needed really the right distribution system to get there and so that’s why we did the partnership with Dot Foods that has a strategic relationship with McKesson, and they get to all the hospitals from a distribution standpoint. So not only do we have the products that we believe will materially impact revenue, but probably not in a significant way in the first part of the year, but we have the distribution system and the execution system that goes with what we think are going to be some breakthrough products for the firm.

[Operator:]

Our next question is with [Zach Hirsch] with APG. Please proceed with your question.

[Unidentified Analyst:]

I was wondering, so now that you have this financing out of the way, what other hurdles do you see through the rest of the year?

[Brent Willis:]

I do believe the financing is out of the way, but we've got to finish and close off the PMC credit facility. And we spoke to those guys yesterday so we’ve got a specific timeline on -- and closing off that facility. So that’s the next thing we got to do, because we really need a very serious big banking relationship, and as the proper super low cost to capital financing we want going forward. So we still need to do that. But I don’t honestly see Zach any production, any competitor, any retail execution bottlenecks or roadblocks in front of us. It really just is about execution and I think we have a very simple plan, and simple plans are always the easiest to execute. But it really is execution in our own sales that is our only limiting factor. If we execute well and we bring on the distribution as committed by already these major distribution partners and we get our new products out on time and we do the right things to drive the pull through at the point-of-sale, which is all the in-store merchandising racks and coolers and shipper activities then we should be fine, both on the top and bottom lines as a company. So I think the only thing left in our way is yes let’s close off to PMC loan and then let’s just execute the business. But there is nothing stopping us expect for ourselves.

[Unidentified Analyst:]

And then my next question is, you bought all of these companies at really great values and most but not all under one-time sales. And they take some time to be integrated. But when do you believe you'll see the true value of these brands really reflected and they’ll reach their full potential?

[Brent Willis:]

First off from a value standpoint, the fact that we’ve taken out $14 million of costs from these businesses is just standalone and captured real cost synergies, which some organizations do but both and that I know of, the big one and the little one, both are pretty darn good at capturing cost and synergies. So that's one major of value. The other major of value in terms of really driving organic growth now on these platforms is probably what you were referring to. And I believe that we’ll start to see that. So our strategy isn't a whole bunch of innovation and new products, our strategy is in traditional retailers -- take our existing core brands Búcha, Xing, Marley and Coco-libre and innovate within those franchises, that way you get all the awareness benefits and you get the already understanding trial and consideration benefit. So you just bring new news to a branded consumer that already know and like and are aware of. So I think we’ll start to see the real value of these brands on the revenue side accrue in 2018, but I also don't think that there's any stopping thereafter. It's why we bought these businesses. We think Coco-libre is a great brand. We think Marley with its 72 million Facebook followers is a great brand. Búcha, we think Kombucha is becoming a great brand. And Xing, which actually means star in Chinese, also has the potential to become a great brand. They just need to be marketed and connected with consumers with relevant propositions around these, this concept of healthier, better for you alternatives. So we're doing that with each one of these brands. And I don't think it's just ’18 that we start to see the value. I think it’s ’18 and unlimited thereafter. And I believe with what we're doing to do the lifting on these brands with the new products within these core franchises is the right and frankly the most cost-effective way to do it.

[Operator:]

Our next question is with [Kevin Barrett] with Bank of America. Please proceed with your question.

[Unidentified Analyst:]

Brent, congratulations on 2017, I know you have to jump through a lot of hurdles this year but doubling revenue is certainly nothing to be that. Couple of questions for you, you ended the year at 29% margins. When do you think it's feasible to start to see the climb towards 35%, and then from there, what's the upside? And then also, what is the upside or growth prospects on the distribution side, because I think that gets missed a lot by everybody. But is there a plan in place to continue to grow the distribution business as well?

[Brent Willis:]

Just from the first part that you didn't ask on ’17, we appreciate the positive reflection on what we've done and we’re positive on that too, but we know we can do so much more. So it's not success for us Kevin, it is just a solid foundation and a new demarcation point. So we are motivated to build on this platform, which we had what we have so far. And the progress in margin is really the key that everybody should be holding the company accountable for. But to go through 16% two years ago to now 29% is commendable and the pathway to 35% really comes as all these new product set. So I don't think you’ll see much movement in Q1 frankly, but you'll see movement to from 32% to 33%, and just linearly up to 35% throughout the rest of the year. It really comes from the launch of these new products at these much higher margin levels. And as they become a bigger part of the mix that just changes your blended margin and gets us to the 35% target for the year, but that is all mix enhancements. The upside to your question and how do we get to 40%, which is our next interim target after the 35% target this year, we get there through gross margin enhancement. So yes, we’ll get there also through mix but if we can get that, we can take $3 million or $4 million out of the business, which of course is the target for the guys but it's not in our plan. If we can take that out of the business this year through, I don’t want to give anything away, but let's just say hypothetically sourcing with multibillion-dollar players of aluminum or sugar or citric on the raw material side, more integrated production, more integrated warehousing, some of the new partnerships that we’ve built instead of having three consolidated warehouses have eight to further reduce shipping costs. Those things from a cost of goods sold standpoint is a million pieces of heavy lifting you have to do but that can gets us to 40% and above gross margin, which is clearly, in our view insight but probably won't be insight in 2018. On the distribution side of the business, those guys are as good. And to grow your business nine years consecutively even in the face of you used to distribute things like vitamin water and you lose it to coke, you used to distribute Monster and you lose that, you used to distribute this year core water and you lose that to DPSG, now JV. So even in the face of obstacles, these guys just say fine, it’s just an obstacle. I am still going to deliver now the 10th year of consecutive growth on that distribution side. What’s greater and was unique about that part of the business for us is it throws off cash. And there is also some other benefits, but those cash benefits that it throws off, we can use to fund a lot of our own growth and diversification. And we do that because it still that 25% margin base business and that is just not going to deliver the ultimate EBITDA margin that we want. That being said, it is a great vehicle to optimize and maximize to really build the trend of mix of business that we want. Of which our distribution business is a very important strategic contributor. So we like it. It’s a machine here in Colorado and surrounding areas. We keep building on it and expanding to adjacent markets and expanding depths and breadth of the portfolio. And the guys is just -- I can't say enough of what a great leader runs that division but also just what a superb job they do to enable us to be profitable even though we were under $100 million and to have the cash to at least generate some funds to self expand and diversify.

[Operator:]

Ladies and gentlemen, we have reached the end of our question-and-answer session, as well as the New Age Beverages conference call.

[Brent Willis:]

Thanks everybody. Thank you.

[Operator:]

Ladies and gentlemen, you may now disconnect your lines. Thank you for your participation.