Turning Point Brands, Inc. (TPB) Q2 2023 Earnings Call Transcript

Turning Point Brands, Inc. (NYSE:TPB) Q2 2023 Earnings Conference Call August 2, 2023 10:00 AM ET

Company Participants

Louie Reformina – CFO

Graham Purdy – CEO

Summer Frein – Chief Revenue Officer

Conference Call Participants

Vivien Azer – TD Cowen

Michael Legg – The Benchmark Company

Eric Des Lauriers – Craig-Hallum

Operator

Good morning, and welcome to the Turning Point Brands’ Second Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. All lines have been placed on mute to prevent any background noise. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note that this event is being recorded.

I would now like to turn the conference over to Louie Reformina, Chief Financial Officer. Please go ahead.

Louie Reformina

Thank you. Good morning, everyone. This is Louie Reformina, Chief Financial Officer. Joining me are Turning Point Brands’ President and CEO, Graham Purdy; and Chief Revenue Officer, Summer Frein. This morning, we issued the news release covering our second quarter results. This release is located in the IR section of our website, www.turningtpointbrands.com. During this call, we will discuss our consolidated and segment operating results and provide a perspective on the operating environment and our progress against the strategic plan.

As discussed, may I direct your attention to the discussion of forward-looking and cautionary statements in today’s press release and the risk factors in our filings with the SEC. On the call today, we will reference certain non-GAAP financial measures. These measures and reconciliations to GAAP can be found in today’s earnings release, along with reasons why management believes that they provide useful information.

I will now turn the call over to our CEO, Graham Purdy.

Graham Purdy

Thanks, Louie. Good morning, everyone, and thank you for joining our call. Our second quarter results demonstrated continued progress against our plan. During the June quarter, we showed revenue growth of both Stoker’s and Zig-Zag as we continue to gain traction from the initiatives we put in place and consumers are responding as demonstrated by market share gains in most of our major categories.

Given our solid start to the year, we are raising our annual EBITDA guidance to $90 million to $95 million. Of course, our business like many other consumer oriented companies is not without challenges. Our results continue to reflect the impacts of prolonged inflation and higher interest rates. As we’ve shared previously, our wholesale customers, particularly buyers of our Zig-Zag paper and wraps portfolio have been carefully monitoring inventory levels in response to the higher cost of financing their working capital.

While we think the bulk of our wholesale customers’ inventory adjustments are largely behind them, we still saw further destocking with certain customers in the second quarter. Despite this transitory dynamic, we’re confident that the Zig-Zag brand continues to strengthen based on several factors we track. Our sell-through was better than our reported results and we are encouraged by our wholesale customers and retail customers’ response to our expanding portfolio, which includes CLIPPER lighters and our recent new product introductions.

We are also encouraged by our continued penetration of the alternative channel, driven by continued secular tailwinds that are expanding our addressable market. We are having success in not only winning new untapped alternative customers, but our new and existing alternative customers are showing more interest in taking on more complete Zig-Zag portfolio. This not only increases our order sizes, but also provides valuable shelf space and merchandising real estate within these stores to build brand awareness as we satisfy evolving in consumer preferences.

As many of you can probably see in your hometowns, the alternative channel is consistently expanding by virtue of additional states greenlighting medical and recreational cannabis. In addition to more legal dispensaries, other alternative retail outlets and manufacturing processing facilities are drafting off this trend. Our Zig-Zag B2B e-commerce business selling into that channel was up over 30% during the quarter, excluding CLIPPER, which also contributed to our sales within the channel.

Stoker’s had another strong quarter with revenues up 7.3% and market share gains in both the MST and loose leaf chewing tobacco categories as its value proposition continues to resonate with consumers. MST continues to expand distribution and gain market share, while our Turning Point Brands became the number one manufacturer of loose leaf products for the first time in its history.

On FRE, our modern oral product, we’re increasingly optimistic about our prospects and given positive consumer feedback and results in recent test markets. We also continue to be proactive in optimizing our capital structure and opportunistically purchased another $15.1 million notional of our convertible notes during the second quarter, bringing the total as of the end of the quarter to $39 million, while maintaining a strong cash balance to help address future maturities.

With that, let me hand the call over to Summer to walk through some progress and results of some of our specific go-to-market initiatives.

Summer Frein

Thank you, Graham. As discussed in prior quarters, our focus on growing the Zig-Zag brand is a critical element of our plan. We continue to execute against our multiyear road map to solidify Zig-Zag as a lifestyle brand, especially in the alternative channel, which is clearly expanding across the United States. We recognize the immense value of growing brand awareness, trial and conversion and ultimately becoming a ubiquitous brand that a consumer is able to find anywhere.

To that end, and as an important example of our progress, we are proud to share that we have partnered with two of the top five largest multi-state dispensary operators or MSOs, to build dedicated in-store presence for our products. Last quarter, we also expressed the value of product innovation to the Zig-Zag portfolio as an essential necessity to expand our on-shelf presence across trade classes, along with the launch of Palm rolls and 70 millimeter cones. Both sets of new offerings and especially the 70-millimeter cones have proven to resonate well with both the trade and our consumers and show momentum in the marketplace.

In addition to consumable product innovation, we also believe it is important to develop other accessories and products such as apparel, which has previously had great success. As part of our strategy to both expand our product lines and sales channels, we recently launched in Zumiez, one of the largest brick-and-mortar specialty apparel stores with over 600 locations across the United States. Expanding these partnerships serves as a large sales and marketing opportunity for the Zig-Zag brand and speaks to the strength of the brand as we have received encouraging feedback and engagement thus far.

Turning to CLIPPER. As we’ve discussed, the brand is a well-known top lighter brand in international markets and we believe we have a proven track record of leveraging our sales force and marketing engines to grow brands in the U.S. We continue to increase distribution and expand product assortment across all sales channels, while building brand awareness and engagement by educating consumers on the CLIPPER brand at retail. In addition, we see traction on Amazon and across our social channel.

Amazon was a new channel for CLIPPER in the United States, launching in Q1 2023 and has proven to be an important sales avenue for consumers. Our social channels highlight that consumers are interested in the points of difference of CLIPPER versus competitive lighter brands by way of significant and increasing engagement. As noted in previous calls, we believe this category is complementary to our existing business and are optimistic that plenty of opportunity remains in this roughly $500 million market.

Moving to smokeless, Graham already mentioned the continued strength in Stoker’s during the quarter. On the product innovation front and as noted in prior calls, we remain committed to profitably competing in the growing $1 billion white pouch category with the FRE brand. Our progress across the channels in which we compete gives us confidence that we will carve out a competitive and distinct position in the market. We look forward to sharing more detailed plans and remain committed to scaling in this segment over time.

In summary, we continue to focus on maximizing the value of our brands, executing against the plan we’ve established and growing our business at both our retail and end consumers. We are hyper focused on maximizing the value of our world-class brands and extensive distribution capabilities.

Let me now turn the call back over to Louie to go through our results.

Louie Reformina

Thank you, Summer. Starting with our consolidated quarterly results. Q2 sales were up 2.6% to $105.6 million. Adjusted gross margin was down 30 basis points to 49.7% due to segment and product mix. Adjusted EBITDA was $25.3 million, up 2.2% year-over-year. Go into segment performance — going into the segment performance. Zig-Zag sales increased 1.1% year-over-year to $46.7 million.

Our U.S. papers and wraps businesses were down as we saw further trade inventory rightsized during the quarter, but we continue to remain encouraged by end market demand. Our e-commerce business, particularly B2B alternative sales grew double-digits. Our Canadian and other smoking accessories category saw strong growth during the quarter, both aided by CLIPPER sales.

Gross margins declined 60 basis points to 56.6% during the quarter, driven primarily by product mix. Notwithstanding the trade inventory fluctuations we have seen this year, end demand for our papers and cones products continue to be strong. Q2 2023 U.S. paper and e-commerce sales are double the levels of the second quarter of 2019, which speaks to the cycle of growth trends and our market share gains over the last few years.

On to Stoker’s. Stoker’s products net sales increased 7.3% to $36.1 million in the quarter, with a 0.7% volume increase and a 6.6% price mix increase. Net sales for the MST portfolio grew double-digits. Stoker’s volumes was up 2.5% despite category volume down 5.6% and with share growing 60 basis points year-over-year to 6.9% according to MSAi. Its share in store selling was up 30 basis points year-over-year to 10.3% and Stoker’s now in stores representing 67% of industry volumes, which still provides a long runway for growth.

Chew sales were down mid-single digits from the previous year. Stoker’s Chew was the number one chewing brand in the quarter, meaning 280 basis points of share to 30.7% according to MSAi. Overall, TPB loose leaf volume was down 2.8% versus the category, which declined 8.5%. The category performance was driven by a larger decline in premium loose leaf compared to discount brands with TPB’s volumes benefiting from consumer trade down as Stoker’s volumes grew from the previous year. Gross margin increased 160 basis points to 55.4%, primarily due to MSC pricing needs.

Moving to CDS, our wholly-owned distribution subsidiary. Sales were $22.8 million and adjusted gross margins were 26.7%.

Moving to our balance sheet. We repurchased $15.1 million notional value of our convertible bonds during the quarter. And we ended the quarter with $100.5 million of cash and $124.1 million of available liquidity, providing flexibility for further capital deployment. We continue to closely monitor the financial markets ahead of our July 2024 convertible note maturity. We believe our current cash balance and free cash flow generation provide us the necessary flexibility to adjust the maturity of the remaining $133.5 million of convertible notes.

With our first half performance, we now expect consolidated adjusted EBITDA of $90 million to $95 million for fiscal year 2023 compared to previous outlook of $88 million to $94 million. Other projections include effective income tax rate of 24% to 26%. We continue to expect CapEx to be temporarily elevated this year, up to $13 million with $9 million related to a manufacturing project, which we expect to complete late this year although timing of payments may slip to the first quarter of 2024.

We expect CapEx to return to more normalized levels in 2024. We also expect to spend $12 million to $15 million in capitalized software implementation costs related to our ERP and CRM implementations, which are still expected to be completed by the end of the year. We currently expect to spend approximately $2 million for the full year on PMTAs related to our modern world products, which remain under review by the FDA.

Now let me turn it back to Graham.

Graham Purdy

Thanks, Louie. To conclude, we had a solid start to the year and we remain focused on demonstrating further progress for the balance of the year. Thank you for participating in the call today.

And with that, I’d like to open the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Vivien Azer from TD Cowen.

Vivien Azer

Hi. Good morning.

Louie Reformina

Hi, Vivien.

Vivien Azer

Good morning. So I wanted to start on Zig-Zag. Certainly a nice move sequentially and good to hear that a lot of the inventory nodes is behind you. Is there any way for you to quantify kind of what you think might be a potential inventory headwind in either the third quarter or the back half? And maybe just kind of more broadly, holistically, how we should think about modeling the sequential revenues, in particular, in light of the new partnership with the MSOs that you announced today? Thank you.

Louie Reformina

Yes. Vivian, on a sequential basis, I would say that we think mostly inventory [indiscernible] you are still seeing it in certain areas. I would say that we should continue to see sequential improvement in Q3 versus Q2 on Zig-Zag as I was going to model it out. I would kind of point out that last year, we did have when you look at a year-over-year comparison, we did point out Q3 of last year had $5 million of pull forward given the programs that we ran during that period last year.

Vivien Azer

Noted. That’s really helpful. And then as we kind of think about the gross margin progression on Zig-Zag, seemingly kind of just a better top line performance has helped narrow the rate of gross margin compression in 2Q versus 1Q? Is that right? And are there incremental considerations, inventory or otherwise, maybe a negative mix from the MSO partnership that we should be cognizant of as we think about the Zig-Zag margins in the back half.

Louie Reformina

Yeah. So the big driver that we had from Q1 to Q2 is that if you recall, the products that were subject to the trade inventory reduction in Q1 where our papers and wraps, which carry higher gross margins. So obviously, those rebounded in Q2 sequentially. So we had a nice lift in gross margin in Q2. And going forward, as we continue to grow our paper cones and CLIPPER on some of our other kind of lower gross margin businesses, I would expect gross margins to have that same kind of headwind as we’ve experienced in the past.

Vivien Azer

Super helpful. Maybe pivoting to FRE, the modern oral category has been incredibly topical this earnings season from your larger competitors. Any incremental insights you can offer around kind of performance, how you guys are feeling about contraction it’s getting with consumers, the 3-milligram offering? Anything incremental on that would be great.

Summer Frein

Yeah. Hi, Vivien. This is Summer. We continue to get really great feedback from both the trade and our consumers. We have the ability to really look at what consumers are doing within our own websites and our purchase patterns, and we remain really encouraged by what we’re seeing. We also feel really great about our product assortment. As you noted, our points of difference in milligram strength sort of separate us and we are excited about what we’re seeing there as well. As we think about the playbook going forward, obviously, we’ve learned a lot about how to go to market through the success we’ve had with Stoker’s, and so borrowing from that playbook will definitely be influencing our go-to-market strategies in the near future.

Vivien Azer

Got it. Last one for me. On Stoker’s, perfect segue. We’re seeing some changes in the competitive landscape in cigarettes. I don’t think it’s yet kind of impacted the broader traditional moist smokeless tobacco category. But any kind of insights you can offer on the competitive landscape in MST more broadly?

Graham Purdy

Yeah. Hi, Vivian. It’s Graham. Look, I think the sort of the tale of two cities, the value category, I think, continues to be successful in MST and the premium brands are struggling at this point in time. I think a little bit of that has to do with sort of a macroeconomic environment, but also the pricing activity that they’re taking. We sort of remain committed to this down the street plan that we’ve had for many years. continue to get — win more stores, continue to win more chain accounts, continue to opportunistically price when that allows, and we’re excited about the continued runway that we have with Stoker’s.

Vivien Azer

Sounds good. Thanks for all that guys.

Graham Purdy

Thanks, Vivien.

Operator

Your next question comes from Michael Legg from The Benchmark Company.

Michael Legg

Thanks. Great quarter, guys. I appreciate you see these results in a tough environment. I want to understand a little bit about the MSOs guiding two of the top five. Can you talk a little bit about whether you’re displacing other products that’s there if it’s additive for the MSOs and what you’re looking forward to getting in there over time? Thanks.

Summer Frein

Yeah. Hi. This is Summer. In terms of getting into the MSOs, I think for us, it’s about getting broader presence in the very important retail environments for us so that Zig-Zag continues to carve out its space in that environment. I won’t go into the competitive nature there in terms of what will be taking the shelf space of or not. But for us, it’s really about continuing to get into the alternative space, expand our footprint there and the growth opportunities that remain.

Michael Legg

Okay. Great. Thanks. And then just on CLIPPER, can you talk about where you see your penetration today? I mean, are we 10% into the market? Are we — how much more runway is there for you to go? Thanks.

Summer Frein

Yeah. So as noted, that category is pretty tremendous for us in the United States. We’ve been at it for almost a year now, and we continue to see distribution expand quarter-over-quarter, and we’re continuing to gain distributors as well, both in the traditional and the alternative space. So making inroads there, continue to see growth in that space, both in-store and as shared, we’re on Amazon now as well. So the growth there is encouraging as well.

Michael Legg

Great. And then with the Zumiez, I mean, what type of level of apparel sales are we thinking? Is this just a small piece to start? Or are there a lot of other retailers you’re talking with? And where do you see that going?

Summer Frein

Yeah. So for us, it’s as much of a sales opportunity as it is a marketing opportunity. Introducing into Zumiez certainly affords us the opportunity to be at the table with other partnerships as well. And when we think about going into Zumiez, we think about creating walking billboards for our brand, and that is a tremendous marketing opportunity for Zig-Zag. And the fact that it’s resonating in the early days of us getting into Zumiez is very exciting for us and it’s the opportunity the brand has going forward.

Michael Legg

And what type of margin potential do you think you have in apparel?

Summer Frein

I don’t know if we’re sharing what the margin potential is quite yet with apparel, but certainly can follow up on that.

Michael Legg

Thanks. Okay. Great quarter. Thanks, guys.

Summer Frein

Thank you.

Operator

And your final question comes from Eric Des Lauriers from Craig-Hallum Capital Group.

Eric Des Lauriers

Great. Thank you for taking my questions. First one for me, a follow-up on one of Vivien’s questions just on the sort of continued strong performance of Stoker’s MST and just overall, that sort of value segments continuing to be successful against premium. You called out that you’re in 67% of the stores by volume. Obviously, leaving about one-third of the market available to you guys. So a strong opportunity there. It seems to me like that opportunity has kind of been out there for a while. So I’m just kind of wondering what the overall sort of road map there looks like? And maybe another way of thinking about it would be just sort of what might cause you to lean into that opportunity maybe more than you have in the past? Thanks.

Graham Purdy

Yeah. Look, great question, Eric. I don’t think that we’ve made any modifications to our strategic approach around Stoker’s. It really is sort of trench warfare. It’s 1 store at a time. It’s a chain at a time. At the same time, we’ve sort of maintained this ethos about being profitable while we do it, so not going out in — you’re rationally spending money to gain distribution. And so I think that the pathway we’re on, we continue to grow that weighted distribution. We continue to win stores. We continue to win chain accounts.

So I think that, that long runway is something that’s very exciting for us, especially with the pricing dynamics in the category. We’re one of the few that’s actually growing volume in the space. So obviously, that leaves share growth. And we’ve got the benefit of fast following pricing from a large competitor. So lot of great dynamics. I wouldn’t anticipate any change to our current thinking about how we go to market there.

Eric Des Lauriers

Okay. No, that certainly makes sense to me. Obviously, continuing to benefit in more ways than one was just kind of status quo. So that certainly makes sense to me. Moving to Zig-Zag here. Definitely very encouraging to hear that the B2B alternative channel sales are up 30%. I think it was — so that’s great to hear that these sort of initiatives are kind of catching momentum here.

I was wondering if you could expand a bit on the Zig-Zag innovation pipeline. You touched on it a bit in the prepared remarks. I’m just wondering if you could expand on that, whether there’s any difference in the sort of measured channel versus the alternative channel? And just overall, if you could give a bit more insight into the innovation pipeline for Zig-Zag and how you’re kind of expecting that to translate to overall sales growth? Thanks.

Summer Frein

Yeah. Sure. So as noted on the call, we recently put into market palm rolls and 70-millimeter cones. We’ve especially seen a lot of great traction across both the alternative and the traditional channel with 70-millimeter cones. Just tells us that consumers are both interested in the Zig-Zag brand as well as interested in that particular product assortment or lineup. So I think there’s a lot of runway for us to still get into stores there. And on palm rolls, more focused on the alternative side at this point, but it seems like consumers and the dispensary owners are very interested in that assortment as well.

Louie Reformina

Yeah. I’ll add that the all-channel e-commerce platform, [indiscernible] provides kind of a great channel for us to try out products and prove it out before we launch it into the Z-stores. So we’ve been doing that with some of our new innovation.

Eric Des Lauriers

That’s great. And as we go forward, so we sort of had palm rolls and especially the 70-millimeter cones helping to drive results currently and in the recent past. I’m just wondering on the road map, like sort of as we look into 2024, should we expect a significant proliferation in the number of SKUs you guys are servicing? Is it really kind of focusing on these finding one or two that really work and kind of investing behind those a bit. I’m just kind of wondering how we should think about the innovation pipeline going forward, just considering how much it has been a driver of the growth here.

Summer Frein

Yeah. So for us, two things are really important. One, what is the consumer wanting from us, right? And staying ahead of the consumer is really critical for us, especially as we think about growing the Zig-Zag brand into the future. And as we think about what these various channels are looking for. Additionally, I would add that getting shelf space in the alternative channel is really important for us.

And so as Louie noted, testing in the alternative channel for what products make sense is the profitable way for us to think about growth in this space as well and not over investing in product innovation is an important watch out for us. So I think it’s a very balanced approach we’re trying to strike so that we’re staying ahead of the consumer, but also staying relevant with the product innovation that we bring to market in a profitable way.

Eric Des Lauriers

That makes sense. And then the last one for me is kind of similar to the Stoker’s MST outlook here. I just wanted to circle back on the FRE pouches. Just wondering if you’re seeing any kind of green shoots of any inflection in market share? Or if there’s any sort of anticipation of a significant ramp in the FRE pouch sales? Or this is going to be sort of that similar trench warfare? I mean, obviously, it’s a very high category with many big players here. Is it that sort of one-by-one trench warfare or is there anything that you guys are seeing any green shoots to kind of call out on any inflection point in growth here? Thanks.

Summer Frein

Yeah. So we’re very encouraged by the progress thus far. I think you hit the nail on the head when you refer back to Stoker’s and various studies growth there. I do think it’s a fair point on the trench warfare piece as well. So we’re very mindful of that profitably growing in the space is a top focus for us. So I think the Stoker’s reference was right on.

Eric Des Lauriers

Okay. Great. Appreciate it. Thank you.

Summer Frein

No problem.

Graham Purdy

Thanks, Eric.

Operator

The next question comes from Andrew Rem (ph).

Unidentified Participant

Hey, guys. I got to say, I really like the intro music, pretty sure that’s the primary reason your stock is up today. So kudos on that.

Graham Purdy

Thanks, Andrew.

Unidentified Participant

Summer, just on your last comment there regarding innovative products. When you say test, can you — what is an example of testing?

Summer Frein

Yeah. That’s a great question. So what we have the opportunity to do in the all channel and on our e-commerce channels, is put a product into market and sort of gain that understanding of what consumers feel about it in terms of purchase patterns, giving feedback through our website, getting feedback through the dispensary channel and then determining if it makes sense based on the interest to expand it out further.

It’s really as simple as that if we find a product, does it make sense and it only going to be a temporary offering, for example, we won’t expand it out further. We had a product earlier this year, rose wraps, that we concluded just made sense for us to have as a temporary product. And we’ll decide later if it’s something we expand further, but that’s an example of when we test it, understood it was great for a moment. And more to come as we’ll do something beyond, but I think that’s an example of a test that we did and how we think about it.

Unidentified Participant

So do you — when you test, are there specific stores or geographies? And what is the duration of a test?

Summer Frein

Yeah. I think it varies from product to product based on the market conditions and the product that we’re testing.

Unidentified Participant

Do you start with some initial time frame? And then based on as results come back, that may expand or shorten, so it’s very much like a feedback loop.

Summer Frein

Absolutely.

Unidentified Participant

Okay. Also, could you talk about — I don’t know exactly how to say this, but CLIPPER and FRE, what is the marketing road map? If it’s like a Phase I, II, III, but kind of walk through each of those products, maybe CLIPPER since it’s more recent. But just understanding when you think about marketing, what are the different phases that a new product like that goes through?

Summer Frein

For CLIPPER, when we first introduced the product, we really broadly focused on building product awareness. And that was done in a pretty traditional way across in-store and online. So I think in-store point-of-sale, advertising displays, that sort of thing is pretty typical to other businesses. And in terms of online, using social channels such as Instagram or TikTok to market that brand, so a pretty traditional playbook as it pertains to CLIPPER.

As it pertains to FRE, similar story in terms of the marketing channels that we’ve been leveraging, albeit for FRE, starting on a smaller given the background that we’ve talked about before related to the category, and I just wanting to learn and be very methodical about our in-market approach.

Unidentified Participant

So do you use TikTok as an example, are you using influencers? You’re creating your own content? How do you do that?

Summer Frein

It certainly varies as it pertains to CLIPPER. We have done a little bit of both.

Unidentified Participant

Sorry, am I still on?

Graham Purdy

You are.

Unidentified Participant

I’m sorry. So the last part of what you said cut off.

Summer Frein

No problem. I said as it pertains to CLIPPER, I think your question was specific to TikTok and the advertising approach we leverage there. It’s a little bit of both.

Unidentified Participant

Okay. And then on the Zumiez collaboration or partnership there. Why Zumiez is a good initial partner? And then you also talked about looking at that as an opportunity to expand. So I wondered like would a hot topic as a brand fit well with what you’re trying to accomplish there?

Summer Frein

So Zumiez is great because they have a broad brush of stores across the United States. They’re a specialty apparel retailer. For us, as noted in a prior question, I think the opportunity with partnerships like that afford us as much of a marketing opportunity as it is a sales opportunity. As we think about partnerships beyond Zumiez, I think we’ll take it on a case-by-case basis, but Zumiez is a great proxy for us to think about other potential retail partnerships in the future.

Unidentified Participant

Okay. Thanks a lot, guys. Appreciate it. Great quarter.

Graham Purdy

Thanks, Andrew.

Summer Frein

Thank you.

Operator

There are no further questions at this time. Mr. Graham Purdy, I turn the call back over to you.

Graham Purdy

Yeah. Thanks, operator. I appreciate everybody’s time today. We’re excited about the results in Q2 and we remain committed to our plan for the balance of the year. So thank you for joining, and we’ll talk to you guys soon.