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Oil-Dri of America (NYSE:ODC)

Q4 2011 Earnings Call

October 13, 2011 11:00 am ET

Executives

Jeffrey M. Libert - Chief Financial Officer, Vice President and Treasurer

Daniel S. Jaffee - Chief Executive Officer, President, Director and Member of Executive Committee

Ronda Williams - IR

Analysts

Robert Smith - The Center for Performance

Ethan Starr - Private Investor

David Zelman - Zelman & Associates, LLC

Operator

Good day, ladies and gentlemen , and welcome to the Fourth Quarter 2011 Oil-Dri Corporation of America Earnings Conference Call. My name is Ann, and I will be your coordinator for today's call. As a reminder, this conference is being recorded for replay purposes. [Operator Instructions] I would now like to turn the presentation over to Mr. Dan Jaffee, President and CEO. Please proceed, sir.

Daniel S. Jaffee

Thank you, Ann, and welcome, everybody to the fourth quarter and fiscal year-end teleconference. I hope you all have had a chance to review the news release. I guess before I do my pre-comments, let me introduce who's here with me: Jeff Libert, our CFO; Doug Graham, our General Counsel; and Ronda Williams, our Director of Investor Relations, who will do the Safe Harbor.

Ronda Williams

Yes, I will. Thanks, Dan. Welcome, everyone. On today's call, comments may contain forward-looking statements regarding the company's performance in future periods. Actual results in those periods may materially differ. In our press release and our SEC filings, we highlight a number of important risk factors, trends and uncertainties that may affect our future performance. We ask that you review and consider those factors in evaluating the company's comments and in evaluating any investment in Oil-Dri stock. Thank you.

Daniel S. Jaffee

Thank you. And before I turn it over to Jeff for a detailed review of the quarter and the year, now let me just say from a 50,000-foot standpoint, quantitatively, not the kind of year we would have liked to deliver, although a lot of reasons why we were even, I'd say, somewhat happy with the financial results, and we can get into that, as those of you that have been following us for a while know, given what could've happened with our largest account a couple of years ago, the numbers really weren't so bad, but qualitatively, very, very positive. We believe that fiscal 2011, a lot of strategic moves were made that are going to add value to your investment over the long term. And so we'll certainly be talking about those in the rest of the call. Jeff, why don't you cover…

Jeffrey M. Libert

Thanks, Dan. For the quarter and the year, sales were up 6% for the quarter and up 4% for the year. Sales were a little under $58 million for the quarter and $227 million for the year. For the EPS, the bottom line was a mixed bag. EPS was $0.40 a share, up 21% versus a year ago. However, for the year, EPS was $1.26 a share, which was down 3% versus a year ago. And the story was that the top line increased due to a higher value mix of products, and I'll talk about that in a moment.

For EPS, we had a strong fourth quarter, primarily due to lower health care costs in the quarter, and as some of you may know, we're self-insured, and we see some volatility in healthcare cost, and we just saw a very good experience this quarter. And we had lower effective tax rate in the quarter as we assessed our tax position at year-end. For the year, EPS was lower due to, as we've talked about in previous teleconferences, increased costs, primarily oil commodity driven things and energy driven things. Oil is a major factor in our freight costs and in our packaging costs, and as a result, our gross profit margins declined from 22.7% to 22.1%.

On the SG&A side, we spent significant amount of dollars preparing for our Fresh & Light launch, but in offsetting those costs were lower discretionary bonuses which reflected our reduced earnings.

Getting into the business units. On Business to Business, sales increased 3% for the year, but income was down 2% for the year. We saw really strong sales in animal health, bleaching earth and agricultural carriers during the quarter, however, co-pack and international sales declined. We saw incremental sales that went into our ag carrier business of Verge engineered granules, and co-pack and international declined due to industry trends of declining coarse cat litter sales, of which we have a large share.

On the retail and wholesale side, sales were up 4% for the quarter, but income was down 11%. Slow sales of coarse cat litter, as I mentioned earlier, and higher commodity costs have grossly affected our consumer business. However, higher sales of scoopable with the return of Cat's Pride Scoop to Wal-Mart helped drove sales higher. And as mentioned a minute ago, we spent significant dollars during the year to develop the Fresh & Light product that affected adversely our income for the quarter.

Our balance sheet remains strong as it has in previous quarters. Our cash and investment balance is now $33.7 million. During the year, we borrowed $18.5 million at very attractive rates. However, our net debt, that is our borrowings less our cash investment, is virtually 0 at year-end. So our balance sheet has really never been stronger.

During the year, we spent $13.8 million on capital, a little over half of that amount related to the Fresh & Light launch. And we really spent that money to produce a product that has unsurpassed quality and to have configurations that are standard within our industry. So we can sell on any of the formats that our customers want.

As we have been in the past, we remain strongly committed to dividends. We recently increased our dividend. Our quarter dividend was $0.17 per common share, and that represents a yield of 3.3% at the quarter's closing price. And during the year, although we weren't active in the quarter, we repurchased $2.5 million of our own shares.

Back to you, Dan.

Daniel S. Jaffee

Great. Thank you, Jeff. Great recap and I think highlighted the key parts from the quarter and the year. As always, I really want to spend the next 20 minutes covering everything you guys -- 20, 25 minutes, everything that's first and foremost on your radar screens. So please, Ann, if you could open up the queue. And I would just emphasize again, prioritize your questions, ask your most important ones first, and then get back in the queue to let other people ask their questions.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from the line of Ethan Starr, a private investor.

Ethan Starr - Private Investor

I'm wondering, have you added new retail distribution that did not previously carry oil-derived products? With the new Cat's Pride Fresh & Light, have you added new retail distribution? And how is sell-through at retail?

Daniel S. Jaffee

I will tell you this. We've definitely -- we've been out presenting coast-to-coast, and the reception has been overwhelmingly positive. So it takes them time from the day they say go to actually get it on their shelves. A lot of the major retailers do things called planogram resets, where they put in their new -- what they're going to be stocking on their shelves on a systematic basis, so they may do it once a year, maybe twice a year, but they don't do it the day after you make the sales call. So we have got commitments -- really, I mean we're batting nearly 1,000, which is great. And so over time, over the next 6, 8 months, you're going to start seeing it everywhere. You'll see it some places quicker, who were just about to do a reset or have the flexibility to get around their shelves sooner. You'll see it other places farther out, but the response has been overwhelmingly positive.

Ethan Starr - Private Investor

Okay. And sell-through?

Daniel S. Jaffee

Well, you can't see sell-through yet. You can see sell-through at the 1 retailer who did get it out there quickly, which was Wal-Mart. All I can tell you is the feedback from them is that it is adding to category sales, so not cannibalistic, driving their category growth. These are quotes we're hearing from them, so all very positive. They are very much behind this launch as they see it as a strategic move in terms of environmental sustainability. So, very positive on the 1 retailer who really has it at the moment.

Operator

[Operator Instructions] And our next question comes from the line of Robert Smith with Oil-Dri.

Robert Smith - The Center for Performance

So can you just go over the landscape of Calibrin and Verge?

Daniel S. Jaffee

Yes, I'll take Calibrin, and Jeff will take Verge. While we did finish the year strong, all in all, it was not a great year. I will tell you it did cause us to re-look at our strategy, and I would say when we launched the Calibrin products 3 years ago, it was believed, oh, this will be a global product, which it is, and we should, sort of, indiscriminately blow it out there and hope we get customers in every country of the world. It was not a great strategy on my part. I will take the blame for that. I mean, we learned from the past that focus is the key, so better to have a 10 share in 5 markets than have a half a share in 50 markets. So, we have been refocusing on our major markets, and we are seeing the benefits of that. We saw it at the end of the quarter, and we're really seeing it at the beginning of this fiscal year. So we're -- Calibrin is doing very well, and that's sort of focusing on the core markets where we have real good distribution, real good strategic partners, and we'd rather increase our share with them, and it helps us concentrate our travel, our marketing, everything. So -- and I think...

Robert Smith - The Center for Performance

The core markets, though, are which?

Daniel S. Jaffee

Well, I'm not sure I want to disclose that just from a competitive standpoint. I think it's, sort of, it's like telling the competition what play you're going to run before you run it. But -- so I'm not really going to get into that, but you could easily figure it out because you'd say, well, you're going go where the dairy, poultry and swine production is. But anyway, it's the top 5, 6 markets for us, and at the moment, it's -- the strategy is working.

Jeffrey M. Libert

You asked about Verge.

Daniel S. Jaffee

Oh, Verge. Wait, Bob, in a second, Jeff is going to cover Verge.

Jeffrey M. Libert

You asked about Verge. And I would say that the process is still very much being developed. This is kind of a new to the world process, and so it's going to take some time. But we've seen a lot of improvements during the year and even during the quarter. We are now making product at a much faster rate than we were before. But a worry for us is we see a lot of enthusiastic response to this in the marketplace. There are people who want to try this product, and we just don't have the volume to sell them right now. And we're working on overcoming that. So I would say that at the time, we're still not really at a point where we can say this is a real moneymaker for us. But we are seeing good response in the marketplace, and we are making manufacturing improvements that we expect to continue. So we're bullish on its future.

Operator

And our next question comes from the line of David Zelman with Zelman Capital.

David Zelman - Zelman & Associates, LLC

I'm relatively new to your story. Obviously, you have a very high-quality company. Your cash flow has been pretty consistent for a long time, and it appears to me that the growth here is on your new kitty litter product. I read your transcript that talked about the benefits of shipping and the volume. And so it's obvious from a retailer standpoint, the cost savings. How about from a consumer standpoint, other than weight, is there some sort of cost benefit advantage to the consumers? And then from a profitability profile, on your last call you said it's priced about the same. What does the margin profile of that product look like? And then the other part is, what's going on with your new international distribution as well? So if you could drill down a little bit more into the economics of your new product and your new markets, that would be very helpful.

Daniel S. Jaffee

You have some good questions there. Consumer benefits, let's start with that. And you said other than weight, and just to clarify on weight, why a consumer would care. Yes, they might care a little bit about the environmental sustainability. The weight aspect for the consumer is the #1 negative when you survey buyers of cat litter, which the demographic is women, 25 to 54, those are predominant buyers of cat litter, is that it's so heavy and bulky. And so making it lighter just means they carry home less pounds each week. It isn't so much about the environment. It's more about ease of use, ease of carrying and pouring. But having said that, when we first challenged our research team and manufacturing team to make this product, I was hoping for product parity. I was hoping the product would work as well on the key features and benefits: Clump strength, odor control, dust, and that the added benefit would be that it's lighter so it's easier to carry and pour. So the synergistic benefit of taking the -- what we call the best of both worlds, and I'll give you a little bit of a history course on cat litter. In about 1948, Ed Lowe came to my grandfather and had the idea of buying coarse, absorbent material. We were their distributor on floor absorbent. So he said, "How about, I'll -- I'm going to break it up, sell it in 5-pound bags, write kitty litter on it," and try and get people to use it instead of sand, which was not absorbent and didn't control odors. He invented the industry, so that started cat litter back in about 1948. And that was based on calcium bentonite, which is a non-swelling mineral, highly absorbent, light in density, controls odors very well, and it's our raw material. So until about 1991, that was the mineral of choice in cat litter. Then about 1991, John Hughes of the American Colloid Company, which they’re in the sodium bentonite business, came up with the idea with, "Hey, our product doesn't work as well as calcium bentonite in many of the traditional aspects, but it does 1 thing that calcium bentonite won't do, and that is, when it gets wet, it forms a clump, and maybe we can change consumer behavior and get people to actually scoop it out." And that was the advent of scoopable cat litter back in 1991. And now 20 years later, what we've done is pretty eye-popping. Our scientists figured out that with the right percentage of blend and the right granulometry, the size of the ratio of the 2, you can put calcium bentonite together with sodium bentonite and come up with a better cat litter. It clumps better, controls odor better and has less dust and weighs 25% less on a pounds-per-cubic-foot basis. So all of a sudden, what you got was, like the Post-it note. I mean, we went out to invent 1 thing and actually came back with something else. Now the exciting thing is, we have patents. We have patents pending. We have the raw materials. So -- and you've got the environmental movement. So when we took this to Wal-Mart and the other retailers, yes, they were very excited. As you said, they saw the benefits of, hey, you can put pretty much 22% more on a truckload. The pallets are the differential. They -- we didn't change the way that the pallet -- so you can put 22% more on the truckload, which means I'm going to bring in thousands of trucks less if I'm Wal-Mart, tens of thousands of truck less. If the whole country changes to this thing, it'll free up dock time, it'll take trucks off the road, it'll use up less diesel fuel, it will emit less carbon dioxide -- carbon monoxide into the environment. It's all good. And then when you compound that with okay, and now it works better and the consumer, when they try it, it's eye-popping. It's really a great cat litter. So it really hits on all fronts, except you -- I think you said from a cost of use standpoint, over the year, if someone converts from any of the competitive products to ours, their total cat litter bill will be about the same. It isn't a cost savings for them. It's certainly not a cost increase for them. But over and over and over again in the pet category, people have shown they are willing actually to pay more to achieve whatever it is they think they need to achieve, whether it's food so that their pets are healthier, or whether it's litter so they can control odors better, so people -- when friends and family come to their home, they don't think that they've got a feline cage going at the zoo. They want that odor controlled, and they're willing to pay for it. So scoopable cat litter was more expensive than coarse, and this is actually a price parity. So we feel, in our usage and attitude studies and our in-home use tests, the feedback was, we would pay equal to or more for this product than we would pay for what we're currently using because of the performance and because of the added benefit of it’s lighter weight, it's like wheels on luggage, I mean, it's just really…

David Zelman - Zelman & Associates, LLC

Well, that's very helpful. And the margin profile at the same price of your -- or versus your older product, and do you think you are going to continue to supply your older product? Or is this so revolutionary that all your customers are going to immediately displace your older product with your newer product?

Daniel S. Jaffee

Okay, good questions. Margin profile -- and I'm assuming you mean for us, and then for the retailers, it's also giving them a healthy margin, but much better margin profile because we're using our clay, our technology, and priced at parity. In the past, a lot of our scoopable entries have either been priced at a discount where we've been a value brand or have utilized a lot of clay and technology that wasn't our own. So the margins are better. We're not really disclosing exactly what the margins are, but they're better, and they'll allow us to support the product through media to actually drive consumers to the store. And then, what was your second question? I'm sorry.

David Zelman - Zelman & Associates, LLC

Is it going to displace the new products and then take all the shelf space from your older existing product?

Daniel S. Jaffee

Yes. Now -- look, we have factored cannibalization into our model, and the good news is, our historic Cat's Pride brand didn't have a large share. So it's not going to cannibalize that much. Our products do have unique points of difference. Our Cat's Pride Scoopable is the only certified safe-to-flush product out there. It really doesn't compete with this item at all. This item is not flushable. Sodium bentonite is not flushable. So that's what knocks it out. That Cat's Pride Scoopable utilizes 100% of our calcium bentonite, and then we put an additive in there to make it clump. So it's still very, very relevant with the retailers and the consumers. They love that item because it is unique. It's the only one they carry that's certified safe to flush. Our Kat Kit is a disposable tray with cat litter inside. That's unique. So, no, we don't -- we are not at all walking away from our historic line. They all have unique points of difference and reasons to be there. We do believe, over time, if the light concept catches on like we believe it will, then all of our products will have to have a light spin to them. And frankly, the competitors will, too. It's sort of what happened in liquid detergent. It all went to 2x and then 3x because that's the way the retailers wanted this thing to shake out.

Operator

And our next question is a follow-up from Ethan Starr.

Ethan Starr - Private Investor

Yes. On the Fresh & Light, do you have -- if half the country starts using that, do you have the capacity to produce that much?

Daniel S. Jaffee

We -- it'll be a great problem to have when we're out of capacity. I mean, yes, we are the calcium bentonite guys, and we have a lot of capacity. I would never say never. As BlackBerry showed yesterday, do they have the capacity to deliver e-mail? So I don't ever want to be quoted to say, "We'll never have a shipping problem," but we have plenty of plenty capacity, and it will be a great day for all of our investors when we're out of capacity on Fresh & Light.

Ethan Starr - Private Investor

Okay, great. On the Verge quickly, have they added another production line on that?

Jeffrey M. Libert

No. We're optimizing. Before we really feel we can add another production line, we need to optimize what we have. So that's we're focusing on.

Ethan Starr - Private Investor

Okay. And then has Oil-Dri generally been able to sufficiently increase prices to offset your rising input prices?

Daniel S. Jaffee

I think you saw some margin compression during the year, so that sort of answers the question a little bit that, while we have gotten the average price up, and I think I've announced these on teleconferences so in the past, I can tell you in fiscal '10, we close at $244 a ton. You'll recall, just 8, 9 years ago, we were at $150. We finished this year at $260. So, we were able to get our prices up, but you saw the percentage margins declined a little bit, so it kind of answers your question that, we've got the prices up, but maybe not enough to cover all the cost increases.

Operator

And our next question is another follow-up from Robert Smith.

[Technical Difficulty]

Daniel S. Jaffee

Any other questions?

Operator

We have no further questions at this time. So I would like to turn the call back to Dan Jaffee for closing remarks. Oh, wait a minute. We do have Ethan Starr again.

Ethan Starr - Private Investor

Yes. You spoke about the Calibrin and what your new strategy there. But I'm wondering, will that really significantly boost Calibrin sales, you think, so that will really make a difference?

Daniel S. Jaffee

Yes. I think it will make a huge difference. I really do. I think concentrating our marketing and our travel into specific target-rich countries is the way to go. And it's already showing huge benefits. I'm not going to disclose any numbers yet, but the snowballs are already starting to turn in those markets. And so, yes, I think it will make a big, big difference.

Ethan Starr - Private Investor

Okay. So we should see increased sales in fiscal '12?

Daniel S. Jaffee

Yes.

Ethan Starr - Private Investor

Okay, good. Anything new in either R&D or M&A?

Daniel S. Jaffee

Not that I'm going to answer, so just the typical. We're very focused. We continue to invest heavily in our Research and Development because we are the guys who are creating value from sorbent minerals. And so we have a great team out there, and we've got the pedal to the metal to find new uses. And I think the fact that we've been able to get our average price up so much so fast is a validation of all that research spending.

Ethan Starr - Private Investor

Okay. Does anyone else own calcium bentonite reserves? Or are you the only guys with calcium bentonite?

Daniel S. Jaffee

There's some in the U.S. There are some other calcium bentonite -- I would say all calcium bentonite is not created equal. And so we are using specific reserves for this opportunity because we found that they clump better and their profile was better. Additionally, we have the lion's share of the calcium bentonite. To the extent we create all this demand, a lot of that will come to Oil-Dri. And then finally, we have this specific opportunity, we have a patent on, so -- and it is on calcium bentonite. So this -- we will be involved in this conversation.

Operator

And our next question comes from the line of Robert Smith with Center Performance.

Robert Smith - The Center for Performance

Who is doing your creative work for Fresh & Light?

Daniel S. Jaffee

Can I answer that question?

Jeffrey M. Libert

Yes. They put out a release.

Daniel S. Jaffee

Okay. Good. Yes, because they had put out a release. We're using the ad agency Doner out of Detroit, and they've really done a great job.

Robert Smith - The Center for Performance

It’s spelled D -- how do you spell it?

Daniel S. Jaffee

D-O-N-E-R.

Robert Smith - The Center for Performance

Okay. So, and that -- are they going to be emphasizing the question of weights?

Daniel S. Jaffee

If you go out -- have you seen our TV commercials?

Robert Smith - The Center for Performance

I've seen a couple of them, yes.

Daniel S. Jaffee

Yes. So with the TV commercials, one of them is more weight-centric, the other one is more performance-centric, and then they both finish with the concept that the same volume can weigh different, that's the teeter totter and the cat, and then the balloon, the cat reaching up for the balloon and minimizing on to the packaging. So -- and then we have a bunch of print ads that are getting across the weight as well. But I will tell you that we had a lot of discussions on this, and when I'm making the sales calls, I ask all the buyers, and I'd be happy to ask everyone on this conference call, how many of you drive a purely electric car? And I've yet to find anybody that's driving a purely electric car. But I'd say "Okay, but if it performed exactly like a gas car, it went as far on a charge, it went as fast, it was as easy to charge and it cost equal to or less than a gas car, now how many of you would be driving an electric car?" And they all say, "Of course I would." But the trade-offs are too negative. So nobody's willing to just buy your product. I think David hit the nail on the head. No one's going to buy the product because it's lighter weight, or they may buy it once. They're not going to buy it the second time if it doesn't perform as a cat litter. So you're not going to buy an electric car, if it goes put, put, put and you have to charge it every 5 minutes. It's got to perform. And that's the beauty of Fresh & Light. It controls odors. Its absorbency is fantastic, no dust, tremendous clump strength, and oh, by the way, it's 25% lighter. So it's really exciting.

Robert Smith - The Center for Performance

How much money are you going to put behind this? I mean, is it your plan in this fiscal year just to spend it out to pump up the selling? I mean, if it starts selling really well, you'll just put more and more behind it?

Daniel S. Jaffee

I'm glad you raised this point because I think in an earlier release, or maybe last teleconference, I made a comment. I said, regarding this, while we don't give guidance, we're spending all this money on Fresh & Light, I said we expect consolidated earnings for fiscal '12 to be approximately equal to 2011. And you raise a good point. I mean, we're getting such great response from our retail partners. And in the year 1, there's a lot of onetime spending. I don't know how familiar you are with the grocery trade, but there's something called slotting allowances where you got to put money so they can put it on shelves, and a lot of the accounts put the money to work. They'll give you ads. They'll give you displays. They'll give you features, but it's to get the product up and off the ground. Those are onetime things that won't recur in year 2 and beyond. So the more acceptance we're getting, the more onetime spending we're getting. So look, it's too early in the year to say whether that statement I made is true or not, but I will tell you that as we get 6 months or 9 months into the year, if we're confronted with the decision of doing pullback on the spending and choke the horse or do we let the reins go and keep feeding it, as long as we're seeing positive repeat and positive velocities and getting great acceptance from the trade, which is what we're seeing so far, we're going to keep feeding the horse. We're going to keep letting him run.

Robert Smith - The Center for Performance

Okay. Well again, the present fiscal year seems to have some really exciting possibilities. I hope that you might consider expanding the conference call time to 45 minutes.

Daniel S. Jaffee

Yes, maybe next time, if there's enough results. It’d probably be the third quarter one or maybe the fourth quarter one. It's a good point.

Operator

And we have one last question from David Zelman.

David Zelman - Zelman & Associates, LLC

So, I’m debating with my colleague over here as we listen to the call, and I'm thinking it's obviously a very -- I’m as excited as you are over there, and my pragmatic colleague is like it's a huge fragmented market, there's giant consumer brand, private players. Can you sort of talk about what the market share opportunity is for this new product? So we're all trying to gauge a size opportunity for this new product. And although we know it's good and it's got the benefits and the environments and all those good things, it's very hard to try and quantify what the real opportunity is for this. And based on what you're seeing on retailer acceptance, what’s sort of a short-run year or 2 opportunity for it, do you think?

Daniel S. Jaffee

Well look, I mean, that's the million-dollar question and our multimillion-dollar question. We have our own internal share expectations. I will tell you the thing that gave us the confidence, and look, I mean, we own more of this company than anybody else, and this is a huge launch, and we're -- we couldn't be more excited about it. And what makes us excited about it, in our history, share has gone hand-in-hand with distribution. Because there's such little holding power on the shelves, this isn't like One-A-Day vitamins, where they can put a months’ worth of stock probably in a 6-inch facing. You can only fit 3 or 4 jugs in a facing. So the key -- these guys go out of stock so much that basically everyone’s share pretty much falls in line with the distribution they're getting on the retailer shelves. Some guys will outperform it by a little bit, but it usually just means they go out of stock on Saturday versus Sunday. And then they all restock the shelves on Monday. So we are getting the commitments on distribution. So we're very bullish. I mean, that's all I can tell you. So you can do the math, you can go out and do some retail checks as this starts to happen, and if we have 10% of the distribution, you should be able to say "Okay, then given average velocity, they're going to get 10% of the share. If they're getting 2% of the distribution like they got now or 4%, then they're going to have a 4% share. And if they get 20% of the distribution, holy cow.” So, it's too early to tell you what percent of the distribution we're getting, but that's all public trackable stuff. IRI does it through what's called ACV, all commodity volume, and we'll start reporting on that as it starts rolling out.

Operator

Ladies and gentlemen, due to the time allowed, this concludes our question-and-answer session today. I would now like to turn the call back to Mr. Dan Jaffee for closing remarks.

Daniel S. Jaffee

Real quick as we are over the time, and I would just -- I'm excited that the questions today were about what we see as a very exciting opportunity. So we will be able to come at you with more public data as the data starts to be gathered. We subscribe to IRI, and we'll use that to help communicate how our distribution is going and how our sales are going. And we look forward -- there'll be some of that on the next call, but it's really the call after that, that we'll really start getting some data. So thank you, and we'll talk to you again in 3 months.

Operator

Ladies and gentlemen, we thank you for your participation in today's conference. This concludes the presentation, and you may now disconnect. Have a good day.

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