Farmer Brothers' (FARM) CEO Mike Keown on Q2 2016 Results - Earnings Call Transcript

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Farmer Brothers Company (NASDAQ:FARM) Q2 2016 Earnings Conference Call February 5, 2016 5:00 PM ET


Tom Mattei - General Counsel

Mike Keown - President & CEO

Isaac Johnston - Treasurer & CFO


Tony Brenner - ROTH Capital Partners

Kara Anderson - B. Riley & Company

Carter Dunlap - Dunlap Equity Management


Good afternoon, ladies and gentlemen and welcome to the Farmer Brothers Second Quarter Fiscal 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a brief question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to turn the call over to your host, Tom Mattei. Go ahead, sir.

Tom Mattei

Good afternoon, everyone. Thank you for joining Farmer Brothers' second quarter fiscal year 2016 earnings conference call. I'm the company's General Counsel. With me today are Mike Keown, President & Chief Executive Officer; and Isaac Johnston, Treasurer & Chief Financial Officer.

Earlier today we issued a press release which is available on the Investor Relations section of our Web site at The press release is also included as an exhibit to our Form 8-K available on our Web site and on the Securities and Exchange Commission's Web site at Please note that all of the financial information presented on this conference call today is unaudited. A replay of this audio-only webcast will be available approximately two hours after the conclusion of this call. The link to the audio replay is also available on our Web site.

Before we begin the call, please note various remarks that we make during this call about our future expectations, plans and prospects may constitute forward-looking statements for purposes of the Safe Harbor provisions under the Federal Securities Laws and Regulations. These forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. Results could differ materially from those forward-looking statements. Additional information on factors that could cause actual results and other events to differ materially from those forward-looking statements is available on the company's press release and in our public filings which are available on the Investor Relations section of our Web site.

On today's call, we use certain non-GAAP financial measures including non-GAAP net income, non-GAAP net income per common share diluted, adjusted EBITDA and adjusted EBITDA margin in assessing our operating performance. Reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures is included in our earnings press release which is available on the Investor Relations section of our Web site.

I will now turn the call over to Mike Keown, our President and Chief Executive Officer. Mike?

Mike Keown

Thank you, Tom. Hello everyone, and thank you for joining us this afternoon for our first call of 2016. Before we begin I want to thank those of you who sent feedback on the timing of this call on a Friday afternoon and in the future we'll do everything possible to best meet the needs of our shareholders.

I'd like to start by providing a roadmap for the call. First I will highlight certain key areas of our financial results and provide perspective on how we manage supply in our largest volume period. Then I'd like to review two key strategic initiatives that are underway which includes changes we are making in our direct store delivery organization and our corporate relocation plan. I'll also bring you up to speed on the disposition of our spice assets and will then turn the call over to Isaac Johnston, our Treasurer and CFO who will discuss our financial results in greater detail.

In terms of the second quarter let me start by saying we feel good about the second quarter results. Net income results were strong, our volume trends improved, we had great execution on the operation side and we made continue progress on our corporate relocation plan. In addition we have started an initiative to improve our DSD business. As you look at the second quarter I will draw your attention to roast and ground coffee volume and net income is important to understanding our performance.

As you know after several years of growth in 2015, we were not satisfied with our volume trends. However we saw signs of encouragement during the second quarter. We were pleased to see a return to volume growth with our roast and ground coffee products even if very modest compared to our second quarter last year. It was up by 100,000 pounds, when we compare trends against the first quarter of this year what we see as 500 basis point improvement against the first quarter’s 5% decline, against their prior period. In other words, we'd like the change in the trend line.

With the addition of several new customers which ramped over the last six months, I believe we're well positioned to grow in the near-term barring those kind of events we can't necessarily predict or control such as a downturn in the domestic economy and of course severe weather this time of year which has limited our results in the past.

Net sales were up slightly at $142.3 million in the quarter compared to $144.8 for the same period the prior fiscal year but this was not due to a decrease in coffee volume but mostly from customer and product mix and to a lesser extent from a decrease in the cost of green coffee and its effect on our commodity based pricing arrangements.

I'll now provide perspective on our profit performance. Net income in the second quarter was $5.6 million compared to $2.9 million for the second quarter of 2015, restructuring and transition expenses related to the corporate relocation plan increased our operating expenses by about $5.2 million. But during the quarter we had a gain of 5.1 million related to the sale of our spice assets, pushing up our operating income so the net effect was nearly offsetting. The remaining underlying net income improvement was solid, driven by 50 basis point improvement in gross profit primarily from the manufacturing improvement by moving production from Torrance along with improved fleet and vehicle cost improvements.

Also helping net income this quarter our selling expenses and G&A decreased by $1.7 million and $400,000 respectively as compared to the same quarter in the prior year. So, when you look at our non-GAAP net income measure we saw an increase to $5.7 million in the second quarter of fiscal '16 compared to 3.9 million in the second quarter of fiscal '15 which translates to a non-GAAP income per diluted common share of $0.35 per share versus $0.24 per share in the second quarter of fiscal '15 and improvement of $0.11 per share.

Before I conclude my comments on the quarter, I wanted to highlight a notable achievement in our production and logistics and how we handled what has traditionally been our highest volume quarter.

When we were developing the corporate relocation plan and the initial step of merging the coffee production from our Torrance facility into our other production facilities, we took a close look at production capacity, while we believe that that we would have sufficient capacity to meet our commitments to our customers without service issues we knew that the first half of this year had the potential to test that capacity and planned accordingly to address the risk. Having come through the period, I'm proud to say, we maintained our high service standards and I'm want to knowledge the employees involved in operations, logistics, sourcing and production planning for their excellent work. This was a significant milestone for our corporate relocation plan. Isaac will detail the income statement later.

So, next I'll summarize several key strategic initiatives including changes we're making to our DSD or direct store delivery sales organization, the sale of our spice assets and our corporate relocation plan. So, let's move to direct store delivery. To better address what has been a period of top line trends not up to our standard, this month we announced internally several initiatives designed to improve Farmer Brothers, direct store delivery network and drive consistent growth in this critical area of our business.

We studied many companies’ DSD models and found in some areas it looked like we could be behind and then others we were doing well. However on balance we needed to take prudent action to improve, while keeping much of what was working in various markets around the country. We have reorganized our top leadership structure that reports to our Senior Vice President for DSD, Scott Bixby, elevating several internal leaders that we may go outside the organization as necessary for key capabilities critical for the future. We believe these changes will speed decision making and will improve execution.

We also created a formal team of cross functional leaders that have all been caped to focus on profitable growth. We are rolling out new initiatives and test models designed to giving us information to potentially redesign some other ways we go-to-market including new sales and delivery models. We will connect this to our efforts and supply chain engineering again with a focus on growth. Finally, I'd like to bring you up to date on the disposition of our spice assets and then address our plans for the relocation from Torrance, California to Northlake, Texas.

First spice, as you have seen from our 8-K filing on November 16, 2015, we entered into an asset purchase agreement with Harris Spice Company in which we agreed to sell to Harris certain assets associated with our business and manufacturing processing and distributing of spices and certain other culinary products. There were a number of factors motivating this sale, one of the primary ones being that it would have been very costly to move the business to Texas as manufacturing and processing spice products in the new facility would have required design changes and cost, they did not appear to us to be prudent expenditures or in line with the company's core business.

In addition, in Harris we were able to sell to a company that is a supplier to Farmer Brothers over the years has proven to be a trusted partner and has assured that they will be able to supply us a broad array of spice products that we will continue to sell through our DSD network which represents the majority of our spice sales today. This transaction closed on December 08, 2015, and we received the closing payment of $6 million noted in the asset purchase agreement and there is an earn-out of up to $5 million over a three-year period based on Harris’ sales to our former direct customers during that period.

We will produce for Harris as a co-packer for a limited period of time before Harris takes overall production. Completion of this transaction is an important part of our corporate relocation plan as well. I will now give you an update on that plan. While we've been working very hard on the corporate relocation plan, there is not a great deal to report right now beyond what we presented at the Stockholders Meeting in December. We have made additional progress on the final design as well as progress on construction. We expect to be able to provide revised information on estimated cost ranges before the end of February.

So to recap of few items beyond, the new facility in spice assets disposition I mentioned during the Annual Meeting of stockholders that we're embarking on vender managed inventory or VMI and a more comprehensive third-party logistics program. The VMI program started in December and 3PL a third-party logistics program has begun at the end of January with implementation ramping up through April of this year and completion of implementation within our fourth quarter of 2016.

Lastly, we recently put our Torrance property on the market and we're seeing very strong interest in the property from what we would consider to be high quality potential buyers. The interest in the property has exceeded our expectations and we believe that this competitive bridge structure in conjunction with the state of the commercial and industrial real estate market in Southern California will lead to a very robust bidding process.

Let me now turn the call over to Isaac Johnston, our CFO who will provide you with more updates on our first quarter results as well as some financial updates related to our corporate relocation plan, Isaac?

Isaac Johnston

Thanks Mike and hello. I'll spend the next few minutes discussing our financial performance for the second quarter fiscal of 2016. As Mike mentioned, we continue to make significant progress towards our objectives of driving improved operational and financial performance.

Now, let me get into some of those details. On the income statement, net sales in our second quarter of fiscal 2016 was 142.3 million, representing a 1.7% decrease compared to net sales reported in the second quarter of fiscal 2015. This was primarily due to decreases in net sales of our coffee and tea products. RMG coffee pound volume was up slight 3.10% for the quarter an improvement from Q1 where RMG coffee pound volume was down 5.3% compared to the same quarter of the prior year. The decrease in net sales of 2.5 million included 300,000 reduction in revenues driven by customers in cost plus pricing arrangements. Most of our direct ship customers utilized commodity-based pricing arrangements where the changes in the green coffee commodity costs are passed on to the customer.

From a gross margin standpoint for the second quarter of fiscal 2016, we were 37.2% or 50 basis points higher than the 36.7% recorded in the second-quarter of fiscal 2015. The improvement in gross margin was primarily driven by improvements in conversion and leverage as we moved production from Torrance California manufacturing site. Within the gross margin, we saw a benefit of LIFO layer reduction in the second quarter of fiscal 2016 of 300,000 and that was compared to a benefit of 2.2 million in Q2 of 2015, a 1.3% comparative margin impact. If you wash out the impact of LIFO and the 50 basis point improvement that was about 180 basis point improvement from a apples-to-apples basis standpoint.

Operating expenses in the first quarter were 47.5 million, representing a decrease of 2.1 million as compared to the 49.6 million recorded in the prior year. Three major factors impacted net favorable operating expenses; first, a 5.1 million gain from the sale of the spice assets; second, 5.2 million incurred in restructuring and other transition expenses related to our corporate relocation plan this quarter, basically the two nearly offset each other; and third, better fleet and vehicle cost driven primarily by lower fuel costs for both our direct store delivery routes and long haul fleet.

G&A was better within the quarter also primarily through bonus and some consulting work that was done as part of the pre-work associated with our -- as preparing for the corporate relocation plan in 2014. As a result, income from operations in the quarter was 5.4 million compared to income from operations of 3.5 million in the prior year period, an increase of 1.9 million versus the prior-year quarter. Total other income was 600,000 in the second-quarter of fiscal ’16 as compared to total other expenses of 400,000 in the second quarter of fiscal ’15 just under $1 million swing between the two.

In Q2 of fiscal '15 we experienced $900,000 of coffee related derivative instrument losses with coffee related derivative instruments nearly flat in Q2 of fiscal '16. As of December 31, '15 we held coffee related derivative instruments covering 41.1 million notational pounds of green coffee as compared to 34.2 million notational pounds covered as of June 30, 2015. So, we have more coverage on green coffee currently. In addition to these coffee-related derivatives as of December 31, 2015, we had 27.4 million in coffee inventory and commitments to purchase green coffee totaling 38.9 million under fixed price contracts.

For the second quarter of fiscal '16, we recorded an income tax expense of 363,000 compared to an income tax expense of 352,000 in the second quarter of 2015 which is an effective tax rate of 6.1% in Q2 of 2016. In the second quarter of fiscal 2016, we decreased our tax valuation allowance by 2.2 million and still have 83.1 million in our deferred tax valuation allowance. We will continue to monitor all available evidence both positive and negative in determining whether it's more likely than not that we will realize our net deferred tax assets.

As a result of all the factors I mentioned net income was $5.6 million in the second quarter of fiscal '16 compared to net income of 2.9 million in the second quarter of 2015. Net income per share diluted in the first quarter was $0.34 versus net income per common diluted share of $0.18. As Mike mentioned in referencing our non-GAAP net income, which excludes restructuring and other transition cost and gains and losses on sale of assets, you will see we achieved non-GAAP net income of 5.7 million for the second quarter of fiscal 2016 versus 3.9 million in the prior year period. Our non-GAAP net income per share diluted was $0.35 in the quarter, fiscal '16 second quarter versus $0.24 per share in the second quarter of our fiscal '15.

Moreover our adjusted EBITDA margin improved to 9% in Q2 2016 versus 8.4% in Q2 of 2015, 6.10 point improvement in our adjusted EBITDA margins. That brings our net income results for six months in fiscal '16 to 4.5 million compared to 5.4 million for the six months of fiscal '15 or $0.27 per share, fiscal '16 diluted versus $0.33 per share diluted. Our non-GAAP net income is 9.9 million for the six months of fiscal '16 compared to 6.6 million for the first six months of fiscal '15. Our non-GAAP net income per common diluted share is $0.60 per share year-to-date for the first six months versus $0.40 per share the same period in fiscal '15. This is a strong start to the first half of the year.

Now let's turn over to the balance sheet, as of December 31, 2015, we had 30 million in cash and cash equivalents plus restricted cash. Additionally, we had 23.3 million in short-term investments. As of December 31st, we had 200,000 borrowed an outstanding in our revolving credit facility. Our credit facility with JPMorgan Chase and SunTrust has a 75 million borrowing capacity and a 50 million accordion expansion feature. As of December 31, 2015, we had utilized 11.4 million in letters of credit and had 47.7 million of excess availability on the credit facility based on our borrowing base capacity.

For the first six months of fiscal 2016, our capital expenditures were 11.4 million as compared to 9.4 million in the first six months of fiscal 2015. Our CapEx included fund spent on coffee brewing equipment, expenditures for vehicles, machinery, equipment building facility improvements and IT related expenditures. In addition for the first six months we increased CIP assets under the Texas facility lease of 8.1 million offset by an increase in Texas facility leased obligations of 8.1 million. Depreciation and amortization for the first six months of 2016 was 10.5 million versus 12.4 million in the first six months of fiscal year 2015.

I would now like to discuss some of the financials relating to our corporate relocation plan. In the first six months ending December 31, 2015 restructuring and other transition expenses associated with our corporate relocation plan totaled 10.7 million. For the six month period, these expenses consisted of employee retention and separation benefits of 6.6 million. Facility relocation cost of 1.9 million and other related costs including legal consulting and travel of 2.1 million. We have estimated that we will incur approximately 27 million in cash cost in conjunction with these restructuring and other transition expenses associated with the corporate relocation plan. This is a $2 million increase versus our last estimate of 25 million driven by the separation cost associated with converting to 3PL and an extension of retention timeframe for a very small group of individuals. Today we've paid or accrued 21.1 million in cash cost in connection with the exit of the Torrance facility, with the remainder of the estimated 27 million or 5.9 million expected to be recognized in the remainder of fiscal 2016 and the first quarter of fiscal 2017. In addition we may incur certain non-cash asset impairment, post retirement related, and pension related cost the amounts of which we have not yet determined.

In July 2015, we entered into a lease with an affiliate of Wells Fargo to lease an approximate 538,000 square foot facility to be constructed on just over 28 acres located in the city of Northlake, Texas which will include corporate offices, manufacturing and distribution, in addition to a housing land. The lease agreement contains a purchase option equal to 103% of the total project cost as of the date of the option closing. If the option is not exercised an obligation to pay rent would commence December 31, 2016. As Mike mentioned by the end of this month, we expect to have an updated estimate on the cost of the facility. The expenditures associated with our Northlake, Texas facility are expected to be partially offset by proceeds from the planned sell of our Torrance, California facility which is currently on the market and has received high interest from potential buyers.

We believe our credit facility, the expected proceeds from the sale of the Torrance facility and to the extent available cash flows from operations and other liquid assets collectively will be sufficient to cover our financing requirements for the next 12 to 18 months including anticipated expenditures for our corporate relocation plan. In February 2015, when the corporate relocation plan was announced, we expected that we would when fully implemented to see annualize cash savings in the range of $12 million to $15 million per year. At the shareholders meeting in December 2015, we updated the range of annual cash savings to 14 million to 18 million inclusive of savings related to our announced move to 3PL and also vendor managed inventories. These savings along with other savings will be increasingly realized through fiscal 2016 and early 2017. As Mike mentioned, the marketing and formal offer process on the property in Torrance, California is very robust and active and we wish all prospective buyers good luck in the bidding process.

And with that, I'll turn it back over to Mike.

Mike Keown

Thanks, Isaac. As always, I would like to thank those on the call for their continued interest in Farmer Brothers. We are excited about the continuing turnaround and confident that while we'll hit bumps in the road, given the size and complexity of our plan. We are making good progress and we'll continue to focus on creating value for our stockholders.

And with that, I'd like to open up the call up to a few questions.

Question-and-Answer Session


Thank you. [Operator Instructions] Our first question comes from the line of Tony Brenner with ROTH Capital Partners. Your line is now open.

Tony Brenner

Thank you. Good afternoon. I have a couple of questions, first is as you ramp up into third party logistical efforts, I wonder if you could expand a little on what you said, that we'll have going forward on selling expenses?

Isaac Johnston

We have estimated a net impact of right at 2 million, 2.1 million to between the range of 2 million to 2.2 million net impact on an annualized basis.

Tony Brenner

Which would begin fully at the end of the year presumably?

Isaac Johnston

The timing associated with the move and transition. We said we'll be completed by for sure by the end of the fourth quarter. So that by latest June 30th of this year with the targeted timeframe could be four or five weeks earlier than that timeframe but think of June 30 as the timeframe.

Mike Keown

And then Tony that would ramp in over that period as we move to phase it in.

Tony Brenner

Sure. And with a good part of the transition and the shifting of your workforce from Torrance to Dallas, what about G&A going forward should that now begin to subside a little bit or remain at these levels?

Isaac Johnston

Let’s see we have staffed the majority of the individuals on this in -- but we still have a few roles that we have not completed filling at this juncture. I would not anticipate a significant change in direction of the G&A side of the business at this point.

Tony Brenner

Last question, Mike you've talked about changes you're making in your DSD business with respect to a focus on increasing the bottom line, but I wonder if you could expand a little on some of the strategies that you're pursuing in order to grow the top line of that business, what sort of changes in terms of specifically being able to add new accounts more successfully and up-sell in existing accounts, what will change to enable you to do that?

Mike Keown

Sure, and Tony, if I misspoke the real intent here is to drive the top line and I think there's a couple of areas that we will be looking at. If you study the Farmer Brothers' model from a legacy standpoint often the DSD salesperson was also the delivery person. And in some markets particularly whether there's more density, it might make sense to have a dedicated or dedicated salespeople calling on the customers to improve the sales effectiveness, but also to free up time and allow the delivery network to be more efficient. That would be one area that we're exploring and another area would be an increased use of technology which I think we've talked about, but we will continue to focus on.

And then a third area would be our sales process. In other companies there is very defined process of engaging with the customer, I have some experiences in my background, Isaac had some experience certainly people like Scott Bixby with his background both in Food Service but also at Procter & Gamble have that and so we will be more robustly defining what the Farmer Brothers way is if you will. So those would be some of the change areas, other areas we don't plan on changing would be our commitment to service our equipment, the dedication and passion that many-many of our DSD organization have to earn and maintain the customer's trust and reputation are bedrocks of this, but there are some areas we're going to be more aggressively exploring than what we have. That being said, I think we're very confident that the products on the truck are of a level of breadth width and to get the job done. We need to spend more time on the customer interaction.


[Operator Instructions] And our next question comes from the line of Kara Anderson from B. Riley & Company. Your line is now open.

Kara Anderson

I am just wondering, if you can comment on the growth in coffee volume for the DSD versus those under the commodity plus price arrangements in the quarter?

Mike Keown

Look we haven't broken it out exactly, I think from what I've seen from a trend standpoint national accounts are the larger accounts I should say where the more robust piece of it, what we're pleased with coming out of this incredibly busy season from an operational standpoint is that we were able to get back to some growth and we were able to meet all the customer’s demands at a very high level, customer service was incredibly strong, and we think we're well-positioned now to grow at a higher level than we were in a quarter where we moved the volume from Torrance as you know to Houston and Portland.

Kara Anderson

And on previous call you've talked about some of these new national accounts that you plan to ramp up I thought at the beginning of the calendar 2016 year, have we seen those accounts come on board or did they come on sooner than expected?

Mike Keown

I would say that first everybody all the customers came on as planned which is always our first goal in many cases it takes a little while to ramp up often there maybe displacing another coffee company and of course running down that volume and then starting up. So at this point, I think the key message is we're up, we're running and then the natural ramp up which varies by customer will continue to take place probably over the next quarter or so.

Kara Anderson

And then at some point do we see the benefit of having two plants operating reverse when you open the new facility or can we look at the benefits we're seeing in the supply chain right now on an emergence as part of more of a permanent effect?

Mike Keown

First, we're very pleased with what we're seeing in the move from Torrance primarily to our Houston facility today. So we are realizing a very large portion of the savings that they're flowing through the P&L. Today, I think if you look at the gross margin where we were washing out the difference in LIFO layers we were probably 180 basis points improvement kind of core improvement within the business. I would think we now have basically two quarters in that range, so I would think we're going to continue in that and that's one of the big assumptions in efficiencies that we would get as we went through the transition. So, I would anticipate that we would continue seeing those moving forward because we're getting good results so far.

Kara Anderson

And then can you give some color on the spice business and over the piece that was sold and what it contributed to the bottom line last year?

Mike Keown

Yes, I can give some updates on the spice business and kind of explaining the transaction we sold the manufacturing processing and distribution of our spice business. We sold it for 6 million in cash and we have up to 5 million earn out and then they assumed some of the liabilities. The gain on the sale to asset to Harris was 5.1 million which we recorded in the quarter. In addition we've signed a transitional service agreement, where Harris will continue to produce the product for us at our Torrance facility for up to 6 months. And we'll have deferred recognized for the sale of those assets during that transitional timeframe in the 600,000 to 700,000 range. So, we'll have that much more coming over the next -- in the couple of quarters.

This was not a sale of a business but a sale of assets. So in fiscal year '15 we had 32.3 million in spice sales which was roughly 6% of our total business. Less than a third of that business is to the direct customers which Harris will now sell to. So, less than 2% [Technical Difficulty] is associated with the direct business which Harris will now sell. The remainder of the spice sells approximately 4% of the total 6% will remain on our DSD system and we will continue selling that business. You asked about the profitability I would think of the -- a fully allocated cost it's just think of it is a kind of a normal range of margin is what I would think up for the business that is the 2% that's is going with Harris is the way I would think about it.


And our next question comes from the line of Carter Dunlap from Dunlap Equity Management. Your line is now open.

Carter Dunlap

In thinking about the outlook for national account business opportunity, having just made it through this -- your peak seasonal quarter with all these other things going on, is there anything that you can do either in VMI or 3PL make the December '16 calendar quarter have more capacity because I guess my sense is that until you're fully over to the new facility, you're still going to have a tight December calendar year this year, is that not fair?

Mike Keown

I think we'll be better than, than you might be guessing from or thinking about it from your question Carter.

Carter Dunlap


Mike Keown

So, this was the peak of what we would expect. If you think of Q2 next year, our second quarter the quarter ending December, we should be ramping up in the new facility. We continue to work to debug the plants if you will with skew consolidation and those types of things to free up capacity. And we do if you recall have an agreement with a co-packer to provide some additional capacity. So, maybe in a perfect case, we'll bring on an up new business that we would be tied again but it would be a much better scenario than it was in the last three months.

Carter Dunlap

Okay. And just separately thinking about VMI if you sort of frame the benefits, I assume there's a asset churn benefit is there anything else that it brings to your say go-to-market DSD strategies or anything that isn't obvious to us to analysts?

Mike Keown

We had in the range of $1 million of supply chain cost-efficiencies on an annualized basis as a result of the move to VMI as they have greater scale and leverage in purchasing of items that are second and third tier items. So, it's on our raw materials side versus the linkage to our finished customers that we're deploying the vendor managed inventory. So, it's going to be a more of a productivity or efficiency play for us within what we've done today. It's in $1 million range.


[Operator Instructions] And I'm currently showing no further question, I would now like to turn the call back to Mr. Keown for any further remarks.

Mike Keown

Okay, well thanks once again everybody. We look forward to speaking with you all again soon. And we should have an update for you on the corporate relocation plan by the end of February, so stay tuned and thank you very much. Bye-bye.


Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may now all disconnect. Everyone have a great day.

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