Rogers Sugar Inc
TSX:RSI
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Rogers Sugar Inc
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Good morning, ladies and gentlemen, and welcome to the Rogers Sugar Corp. Second Quarter 2021 Results Conference Call. [Operator Instructions] Please note that this call is being recorded today, May 6, 2021, at 8:00 a.m. Eastern Time. I would now like to turn the meeting over to John Holliday, Chief Executive Officer. Please go ahead, Mr. Holliday.
Thank you, operator, and good morning, ladies and gentlemen. Joining me for today's call is Jean-Sebastien, JS, Couillard, our VP Finance and CFO. During today's call, I will provide some insights on trends in our industry and an update on our outlook for fiscal 2021. Please be reminded that today's call may include forward-looking statements regarding our future operations and expectations. Such statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied today. Please also note that we may refer to some non-GAAP measures in our call. Please refer to the forward-looking disclaimers and non-GAAP measures definitions included in our public filings with Securities Commission for more information on these items. Given the far-reaching implications of COVID-19 on our operations, I first wanted to provide a brief update on how COVID-19 is affecting our business and what we are doing to manage through these challenging times. Incredibly, we have been in this environment for over a year now. And with each wave, we have learned to adapt our operating protocols to meet or exceed the health authority guidelines. This continues to put a strain on our organization as we deal with the uncertainties of this unprecedented operating environment. As case numbers have increased in Canada, we have also seen similar patterns across our operations. Our thorough safety processes and our committed staff have successfully protected our business despite these increases. We've had no operational disruptions at any of our facilities, which has allowed us to respond to significant swings in product demand with nothing less than reliable delivery of essential ingredients to critical food supply chains. We firmly believe that our ability to successfully navigate through the challenges of COVID-19 is a result of our trusting environment, where open and frequent communication has provided early awareness of risks and helped maintain the control of our operations. In the second quarter of fiscal 2021, we estimate that we invested approximately $1 million across the Sugar and Maple business units in direct COVID-related expenses, including personal protection equipment and wages paid to employees for preventative quarantine measures. We are very proud of our strong performance, and we will not waver from our commitment to adopt and adapt COVID-19 health and safety measures, as necessary, to provide a safe and reliable operating environment. Now let's turn to our second quarter results. Adjusted EBITDA in the second quarter improved significantly, up 30% from the same quarter last year. Higher overall volumes and revenue and another strong quarter in the Maple segment helped to deliver increased consolidated adjusted EBITDA in Q2. Our Sugar volumes in the second quarter reached 184,000 metric tonnes, 8,500 metric tonnes better than last year, and in line with our internal expectations. As I mentioned last quarter, volumes related to a temporary slowdown in sugar sales at the end of the first quarter were fully recovered in the second quarter. In terms of our sales channel results, our consumer business was lower by approximately 5,000 tonnes, offset by growth in other channels. In particular, exports, which were up 8,300 metric tonnes due largely to the benefits of the new CUSMA free trade agreement. We continue to have an overall positive outlook for sugar volumes. But as we have experienced since the start of the pandemic, demand within quarters and within sales channels is proving to be extremely difficult to forecast. Notwithstanding a 23% improvement in Sugar business EBITDA versus the prior year, overall EBITDA fell below our internal expectations, largely due to a difficult end to our sugar beet campaign. The cumulative effect of less an ideal weather conditions at the end of harvest, coupled with challenging weather during the campaign, led to reduced sugar production and increased operating costs in the last 6 weeks of the campaign. As a result, total production was adjusted from our last reported expectation of 128,000 tonnes to 119,000 metric tonnes. Agricultural risks are part of our business. And although we are disappointed in the outcome of this year's crop due to weather conditions, we remain committed to growing sugar beets and Taber and continue to improve the Taber business model to mitigate the potential impact of weather risks. Our newly negotiated Alberta Sugar Beet Growers purchase agreement is a good example of what we are doing to lower exposure to weather-related crop losses and to bring positive change that will benefit both the growers and Lantic. The recently concluded agreement lowers the cost for early harvest by approximately 35%, making it much easier planning -- a much easier planning choice, which will lead to a greater percentage of the crop being processed in September when weather conditions are much -- are a much lower risk factor. In addition, the new agreement provides changes in the structure of how we establish the value paid for the sugar beets, which will provide Lantic with an incentive to invest in operational changes that improve sugar beet storage conditions, flat operating efficiencies and yield. Overall, these changes will help to mitigate some of the recent weather-related losses and help the Growers and Lantic get back to the record production we realized in 2018 and 2019. In the interim, production shortfalls in Taber will be made up by the operating flexibility we have within our cane refineries in Montreal and Vancouver. Overall, we expect our Sugar segment to perform well in fiscal 2021, even when considering the challenges brought on by the production shortfall in Taber. Volumes in the second quarter were strong, and we expect firm underlying demand in our flexible manufacturing platform to support our sales outlook. Our full year outlook for 2021 remains unchanged at 776,000 metric tonnes, an increase of 15,000 metric tonnes over fiscal 2020, which you will recall, included an extra shipping week. Higher volumes in fiscal 2021 are expected to be driven by improved demand in the industrial and liquids areas and higher export volumes as a result of new export quotas and the resumption of deferred beet sugar shipments to Mexico. Overall, we expected stronger volumes, sales margin improvements and reduced non-standard supply chain costs during the balance of the year will deliver improved year-on-year financial performance for the Sugar segment. In our Maple segment, we had another strong quarter. Sales volumes have been very firm since the onset of COVID-19 and continued in the second quarter. Price increases that we implemented in fiscal 2020 and early fiscal 2021 are being captured in revenues as new contract pricing takes effect. In addition, manufacturing costs continued to lower driven by our operational optimization and efficiencies improvements. Positive impact of both these factors is expected to continue throughout the year, the sales contract renewals and ongoing optimization at our manufacturing facilities and efficiency improvements at our Granby and existing Degelis plant continue. Production from this year's maple syrup season was below average and well below the last 2 years of record output. The PPAQ strategic reserve will provide the necessary supply to offset this shortfall. With our direct producer supply and authorized dire access to the strategic reserve, we do not anticipate any supply risk or nonrecoverable supply costs in this area. The U.S. maple syrup production was also below average. Packers in this market are short supply and will need to draw a larger than average supply from PPAQ. With a short supply in the United States and the stronger Canadian dollar making PPAQ supply to the U.S. packers more expensive, we are projecting the price for maple syrup in the U.S. will increase by approximately 10%. Though it is early in the new crop pricing cycle, we are observing these costs are being passed through to customers. The volume for Q2 was up 10% versus the same quarter last year. As we lap COVID-19 and markets begin to reopen, we expect volumes will remain above pre-COVID-19 levels, but tempered from the last 12 months of extraordinarily strong demand. That being said, overall, we believe firm underlying demand for maple syrup, combined with our improved margins and lower cost structure, will result in improved financial performance for the full 2021 fiscal year as compared to fiscal 2020. Before wrapping up, I wanted to provide a brief update on our strategic collaboration with DouxMatok, a food technology company and a pioneer in the development of efficient flavor delivery technologies. DouxMatok is focused on delivering a unique natural sugar reduction solution based on cane sugar to food companies in North America. The benefit of DouxMatok's sales and product development resources in the U.S.A. and partnership with Caldic, customer prospecting efforts are now well underway. Our partners are organized to build awareness and engage customers who are interested in sugar reduction solutions. These efforts have translated into product development briefs for a cross-section of customers, which is an important first step in the solution selling cycle. In the quarter, DouxMatok also completed product labeling reviews in the United States, which confirm that Incredo Sugar can simply be labeled as sugar in food applications, making it an even more attractive sugar reduction solution. In April of 2021, using Incredo Sugar produced at Lantic, DouxMatok launched a limited edition Incredo hazelnut and cocoa spreads, using Incredo Sugar with 50% less total added sugars compared to other leading brands in the category. This is mainly a consumer awareness campaign and is expected to assist DouxMatok in penetrating the market. The selling cycles for Incredo will be long. Accordingly, we do not expect any material selling developments until fiscal 2022. Knowing that you are following the news that might impact our business, I wanted to make you aware that a quick return to work at the Port of Montreal -- with a quick return to work at the Port of Montreal, we have no business disruption or added costs related to this work stoppage. In addition, I wanted to mention that the stoppage at ASR's Baltimore refinery caused by a fire in the raw storage shed was temporary in nature. And after less than a week, they returned back to full operations. As a consequence, at this point in time, the U.S. market remains fully supplied. And finally, I wanted to -- again, to thank all our employees for their continued efforts and collaboration, especially throughout the COVID-19 pandemic, where they have proudly demonstrated their commitment to each other and to our customers. Now I will turn the call over to JS, who will provide additional information on the quarterly results.
Thank you, John, and good morning, everyone. In the second quarter of fiscal 2021, we continue to experience strong demand and improved profitability in our Maple segment, and we noted increased volumes and improved sales margin in our Sugar segment. Together, these 2 factors led to an improvement of our financial performance as compared to last year. Consolidated adjusted EBITDA in the second quarter of 2021 amounted to $21.4 million, up 30% from the same quarter last year. As John mentioned, unfavorable weather conditions in Taber negatively impacted our sugar operations in the second quarter of 2021 with lower-than-expected beet quality. We continue to forecast an improvement to our financial and operational performance for fiscal 2021, despite this weather-related issue in Taber and the fact that the current fiscal year has 1 less week than 2020. Let's begin our financial discussion with an overview of our Sugar segment. In the second quarter, sales volume increased to almost 184,000 metric tonnes, an increase of 5% over the same quarter last year. This was driven by strong industrial, liquid and export volumes, partially offset by a reduction in consumer retail volume. The underlying factors that drove higher volume in the quarter included an increase in export sales largely due to higher beet sugar exports to the United States under CUSMA. On the domestic market side, the overall volume remained largely unchanged as compared to last year. We noted an increase in industrial bulk and liquid volumes due to sustained higher customer demand and the fulfillment of orders that were unexpectedly delayed at the end of the first quarter. These favorable variances were partially offset by lower customer retail volumes as demand appears to be returning to pre-COVID levels following the pantry loading we saw in the first stage of the pandemic.Adjusted gross margin increased by $2.6 million in the current quarter, mainly due to higher sugar sales margin of $1.2 million and increased byproduct net contribution of $2.9 million. This was partially offset by higher processing costs of $1.5 million from our operations. It should be noted that the higher sales margin included an unfavorable adjustment of $2.1 million, reflecting the impact for the first 6 months of the current year crop shortfall in Taber. Overall, our adjusted gross margin per metric tonne increased by $9 in the second quarter, amounting to $119 per metric tonne. This increase reflects the benefits from higher volume and improved pricing contribution and include the unfavorable adjustment related to the 2021 crop shortfall, as mentioned previously. We expect to meet our customer volume demand despite the current year crop shortfall in Taber. Similar to 2020, the impact of the crop shortfall on our ability to fulfill orders should be minimal due to the flexibility built into our operations, allowing us to use the available capacity of our Vancouver cane sugar plant to backfill the shortfall from the Taber operations. We also used this available capacity in Vancouver to backfill eastern orders in the first quarter and meet the demand from our customers. Adjusted EBITDA for the Sugar segment increased by $3.2 million compared to the same period last year. This increase was mainly due to higher adjusted gross margin, as discussed previously, along with slightly lower distribution costs associated with reconfiguring our supply chain requirements in the current quarter. Selling and administrative costs remained largely unchanged compared to the prior period. The increased costs associated with COVID-19 were partially offset by the recognition of nonrecurring government-related support in relation to various programs, including research and development tax credit. While both the current quarter and prior comparable period were impacted by COVID-19, the impact was slightly lower in the second quarter of 2020 due to the timing of the pandemic. Now let's look at the financial results of our Maple segment. In Maple, our operations continued to perform well as we benefited from our competitive marketing strategy that's focused on margin improvement. In the second quarter, adjusted EBITDA increased by $1.7 million or 65% from last year due largely to higher sales volume and improved margins. As mentioned earlier, Maple volumes increased due to sustained demand in the maple product market. We sold over 14 million pounds of maple product in the second quarter of 2021, an increase of more than 10% from the same period last year. The higher demand was driven partially by a shift in retail customer habits due to the COVID-19 pandemic as well as our competitive sales and marketing strategy. Adjusted gross margin increased by $1.2 million from the same period last year. The increase was driven by a combination of improved operational efficiency and higher sales margin. We are seeing the operational benefits of the investments made in our bottling facilities over the last 2 years in Granby and Degelis. The impact of our pricing and marketing strategy began in the later part of 2020 and continued to benefit our Maple segment. These factors are reflected in our gross margin percentage, which increased by 150 basis points to 9.4% in the current quarter, up from 7.9% in the same quarter last year. With the improvement of our plant operation efficiencies and the focus of our marketing strategy, we expect our margin to continue to improve and our production capacity to mature nicely to support the current Maple product market. Finally, adjusted EBITDA in the quarter benefited from lower administrative and selling costs and reduced distribution costs. Finally, I would like to close with some comments on our financials. Free cash flow for the last 12 months increased by $11 million compared to the same period last year. The increase was mainly due to improved EBITDA and lower amounts paid for tax and interest on our credit facilities. These favorable variances were partially offset by an increase in our capital-related expenditures. We continue to return capital to our shareholders through the payment of our quarterly dividend. In the second quarter of 2021, we paid out $9.3 million, continuing a record of over 10 years of steady quarterly returns to our shareholders. On that note, the Board of Directors declared a dividend of $0.09 per share on May 5, 2021. The total payout of this dividend is estimated at $9.3 million and will be paid in mid-July. In the past week, we took advantage of favorable long-term interest rate available in the financial market. We issued $100 million in senior guaranteed notes through a private placement debt instrument with institutional investors. All the proceeds from this executed transaction were used to reduce the outstanding balance of our revolving credit facility. The objective of this transaction was not to increase the level of debt of the company, it was to take advantage of what we believe were strong market conditions. The notes were issued on a pari pasu basis with our revolving credit facility. The fixed interest rate on the notes was set at 3.49% per year for a term of 10 years to April 30, 2031. In conclusion, I would like to say that we remain positive on our sugar outlook for 2021, despite the damage cost of the sugar beet crop by the unfavorable weather conditions in Taber. We are maintaining our previously stated volume forecast, and we are still expecting improved financial results over 2020 for our Sugar segment as we took actions to mitigate the related operational and customer impacts. For Maple, while we expect the COVID-19-related demand to temper in the second half of 2021, we continue to expect improved financial performance in comparison to 2020. Our forecast is supported by firm underlying demand, improved sales margin and lower cost structure from operational efficiency. Overall, we believe that with the contribution of both of our business segments, we will be able to deliver strong financial results for fiscal 2021. With that, I would like to turn the call back over to the operator for questions.
[Operator Instructions] Your first question comes from Michael Van Aelst of TD Securities.
So just to start off with the Taber issues. And to be clear, the $1.5 million in Vancouver and the $2.1 million in Taber, those are separate charges, right? They weren't -- $2.1 million doesn't include the $1.5 million, correct?
That is correct.
Okay. So this weather event, you say happened in October, but it wasn't mentioned in the February conference call. So I'm wondering what happened between now and then -- and back in February?
Yes. I'll address that, Michael. It's a good question because we've asked sort of the same questions of ourselves. But if you took a look at the weather events, and it's a cumulative effect of weather, not a particular individual event. And we did some comparisons to look at this. You could look -- we look at every single month from September through to the end of February, which is the length of our campaign. And we compared it to historically what had happened, and largely historically over the last 4 years. And what we found was in every one of those months, almost without exception, each month this year had the highest temperature and the lowest temperature as compared to the last 4 years. And temperature variations have -- create stress on the beet crop. They change the cell structure, they damage the cell structure of the beet crop. So if they happen -- and they accumulate over time. So the more severe the temperature variations, the more impacted the cell structure is. And the more difficulty we have to process the beets through the campaign. So that's why we didn't necessarily see it. We've seen some observations, but it's really the cumulative effect that we had every single month, which was extremely unusual if you compare it to kind of recent history.
Okay. And so your -- when you say the impact was on the beet crop, are you talking about actually, later -- those later -- you're talking more, I'm assuming about like the piles of beets that are being affected that have already been harvested?
Yes. Yes. And their processability. It deteriorated every single month based on the weather events that we experienced in this crop year, which were...
Okay. And so you're going to move some production up into September or some harvesting into September? And I believe that was a higher cost venture early, like in past years, if you wanted to do that. But does the 35% reduction in cost, is that -- does that make it more -- like equally profitable to processing later in the year?
It does. What it does for us is it gives us the advantage of operating the facility at full capacity in the month of September on economics that makes sense to us as a business. By doing that, we reduce the amount we're going to be processing after January -- or after December, sorry, because after December is where all these cumulative effects occur. And naturally, regardless of the weather issues that we had this year, which were extreme, we lose sugar through storage. So we believe with the changes that we made, that the economics are -- it's a good economic decision to start early and to start at full capacity -- operating capacity, which will essentially, say, on average, kind of give us an extra 3 weeks of production or take 3 weeks away from what would typically have occurred in -- after December in -- on historical basis. So that's the kind of the underlying thesis.
So in a typical year, let's say, when you have no weather effects, is this -- is processing earlier going to be equally economical as those will...?
It will be -- yes, it will be -- continue to be economical. We can't ever project what the weather is going to do as you can imagine, right? So I can't project that. We do understand the math of loss of sugar from the day that we harvest it to the day that it is processed. And we understand that it doesn't matter or even if it's more normal weather, you're still going to have stresses on the crop associated with weather events in Alberta and from November through to -- through the end of February. So we would lose sugar anyways. So I believe the economics are favorable to do it early like we planned. And they also derisk us from some of the events that we face this year, which again, we're, as I said, extreme as in comparison to recent history.
Okay. And can you provide more detail on the storage or whatever else you're doing to try -- apart from moving the crop earlier?
Yes. So we'll look at 3 things in the operational side. So one thing, obviously, it was going to start earlier. That's a decision that's made and we can do that quite easily. We'll execute that this crop year, which is coming September. And then the other areas were just -- we've been looking at and we will look at. What we can do to mitigate some of the, call it, losses that occur in piling grounds. Typically, what we would be doing, and given what we face this year, is looking at improving our aeration capabilities at the piling grounds. And the one thing you might ask clearly is, well, why didn't you do that? We do have aeration of the facilities, no doubt. But we're going to look at the facilities that we need to focus on that will -- where we can improve our capabilities in that area. And I made mention of this in the call that we changed and also in the agreement how we procure the beet from -- sugar beets from the grower. And historically, we bought the beets based on the amount of sugar that we produced at a facility. So the more sugar we produced, the more we paid the beet growers. Now we're buying beets based on the sugar content of the beets when we receive them. And if we invest in things like piling grounds to improve aeration or we increase speed in the facility or yield in that facility, those benefits will accrue to us as a company. And so now the beet processing, supply chain and the operation will benefit from more opportunities to present ROI projects to the business to compete with the other capital allocations that we have.
Okay. So you also had a big increase in your byproduct revenues or gross profit this quarter. I know it was lower last year. Is this -- did you front-load more of the sales into this quarter? Or do you still have more coming?
We have more coming. It's -- we mentioned last quarter, we had -- we struggled getting the feed lots or feed producers back on to the formula. So they were off because we had such a small crop. So we had a lag in kind of getting started. Now it's in their formulation. So we benefited from that kind of pickup in this quarter. And so that's the most significant impact. Our revenues on byproducts are correlated or related to the amount we process. So they'll be up from last year just on the basis that we'll process a lot more beets than we did last year. So we expect those revenues to continue, they'll be better than last year. The only thing different -- So volume's up. Pricing for beet byproducts is a little bit lower. So there is a bit of an offset on that side, but they will be up from last year, most definitely.
Yes. Okay. And then on the Maple side, are there still any operating inefficiencies or is 9.5% gross margin the level that is kind of reasonable going forward?
We kind of really kicked off...
John, you want to -- yes, go ahead.
Go ahead. Yes. I'll take that, and you can fix it...
That's fine.
Add to it, if necessary. But we've done a really good job in getting the operations up and running from where we started in the development of a new network. We're running -- we've set high goals. We're running towards those goals right now. We're reaching those goals. So that doesn't mean there isn't a little bit of room in the operations to improve our efficiencies, and we will always challenge ourselves to do that. And as you know, we've said we have been taking moderate increases in pricing through our pricing kind of renegotiations, and we'll continue to do that whilst also remaining competitive in the marketplace. If you look forward, I would say, from an operation perspective if we have opportunities for improvement, and we do believe we have opportunities to continue to improve our margin. I would say I would allocate 20% of that opportunity is going to come through improved operating efficiencies and 80% is going to come through just recapturing margins that we enjoyed, say, at that point in time that we acquired the business.
Okay. And just finally, you said that you expect improved financial performance in Maple for all of fiscal '21. Does that also apply to the second half of the year, even though volumes are likely going to be lower?
Yes, I think we -- Michael, we benefited from high-volume in the first 6 months of the year. I think we're -- the path that we're seeing in Maple is that we're going to continue on the same type of trend as far as -- potentially a bit of improved margin, as John mentioned earlier, like we're cautiously optimistic on our margin. On the volume, we do see that it tapers a little bit from what we have seen. So we're cautiously optimistic on the volume, probably not a volume as high as in the first 6 months, but I think we can compensate that from a margin standpoint.
[Operator Instructions] Your next question comes from Endri Leno of National Bank.
I'll just continue a little bit with the weather event in Taber and the changes you made for early processing. So I just wanted to clarify, does that also involve earlier harvesting of the beet crop? And would there be any changes in the sugar yield if the crop is harvested earlier?
Good question. There is a relationship, absolutely. And that's why traditionally, and even today, we do pay a premium for beets. They're more expensive to buy them in September because we don't allow the crop to fully mature. So there is a reduction in the amount of sugar in the beets themselves, but it's not material in the whole financial model that we've been talking about. So that's why there is a premium there. They will not impact the total amount of sugar we produce.
Okay. Great. So that 35% reduction in cost, I mean you should enjoy, more or less, all of it, right, irrespective of the yield that comes from that?
Yes, we'll pick it up on the back end because we won't lose the sugar. And we also, as I said, this year is a great prime example. We derisk ourselves from some of the cumulative effects of the weather conditions that we are exposed to from, say, November through to February.
Okay. Great. Next question on Maple. You mentioned that you had lower employee comp and benefits in this quarter. Was that from overtime that you had last year? Or is there something else in there?
I'll take that. Yes, it is -- there's a bit of that. I think as we're getting better with our facilities, we are able to optimize the use of our employees and that is why we're benefiting from that side.
Okay. Great. And last one for me. On Maple that you're guiding a bit to tempered volumes going forward. Have you seen some of that already, I mean in early shipments for the second half of the year? And then as a second part to that question, if you can speculate what the competitive developments will be based on the lower -- a bit of a lower demand on Maple?
I'll try and address some of that. So I think we've said all along, there's really no analogue year to what we're faced. We do think that markets are going to reopen, which I'm sure we are hopeful for personally and as well if things start to change. As market reopens -- do reopen, we do -- and I think it's clear in anybody's analysis that COVID has helped Maple in terms of volumes. So I expect market reopening to have some lowering in the demand. But I think one thing also, when we think about reopening, we're not going back to where we were. I think a lot of people, yourselves included on the call, I know our team in Lantic are looking at a return to work that will be different. We don't expect that we'll be working 5 days a week in many, many environments. So I think working from home will continue. And I think that fact is going to temper somewhat any significant change in demand for Maple in terms of the COVID effect. So it will affect us, but we don't think it's going to be as dramatic as it increased. And I think the other thing on Maple to keep in mind, which we've kind of forgot about in terms of what's going on in that category. Before COVID it was still growing. So those reasons it was growing is it was finding new market opportunities with new distribution channels in different countries, continuing to find new applications or increased use by consumers as they become more familiar with the alternative sugar. So we think that we'll see a demand decrease because of COVID. We'll continue to see some of the benefits that were underlying the growth in the past. It will be tempered, but I'll tell you this, putting that all together into a calculator and saying exactly what that outcome is going to be, is very difficult to do. So we're not going to be specific, but we do expect it to be tempered somewhat. In terms of the competitive environment, I think we'll -- it is a competitive environment. We know that. It has been all along, and we have navigated through this last 12 months with the ability to recover our costs, find moderate improvements in margins, and we continue to believe that we will be able to do that in the future. We have no reason to believe that we won't.
Okay, great. That's great color. And one more quick one, if I may squeeze one more. On the Maple, in U.S., that you said people are resulting about 10% increase given the dollar and the lower crop. Would you expect that to impact demand at all in the U.S. markets that you serve? Or it should be fairly stable, apart from reopenings and pandemic aside?
I don't -- we really -- I can't really try and articulate what we think the impact could be on demand in the U.S. It's hard to say. If that's your question where the fact it's up by 10%, will that have an impact on consumption. It's very difficult to say. I don't want to speculate.
There are no further questions at this time. I'll turn the call over to John Holliday for closing remarks.
Okay. So thank you, everybody, for your continued interest and the good questions, and we will look forward to catching up to everybody in Q3. Take care and be safe.
And this concludes today's conference call. Thank you for participating. You may now disconnect.