Mission Produce, Inc. (AVO) Earnings Call Transcript & Summary

Good morning, and welcome to the Mission Produce Fiscal Fourth Quarter 2020 Conference Call. [Operator Instructions] Please also note, today's event is being recorded. At this time, I'd like to turn the conference call over to Jeff Sonnek, Investor Relations at ICR. Sir, the floor is yours.

Thank you, and good afternoon. Today's presentation will be hosted by Steve Barnard, Chief Executive Officer; and Bryan Giles, Chief Financial Officer. Chief Operating Officer Mike Browne is also participating on the call today and will be available for Q&A. The comments during today's call and the accompanying presentation contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are considered forward-looking statements. These statements are based on management's current expectations and beliefs as well as a number of assumptions concerning future events. Such forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the results discussed in the forward-looking statements. Some of these risks and uncertainties are identified and discussed in the company's filings with the SEC. We'll also refer to certain non-GAAP financial measures today. Please refer to the tables included in the earnings release which can be found on our Investor Relations website, investors.missionproduce.com, for reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures. With that, I'd now like to turn the call over to Steve Barnard, CEO.

Thank you, Jeff. Thank you for joining us on our first conference call as a public company. We're very happy to be here today to share some insights into Mission Produce's wonderful business that we will continue to nourish and grow for many years ahead. We enjoyed speaking with many of you while out on the virtual roadshow during our IPO in October, and we look forward to meeting more of you during our participation at investor conferences in the future. As the original founder of this business 37 years ago, I'm extremely proud of the Mission Produce organization that we built today and the leading global leadership position that we hold today. The avocado industry is tremendous with its large $14 billion global addressable market and the secular consumption trends that underpin the consistent growth that we've enjoyed for decades. However, I believe we are just getting started. Despite all the growth that the category has enjoyed over the past decade here in the U.S., which represents just over 40% of the global market, per capita consumption is still only about half of what Mexico consumes. Demographic trends are in our favor with millennials and the growing Hispanic population here in North America, both of which have an incredible impact on our industry. Moreover, trends toward health and wellness, clean foods, nutrient-dense superfoods are perfectly aligned with our business. We are the only global pure-play provider of avocados in the world, and we didn't become the industry leader by accident. Mission is a story of true innovation. We have been first every step of the way, blazing the trail with innovations that the entire industry enjoys today. We were the first to use avocado ripening centers. We were the first to import avocados from Mexico, Chile and Peru. We were the first to utilize state-of-the-art post-harvest techniques in hydrocooling and shelf life extension. And we were the first to build a category management program to generate intel and opportunities for category growth. Mission is an organization that considers first to be cultural foundation. It stands for fun, innovative, reliable, successful and trustworthy. This is what has allowed us to stay ahead of our competition and grow into the global organization we are today. We have been building relationships, investing in infrastructure and establishing our dominant market position for 37 years. Fragmented players make up most of the industry, but our customers are demanding consistency and efficiency. There is no other company that can supply large volumes consistently year-round to the scale that Mission can. This takes infrastructure that's not easily replicated. Our global network of grower relationships, packing houses, forward distribution centers and ripening centers. In fact, Mission has been so successful in building a presence in new markets that we were forced to identify new sources of supply. And today, we find ourselves as a vertically integrated grower and distributor of Hass avocados with our own operations in Peru, which is ideally suited to meet year-round demand during Mexico's off-season. For all we've accomplished to date, we have significant opportunity for growth ahead. We are poised to capitalize on the strong trends in our core U.S. market by expanding our nationwide distribution network. We are continuously looking at optimizing our infrastructure, opening new facilities and forward distribution centers to improve throughput, better service our customers and drive sales. We are leveraging our global supply chain and distribution capabilities to continue developing international markets. In Europe, we've been empowering retailers to grow the category through direct access to high-quality ripe product by the way of our export capabilities in Peru, Guatemala and Colombia. And in Asia, we are leveraging our more than 35-year presence in Japan and existing Chinese distribution facilities to service as a platform to build our Asian distribution network. Both of these regions present immense long-term growth opportunities for us with consumption rates that are a fraction of what the U.S. has grown into today. And finally, we will continue to invest in our diversified sourcing capabilities to enhance our global leading market position and year-round supply position. Avocados are no longer a seasonal fruit, and we are continually evaluating opportunities to optimize our sourcing capabilities with third-party growers as well as investing in our own farms to ensure that we can control the quality that our customers have become to expect. We've invested more than $350 million in our business over the past 10 years to build the infrastructure that shareholders are able to enjoy today. This infrastructure enables our financial model, which we expect to generate compounded adjusted EBITDA growth in the low double digits over the long term. As a result, we're able to maintain an extremely healthy capital structure with nearly no debt and continue to fund our capital priorities that will fuel our growth for many years to come. With that, I'll pass the call over to our CFO, Bryan Giles, for some commentary around our recent financial results.

Thank you, Steve, and good afternoon to everyone on the call. I'll start with a brief review of our fiscal fourth quarter 2020 performance ended October 31, 2020, and touch on some of the drivers within our 2 operating segments, then I'll provide a snapshot of our strong financial position and conclude with some thoughts around our outlook. As Steve mentioned, we had a great fiscal fourth quarter 2020, which met our plan and reflects the strong global infrastructure we have in place to service our blue-chip customer base. Total revenue was $206.8 million compared to $231.7 million for the fourth quarter of 2019, representing an 11% decrease. The decrease in revenue was driven by lower average selling prices, which declined 24%, partially offset by volume growth of 16%. I'll touch on the price volume dynamics in a moment, but would like to reiterate that our business has managed the volume targets as we leverage our global presence to drive share of fresh avocados to our retail and foodservice customers. While prices fluctuate, given the influences of global supply and demand, this is not something Mission can control or forecast with any degree of certainty. That said, our leadership position as a global value-added marketer and distributor of fresh avocados insulates our gross profits as these sought-after value-added services such as ripening, storage and distribution are largely unaffected by price changes. Our fourth quarter gross profit decreased 7% compared to prior year despite an 11% decrease in total revenue, driving a gross profit margin improvement of 70 basis points to 19% of revenue. SG&A for the fourth quarter increased $6.1 million to $16.8 million, reflecting higher stock-based compensation expense due to awards that vested upon successful completion of our IPO and higher professional fees. For comparative purposes, stock-based compensation was $3.9 million in the fourth quarter 2020 versus no expense in the prior year period as we were a private company. Net income for the fourth quarter of 2020 was $18.8 million, $0.29 per diluted share. This compares with net income of $23.9 million or $0.38 per diluted share for the same period last year. Adjusted net income was $21.9 million or $0.34 per diluted share for the fourth quarter of 2020 compared to adjusted net income of $24.7 million or $0.39 per diluted share for the same period last year. Adjusted EBITDA was $32.1 million for the fourth quarter of 2020 compared to $36.8 million for the same period last year. In terms of our segment drivers, our Marketing & Distribution segment net sales decreased 12% to $202 million for the quarter. As I mentioned, the lower revenue was driven by lower average selling prices, which declined 24% and were partially offset by volume growth of 16%. As we look back across the fiscal year, strong industry supply in California and Peru had an inverse effect on average price. These decreases were concentrated in the second half of fiscal year 2020, which impacted the fourth quarter and drove the year-over-year revenue decline despite meeting our volume goals for the quarter and year. Compared to the 12% sales decline, our segment adjusted EBITDA decreased a more modest 4% to $19.4 million. This is due to the insulating effect of our per-box margins in our Marketing & Distribution segment, where we can drive down fruit costs in correlation with lower market prices. This ability, combined with our scale, diversity of source and value-added differentiation, provides a structural advantage to our model that we expect to remain in force over the long term. Our other operating segment is called International Farming and represents our own farms that we manage in Peru. Actually, the dynamics of this business are quite different from those in the Marketing & Distribution segment. Here, we behave as an operator and our ability to scale our operations in an efficient and profitable manner are central to our current and future success. While we are more exposed to price in this segment compared to our Marketing & Distribution segment, as Steve mentioned, this is a highly strategic initiative for Mission. Our growing base of global customers requires year-round supply, and today's key growing regions can't keep up with international demand. As a result, we made a commitment close to a decade ago to establish a presence where we control our own supply that we are able to sell to customers through our Marketing & Distribution segment operations. As we look forward, in the short run, growth within our International Farming segment will be dictated by yield improvement within our maturing orchards, while longer-term growth will be supported by additional producing acreage that will come online and subsequently mature. For the fourth quarter, International Farming segment sales increased 24% to $22 million due to volume growth of 46%, driven by higher yields on existing orchards versus prior year, which is a driver that we expect to remain in force for several years as the orchards approach targeted production at full maturity. Harvest timing also came into play on volume when we looked at the business from a quarterly perspective. This year, we experienced a delayed harvest due to the timing of fruit maturity, which led to a larger percentage of food harvested in the fourth quarter versus the third quarter. Net sales increased 85% to $4.8 million due to higher packing service revenues provided to third-party growers, driven by their higher volumes. Segment adjusted EBITDA decreased 23% to $12.7 million due to lower sales pricing during the quarter, which was impacted by higher overall supply conditions resulting from large industry volumes from California and Peru relative to prior year and harvest timing in Mexico. Shifting to our financial position. In October 2020, we completed our IPO of common stock, in which we sold 7.5 million shares at $12 per share, generating total net proceeds of $78.1 million after deducting issuance costs. Including the IPO proceeds, cash and cash equivalents were $124 million at October 31, 2020, compared to $64 million last year. Total debt was $174.1 million. Mission's financial model has historically generated strong operating cash flow, which has provided us great flexibility to support our long-term growth objectives with the required infrastructure and sourcing capabilities. Despite significant investments in the business over the past decade as we built out our global footprint, our net leverage ratio is very healthy at 0.5x our full year 2020 adjusted EBITDA. Net cash provided by operating activities was $78.9 million for fiscal 2020, which is a decrease of $13.7 million compared to prior year. This decrease is primarily attributed to our lower adjusted net income but was partially offset by lower working capital requirements, which were driven by an overall decrease in market pricing conditions. Capital expenditures were $67.3 million for the fiscal year 2020 compared to $29.7 million for the same period last year as we invested in the construction of our new Texas distribution center, farm development and packing house expansion in Peru and land improvements on new land leased in Guatemala. Our Texas distribution center is on track to be completed in the third quarter of fiscal 2021. In terms of our outlook, we are providing our expectations for fiscal first quarter 2021, which calls for consolidated volume in the range of 155 million to 165 million pounds, translating to revenue in the range of $165 million to $175 million and consolidated adjusted EBITDA in the range of $11 million to $12.5 million. I'd also share a couple of considerations as you think about the sequencing of our business from the standpoint of our fiscal year, which ends in October. November and December tend to look similar from a volume standpoint. However, we have a significant lift in the business associated with the Super Bowl in January. So speaking with you today in mid-January, we are still extremely active before we close the quarter, which is why we are providing a wider range of expectations for volume, revenue and adjusted EBITDA. As we've discussed here today, pricing is not something we can control so we think that providing you with a volume-based metric is a better representation of our ability to meet our growth objectives than revenue. Further, I'd like to reemphasize that we have better control of our margins within the Marketing & Distribution segment, which we expect to translate to more consistency on the adjusted EBITDA line than what we may experience on the revenue line, again due to changes in pricing driven by market forces. That said, we are providing long-term financial targets today that we believe outline our goals and underpin the management of our business. We believe that over the long term, we can achieve: compound volume growth in the high single-digit range, in line with our expectations for industry growth rates; adjusted EBITDA margins in the low double-digit range, excluding any material nonrecurring events or extreme market conditions; compound adjusted EBITDA growth in the low double-digit range. That concludes our prepared remarks. Operator, now over to you. Please open the call to Q&A.

[Operator Instructions] And our first question comes from Bryan Spillane with Bank of America.

So a couple of questions for me. Maybe the first one is just as we're thinking about this year, the -- 2021 relative to the long-term EBITDA growth expectation, I guess, would we -- would it be fair to assume, just knowing where pricing is now, that this '21 would potentially be a year or maybe would be more difficult to achieve that EBITDA growth expectation that you have longer term?

Well, I think one of our obstacles right now is the volume coming into the marketplace. Prices are pretty cheap by comparison to what we've been used to for most of the time over the last 5 years. But hopefully, we can make it up with volume, which has absorbed a lot of the overhead. I think you'll probably see a reduced margin per box, but we're going to have more boxes. So I think we'll end up being pretty close.

And I'll add on to that. I think that certainly, lower pricing creates some different challenges for our International Farming segment than it does for our Marketing & Distribution business. Again, as we sit here today, our farming operations really don't pick up significantly until we get into our Q3. And it's tough for us to anticipate where pricing is going to be at that point in time. But if pricing stayed at levels where it's at today, it would put pressure and create challenges. But that being said, we've seen large movements in pricing over fairly short periods of time. So we're hesitant to really make any projections at this point of where we think pricing may be as we move through the summer months.

Okay. And then just 2 on cost. I think you called out lower field cost in Mexico in the quarter. And then I know we've seen freight costs in the U.S. kind of moving up just more broadly. So maybe could you just touch on those 2 topics and how we should be thinking about those as we're modeling out '21?

Well, I think there's 2 areas that are pretty common in the avocado world. Super Bowl has an effect on prices going up right now because the demand is record-setting on volume. It's going up in the field also. And then the other time it will go up in Mexico is right after Easter in that they generally take most of that week off and don't harvest, and it creates a gap in the U.S. inventory. And it historically has not caught up and the prices generally go up after that period of time on the calendar.

Yes. I would kind of reiterate or kind of add on to that, that we -- in terms of field pricing, it adjusts pretty much in sync with what market pricing or retail price -- maybe not so much retail but market pricing of fruit to our customers. So we're, on a daily basis, evaluating prices we can afford to pay in the field to hit our margin targets. There's points in time where that gets squeezed a little bit, and there's points in times where we're able to expand it a bit. But I think that generally, when we're buying third-party fruit, those costs are pretty variable, and they can move in line with where market pricing is at. I think to some of the other input costs, I think Steve mentioned price, transportation is one of the larger ones. I think we have seen some increases recently. Nothing that's created significant challenges for us in achieving our margin goals, but it is something that we continually keep an eye on as we're looking at what we can afford to pay for fruit in the field and as we determine pricing for our customers.

Okay. And then last one for me just relative to the Super Bowl. If the Buffalo Bills win, does Mike Browne get the week off?

You'll have to ask him. He's on the line.

I'm going to need the week off.

And our next question is from Tom Palmer with JPMorgan.

I just wanted to follow up on the supply picture in Mexico. What is really driving the high supply into the U.S.? Is it that the harvest was abnormally strong? Has demand from other parts of the world in some way been impaired and therefore, more -- a higher percentage of Mexico's harvest is coming into the U.S.? And then as we think about kind of the timing of that flow-through, when does Mexico become less important relative to seeing like California and Peru ramp up? And do you have any early read on yields in those regions?

Well, historically, what will happen, Mexico will generally -- has a peak and then they taper off. Last year, they peaked late in the season. That's why you saw the fourth quarter drop in price levels, and that has continued. So we don't think that they can maintain this sort of volume 12 months. They never have historically. So we -- as I mentioned a minute ago, my guess is somewhere around Easter or right after, the thing will start creeping up legitimately, rather -- I'm not talking about the Super Bowl, which is sometimes temporary but on a longer-term basis. And that -- those changed from small growers up in the mountains that maybe not -- don't have the infrastructure or the irrigation practices so they have to harvest this time of year into a larger grower that has irrigation and can play the game a little bit stronger, which generally drives prices up. So we look for the thing to change here in a couple of months. And I don't think it's going to go crazy. California doesn't have that big a crop but Peru has a bigger crop. So they all take their turn in the pot, so to speak, and we just work with all sides of it and try to get ahead of it and stay ahead of it.

I can just add a little bit to that. The summer crop for Mexico is really dependent on the bloom they call loca, and that's undetermined at this point. But as Steve mentioned, the second half of the year, a lot of things happen with the Mexican crop in terms of quality and availability. This has been an on-crop season for Mexico, so their crop is larger this year. It isn't that other markets aren't taking the fruit. It's just a larger crop and lot of hectares harvesting. But the other thing that Steve mentioned is as we look to the summer, California is down in terms of industry estimates, probably 85 million pounds, about 20%, 22% versus last year. And Peru is -- preliminary estimates for Peru, it's only up, for the U.S. market, about 20% or 36 million pounds. So there's possible daylight out there for this static pulse of heavy volume coming at us.

Great. That's really helpful. And given how low prices are today, I realize you're dealing with a perishable product but you also have facilities that can lengthen the shelf life. To what extent are you building more inventory than maybe you typically would to take advantage of low prices to distribute maybe a quarter down the road?

Well, not too much. One of the things that's happened right now, the market in Europe's a lot better than it is here, and we're sending a fair amount over there on a weekly basis as we are into Asia. We're spreading it out but trying to play the market at this time of the year, we try to avoid that. Late in the season when we see a definite end of the crop, we will try it. But there's just plenty of fruit out there playing games on [ AG ] at this time. It's kind of risky.

And our next question is from Gerry Sweeney with ROTH Capital.

Just wanted to dig in a little bit more into timing and volumes, et cetera. From what I can see here or from what I have heard, it sounds like Mexico had an on-crop with -- on the alternating year side and the crop came in later in the season so we had a lot of volume coming in. But then we also had year volumes up partly due to timing, but I was also curious as to how much you benefited from maturing fields versus maybe good weather, et cetera, because if some of this pricing edges out or -- and your volumes stay up, there's -- there could be a pretty strong delta in there on profitability at some point as well.

Well, I think the reason our numbers in Mexico are up because we're pulling it through the system. They've got a larger customer base than we had a year ago. Our export business is substantially bigger, like I said, mentioned going to Asia. We're going to Europe and we're going to South America. It's a substantial amount of product. So I think we're in a position where we can spread it out, providing enough good product to make the ride. And I mean, like I said, I think our export numbers are probably close to double what they were a year ago on loads per week. So there's more fruit out there to pack and distribute it if you have a place to go with it. The problem with a lot of the Mexican shippers, not necessarily the U.S. shippers that are in Mexico but the Mexican shippers, they really don't have a year-long plan. So rather than pull it through the system with a program and value-added services, transportation, rights, bags, et cetera, they'll send it to the border, and their only variable is price and they usually get slaughtered when the markets glut. They can do okay if there's a shortage. But it's just a different model. It's a different game. It takes a long time to get to the position Mission and some others are in, big investments, a lot of time and effort to get the customer base where you could pull it. There's really a twofold market with the Mexican product.

And Gerry, I guess I'd add a little more on our Peru crop, in particular, as we look at our Farming segment. I think we're looking at -- certainly, we're anticipating growth in our volume from our own farms in 2021 relative to 2020. We think we'll have better information as we move forward in the next couple of months, and the bloom is set but we continue to watch how the fruit develops on the tree. So we'll have better estimates as we move closer to the summer. But we do anticipate higher volumes from our own farms this year than we had last year. I think when it comes to pricing, that is probably the bigger variable that we're looking at. We touched on it a little earlier in the call is that certainly, if -- we've seen a broad range of pricing over the last 4 or 5 years. So when we're doing our modeling, we're kind of trying to take into account where we think pricing will settle in based on all the factors that come into play. Certainly, we would hope. I think we're -- we hope as we move towards the summer months, that pricing does pick up from the levels that it's at right now. But we don't know with certainty that it will. But certainly, if it does, that is going to certainly have an impact on what the profitability of that segment looks like as we move towards the end of the year.

Got you. So at the end of the day -- I'll follow up with that in a little bit with you off-line. But at the end of the day, you're expecting a higher yield or higher production out of your International Farming in this year coming up than this -- I guess it was fiscal 2020.

Yes. And that's -- I mean, as the trees mature, that's kind of in line with our expectations is that we still have room to grow before the trees reach full production levels.

We have thousands of hectares planted and paid for that aren't producing yet.

Yes. No, and I get that. They're maturing but I was also just curious if production was -- that 46% was, I think you mentioned, was higher than you had anticipated. That's all.

And last year, it was pretty -- 2020, it was pretty much in line with what we expected. And I think that we mentioned that 46% was not the increase for the entire year. That was really just for Q4. Q3 was relatively flat year-over-year and it was impacted by timing of harvest. Overall, I think our growth last year was probably about 20% in production from our own farms.

And our next question is from Ben Bienvenu with Stephens Inc.

Congrats. I wanted to ask as it relates to your long-term guidance. So you guided for high single-digit volume growth and low double-digit EBITDA growth, so presumably, margin expansion there. I'm curious, when you think about disaggregating the margin expansion, how much of it comes from continued margin per pound unlocked in your Marketing & Distribution business versus, I would assume, yield per hectare improvement and just fixed cost absorption improvement in your Peru International Farming segment? To the extent you can add color there, that would be helpful.

Sure. I think that we're -- certainly, as we generate better margins on the sale of our own fruit as opposed to buying and selling third-party fruit, as the production from our own farms increases and it becomes a larger percentage of the overall fruit that we sell, that is absolutely going to have a favorable impact on our margin profile. And we believe that, that's probably the larger portion of the margin improvement that we'd expect to see in the near term. I think in our Marketing & Distribution segment, we tend to operate or target a range of per-box margins that we shoot for. Sometimes, we operate a little bit above that. And then we saw that during the latter half of fiscal '20. There are times we operate a little bit below. But I think there's a per-box margin that we generally target. I think there are things from an operational perspective that we're looking at, that we've been looking at in terms of material cost and transportation cost reductions that could add pennies here and there to that number. But I think that in order to achieve our overall top line growth, and that's really where the EBITDA growth of the Marketing & Distribution segment is going to come from. It's going to come from driving volume as opposed to necessarily squeezing significant margin growth out of that side of the business.

Okay. And thinking about Peru, and I don't want to belabor this point, but if we think about the supply-demand setup for this year as we transition out of Mexico and into California, presumably supply will get tighter this summer. I would also assume we'll get some demand recovery as we move through this year, although I know retail demand has been very strong, foodservice could come back. I would think that would support pricing to the comments that you made across the broader market. At what point do you have to start making commitments around your fixed price contracting on the Peru crop for the back half of the year? Does it happen and start in the spring and stagger through the summer? What is that lead time like?

Well, we'll usually do it about a month out of the beginning of the harvest. I mean we'll have a better idea. I'd say, 2 to 4 weeks out before we start harvesting. And keep in mind, it will take 2 to 3 weeks to get here. So we're probably looking at early April on pricing.

Okay. So you got the time.

Yes, the other thing we'd do with that, we'll work together with the retail, and we'll, say, put a fixed price of X on it with a limit up or down of, say, $5, where it can -- it doesn't wipe the other side out.

I see. Okay. So think of it more like a band of pricing versus just a flat price with no variability up or down. Is that right?

Yes, it's like a moving band, so to speak. And say, if you pick $30, if it goes to $35-plus, the price will now be $31. And then if it goes the other way, it'd be $29 as an example.

Our next question is from Brian Holland with D.A. Davidson.

So I just wanted -- most of my questions have been answered. Just a couple of quick ones here. I presume not a big deal or else we would have heard more about this, but just thinking about ahead of the Super Bowl and the seasonal demand here. Given gatherings will look certainly different than they did -- than they have in years past, do you see no impact just confirming on demand into quarter end ahead of the Super Bowl, just given the different dynamics we have this year?

I don't know what our record volume per week was over the last years of Super Bowl, but the numbers are pretty substantial this year on volume. Now the prices are lower, but we're pretty happy with the volume.

Yes, understood. Yes, I understood on the pricing side, so volume remains strong. And then just kind of on the foodservice side, any change there? I know as we look into the first half of 2021, we're lapping some mix impact, the more bias towards kind of the retail channels and foodservice. Any updated thoughts? Any changes there?

The fast casual continues to grow, actually. The other white table cost side of it goes up and then they shut it down and it goes back down. But the fast casual has been pretty impressive on their growth. I mean they're much higher than they were a year ago.

Yes, sure. Easy enough. Last one for me. Just kind of curious, any impact from some of the broader -- some of the instability that we're seeing in the Peru market? I'm talking more at a governmental level. Any impact at all to your business?

A little bit. This is our slowest time of year down there so we're really not affected. We're done with the blueberries and really haven't started the avocados yet. But yes, we've been quite familiar with it because we've been in the middle of trying to help negotiate. What that main issue is, is some labor issues with some labor contractors, not necessarily big companies like us or Camposol or some of the others. It's the little guys that are hiring outside labor services that aren't doing what they're supposed to be doing. But it's -- there's some reform going on. There's some new tax rules coming out. But I think that will all be remedied here very quickly because everyone agrees that it's isolated and we know what the problem is and we know what the solution is.

And ladies and gentlemen, at this time, I'm showing no further questions. I'd like to end the question-and-answer session and turn the conference call back over to management for any closing remarks.

Okay. Well, again, this is our first quarter and our first conference call. And I'd just like to thank -- I want to say thank you and appreciate everybody's interest in Mission, and we look forward to a long and profitable partnership. And thank you for your time.

Thank you. This concludes today's conference. We appreciate everyone for their participation, and have a great evening. Thank you.

Thank you.