Earnings Call: Q3 2021

Feb 16, 2021

Greetings, and welcome to the Alkaline Water Company Fiscal 2021 Third Quarter Results Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host and Director of Investor Relations, Sajid Doudi. Good afternoon, everybody, and thank you for joining us for the Alkaline Water Company's Q3 fiscal 2021 earnings call. Shortly, you will hear from Ricky Wright, our President and CEO and David Garrino, our Chief Financial Officer. During the call, we'll be making forward looking statements within the meaning of Forward looking statements involve risks and uncertainties and undue reliance should not be placed on such statements. Certain material factors All assumptions are applied in making forward looking statements and actual results may differ materially from those expressed or implied inside the statements. For additional information about factors that may cause actual results to differ materially from expectations and by material factors or assumptions applied in making forward looking statements, Please consult the company's Form 10 Q, which is filed today and its other reports filed with the Securities and Exchange Commission on EDGAR And Canadian Securities Regulators is SEDAR. In addition, such forward looking statements and any projections as to the company's future performance represents management's As of today, February 16, 2021, the company does not undertake to update any forward looking statements or projections except as required by applicable laws, including the United States and Canada's securities laws. Actual results could differ materially from those Constellated by any forward looking statements as a result of certain factors, including, but not limited to, general economic and business conditions, competitive factors, Changes in business strategy or development plans, the ability to track and retain qualified professionals, as well as changes in legal and regulatory requirements. The company issued a press release announcing its financial results and filed the Form 10 Q with the SEC. So participants on this call who may not have already done so may wish I will now turn the call over to our CEO, Richie Wright, We will give an overview of the company's Q3 fiscal 2021 financial results. Following Ricky's comments, David Garrino, our Chief Financial Officer, will We'll provide an overview of the company's operating results. Ricky will follow David to provide closing remarks, and we will then open up the call for question and answer. And now, I'd like to turn the call over to Ricky. Thank you, Sajid. Hello, everyone, and welcome to the Alkaline Water Company's 3rd quarter fiscal 2021 conference The momentum we saw over the summer and into our Q2 continued right through the Q3. Fiscal 2021 has been a challenging yet very rewarding year for the company. We believe our core business is stronger than ever. Alkaline 88 is once again the fastest growing top 10 value added water brand in the country. As the fiscal 20 22 approaches and the economy normalizes, we are well positioned in our lifestyle products, 888 CBD, Alkaline88 flavor infused and other products to accelerate growth going into our fiscal 2022. Our strategic priorities focus on achieving broader distribution of all SQUs in the grocery, supermarket and drugstore trades, Growing the convenience store channel through strategic direct store distributions and expanding our hospitality and food service presence, Opening up international markets and accelerating our growth in our direct to consumer e commerce sites, alkaline88.comand88cbd.com. Our teams are pursuing clearly defined strategies for each of these growth areas, which I will be highlighting shortly. During our 3rd fiscal quarter, revenue grew approximately 20% year over year to a record $10,200,000 The 52, 26, 13 and 4 weeks scan Nielsen data shows that we exceeded the value added water category growth both on a dollar volume and unit basis. In fact, in calendar 2020, Alkaline 88 was the fastest growing non flavored top 10 brand in the category. For the 1st 9 months of fiscal year, revenue grew approximately 21% to 35,200,000 Our team has done a great job executing against our plans and driving growth across all trade channels throughout the fiscal year. Our brand momentum continues to grow with our lifestyle products now available in over 75,000 retail locations nationwide. We expect to add another 9,000 stores by the end of the current quarter. The company is very well positioned for future growth in the value added water category. This is supported by the latest Nielsen data, January 23, 2021, which shows that In the 1st 4 weeks of the New Year, our brand has continued to outperform the category in both volume and in unit growth by a factor of 25 respectively. We have also risen to the 8th largest company in the value added water category. For a recent beverage marketing corporation's report, the bottled water category continues to gain over the carbonated soft drinks, driven by consumers' preference for healthier options. For the same report, Alkaline and Essence Water continues to be the growth leaders. Overall, we are pleased with the substantial progress we have made during the 1st 9 months of our fiscal year. With the health and wellness consumer in mind, we have Strategically introduced key lifestyle products for our beverage and CBD portfolios over the past 2 years. Today, we offer a robust portfolio of lifestyle brands and have expanded our beverage offerings to 14 SKUs and our CBD portfolio to 24 natural topics and adjustable products. Our lifestyle brands are currently available in over 75,000 retail locations. We see strong demand for our products in specialty discount retailers as well and recently added the $0.99 only stores to our growing base of customers. In addition, we'll soon be launching another leading retailer in this category. They will carry our 700 ml and our alkaline 88 flavor infused waters. Beginning next quarter, our 1 gallon, 1.5 liter and our 500 milliliter eco friendly Aluminum bottles will be on the shelves of a premier Midwest Top 15 retail banner. I'm also pleased to announce that an existing customer in the Drugstore channel will be adding our 1 gallons in addition to the 3 liter that they already carry nationwide. And we'll also be offering our 1 liter in their open air Cooler section across a number of stores nationwide. We continue to see a strong pull through of small formats. We expect to reach 90,000 to 110,000 stores by the end of our fiscal 2022. We will provide further details on these large wins in the coming months. As we prepare for the strong demand and our strategic objectives of penetrating the C store channel, we believe based on our dominance in the grocery The timing is ideal for expanding our direct store delivery DSD strategy. We are pleased to announce that we have entered into agreement with a premier This partner is one of the largest and most respected family owned beverage distributors in the nation. Its customer base includes 9,000 retail locations. This partner will carry the full line of our smooth tasting alkaline 88 water portfolio and our alkaline 88 flavor infused waters under this agreement. This will be the first time in a major metropolitan market that the company has adopted a DSD model for its entire alkaline 88 line. According to Ariston, an advisory and intelligence research firm, convenience stores are emerging as a key distribution Now for premium bottled water brands and account for over 60% of the distribution network in North America. Additionally, we have added 3 Regional DSDs in the Southwest, Mid Atlantic and East Coast regions, which provide us access to an additional 12,000 customers. In our fiscal 2022, we look to add additional premier beverage distributors in other key U. S. Markets. We believe this will accelerate sales for our single source offering and our A88 CBD products. Management believes that by adopting a direct store distribution model in a number of key markets, we will increase our sales significantly into the C store channels. We have also made significant progress on expanding our distribution partners for 88 CBD Lifestyle Brands during our 3rd fiscal quarter. We expanded our relationship with Kagi, who will now carry our topical lines, giving us reach into 12,000 customers and access to 30,000 stores. And we've also added Betterment RS, a CBD focused DSD to drive C store and grocery store CBD sales growth. We are seeing strong interest from these engagements and recently added incrementally 150 stores for our A88 CBD portfolio of Innovation remains a core focus for our entire ADA CBD portfolio. During the quarter, we introduced vegan gummies and sour gummies and gluten free powder packs and 4 exciting flavors. We believe our 88 CBD product line is one of the best in the industry And like all our products, superior distribution, multiple sales channels and trusted products will allow us to continue to gain market share. Based on the changing habits of consumers, we have allocated additional resources to our e commerce and digital marketing strategies, both in the water and the CBD categories. We have tested and will expand on programs that have shown extraordinary ROIs in our test markets. To that end, e commerce sales for our 88 CBD portfolio and water continue to grow. Since the launch of the aacbd.com in February of 2020, we have already nearly a quarter 1000000 unique visitors and seeing customer retention rates Some of the best selling products on ADA CBD sites have been Muscle Salve, DeepRelief Cream and Hand and Foot Cream. Our intangible portfolio, which launched later in the calendar year, has been gaining momentum both on the e commerce sites and the brick and mortar sites. We have also entered into an agreement with CA Fortune to accelerate our growth in the e commerce water area, specifically helping us work on our Amazon and Amazon distribution. Since inception, the Alkaline Water Company has focused on having the smallest carbon footprint per liter of any major water brand. In the past 52 weeks, we have taken major steps in reducing our carbon footprint. We've already begun to include 25% recycled We continue to focus on sustainability throughout our new initiatives as demonstrated by being the 1st national water company What we can do to minimize our impact on the environment. I'd like to provide a brief update on our international efforts as well. Last quarter, I shared with you that we received FDA approval for exports to key international markets from 3 of our strategically located co packers. It now appears that our first foray into the international markets will be Mexico. We are currently negotiating with a key partner in the region and As 2 of the FDA co packing facilities are on the southern border of the U. S, Our logistics to Mexico are less complicated and it is well known that Mexico has one of the largest consumption of bottled water per capita in the world. Also, the rebounding hospitality industry should contribute to significant revenue growth during fiscal 2022. In addition to our wins with Dot Foods and IBA Food Services, we are negotiating with 1 of the largest food service companies in the world That will further cement our presence in the on premise beverage business. We hope to be able to make that announcement From an operational standpoint, as we prepare for increased demand over the coming fiscal year, we have taken the following steps. We are expanding our co packing facilities and plan to add 2 new plants. And additionally, we are increasing our process of domestic capacity for raw materials and finished goods. We will be announcing new plants and new raw material providers that should increase our overall All capacity positively impact our gross margins. Our current providers of bottles and handles are doubling up our capacity by opening up East Coast plants. In addition to increasing our gross margins and capacities, they will significantly decrease our carbon footprint as their new plants will be closer to our East Coast co packers. We are targeting to open 2 additional co packers in the next 6 months. Our target is to add a Midwest facility by the beginning of fiscal quarter 1, 2022 and the West Coast plant by fiscal quarter Q2. This will add additional incremental Wholesale capacity of $12,000,000 to $15,000,000 and effectively position us for strong growth expected in fiscal 2020 Lastly, another key area of focus has been working with a national agency To develop our brand messaging for the coming year and to help us identify an A List celebrity that shares our brand values. With our growing base of loyal customers So, we're typically health conscious and pursue a helpful lifestyle. We believe an ideal 3 brand partner would be a home run for our family of brands. Overall, I'm pleased with the progress we are making against our strategic objectives and expect substantial returns from the investments we are making. We expect a solid fiscal Q4 and a very strong fiscal 2022 for our lifestyle brands. It's a great time for the Alkaline Water Company, which has emerged from a single bulk brand west of the Mississippi to a trusted national and soon to be global brand with multiple in demand lifestyle consumer packaged goods and products. With that, I would now like to turn the call over to David Garrino, our Chief Financial Officer, who will take you through the Q3 fiscal 2021 financial results. David? Thank you, Ricky. Before I begin, I'd like to encourage interested listeners to review the Form 10 Q that we have filed with the SEC earlier today For a more detailed explanation on some of the quarterly results, I will be highlighting. For the 3 months ended December 31, 2020, We reported revenue of approximately $10,200,000 which increased approximately 20% year over year. And for the 1st 9 months of our fiscal year, we delivered growth of 21% compared to the same period last year. Increase in sales is due to continued strength With our existing customers and expanded distribution of our product to additional retailers throughout the country. Our gross profit from sales in the Q3 ended December 31, 2020 was $4,200,000 versus gross profit of $3,400,000 in the quarter ended December 31, 2019. Our gross margin percentage of 41.2% Increased compared to the prior year quarter, primarily due to a positive change in sales mix and lower cost of goods sold. Total operating expenses for the 3 months ended December 31, 2020 was approximately $8,400,000 compared to the approximately $6,100,000 in the prior year. Specifically, for the 3 months ended December 31, 2020, Sales and marketing expenses was approximately $4,700,000 compared to approximately $4,100,000 in the prior year quarter. The increase in sales and marketing expenses resulted from higher freight and promotional expenses due to the increased sales. During the same period, general and administrative expenses were approximately $3,500,000 compared to approximately $1,800,000 in the prior year quarter. G and A expense of approximately $3,500,000 this fiscal quarter ended December 31, 2020 consisted primarily of 3 items: Approximately $2,000,000 of professional media and legal fees, approximately $800,000 of wages and wages related And approximately $400,000 in non cash stock option compensation expense. Net loss The quarter ended December 31, 2019. The net loss per share was negatively impacted by roughly $700,000 in net non cash items, which resulted in a negative $0.01 impact on our bottom line. Cash used by operations during the 9 months ended December 31, 2020 was approximately $9,600,000 as compared to the approximately $8,900,000 in the prior year period. The increase was primarily due to increase in inventory, specifically related to our A88 CBD line. Importantly, our cash position as Our expected conversion of our outstanding warrants and our credit line, we will have sufficient cash to sustain our operations at least through December 31, And with that, I'll turn it back to Ricky. Thank you. Thanks, David. Once again, I would like to thank you for participating in our call today. In closing, I would like to say this past year has been an incredible 9 months for us. With the global pandemic in early 2020 that disrupted global economies, we have managed to maintain the company's revenue growth and added exceptional talent. We're coming out of it stronger than our competitors. Our efforts resulted in increased brand awareness With our flagship brand, F Line 88, emerging as the fastest growing brand in our product category this past year. As of Onetwenty threetwenty twenty one's Nielsen report, we continue to be the only top 10 value added company in the country that has grown double digits to both sales and units every Since December 2019, we have innovated based on consumer demand with new and unique products, gained market share, expanded our omni Channel presence and quickly adjusted to the changing market dynamics. This is a testament to our team, our partners and our resilient business model. I couldn't be more proud of our brand's journey through today and genuinely believe that the best is still ahead of us. I would also like to thank you, our shareholders and our Board for their contribution and continued support. We're making great strides in making Alkaline 88, At this time, we will be conducting an answer A confirmation And our first question is from David Bain with ROTH Capital. Please state your question. Great. Thanks and nice quarter. My first question would be on the hospitality rebound. And I guess what I'm trying Trying to get a sense of is the timing of meaningful revenue generation from the segment. And I guess maybe put differently, when can we see a run rate toward Say 100,000 cases, and is there anything different with the new potential hospitality partner in terms of Revenue cadence now that hospitality is coming out of COVID, the new partnerships will be structured differently than the first. Any kind of Hey, David. Thanks for attending today. Yes, the Hospitality industry is recovering. We are in some, believe it or not, golf courses. We're doing a test with 1 of the largest golf course groups in the country. Universities are opening up to us as well. We're still a little slow in the restaurant and hotel segment of it. However, our new partner is extremely strong in both of those, our new potential And it's just going to be a great add for us. I was looking at the segment reporting requirements just before the call. I think we're at least a couple of quarters out, David, before we have to do some segment recording. Okay. That's helpful. Okay, great. And then International expansion, I know you, Ricky, have a ton of experience there. First, for Mexico, is there Any kind of TAM we can think about, I guess we should do our own homework, but if you have something to spoon feed us, that would be great. And then, if you could touch on Strategy there, the new partnership you spoke to, is that a distributor or are there other I mean, I don't know if we go into acquisitions or what We're going to be doing to sort of make a big splash in Mexico. Yes, David, we've actually explored a number of different opportunities In New Mexico, I've gotten some help from some of my Board members along those lines, excuse me, through some food alkaline 88 water. And this particular deal, we're in the final throes of negotiations. We're candidly just getting down And we should be able to announce in a week or 2. I believe it will be that quick. It is through a very large group. It's a little different in that we're we'll actually be selling into a direct group that has distribution within their current locations. Okay. And the details on that, it will be a substantial account though, which is the nice thing. It's kind of equivalent if I was to look at the U. S. Market, one of our mid range groups that we already deal with, Probably not as big as the public, but certainly as big as some of the change we have with 200 or 300 stores. So it will be a nice it will be a very nice add for us. And it will be FOBUS, which is also a very nice thing for us. And the last page, just as a follow-up on that, if you don't mind. In terms of pricing and margins, like per unit pricing and then just margins overall, is there anything we should think about as you I don't think there'll be much contraction because of the FOB shipping and the our ability To make sure that we were priced competitively with our other retailers. Okay. All right, great. Thanks so much. And our next question is from Luke Cannon with Canaccord Genuity. Hey, good afternoon, guys. I wanted to follow-up on that point as well actually on the margins. You talked about on the call, Ricky, that there's you to see some sort of margin expansion from these new plants and new raw material providers that you guys are going to be adding. Can you quantify at all like what we should be thinking as far as what the margin profile increase would be there and maybe Rough timing on when you expect to achieve that? So, just looked at the Excel spreadsheet a couple of days ago, Luke, so internally, it's going to some of it's going to be predicated on if we put any working capital towards these arrangements or not On CapEx, we have not to date, but we are considering that as a company to potentially I'll directly invest in some of ours and become a little bit more vertically integrated. We wouldn't run it, but we'd be able to get a little better pricing. The big savings initially though will come frankly from the freight cost. We are going to pick up On the Freight Bound Inn, significant dollars right away. Whether that's 1 or 2 points, I don't know for sure. David might be able to better answer that. But it's definitely significant and we've done our ROIs on any potential investment as well. David, anything on what you think it might be? Yes. It's still too early to tell from a percentage point of view. But from a timing point of view, we won't say anything until Q1 fiscal 20 22. Okay. Thanks. That's helpful. If we look at One of the things that you also talked about is that you're allocating more resources towards those areas where you're seeing really high ROIs In your test markets, can you elaborate, I guess, on what exactly those sort of ROIs are you referring to just an average customer basket Relative to the customer acquisition costs, can you give maybe a little bit more color on what exactly you're seeing there? Yes, Ken. We started out with some 700% or 800%. We've run them now in, I think, 5 markets, David. Yes. Five different markets, very small tests, dollars 5,000 $10,000 a pop, but we're seeing tremendous Return on those investments and I'm going to guess, David, you might have a better I think last time we talked it was close to 300% ROI on the investment. Is that still about? A little less. I thought about that. Okay. So that's why when we look at those, Luke, it makes all the sense in the world to continue to pursue that until It continues to adjust downward. It won't make any sense. But right now and that's mainly digital, and it's not so much acquisition. A lot of these are being done well, I'll step back for 2 seconds. A lot of those returns and that sort of return have been in the food channel or grocery channel. So we've done digital at Kroger's now, HEB, a number of other big companies that we've worked on in the last year, Food Lion, etcetera, and those have all shown tremendous returns for us on the digital side. And then on the cap cost per acquisition, on the e commerce sites, we have run a bunch of things on that. We know what doesn't work And we'll begin to push some additional dollars to bring that cost of acquisition down below where it is today. Got it. And then on the CBD front, Ricky, are you noticing how does the Alkaline brand how do you sort of differentiate yourselves in what's admittedly a Pretty crowded field. Like, have you noticed anything in the metrics that you're seeing or feedback that you're hearing from customers that your product is actually Standing out and sort of differentiating itself? Luke, the one big thing that I do know and I get it from my sales guys all the time is that We're about a taste profile and that there's nothing that we've made that people just don't think is Absolutely outstanding on the adjustables. Obviously, Shea butter and some of the higher cost ingredients on the topicals as well. And then finally, what really is carrying the day, at least on the brick and mortar side, is that people love Alpine 88. And it just opens those doors. I was shocked to see some meetings taking place This coming quarter, that strictly are only a result of us being alkaline 88 and just opened the door for the 88 CBD sales team. And hopefully some of those come in. I love this time of year for us because we've had some big wins in the last Couple of weeks, we don't usually announce until the PO comes. So that's why you see the kind of obfuscated answers or Discussion within our actual release, those are clear, but they're not in the stores yet. We haven't gotten the firm POs, But we're in line for the planogram, etcetera, and we'll see some of that coming in the CBD arena very quickly as well. So this time of year, everybody is making their decisions. The buyers are both on the CBD side and the water side, and we're getting a lot of Ws. And so over the next 2 weeks here, 3 weeks, a lot of those Ws will come to fruition. Got it. Last one for me, if I may, and then I'll pass the line. With the new administration that's in place now, have you noticed anything in your Dealings with potential customers that were you noticing a more positive tone, a more positive outlook on the prospects for some of CBD, ingestible products or have you heard anything from the regulators that suggest any incremental positive there? We've got so much regulators. Obviously, I read the legislative updates almost every day. There was a bill that passed or in Congress, but it was same as last year's bill. But obviously, with the administrative change, we do believe there'll be some additional guidance. The good news is that whether we believe it or not, some of the retailers believe it. And there was a March changed after November 6th and the fact that retailers were much more likely to talk to us about ingestibles. I would have said before November 6, we were pretty much ninety-ten ingestible or topicals to ingestible And now we're no worse than fifty-fifty. Got it. That's great color. Thanks a lot. Thank you. And our next question is from Kevin Deed with HCW. Hey, Ricky, Kevin, G and A. Hey, Kevin. How are you? Can you hear me? I'm good. I'm good. And I was really happy to see your numbers. So congratulations. Thank you, sir. I think the big question for me, Ricky, and I defer to my esteemed colleagues who probably already picked up on it. But last year, you're at 8.5%, now you're at 10.2%. Can you just help us take it apart a little bit? I mean, I apologize, but it all seems kind of lumped in together. It's hard to see what was CBD. It's hard to see what flavor infused. It's hard to What was online? What's in the stores? What should we do to try to take a look at some of the parts? I'm not sure I can I've been pretty firm on this, Kevin, that we're not providing guidance segmented guidance. That's kind of why I went on today To see if the real answer was there, when we're going to push over that line. But what I will tell you is, to give you some guidance that January was our best January ever, okay, and the 1st 2 weeks of February were our best 2 weeks of February ever. And there's not even close second. So the momentum continues to grow with the brand and it's across all parts of the brand. I just did a survey 2 weeks ago. Actually, my sales group did a survey for me. And one of the things that, again, on a Color basis, you can look at where we penetrated the various 60,000 stores that are strictly the Go through channels and you can see that, for instance, 40% administration are 1 leader And another 20 some percent on the 1.5%, 20% on our infused. So those are the kind of things that we move metrics against. And then on the wins coming up, because it is that time of many years, we have 11,000 New, SKUs scheduled 11,000 stores willing and ready to take a new SKUs on the upcoming fiscal year. And then I think we said it in the releases, we pick up about 9,000 new stores that will be coming in the new fiscal year. And a lot of the SKU I did see that today, the one I was focusing on more than anything, Kevin, to be frank Again, was I wanted to have the 2 liter was being accepted because I love that package for us And there's well over a 1,000 stores that the 2 liter is scheduled to go into. And so if you look at 2 liters, Our single serve flavored and fused aluminum, well over 3,000 stores that are picking those up shortly after the fiscal year Okay. It's impressive, Ricky. It's impressive. It's just a little, I guess, to use your Verbiage, a little obfuscated for our at least from my perspective. I'm sure the other guys have a better handle on it. It's just Hard to run numbers without sort of seeing a little more detail. I guess, The other thing maybe you can help me with is understanding what's where. I mean, I know the DSD is sort of a new Strategic effort for the Alkaline Water Company. And I guess what I'm hoping you can share with us is What you think their focus is in terms of storefronts and what products are they helping you move? Good question, Kevin, because it is a new focus for the business. I want to add a little bit of color, because I only had 17 minutes of my prepared speech. We gave myself a little more time on this Q and A session. Yes. No, I appreciate you moving it along, Ricky. Thanks. One of the things that you have to understand is that most people pull the trigger on direct store distribution way early. They have a new idea, they have a new concept. They think the only way the way to get in there is to hire DSD and that sits on the shelf. We kind of did it the opposite. We're looking only at strategic markets, big, big markets to take in a DSD network. And we have an excellent, excellent reputation in the Grocery channel, I look today at the Nielsen reports that came out on 123 of this year And we have 3% market share in grocery and the enhanced water space, which just shocked the heck out of me, Kevin, because if you look down the list, You'll see a lot of big names that are substantially less than ours that you would think would have that much share, but So the name recognition is out there. That will allow us to go into Really, the strategy is convenience stores and up and down the street. That's what the DSP is really set up to do. We've done an excellent job. Frank Chestman and his team has done an outstanding job of penetrating the Grocery channels and some of the major boxes, and now it's time to have a strategy. We hired a guy last year from Essentia. We just had an additional hire in the Northeast. We haven't announced it yet, but he's a DSD guy that actually I'll have, I think, Voss to come to us. And so we're serious about the efforts and we think that the ability to penetrate the C Stores is essential to growing the brand here in the U. S. And accelerating our growth. I mean, I don't like to use comparative, but if you look back 2 years ago, really about 18 months ago, Celsius took their 2nd bite at the apple On DSD, it fell flat on their face and they did it 15 years ago when they didn't have any name recognition. They took that bite at the Apple 18 months ago. I think the Big Geyser was their first one out of New York and And they've continued to roll and done very, very well. And so that's a little bit of how we view it. We think we've just done it smarter. We think we've waited till we had the name recognition and then went and had guys that literally 2 years ago wouldn't talk to us, Negotiating with us where we think we have very, very good ESD agreement. So the other big question is what other SKUs can you pull through Once you've established your yes, so I'm just kind of trying to Get my arms around the opportunity. It's all tantalizing, don't get me wrong. It's just hard to see What's where and what you plan on going? In most cases, I think Kevin, in most cases, the one leader is a no brainer for these guys, Okay. Our sports cap is a differentiation and so is our aluminum. And then they're all carrying the flavored infused as well. So we do have 2 or 3 differentiations in terms of product. I would like to see the 2 liter get on some shelves in the I think that's a good another differentiation that we have. It's a handier sized pack both for the refrigerator and the gym. It's just £4. And so I see that as a big differentiation as well. It wouldn't surprise me that at some point in time, We have all 3, the gallon, the 3 liter and the 2 liter in some of our grocery channels. And then I see in the Convenience store channel, I do see the aluminum being a big item for us because it is a cold pack item. As I said several calls ago, if you drink our aluminum bottle cold, you'll never have a beer again. Is that good? Well, you're talking to the wrong guy about that, Ricky. I'm wondering though, can't you pull CBD Through some of these retail channels as they build? Yes. We actually hired I don't know if you caught the nuance. We hired Betterment, IRS, and I can hear that. They're doing a great job for us. Not a good job, a great job. And that's some of the announcements that you'll hear, some of the wins that we've recently had that will come out over the next week or 2. Again, I don't like to make announcements for Flash. I like to be able to go out and take a picture someplace, post it on social media, So that they can go into their local CVS or Walmart or wherever it is and grab the product. Yes. It doesn't help sales to have a big news flash and not have anything sitting there. All right. Last one for me, Ricky. I'm sure you just breathed a big sigh of relief. How many co packs do you have now? And can you just review your rollout strategy going forward, just so I make sure I have it correct, please? I know you gave it to us on the call. Yes, I think we have 8 total right now. I don't have the list in front of me, but Easy one again, Kevin. We are very, very close to opening 1 in the East, Midwest type of Yes. We're going to state we call it either one. Okay. So we're very, very close Having that open, that will open Q1. Probably, I've got the actual open dates in front of me. Let me see what I think it's scheduled for the end of March, okay, beginning of April. Yes. So that one's coming on. The raw material guys, both those plants, I think they went up last I don't know how much they're producing at, whether they're still in their test Yes, they're still in the test phase. So again, QC and them, you won't see that Economically in total Q1. Yes, we're still QCing them. So that's probably another 30 days before they're really operational and can take some of that We talked about and David mentioned will be available this quarter. And then the West Coast plant, We've identified, we visited, we've qualified, but it is a new build. And so there are Another four and a half months probably, Kevin, before that happens. Okay. Thank you so much, Ricky. I appreciate your patience and your indulgence as always. Congrats again. Stay safe everyone. I want to thank everybody for taking the time with us today. I appreciate it. And again, I know I try to say this every quarter, but I do see rainbows and unicorns ahead for this company. We're as strong as we've ever been at almost every level. We did add a bunch of people this year that have all been A players And it's nothing but strengthening our bench and we get better every day. And I appreciate your faith in the company. And the next question is from David Bain with Roth Capital. Oh, gosh, I saw back on. Sorry, I did have one follow-up and I didn't mean to go over the end there. But if you can indulge me now, just One last one on the international again, because I think that's kind of a big initiative. Can you give us a Kind of a capsulation, I looked up the TAM in Mexico and it looks fantastic. The growth looks great for bottled water. But I don't see anything on value add and I'm wondering how prevalent that is in Mexico relative to the U. S. And just putting it in the flag in to the market, is that enough of a brand building kind of Initiative or is there going to be a CapEx requirement to kind of proliferate the alkaline 8A brand? Well, you asked all good questions. So we've explored both. We think that our first Trip into the Mexico and that market will actually be a much easier trips than most People experience, we've got a unique situation, David, that I think will allow us to actually Get immediate sales and immediate return on investment just because of the way we're negotiating and the company we're working with. The second one will take us a little longer. We have had some discussions with Different people in Mexico that obviously, how do you build that brand? We think based on their business model that We would do a coke type of arrangement. Maybe they'd help us and we'd help them in the States. So That's really where we're thinking about right now. Got it. Okay. So it will be pretty CapEx light then, correct? Is that Yes, it will be very CapEx like, absolutely. All right, phenomenal. Thanks so much. All right. Thank you, guys. Thanks, everyone. Blessings. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great evening.