Earnings Call: Q3 2018

Nov 8, 2018

Welcome to the Celsius Holdings Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen only mode. A brief 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 Cameron Donahue. Thank you. Please begin. Thank you. Good afternoon, everyone. We appreciate you joining us today for Celsius Holdings' Q3 2018 earnings conference call. Joining me on the call today are John Fieldly, President and Chief Executive Officer and Evan Negron, Chief Financial Officer. Following prepared comments, we will open the call to your questions and instructions will be given at that time. We have filed our quarterly report with the SEC and issued a press release today. All materials are available on the company's website at celsiusholdingsinc.com under the Investor Relations section. As a reminder, before I turn the call over to John, the audio replay will be available later today. Please also be aware that this call may contain forward looking statements, which are based on forecasts, expectations and other information available to management as of today, November 8, 2018. These statements involve numerous risks and uncertainties, including many that are beyond the company's control. Except to the extent as required by applicable law, Celsius Holdings undertakes no obligations and disclaims any duty to update any of these forward looking statements. We encourage you to review in full our Safe Harbor disclosures contained in today's press release and our quarterly filings with the SEC for additional information. With that, I'd like to turn the call over to President and Chief Executive Officer, John Fieldly for his prepared comments. John? Thank you, Cameron. Good afternoon, everyone, and thank you for joining us today. During the Q3, we achieved new record volume levels and we further increased our footprint with increased distribution and expansion and in multiple other regions across multiple channels. Expanding our reach and availability, our focus and targeted investments in sales and marketing and providing returns in the form of increased sales volume, increased brand awareness and increased availability of our products as we continue to maintain premium pricing. These record volume levels demonstrates our products are in demand and our growing consumer base has never been stronger. For the Q3, revenue increased 54% to a record 16,600,000 dollars North America revenues increased 92% to a record 11,400,000 dollars and international revenues increased 7% driven by reorders in Asia, which were partially offset by a 15% decrease in European revenues, mainly as a result of our Swedish distribution partner returning the more normalized ordering patterns. As they have optimized their inventory levels and are cycling new flavor launches when compared to the prior year. North America growth was driven from reorders from new accounts such as Target, CBS and Wawa, which we began sell through during the quarter. In addition, we experienced strong growth from existing accounts as a result of the expansion in our consumer base and demand for our products. Our production has returned to more normalized traditional levels following the challenges we faced during the Q2 as we continue to add additional co packers to alleviate bottlenecks and lay the foundation for accelerated growth. 3rd quarter reflects strong demand as we continue to capitalize on today's global health and wellness trends, targeting active health money consumers. These growing trends are present in every market and the continued solid execution of our strategy to increase demand through a diversity of channels and geographic location continues to drive significant results. Most notably, we significantly expanded our presence in China with broader distribution to the modern trade through our previously established partner, Qifeng Food Technology, a national wholesale distributor of food and beverages. As you may recall, we began our partnership with Qifeng Foods more than a year ago, when we initially entered China market with placements in small select channels across Tier 1 cities including Beijing, Guangzhou and Shenzhen, as well as more than 30 other small markets across 14 provinces. The majority of our placements were in smaller, less mainstream retailers. Abbott, the consumer response was overwhelmingly positive. With their network of distributors, national expertise and proven ability to execute operationally, Qifeng Foods has successfully placed Celsius in more than 45 cities across 33,000 locations across China, including 15,000 key accounts. Achieving broader distribution with larger retailers in China is a significant milestone in our efforts to increase product availability internationally. And we are positioning Celsius as a global beverage leader for active health minded consumers. With our investment of more than 8,000,000 the Asian markets to date, we have established a local infrastructure, including distribution, sales, marketing and operational logistics that will support exponential growth as we continue to strengthen our foothold in the region. As we look into 2019, we are exploring further opportunities to partner with local influential strategic partners to further leverage our established operations, local infrastructure, low end local subsidiaries, as well as further leveraging our existing local established networks to capitalize on today's health and wellness trends in the region, driving further availability and awareness for Celsius. Domestically, we have impressive gains in new distribution with placements on the energy drink shelves in Target, a key national retailer broadening our national footprint. Additionally, our convenience store channel expansion continues with notable retailers such as Wawa, 711, Sunoco, Circle K, along with many others where we're seeing excellent product acceptance. Celsius also saw key expansion during the quarter in CVS, which provides significant opportunity for future growth and national exposure. With Target, initial placements included 3 SKUs, sparkling orange, peach mango and sparkling watermelon and single serve 12 ounce cans now in more than over 1,000 of the over 1800 location Target stores throughout the nation. Achieving placements in such a high profile esteemed retailer as Target, our brand takes our brand recognition to the next level. Target's focus on health minded conscious millennials strategically aligns with one of our top audiences we are aiming to reach. The initial launch exceeded our expectations and the buyer is already making plans to add additional flavors. In addition, during the quarter, we drove continued momentum in existing accounts, which was one of the key drivers of our growth in North America during the Q3. Domestic sales was a record $11,400,000 which was up 92% year over year as a direct result of the work we are doing to increase brand awareness through our strategic investments in sales and marketing. We remain at record levels of production and this coupled with our strong network of distributors puts us in the prime position for a strong finish in 2018. We continue to focus on optimizing our routes to market in key regions with strong partners, where we have ongoing with major distribution networks, which we are looking to leverage in 2019 as we continue to expand our footprint and availability. In addition, during the quarter, we continued to target consumers with a live work in play. And our CELTIUS Originals core line was added over 5,000 vending machines in micro markets of national refreshment solution providers leading a new wave of healthy energy via the vending channel. Placement in the vending channel provides additional exposure to new customers, while allowing customers to try a single serve cold can of Celsius. Opportunities in this channel are showing significant upside. Initial feedback has been extremely positive and we are exceeding our partners' expectations in both micro markets and glass front vending. With a dedicated team focused on growing this channel, we view vending as a key channel for future sales growth. It is yet another avenue for reaching consumers with a live work and play. Our products are perfect for the vending channel who are demanding healthier energy options at work, on the go and on campus. As previously mentioned, the increases in North America and Asia were partially offset by a 15% decrease in European revenues mainly as a result of our Swedish distribution partner returning to more normalized ordering patterns and as they have optimized their inventory levels and are cycling new flavors when compared to the prior year, although our distribution partner continues to see positive sales growth. We remain encouraged by the near term prospect of adding several new key retailers to expand our distribution in Finland and Norway this year, which we believe will further our penetration and availability in those markets. Our military channel continues to exceed our trajectory continues to trend upward for this channel. Demand for healthy functional energy sets remain robust. Our SPINS IRI data as of September 9, 2018 provides definitive proof and points that demand for our products in particular in the line of is in line with market trends. The convenience channel market has grown of over 5.8% over the past 12 months, which compares to our growth with Celsius at a 41.8% growth rate in the same market. We are outpacing the category growth in the convenience channel by a measure of 7%. We remain highly active with our sales and marketing initiatives, including programs during the quarter such as Tough Mudder, a series of competitive events for a range of athletic performances from beginner to the elite, with courses engineered for teamwork where we attended over 18 events during the quarter and sampled over 75,000 health minded consumers. Our marketing activities are in full swing with multiple events each and every weekend with demonstrations and weekly gorilla sampling programs taking place between events. Through our targeted gorilla sampling events, we sampled over 150,000 consumers this year and growing. In addition, our team attended multiple consumer and trade events, including Mr. Olympia in Vegas, where we sampled an additional 12,000 health minded consumers. Subsequently, to the end of the quarter, we added an additional Executive Vice President of Marketing, Matt Kahn to serve for the company and lead our marketing initiatives. He brings over 20 years of marketing experience to Celsius, having served a majority of his career in the beverage industry for companies with led brands such as Coca Cola, Glassell, Vitamin Water, Smartwater, Powerade and Heineken as well. And he has a proven track record of building brands, driving innovation and motivating teams to deliver exceptional results. And he has a impressive outlook for our future. We are excited for him to join our team. The momentum of our business is continuing to accelerate with significant progress being made to expand distribution, increase brand awareness through our targeted and proactive marketing campaigns and management of production and cost of goods, all against a backdrop of increased consumer demand. We are encouraged by our progress we are making and energized by the opportunity before us. I look forward to providing you further additional updates as we head towards a strong 2018 finish. I will now turn the call over to Edwin Negron Carballa for our Chief Financial Officer for his prepared remarks. Edwin? Thank you, John. Total revenue for the Q3 of 2018 was a record $16,600,000 compared to $10,800,000 in the Q3 of 2017, which translates to a significant increase of 54%. By geography, North American sales were up a robust 92% year over year from $5,900,000 in the Q3 of 2017 to $11,400,000 in the Q3 of this year. This increase was mainly due to growth in existing accounts and distribution expansion. In Asia, sales also increased considerably from $362,000 in the year ago quarter to $1,400,000 in the current period, an increase of 2 73% due primarily to the recent modern train launch that John discussed. The strength in North American and Asian sales was partially offset by a slight decrease in revenue of 3% pertaining to other international regions and a 50% decrease in revenue in Europe as a result of our principal European distributor lowering their inventory levels, timing delays regarding launch of new flavors and discontinuation of certain other flavors. The net increase in revenues was driven by higher sales volumes as opposed to increases in product pricing. Gross profit dollars for the Q3 of 2018 increased by a healthy 47% to $6,900,000 up from $4,700,000 in the year ago quarter. In contrast, gross profit margin slightly decreased to 41.5 percent in 2018 when compared to the prior year results of 43.3%. The increase in gross profit dollars was mainly attributable to increase in sales volume, while the decrease in gross profit margin was mainly attributable to increases in promotional allowances, slotting charges and increase in production and repackaging costs. Selling and marketing expenses for the quarter ended September 30, 2018 were $8,700,000 compared to $4,700,000 in the year ago quarter, an increase of 84%. The increase is due primarily to marketing investments to continue to build our brand, particularly in the China market and investments in employee costs. Regarding general and administrative expenses for the Q3 of 2018, they amounted to $2,300,000 compared to $1,600,000 for the year ago quarter, an increase of 47%. The increase was primarily due to an increase in stock based compensation of $552,000 when compared to Q3 for 2017, as well as increases in employee costs of 129,000 dollars and an increase in professional fees of $91,000 which were partially offset by savings of $44,000 in other administrative areas. Net loss to common stockholders for the Q3 of 2018 was $4,200,000 or $0.08 per share, compared to $1,700,000 or $0.04 per share for the corresponding period last year. These losses included preferred dividends of approximately $44,000 for the Q3 of 2018 $92,000 for the Q3 of 2017. Operating expenses for the Q3 of 2018 included non cash charges such as depreciation, amortization and stock based compensation for a total of $1,300,000 compared to $734,000 for the Q3 of 2017. As such, adjusted EBITDA for the Q3 of 2018 was a loss of $2,900,000 which included $5,100,000 related to investments in our product launch in China and distribution expansion in Hong Kong. Excluding the investment in Asia, adjusted EBITDA was a positive $2,200,000 a significant improvement year over year compared to $1,100,000 in 2017. We believe this information and comparisons of adjusted EBITDA and other non GAAP financial measures enhance the overall understanding and visibility of our true business performance. To that effect, a reconciliation of our GAAP results to non GAAP figures has been included in our earnings release. Now turning to our year to date results. For the 1st 9 months of 2018, revenues increased a solid 40% from $27,000,000 to $37,900,000 in this year. The increase was a result of strong growth in North American sales revenue of $10,600,000 when compared to the same period for 2017. Revenue from Asian and other markets also reflected an increase of approximately $2,400,000 when compared to the same period in 2017. These increases were partially offset by a decrease in our European revenue of 23%. Here again, the increase the net increase in revenues was driven by additional sales volume as opposed to increases in product pricing. Gross profit dollars for the 1st 9 months of 2018 increased by a solid 34% from $11,600,000 to $15,600,000 for the 9 months ended September 30, 2018. Gross profit margins decreased to 41.2% in 2018 from 43% for the same period in 2017. The increase in gross profit dollars is primarily attributable to increases in sales volume, while the decrease in gross profit margin is mainly related to increases in promotional allowances, slotting charges and increase in production and repacking costs. Sales and marketing expenses increased by $9,200,000 during the 1st 9 months of 2018 to $18,400,000 when compared to $9,300,000 in 2017. The increase is primarily due to marketing program investments, including China investment of $8,100,000 as well as increases in human resources investments in both marketing and the sales areas. General and administrative expenses for the 9 months ended September 30, 2018 were approximately $7,400,000 an increase of $2,200,000 from $5,300,000 for the 9 months ended September 30, 2017. The increase in general and administrative costs is mainly related to the increase in stock based compensation, the settlement of a territorial dispute with a distributor and an increase in research and development costs, which were partially offset by savings in other areas. Below the operating line, other expenses, which mainly relate to interest expense, were basically flat year over year at $123,000 for the 1st 9 months of 2018 compared to $122,000 for the 1st 9 months of 2017. The net loss attributed to common stockholders for the 1st 9 months of 2018 was $10,500,000 or a loss of $0.21 per share compared to a net loss of $3,300,000 or $0.08 per share for the year ago period. Operating expenses for the 1st 9 months of 2018 included non cash charges for depreciation, amortization and stock based compensation totaling approximately $3,400,000 compared to $2,400,000 in the 9 months of 2017. Adjusted EBITDA for the 1st 9 months of 2018 was a negative $6,000,000 which included $8,100,000 of expenses related to our product launch in Asia and one time expenses mainly pertaining to the settlement of a lawsuit with a former distributor of approximately $1,000,000 Excluding the Asia investment and one time charges, we delivered a positive non GAAP adjusted EBITDA of $2,100,000 for the 9 months of 2018. Now turning to the balance sheet. As of September 30, 2018, the company had cash of $5,300,000 and working capital of $16,300,000 This compares to $14,200,000 in cash and working capital of $20,600,000 as of December 31, 2017. We continue to have good turns in our working capital with good margins. As such, we continue to believe that our current cash balance and the results of operations will deliver sufficient liquidity to meet our anticipated cash needs during the next 12 months. Cash used in operations for the 1st 9 months of 2018 totaled $9,000,000 The use of cash in 2018 is mainly related to increased operational losses driven by high levels of investment in product launches and marketing initiatives primarily in Asia. That concludes our prepared remarks. Operator, you may now open the call for Thank you. Our first question comes from the line of Jeff Van Sinderen with B. Riley. Please proceed. Hi, everyone, and congratulations to your team on the strong metrics. Thank you, Jeff. John, can you speak a little bit more about the domestic sell through trends, maybe delve into the rollout with CVS and Target? And I guess how those are going and how the door count might evolve in the future there? Yes, absolutely, Jeff. For the quarter, we saw great sell through in fairly all of our channels are showing extremely strong sell through. And Target and CBS has been a great opportunity for us this year in 2018, where we initially launched, as we call it, a smaller test last quarter in regards to about 500 stores. Target has expanded us further. We're in over 1,000 stores today. There is a lot of opportunity to continue to scale in 2019. We see Target as a great partner for us, a great national footprint to capitalize on and we're getting great interest and seeing good takeaways on the product. So we see Target as a great long term partner. We had very strong sell through throughout the quarter. And the same goes with CBS. CBS, we're in 500 about 550 locations and growing. We do have fire resets coming up. We've gone through the year end reviews and it looks extremely positive to continue to partner with them towards the really towards 2019 as we look to move forward. And we're also actively speaking with other banners in that drug channel as well where we see great opportunity, really targeting that health mining consumer. Okay, great. And then I know you added marketing talent recently. Just wondering, any early thoughts on how you might evolve your marketing plans? Yes. We did bring on Matt Khan to the marketing team. He has over 20 years experience, as I previously stated. He is a great addition to the team. He has a proven track record of building brands, driving innovation and really motivating teams to deliver exceptional results. So we looked you won't see anything drastic, any changes. We have a firm foundation that has been laid. Vanessa Walker, I have to thank her for her services and dedication to the company. We have a great foundation that has been laid to build upon. So you're going to see more from us as we continue to scale along into 2019. You're going to see more consumer activation, more trade activation as well. But we're not going to move away from our core. We're targeting consumers, health money consumers with a live, work and play through a variety of initiatives from social media to a key ambassador and influencer programs as well as event and guerilla sampling plans through 2019. Okay, great. And then if I could squeeze in one more. I think in your prepared comments, you said production is normalizing. Given the increased volumes you're running, maybe you can speak to how your co packer setup is evolving and how that should benefit you going forward? Yes. As we continue to grow and scale, co packer availability out in the North America has been challenging. There's a lot of growth in the sleek can business, where we are operating and producing at these co packers throughout the country. Currently, we're operating at 4 co packers. We are in talks currently with 4 other co packers for 2019 as we continue to build out this supply chain. At this point, we are bringing inventory levels back up to more normalized levels to really support the growth as we look to continue this momentum into 2019. There is availability out there. You're starting to see we have there is some talk about cans being having supply issues, but we have good we have good relationship with our can manufacturer and we have not been effective with that. We've been working with them very closely as well. They were just in the office 2 weeks ago and they are committed to partnering with Celsius and they see the tremendous upside. So really working, solidifying those relationships with our partners and suppliers as this is a joint effort as we build this brand together. So we see great opportunity and availability for 2019 to support the growth that we're seeing and the interest and the demand that's being that has been created. Okay, great to hear. Thanks for taking my questions and best of luck for the rest of Q4. Thank you, Jeff. Thank you. Thank you. Our next question comes from the line of Jeffrey Cohen with Ladenburg Thalmann. Please proceed. Hi. This is actually Destiny on for Jeff. How are you guys doing? Excellent, Destiny. Thank you for calling in. No problem. I'd just like to echo the congratulations on a phenomenal quarter. I had a few questions. Could you explain a bit more some of the strategic partners you're evaluating in China? What areas do you think they would be in and things like that? Sure. We currently as we continue to scale throughout China, we are looking to leverage further leverage our strategic networks as the last two rounds of financing brought in influential strategic investors that are located in China. We are also talking to a variety of other strategic investors that we would be able to leverage further to really drive Celsius further, quicker and to a broader audience. We're talking to a variety of different strategics, which are also within retail segment as well as with that can help also with advertising as well. So I don't have any further information I can share at this point, but we are talking to a variety of local strategic investors to help us penetrate further into the market. Okay, got it. Thank you. And then it sounds like you're having some great success or early success in the vending channels. Do you think you'd be able to replicate that in China as well? Or is there really no interest there? And then I have a follow-up on the vending channels. Yes, absolutely. That's we are replicating our same strategy in North America as well as in the Nordics as well in China, we see great opportunity in healthy vending in these and micro markets within office buildings. And that's been a great success for us. We initially rolled that out and partnered with Vistar as well as Canteen and several other large national vending wholesalers. And the initial rollout started in the 2nd quarter and it's really turned out very successful in the Q3. And we see that continuing to build throughout 2019. We see great opportunities. And we're working at we see the same opportunities as well in Hong Kong, where you're seeing a lot of office buildings as well, cold availability. And there's nothing best than a healthier, healthy Celsius, a Celsius energy drink next to healthier products and these healthier vending alternatives. Okay. Got it. And then I also believe that I read that all the original or all the original products are available to be implemented into a vending machine. But how are your distributors determining which ones to put in? Does it go by geography or based on demand, things like that? We have a well, we have standard planograms that are set up. We'll see variances out there in the marketplace based on the operator that's managing those vending machines. So you will see inconsistencies throughout the market on different flavor availability. But you will see a lot, mainly our core flavors that we're pushing at this time of year entering summer. We have Kiwi Blava as a new great flavor with great acceptance, raspberry acai and the orange is a great flavor as well, as well as all our other flavors that we offer. But all flavors you are correct that all flavors are available through the vending. It does get limited on the number of slots of availability. So you will see a variance out there in the marketplace. Right. Okay. And then I thought I know or I heard that you also mentioned premium pricing. What types of pricing trends are you seeing as compared to last year or even last quarter? Well, what we are doing are maintaining our pricing. We're driving strong revenue growth, maintaining our gross profit margins and we are not discounting price. We are driving our premium pricing in the marketplace and this growth is not coming from discounting product. I think that's what we were trying to clarify in the earlier comments that this growth is organic growth from consumers, from reorders on a great trajectory and it's not driven by discounted product. This is sustained growth. Okay. Thank you for clarifying that. I believe that does it for me. Thank you for taking the questions. Excellent. Thank you. Thank you. And our next question comes from the line of Anthony Vendetti with Maxim Group. Please proceed. Thanks. Good afternoon, guys. Good afternoon, Anthony. Hello. Hello. So I just want to understand the launch in China and how much more money is going in there because the sales and marketing expense for the quarter was a lot more than we were looking for. Was that mostly due to the investments in China or is there something else there? Yes. The 3rd quarter was the investments in China that probably is higher than you anticipated. We did do a lot of activation in the quarter as we are entering the planograms for resets or the planogram discussions as all the retailers are planning out 2019. So there was a lot of activation that took place during the quarter as we're setting the stage in China for 2019 as we continue discussions with these key accounts to further gain penetration within the market. And John, I think I said or Edwin, I think I missed the number for how much was invested specifically in China. It was a combination of people and marketing, I guess, you said. What was the increased expense? Because I heard one number, but I didn't know how over what time Yes. So you're talking about for the year to date, it was $8,000,000 about $8,100,000 of investment in China. That's what I heard year to date. And for the quarter, how much was it? For the quarter, it was about $5,100,000 For this quarter, it was $5,100,000 Okay. That's that was wasn't just in sales and marketing, there was sales and marketing and then there were some other investments in the quarter, right, in China? That's correct. We had sales obviously, we invested in North America. We had a variety of activation going on. As mentioned, we were very active in the Q3 in North America at a variety of trade shows, consumer events, Tough Mudder events. We headed out thousands, 100 of thousands of cans, a lot of activation and gaining great feedback with the targeted market. So just as we go forward though, this was more of a based on all the things you just mentioned, John, it was more of an anomaly for this quarter than it is a go forward expectation, correct? That would be correct. Yes. Okay. And then I don't know if I missed it, but did you give an update on 711? Just briefly touched on 711. 711 is going extremely well. We are seeing good turns. We're partnered with McLean. And things are moving along very nicely with 711. We see them as a great partner. They allow us to have national broad distribution. We're using them as a great example of what how Celsius can perform within the convenience channel. And that's allowed us to expand this year throughout Wawa, further expansion within Racetrack, QT and Circle K as well in key regions. Okay. And then just in Norway, are those timing issues, inventory issues, all of that, is that pretty much resolved right now? Or is there still some lingering issues there? In the Nordics, we're starting to see that inventory move to more normalized levels. We mentioned that last quarter that we would see more normalized. This quarter, we saw it being more normalized. You will still see and experience historical I guess it would be seasonality effects, but we do see normalized revenues or inventories on their side. The product is still growing in the market and we are very confident to continue to move forward. It's further expansion. As you mentioned, Norway and Finland are good opportunities to continue to move further into those grocery outlets as well as hypermarkets within the region. Okay. And then just lastly on SKU expansion. I know you said you have 3 brands in the 1,000 of the 1800 Target stores. When for most of these stores, are the resets going to take place where maybe you can get additional SKUs into whether it be CVS or Target or? Yes. Traditionally, the meetings take place in the back half of the year. So a lot of meetings have already taken place and some are still taking place as we speak. And the retailers usually will update their sets, their planograms usually towards the back half of Q1 to Q2. You'll start to see some resets taking place. We feel very confident to further expand in all of our channels with the momentum that we're experiencing currently. Okay. Thanks guys. Thank you. Thank you, Anthony. Thank you. Our next question comes from the line of Jerry David, a private investor. Please proceed. Hi, John. I just wanted to make a couple of comments. First, congratulations to you and the entire team. Hitting that $16,600,000 top line revenue is absolutely critical in the beverage industry. And I'm so excited about you hitting that number because all the beverage companies are really they're measured on that. So congratulations on that and the tremendous growth. And also the investment in China, it's just to me, it's just going to be it's a golden egg they're waiting. And you guys are just doing a great job there with your alignments and so forth in China. And the last thing I'll comment is, as Matt Kahn, what a great pick you got there. I mean, he's a great guy with a great background, and I can see him really taking helping take Celsius to the next level. But I just wanted to congratulate you on such a great job to you and the rest of the team. Thank you, Jerry. We truly have a very strong and dedicated and passionate team, a focused team, and we look forward to continuing to drive further success. Thank you very much. Good afternoon, Pete. So what I really wanted to kind of just touch base on was the churn expansion. And as of the last earnings call, at that time, to my understanding, the products was located in 25,000 locations at that time. So over the last quarter here, the revenue of 1,400,000 dollars I was just kind of crunching numbers real quick, we're looking at about $60 in product per location. Is that a number that we were aiming for? Is that above what we're looking for or below? Where does that fall? That's a good question. We're not releasing same store sales data. We have not done that in the past. A lot of those stores came on late in the quarter. We are in about 127 sub distributors that are servicing those locations and about 15,000 key accounts. So the 25,000 was through the quarter and then we closed an additional accounts towards the back half of the quarter. Okay. And then just in regards to kind of future revenue casting, what are you anticipating that the continued investment in China and the additional locations that we'll be adding would in turn result with revenue growth in the future? We're looking to move our investment into more normalized levels as we move forward. To be further in line, we're having investment in the initial year, the launch, which was this year. And we're looking for as we move through Q4 and then towards 2019, we're looking for more normalized P and L. There will still be investments, but it will be more normalized. Okay. I appreciate it gentlemen. Thank you. Thank you, Peter. Thank you. We have reached the end of our Q and A session. I would like to turn the floor back over to management for closing remarks. Thank you. On behalf of the company, I'd like to thank everyone for their continued interest. Our 3rd quarter results demonstrates our products are gaining considerable momentum. We are capitalizing on today's health and wellness trends. Our active healthy lifestyle position is a global position with mass appeal. We are building upon our core business and leveraging opportunities and deploying best practices. I'm very proud of our dedicated team and I thank our investors for their continued support. On December 5th 6th, management will be available and will be presenting at LD Micro. We look forward to seeing many of you there. Thank you everyone for your interest in Celsius and have a great day. Thank you. This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.