Ladies and gentlemen, thank you for standing by. Good day, and welcome to The WD-forty Company First Quarter Fiscal Year 2017 Earnings Conference Call. Today's call is being recorded. At this time, all participants are in a listen only mode. At the end of the prepared remarks, we will conduct a question and answer session.
I would now like to turn the presentation over to the host for today's call, Ms. Wendy Kelly, Director of Investor Relations and Corporate Communications. Please proceed.
Thank you. Good afternoon, and thanks to everyone for joining us today. On our call today are WD-forty Company's President and Chief Officer, Gary Ridge and Vice President and Chief Financial Officer, Jay Rimbolds. In addition to the financial information presented on today's call, we encourage investors to review our earnings presentation, earnings press release and Form 10 Q for the period ending November 30, 20 16. These documents are available on our Investor Relations website at investor.
Wd40company.com. A replay and transcript of today's call will also be made available at that location shortly after this call. On today's call, we will discuss certain non GAAP measures. The descriptions and reconciliations of these non GAAP measures are available in our SEC filings as well as our earnings presentation. As a reminder, today's call includes forward looking statements about our expectations for the company's future performance.
Of course, actual results could differ materially. The company's expectations, beliefs and projections are expressed in good faith, but there can be no assurance that they will be achieved or accomplished. Please refer to the risk factors detailed in our SEC filings for further discussion. Finally, for anyone listening to a webcast replay or reviewing a written transcript of this call, please note that all information presented is current only as of today's date, January 9, 2017. The company disclaims any duty or obligation to update any forward looking information, whether as a result of new information, future events or otherwise.
With that, I'd now like to turn the call over to Gary.
Thank you, Wendy. Good day, and thanks for joining us for today's conference call. Today, we reported net sales of $89,200,000 for the Q1 of fiscal year 2017, which is a decrease of 4% from the Q1 of last year. Net income for the Q1 was $11,800,000 compared to 12 $100,000 in the Q1 of last fiscal year, a decrease of 3% year over year. Diluted earnings per share for the Q1 were $0.82 compared to $0.83 for the same period last year.
Now let's start with a discussion about our strategic initiatives. Strategic initiative number 1 is to grow WD-forty Multi Use Product. Our most important strategic initiative is to take the blue and yellow can with a little red top to more places for more people who will find more uses more frequently. We believe we can grow WD-forty Multi Use Product to approximately $600,000,000 in revenue by the end of fiscal year 2025. In the Q1, global sales of multiuse product were down 7% compared to the Q1 of last year.
Despite the choppy start to the year, we have many exciting things planned for the blue and yellow Camber's Little Red Top during fiscal year 2017. We will begin expanding distribution of our newest innovation, WD-forty EZ Reach Flexible Straw to other geographies beginning with Australia later this month. In EMA, we'll increase the rate of converting European end users to our more innovative smart straw delivery system. Strategic initiative number 2 is to grow the WD-forty Specialist line. Once we've built our brand equity and establish the power of the shield in a particular geography, we can leverage that brand recognition to develop new product lines like WD-forty Specialist.
We believe we can grow WD-forty Specialist to approximately $125,000,000 in revenues by the end of fiscal year 2025. In the Q1, sales of WD-forty Specialists were $5,800,000 which represents a 36% increase over the Q1 of last year. In the Q1, we're excited to have launched our new line of specialist greases in the United States, which is a line of grease products designed to prevent rust and corrosion and to protect across extreme conditions. We are optimistic about the long term opportunities for WD-forty Specialist product line. However, there will be some volatility in sales levels along the way due to the timing of promotional programs, the building of distribution and various other factors that come with building a new product line.
Strategic initiative number 3 is to broaden product and revenue base. Our goal under this initiative is to leverage the recognized strengths of the WD-forty company to derive revenue from new sources and brands. We continue to expand the product offering within our 3 in-one GT85 as well as WD-forty bike. Strategic initiative number 4 is to attract, develop and retain outstanding tribe members. Our goal under this initiative is to attack, develop and to grow employee engagement to greater than 95%.
We are to grow employee engagement to greater than 95%. We are a learning and teaching organization, and one of the unique internal programs which capture this spirit is called Tribology University. The goal of this global program is to educate our tribe members so they become the indispensable go to partners for product knowledge and end user insights. Tribology University continues to evolve and grow and our tribe and I am excited about the future of the program. Strategic initiative number 5 is operational excellence.
We continuously focused on optimizing resources, systems and processes as well as applying rigorous commitment to quality assurance, regulatory compliance intellectual property protection. We're excited to share that we have finally completed the upgrade of our ERP system in EMEA. I'd like to thank all the tribe members who helped make this transition a successful one. That completes the strategic initiatives update. So let's move on to the details of our Q1 results starting with sales.
Consolidated net sales were $89,200,000 in the first quarter, down $3,300,000 versus last year. In the Q1, we generated approximately 40% of our sales in currencies other than the U. S. Dollar and changing foreign currency exchange rates continue to be a headwind for us. Translation of our foreign subsidiaries results from their functional currencies to U.
S. Dollars had an unfavorable impact on sales. On a current on a constant currency basis, total net sales would have been $95,100,000 an increase of 3% compared to last year. This is because our net sales were reduced by about $5,900,000 due to the strengthening of the U. S.
Dollar against the functional currencies of our subsidiaries. This is what we refer to as translational related exposure and it impacts reported results from Canada, Australia, China and the EMEA segment. However, if we take a close look, we see that this reduction in sales was significantly offset by about $4,200,000 of transaction related impacts in EMEA due to the strengthening of the euro and the U. S. Dollar against the pound sterling.
So net net, if we remove all foreign currency exchange impacts, our consolidated revenue would have been around about $90,900,000 down 2% compared to the Q1 of last year. Now let's take a closer look at what's happening in the individual segments. We start with the Americas. Consolidated net sales in the Americas, which includes the United States, Latin America and Canada, decreased to $42,800,000 in the Q1, down about 4% from last year. Sales of maintenance products decreased by 3% in the Americas, primarily due to the lower sales of the multiuse product in the United States and Latin America.
Maintenance product sales in the United States were down 3% during the Q1 due to the timing of customer orders and promotional activities associated with the WD-forty multiuse product. This decline is primarily due to the fact that in the comparable period last year, sales were higher than normal due to the initial launch and distribution of WD-forty EZ Reach Flexible Store in the United States. This decrease in sales was partially offset by increased sales of WD-forty Specialist. Maintenance product sales in Latin America were down 6% in the quarter, primarily due to the uncertain business conditions in Mexico as a result of the current political climate in the region. As a reminder, our maintenance products exclude our home care and cleaning products.
We continue to consider our home care and cleaning products, particularly those in the U. S. As harvest brands that continue to generate meaningful contributions and cash flows, but are generally expected to become a smaller part of the business over time. Sales of our home care and cleaning products in the Americas decreased 5% in the Q1 as compared to the same period last year. Let's jump across the pond to EMEA.
Consolidated net sales in EMEA, which includes Europe, the Middle East, Africa and India, decreased to $30,300,000 in the Q1, down 6% from last year. EMEA's reported results in the Q1 were negatively impacted by foreign currency exchange headwinds as well as the timing of customer orders in Russia. On a constant currency basis, sales in EMEA increased $4,200,000 or 13% compared to last year. We sell into EMEA through a combination of direct operations as well as through marketing distributors. Reported consolidated sales of EMEA Direct Markets, which accounted for 66% of the region's sales, were up 3% for the quarter at US20 $1,000,000 However, it's also helpful to look at our results in local currencies in which we conduct sales transactions in our direct markets.
In the United Kingdom, our pound sterling direct market total sales increased 7% in the Q1. In our Europe based direct market, sales in euros increased by 10% in the Q1. Now let's turn to our EMEA distributor markets, which accounted for 34% of EMEA sales during the quarter. Distributor markets decreased 19% in the first quarter, primarily due to a 36% decrease in sales in Russia. Although market conditions have begun to stabilize in Russia, our results reflect the steps of our marketing distributors have taken to normalize their inventory levels to meet the current market needs.
We would like to remind our investors that political and economic instability in the region makes it difficult for us to predict what level of sales we'll have in this market in the near future. Now let's go across to Asia Pacific. Consolidated net sales in Asia Pacific, which includes Australia, China and other countries in the Asian region, decreased to $16,100,000 in the first quarter sorry, increased to $16,100,000 in the first quarter, up about 1% from last year. In Australia, net sales in U. S.
Dollars were $4,400,000 in the 1st quarter, up 16% compared to last year. Changes in foreign currency exchange rates had a positive impact on these results. In its functional currency, the Australian dollar, sales were up 8% for the quarter. The growth was due to increased distribution and higher sales resulting from successful promotional programs as well as the continued growth of our base business. In China, net sales in U.
S. Dollars were $3,200,000 in the first quarter, up 7% compared to last year. Changes in foreign currency exchange rates had a negative impact on these results. In its functional currency, the Chinese RMB, sales were up 14% in the quarter. The growth in the region was due to new distribution and increased promotional activities.
We are in a new phase of building distribution in China. We recently added 121 new accounts in China in an effort to make WD-forty multiuse product even easier to buy. We expect to add more distribution in China later this fiscal year. We continue to remain optimistic about the long term opportunities in this region, although we expect a lot of volatility along the way due to the timing of promotional programs, the billing of distribution, shifting economic patterns and varying industrial activities. In our Asian distributor markets, net sales were $8,600,000 for the quarter, down 8% compared to last year.
The decline in sales was driven primarily by a lower level of promotional activity and the timing of customer orders. This decline is partially due to the fact that in the comparable period last year, customers were buying product in advance of a price increase that took place at the end of the Q1 of fiscal year 2016. Our Asian distributor markets are not impacted by currency since we still have products in U. S. Dollars in that region.
Now over to Jay, who will continue the review of the financials. Hey, thank you,
Gary. First, let's review their 50 fivethirtytwenty five business model, the long term targets we use to guide our business. As you may recall, the 55 represents gross margin, which we target to be at 55 percent of sales. The 30 represents our cost of doing business, which is our total operating expenses excluding depreciation and amortization. Our target is to be at 30% of net sales.
And then finally, the 25% represents EBITDA. First, the 55 or our gross margin. In the Q1, our gross margin was 57.2% compared to the 55.6% in the Q1 of last year. For the first time in several quarters, net changes in the cost of petroleum based specialty chemicals and aerosol cans did not have an overall impact on our gross margin. Although the net changes in the cost of petroleum based specialty chemicals did not have an impact, we did experience a net positive impact on gross margin from costs in our Americas and Asia Pacific segments.
However, these were fully offset by unfavorable net impacts in our EMEA segment. While the cost of petroleum specialty chemicals for our EMEA segment are sourced in pound sterling, the underlying inputs are denominated in U. S. Dollars and as a result of the strengthening of the U. S.
Dollar against the sterling, we saw a significant increase in the cost of goods in pound sterling. Just changes in foreign currency exchange rates had a positive impact on our gross margin as well. This is because in EMEA, our cost of goods are primarily sourced in pound sterling, while approximately 45% of our revenues are generated in euros, 30% in pound sterling and the remaining 25% in U. S. Dollars.
The combined effect of the strengthening of both the euro and the U. S. Dollar against the pound sterling caused revenues in total to be worth more in pound sterling thus improving our gross margin. Also positively impacting our gross margin by 50 basis points this quarter were sales mix changes and other miscellaneous costs, primarily due to a larger portion of our sales in EMEA being made up of higher margin maintenance products. Gross margin also was positively impacted by 10 basis points due to sales price increases which were implemented in EMEA over the last 12 months.
These improvements in gross margin were partially offset by higher warehousing and inbound freight costs, primarily in the Americas which had an unfavorable impact on our gross margin of 30 basis points. Additionally, advertising, promotional and 30 basis points. Well now, I'll address the 30 or our cost of doing business. In the Q1, our cost of doing business was approximately 30 7% compared to 35% last year. Revenue growth is the most important factor in achieving our long term 30% target.
In the Q1, our revenue declined as well as increased SG and A expenses negatively affected our cost of doing business percentage. SG and A increased 4% compared to last year, which was primarily attributed to higher employee related costs associated with higher stock based compensation expense due to the timing of expenses associated with certain equity awards granted during the Q1. While our target is to have our cost of doing business at 30% of net sales, we plan to continue to make investments in support of our 5th strategic initiative, operational excellence. This will include investments in quality assurance, regulatory compliance and intellectual property protection in order to safeguard the blue and yellow can with a little red top. We expect to move closer to our long term target of 30 over time as revenues grow.
For the Q1, 75% of the cost of doing business came from just three areas, people costs or the investments we make in our tribe, the investments we make in marketing, advertising and promotion. As a percentage of sales, our A and P investment was 5.4% in the Q1. And then finally freight costs, the cost to get our products to our customers. And that brings us to EBITDA, the very last of our fifty-thirty-twenty five measures. EBITDA was 21% of net sales for the Q1 compared to 20% for the Q1 last year.
Now that completes the discussion of our fifty fivethirtytwenty five business model for the current quarter. I'll now discuss a couple of other items worth noting. The provision for income tax was 28.3% in the Q1 compared to 28.5% last year. The slight decrease was driven by increased taxable earnings generated from foreign operations, which are taxed at a lower rate. Net income for the Q1 was $11,800,000 versus $12,100,000 in the prior year.
Changes in foreign currency exchange rates had an unfavorable impact of about $1,100,000 on the translation of our consolidated results this quarter. On a constant currency basis, net income would have increased by $800,000 compared to last year. Our diluted earnings per common share were $0.82 in the Q1 compared to $0.83 for the same period last fiscal year. Diluted weighted average shares outstanding decreased to 14,200,000 shares from the 14,500,000 shares a year ago. Now a word about capital allocation.
Our capital allocation strategy includes a comprehensive approach to balance investing for long term growth as well as providing strong return to our shareholders. We target maintenance CapEx of between 1% 2% of net sales. And as we previously discussed, in addition to our maintenance CapEx in fiscal 2017, we anticipate making a one time investment of approximately $15,000,000 to buy and renovate a new office building to house our San Diego based tribe members. In the Q1, we closed escrow on a property and invested $10,700,000 on a building in the San Diego neighborhood of Scripps Ranch. The tribe is very excited to relocate to the new building sometime this summer and we'll be completing the renovation throughout this next couple of months.
In addition, we continue to return capital to shareholders through regular dividends and share repurchases. On December 13, 2016, our Board of Directors approved a quarterly cash dividend of $0.49 per share reflecting an increase of 17% over the previous quarter's dividend at $0.42 a share. With this rise, we have increased our dividend for 7 consecutive years for a total increase of 96% over that time period. And based on today's closing price of $117.30 the annualized dividend yield is 1.67%. Now during the Q1, we repurchased nearly 113,000 shares of our stock at a cost of approximately $12,200,000 under our current $75,000,000 share repurchase plan, which was approved by the Board in June of 2016.
At the end of the 1st fiscal quarter, we had $62,800,000 remaining under the plan. So with that, let's turn to our 2017 guidance. We are reaffirming the guidance we gave in October. Net sales growth is projected to be between 4% 6% with net sales expected to be between $395,000,000 $404,000,000 Gross margin for the full fiscal year is expected to be near 56%. And advertising and promotion investment is projected to be around 6% of sales.
Net income is projected to be between $51,300,000 $52,300,000 and diluted earnings per share is expected to be between $3.64 $3.71 based on an estimated 14,100,000 weighted average shares outstanding. As a reminder, this guidance does not include any future acquisitions or divestitures and assumes foreign currency exchange rates and crude oil prices will remain close to current levels for the duration of fiscal 2017. And that completes the financial overview. Now I'll turn it back to Gary.
Thank you, Jay. So let's sum up of what you heard on this call today. You heard that foreign currency exchange rates continue to be a headwind and on a current constant currency basis, reduced our net sales by about $5,900,000 Additionally, you heard that, that reduction in sales was significantly offset by $4,200,000 in transaction related impacts in EMEA due to the strengthening of the euro and the U. S. Dollar against the pound.
You heard that the global sales of WD-forty Specialist were $5,800,000 in the quarter, representing a 36 percent increase compared to last year. You heard that our EMEA direct markets are performing very well. You heard that our Australian market is performing well with 8% growth in functional currency, the Australian dollar. You heard that in China, we've recently added 121 new accounts in an effort to make WD-forty Multi Use Product even easy to buy. You heard that we increased our dividend 17% last month, and we've increased our dividend for 7 consecutive years, resulting in a 96% increase over that period of time.
You heard that we've reaffirmed our fiscal year 2017 guidance. In closing, I'd like to share a quote from a British author, Neil Gaiman. I hope that in this year to come, you make mistakes because if you're making mistakes, then you're making new things, trying new things, learning, living, pushing yourself, changing yourself and you're going to change the world. Thank you for joining us on the call today. We'd be more than pleased to now open the conference call for your questions.
Your first question comes from the line of Liam Burke with Wunderlich. Your line is open.
Gary, through the balance of the year, do you have any major promotional activity scheduled? Or is it just going to be the usual ones that you had planned in the past?
Nothing outside of what our stated plan was, which include a number of different promotions with a number of different customers in a number of different geographies, Liam.
Okay. And on the specialist side, you mentioned that you introduced a grease product into the Americas. How does the pipeline on some of these some of those types of products and specialists look?
We will be releasing our degrees of range later in the year And we now have distribution of our grease line through Home Depot. If you like to go see it, you can go see it there. We'll be progressively rolling that out. But the Greases and our new Degrees align are the 2 biggest specialist launches this year with the continuation, of course, of added distribution in the U. S.
Of our WD-forty Specialist Spray and Stick Gel and then a number of other specialist products in selected geographies around the world. You noted that specialists grew 36% in the Q1. So we're pretty happy with our trajectory on that at this time.
Super. And then just quickly on China, you mentioned 121 new accounts. I know you have a strong long term outlook for China. Do these new accounts accelerate your expectations there? Or is it pretty much on plan?
I think what it will do, it was a planned move. Our initial move in China was to over time build distribution to match consumption. Then as we've continued to build consumption, we can now add new distribution, which eliminates the fear of actually demotivating the current distributors. So for 10 years now, we've been building to the business that's now at a run rate of several, as you know, dollars 1,000,000 I think $15,000,000 So we're in the next year going to start to actually push out the distribution to now fill the gaps that we think are there. We will do another distribution drive and add more accounts again probably in the 3rd or Q4 of this year.
Great.
Thank you, Gary.
Thanks, Liam.
Your next Hi. So I just wanted to make sure I understood what you said about the petroleum based input costs. I think you said overall it was neutral effect on gross margin, but did you say it was positive in some regions and negative in others? You just repeat that?
Yes, that's exactly right. What we had in the Americas and Asia Pacific is we actually continue to get a net benefit. But when we look to the impact in Europe, in EMEA, what we saw was their cost of goods were rising for these types of products, the input costs associated with the petroleum based products. And that was primarily due to the fact that the Sterling has weakened. And so they've been seeing kind of an inflation in their cost base.
Okay. So you're saying there's some sort of a currency effect on the actual input costs?
Yes, exactly. Right. Okay. While the cost of dollars are the same because of the change in dollar and sterling, their sterling acquisition of these inputs are much higher than they were a year ago.
Right. Okay. So and can you just tell me what was the quantification of the other effect, the FX effect in the EMEA region. That's a separate number. What was that in the quarter?
I think it was 160 basis points, wasn't it?
Yes, it was fairly significant. Let me quickly flip to that. 160 basis points.
Okay. And I seem to recall that's a little more positive even than it was last quarter, which makes sense. But by my read of things, it actually will get less of a positive going forward after this. Is that a correct projection of that sort of?
Well, as long as currencies stay the same, it would. But yes, we don't really know what's going to happen with currencies.
Right. Yes. I meant if the British pound were to stay where it was. Right. Okay.
All right. So I mean there's a lot of puts and takes obviously that in the gross margin. But I mean, I guess I was originally projecting or thinking maybe the gross margin would start to be down year over year in Q3. Is that something that's accurate? Or might we even see gross margin decline in Q2 year over year?
I know you don't want to get into quarterly guidance, but maybe you could help us understand how the pieces move?
Well, I think what we've seen is we've seen a gradual increase in the price of oil. And as that gets into our supply chain and then gets into our inventories and into the customer base, then we'll start seeing an increase because of petroleum based input costs. The timing of that, what we see is that we say about 120 days. Sometimes we see that come through earlier, sometimes in the case of the kind of the recent declines over the last year or so, we've seen that kind of lag quite a bit further than that as we get the benefits. Now when it comes against us, we tend to see that quicker.
Okay. Thank you. That's helpful. So would you still say that your planning range are you still just kind of thinking in your planning range for guidance is $45 to $60 roughly per barrel of oil?
Yes. That's what was in that planning range.
Okay. And then on the can I just ask on the sales performance, granted it's hard to project quarter by quarter for you guys and sometimes it's strong to get strong and weak against weak, but you did have your easiest comparison in this quarter? So I was relatively optimistic. I guess the Russia piece was a lot weaker, but how can we have confidence that you're going to come through with stronger growth when the comps get harder in the second half?
Well, let's talk about the business without all of this static and noise for a minute, Linda, because it's really hard to look at. But I'm looking at a sheet of paper in front of me that lists all of our major geographies and it has green arrows and red arrows on it in relation to transactional currency sales. And if I look firstly in the United States, we had a softer first quarter in the U. S. Versus Last Christmas, we Last Christmas, we had a compelling reason to have that floor space.
We launched Easy Reach Flexible Straw and we got it. So that last Q1 last year had that in it. In Latin America, we've got a whole mess going on with the political climate in Mexico, which is causing the business climate down there to be uncertain. So for the rest of the year, then in Canada, we're up about 2% in our transaction currency for the year. So the main market which the U.
S. Is, we can see in quarters 2, 3 and 4 significant opportunities to have revenue growth because of programs, promotions and activities that were going on. So our big market in the U. S, we're going to see that growth. And we've got a little wash in this quarter.
In EMEA, when I look down this list, in transactional currencies, we're growing 7% in pounds in the U. K. In Benelux, 17 in France, 9 in Indonesia, euros in Iberia, 15 in Italy, 18 across the whole EMEA market in transaction currencies, we grew 10%. Unfortunately, when it moves across and it goes through the 2 currency impacts, it looks ugly like it does now. But from where we sit around looking at the strategic growth of our business and having what I call emotional resilience to the fact that the strategy is being executed on, we feel fine.
Russia, we know what happened. Our marketing distributor there is normalizing inventories. In fact, in market sales are better than they were before. And if we go to Asia Pacific, in transactional currency, Australia is up 8%, China is up 14%. The distributor markets were down.
We understand why. So again, we can't manage this business quarter to quarter in normal times and we won't. And secondly, there's so much static and noise in this at the moment. The price we pay for being global, but thank God we're global because it gives us the hedge against one event to another. So we are comfortable with the guidance we've given.
We can see the business in the future. We're comfortable with our long term projections that the tribe are executing. We've got great growth in specialists. Emotional resilience is what it's about. Steady as she goes.
The strategy is strong and we'll work through it as we have in the past.
Your next question comes from the line of Daniel Rizzo with Jefferies. Please proceed with your question.
Hey, everyone. Hey, Daniel. How's everything? You mentioned increasing distribution in Asia. I was just wondering if I'm thinking about it right, like when would you shift to maybe doing direct sales in that region versus like as it's kind of progressing in EMEA and obviously in the U.
S? I mean is there a timeframe in the future where it would kind of do like a transition to doing to more of a direct model?
No. What I said Daniel is we are increasing distribution in China. And China is already a direct market and we increased our distribution by adding 121 new accounts in China. At this time, we have no plan on converting any other marketing distributors in Asia to direct markets. Our only direct markets in Asia are Australia and China.
All right. Thank you for the clarification. And then with Easy Straw, you said I mean it was down year over year just because of the promotional activity in the initial launch last year. Is that something that kind of kicked into the next quarter? Or is it something just for this quarter and will peter out as we look forward?
It was all in the Q1 of last year. That was the major launch. That was when we took floor space in most of the major home improvement and big box hardware stores in the United States. Easy reach flexible store is doing well. We just had that big selling in the Q1 of last year.
Okay.
Thanks. And then finally, I think you mentioned in the press release something about the destocking inventory destocking in Europe being kind of an issue in the quarter, but I didn't really know if you followed up on that on the conference call here. So I was just wondering if that's something that's going to be something that maintains monitoring for the next couple quarters as well?
What I said was in Russia only, our marketing distributor in Russia is normalizing their inventory. Over the past 18 months or so, Russia has been a basket case as we all know. And we went through a period of time of very severe sales declines in market. Our distributor had stock. We now feel that that has started to normalize.
So we do know what our distributor does have a confidence of what the forward looking output in the market is, which is actually output in the market from our distributor at the moment is up on last year. So what they were doing is basically balancing their stock, which means they bought less from us for a period. We should see that normalize as we enter Q this quarter and the next two quarters.
All right. Again, thank you for the clarification.
Thank you, Daniel.
Your next question comes from Linda Bolton Weiser with B. Riley. Please proceed with your question. Hi, again. So I'm just reviewing you had so many initiatives for growth.
I'm reviewing the list of things you had talked about on the last call. And can you just mention, are you still planning and did it launch yet the expansion into the U. S. Of the motorbike line? And then secondly, the 3 in-one recreational vehicle line, when does that launch?
Yes. The 3 in-one recreational vehicle line, we've started our initial distribution of that. You should see it. If it's not in some stores, it should start to be soon. I can't remember exactly when.
And motorcycle has not yet gone into distribution. It will, but we're waiting for shelf slotting in a major customer. We expect that to come soon.
Okay. Thanks a lot.
Thanks, Linda.
Ladies and gentlemen, that does conclude our allotted time for questions. We thank you for participating on today's conference call and ask that you please disconnect your line.