Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Hydrofarm Holdings Group Fourth Quarter 2023 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode, and the lines will be open for your questions following the presentation. Please note that this conference is being recorded today, February 29, 2024. I would now like to turn the call over to Anna Kate Heller of ICR to begin. Please go ahead. Thank you, and good morning. With me on the call today is Bill Toler, Hydrofarm's Chairman and Chief Executive Officer, and John Lindeman, the company's Chief Financial Officer. By now, everyone should have access to our fourth quarter and full year 2023 earnings release on Form 8-K, issued this morning. These documents are available on the investors section of Hydrofarm's website at www.hydrofarm.com. Before we begin our formal remarks, please note that our discussion today will include forward-looking statements. These forward-looking statements are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that cause actual results to differ materially from our current expectations. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions. Lastly, during today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP, and reconciliations to comparable GAAP measures are available in our earnings release. With that, I would like to turn the call over to Bill Toler. Thank you, Anna Kate, and good morning, everyone. We achieved positive Adjusted EBITDA and positive Free Cash Flow for the full year of 2023, as we had provided in our outlook, even at lower sales levels. Throughout 2023, our team worked very hard to execute our restructuring and related cost savings initiatives, which allowed us to achieve the improvement in several profitability metrics that we are reporting today, including Adjusted Gross Profit, Adjusted Gross Profit margin in 2023 for both the fourth quarter and the full year. Our initiatives included streamlining our product portfolio to enable greater emphasis on our higher-margin proprietary brands, continued focus on inventory reduction and overall working capital management, better space utilization in our distribution centers, and cost reductions in our transportation and logistics. Our cash balance, overall liquidity, and ability to generate positive free cash flow, as we have demonstrated in the last two fiscal years, give me confidence about where we are from a balance sheet perspective. On the top line, our 2023 sales fell short of our guidance range due to several key factors. Fourth quarter sales were lower, primarily due to industry softness in the U.S. specialty retail channel. You may hear from others in the industry that retail stores and cultivation facilities have been closing as the U.S. cannabis industry remains bogged down in regulatory challenges. These issues have led to an overall reduction in demand from retail stores and cultivation facilities. For example, regulators are enacting stronger enforcement in Oklahoma, and many facilities and stores are closing down as a result. We believe these changes will ultimately be good for the long-term health of our industry, as the stronger players will consolidate and create a more stable market environment. There are a number of bright spots in 2023 that we will carry into 2024 and continue to build on, which I'd like to highlight. Our proprietary nutrient brands continue to perform well. In fact, sales grew in the fourth quarter and for the full year of 2023 when you compare them to 2022. Because proprietary nutrient brands is one of our higher margin product lines, the increased portion of sales mix helped to support margin improvement and also helped us to achieve positive Adjusted EBITDA for 2023. Another area of focus in 2023 was to diversify our revenue streams. We have made progress in this area through both geographic and product diversity. Our international sales, which are to customers outside the U.S. and Canada, and non-cannabis sales of CEA products sold into food, floral, lawn and garden, and certain other customers, increased to about 25% of our total 2023 sales, up from 22% in the prior year. In 2024, we will continue to develop geographic and sales channel diversity. Hydroponic sales in the U.S. and Canada are still our core business, but the revenue diversity will help support us as we are navigating challenging industry dynamics. Several potential catalysts are on the horizon for the cannabis industry. The first is the possibility of federal descheduling, which should inject new life into the industry by reducing taxes on legal plant-touching businesses, enabling them to reinvest. The SAFER Banking Act should attract renewed investment from both institutional and retail players. And importantly, since the beginning of 2023, there are an additional seven U.S. states that have legalized adult-use cannabis, which means now there's an estimated 54% of U.S. adults who live in a legalized state. Momentum is beginning to swing positively internationally as well, as Germany just legalized recreational cannabis use last week. We are confident that Hydrofarm will continue to navigate our path forward, and we are well-positioned when the industry returns to growth. I'm very proud of the entire team at Hydrofarm for all their hard work this year in delivering a positive Adjusted EBITDA and Free Cash Flow in 2023. With that, I'll turn it over to John to discuss further details of the fourth quarter financial results and our outlook for 2024. John? Thanks, Bill, and good morning, everyone. Net sales for the fourth quarter were $47.2 million, down 23.2% year-over-year, driven primarily by an 18.7% decrease in sales volume and a 4.5% price mix decline. While we anticipated softer sales volumes in Q4, which is standard cadence for the business, the softness was larger than we had expected. Our price mix decline in the quarter was primarily driven by promotional activity in our durable products, as well as a higher mix of lower-priced consumable products relative to our higher-priced durables. Our sales mix continues to evolve, and for the full year, consumable products represented approximately 74% of our sales, compared to 65% in 2022. Our proprietary brands continued to mix higher on a year-over-year basis and approached 60% of our total net sales in the fourth quarter, our highest ever quarterly level since our IPO. Some of this mix shift was a reflection of the encouraging demand for our proprietary nutrient brands. Accompanying our favorable brand mix for the quarter was continued sales diversification. As Bill noted, our international and non-cannabis sales increased from a sales mix perspective in Q4 2023 and for the full year, and now represent approximately a quarter of our total sales. In 2024, we will look to further capitalize on what is working today, focusing on improving our mix of proprietary brands, most notably our proprietary nutrients, as well as driving further momentum in our international and non-cannabis sales. Gross profit in the fourth quarter was $8.4 million, compared to a gross loss of $0.5 million in the year ago period. The adjusted gross profit was $11.5 million, or 24.3% of net sales, compared to $9 million, or 14.7% of net sales in the year ago period. This represents a significant adjusted gross profit margin expansion when compared to the fourth quarter of 2022, and a 130 basis point expansion when compared to our vastly improved third quarter margin. This margin expansion demonstrates continued progress on more favorable brand mix, lower freight costs, and improved productivity. As you may recall from our Q3 call, we initiated a second phase of our restructuring plan, which includes U.S. manufacturing facility consolidations intended to improve efficiency and further rightsize our footprint. This second phase is primarily focused on our durable products manufacturing operations. In the fourth quarter, we recorded $1.3 million of restructuring expenses, which included nine cash inventory writedowns associated with a reduction in durable manufacturing and warehousing space. In total, when you combine our phase one and phase two restructuring initiatives, along with our sublease cost-saving activities, we expect that by the end of 2024, we hope we'll have reduced our company-wide manufacturing and distribution footprint a little over 25% since the start of 2023. Selling, general and administrative expense was $19.9 million in the fourth quarter, compared to $26.2 million in the year-ago period. Adjusted SG&A expenses were $12 million, a significant 31% reduction when compared to $17.4 million in the year-ago period. The decrease was primarily driven by reductions in headcount, professional fees, lower accounts receivable reserves, distribution center facility costs, and insurance costs. Our Q4 adjusted SG&A expense remained in line with our third quarter, which was our lowest quarterly total since before going public. Adjusted EBITDA was a loss of $0.6 million in the fourth quarter, compared to a loss of $8.4 million in the prior year period. The $7.8 million improvement was driven by our lower Adjusted SG&A expenses and our higher Adjusted Gross Profit. Most notably, for the full year, we achieved positive Adjusted EBITDA, which delivered on our expectations and demonstrates the effectiveness of our improved proprietary brand mix and our restructuring, productivity and cost-saving initiatives. Moving on to our balance sheet and overall liquidity position. Our cash balance as of December 31, 2023, was $30.3 million, an improvement by $9 million compared to the end of 2022. We ended the year with approximately $123 million of term debt, approximately $132 million of total debt when you include finance lease liabilities, and approximately $102 million of net debt. As a continued reminder, our term loan facility has no financial maintenance covenant, and our debt facility does not mature until October 2028. We continued to maintain a zero balance on our revolving credit facility throughout the fourth quarter and across the entire 2023 fiscal year. In the fourth quarter, we reported a loss from operating activities of $1.6 million, with capital investment of $0.2 million, yielding negative free cash flow of $1.7 million. However, our positive Adjusted EBITDA and our disciplined management of working capital throughout the year helped us generate positive free cash flow, as expected, for the full year 2023. With that, let me turn to our full year 2024 outlook. We expect net sales to decline low- to high-teens% for the full year 2024. As we have seen in each sequential quarter since Q4 2022, we expect the quarterly declines to decelerate over the coming year. We also expect to see an increase in adjusted gross profit margin, primarily due to improved sales mix and our restructuring and related cost-saving initiatives. We expect Adjusted EBITDA that is positive for the full year 2024. This assumes improved adjusted gross profit margin and Adjusted SG&A expense savings to more than offset some limited productivity investments. We also do not expect any significant charges related to non-restructuring inventory write-downs or accounts receivable for the full year. Finally, we expect to generate positive Free Cash Flow in 2024. We will continue to reduce our working capital inventory levels. I will note that we do expect capital expenditures of approximately $4 million-$5 million in the year. In closing, we remain optimistic about the future of the industry and the future of Hydrofarm. This year, we proved we can operate profitably despite lower sales levels, as we deliver positive Adjusted EBITDA and positive Free Cash Flow. We look forward to continuing to deliver these results in 2024. Thank you all for joining us, and we are now happy to answer any questions. Operator, please open the line. Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. If you'd like to ask a question, please press Star and One on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star and Two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. Our first question is from Andrew Carter with Stifel. Please go ahead. Yeah. Hey, thank you. Good morning. First thing I wanted to ask is, so your guidance here implies low teens% to high teens% decline, therefore kind of $27 million-$39 million of lost revenue, but you have flat EBITDA. Could you kind of take us through? I know that there's productivity in there at both the gross margin line as well as the SG&A. Can you take us through how much is, like, productivity slash savings versus just improvements in the underlying gross margin from favorable supply chain costs? I assume that'll be hitting on a lag, as well as you mentioned the mix-up of proprietary brands. Thanks. Thanks, Andrew. Yeah, good morning, Andrew. I can jump in on that. Yeah, there's a couple things that'll be driving it. I mean, you heard us mention an improvement in Adjusted Gross Profit margin for the full year of 2024 versus 2023. You know, obviously, we ended last year roughly at 24% Adjusted Gross Profit margin. You know, we expect that our improved sales mix, so higher Proprietary Brands, we have a couple hundred basis points opportunity to improve that in 2024 versus 2023. And I think, as you know, our proprietary nutrients are really inside of that number of Proprietary Brands more broadly, and really represent one of the more profitable pieces of our overall business. We also think we have a couple hundred basis points margin opportunity to improve in terms of percentage of sales for proprietary nutrients. On top of that, with the restructuring that we've been instituting and other related productivity and cost-saving initiatives, we do think that, you know, we'll reduce some space to reduce overhead costs and our labor pool in our manufacturing durable facility located in Chicago. We've already instituted some of that and have a little bit more work to do there, but overall, that's gone pretty well, and we've reduced basically a third of our space there. We also have an opportunity to further consolidate our manufacturing facilities with respect to some of our consumable operations. And while we haven't yet quite accomplished that, that's on the bill for 2024 and should extract savings similar in terms of reducing overhead costs and improving productivity in our main nutrient manufacturing facility. We also, as I think you see through our results in 2023, we captured some freight savings last year, really in the back half of 2023. We will get some lap benefit in the first half of 2024 as we continue to achieve lower LTL and local freight rates. So that'll be a favorable comparison in the first half of the year. You know, on top of that, at the SG&A level, we still have very many benefits that are coming our way in 2024. We have expected lap benefit from savings that we achieved last year in terms of headcount reductions. You know, we reduced headcount by almost 25% during 2023, and so in the first half of 2024, we should see some benefit from that. We also expect in 2024 we'll have lower professional fees, distribution facility costs related to our subleasing activities. We've been subleasing a lot of our excess distribution warehouse space, and then on top of that, we have some insurance expense savings. So as I think you're, you're gathering, I mean, there's a lot of savings opportunity, much of which we've already instituted, some of which is still on the come, which we think gives us margin opportunity at the gross profit level, as well as more savings at the SG&A level. All right, fair. Thank you. That was helpful. I guess the second question is, and I think we just got a press release that Griffin picked up the Quest business. There obviously is the largest manufacturer slash distributor out there. Scotts has, as it is focusing more on signature. Are a lot of, like, some of the kind of third-party distributed brands out there, kind of in play, are some of those that we're going to direct to retail now looking for a different solution, has become economical? What is the landscape like out there in terms of kind of the opportunities for third party, or should we just think about this more as just focusing on really driving proprietary? Yeah, I think that clearly the proprietary part of it, Andrew, it's a good question, has been the big winner for us, right? What's happened in the distributed side of things is as the primary hydroponic distributors, primarily us and Hawthorne over the last few years, you know, weren't delivering the volumes, these third-party brands went to other lawn and garden suppliers, direct to retail, other number of things. And so they've kind of diluted themselves across the market with a number of supply points. So what we have done, conversely, is- ... make sure that we continue to supply those because it makes us the industry distributor we are, but also really focus on our proprietary signature house brands, whatever you, however you call them. And in doing that, you're seeing us be able to uphold, you know, slightly positive EBITDA for last year because of the mixed benefit of driving the profitable house brands. In my script, and I think in John's as well, we said that, you know, our proprietary nutrient brands actually grew year-over-year. Well, that's a very different story than what our total company did, and the weakness, frankly, has been in this, mostly in these distributor brands as they have diluted themselves across a number of supply points, across the industry. We're talking to all those guys as well to figure out the right partners to have, and we'll go forward with a good mix of distributor brands. But really, it's proprietary is kind of driving the bus. Thanks. I'll pass it on. Thanks. Appreciate it, Andrew. Thank you. Our next question is from Peter Grom with UBS. Please go ahead. Thanks, operator. Good morning, guys. Hope you're doing well. Hey, Peter. I just wanted to ask—How are you doing, Bill? I wanted to ask on visibility. You take a step back, you look at the implied revenue guidance for this year, and I was just going back to the model. It's even below, you know, 2018 levels. And I know the business has cyclicality, but it just feels like this downward pressure has just been far more pronounced than we all would have anticipated. So when we think about the guidance for this year, low teens to high teens decline, what's your degree of confidence in that? What are the underlying drivers of that? Just trying to understand, you know, when do you think we will reach a bottom here, just given kind of the performance we've seen over the last several years? Yeah, I, I think we have reached a bottom. The question is, when are we coming off of it, right? And so we really felt like it was important for us to plan the year at being slightly profitably-profitable at the lowest sales level we've given out, right? That's kind of our responsibility to come to you with that, and then go out and try and beat those numbers, right? That's the, that's the goal here, is to say, all right, let's say it's in the high teens, which I think, you know, hopefully is a worst, worst case scenario, then we need to be ready to be profitable at that level. And then let's get better than that, and then, and then we should have really nice business and a really good outcome. But I do think we are at a bottom. I think we've been at a bottom, frankly, for the last four or five months as an industry, and I think you're starting to see some things get a little bit better. Our our visibility into kind of March, April, May, with the pre-bookings around a lot of the grow media look a good bit better than it did a year ago. But we've got this dilution among the distributor brands that has created this sort of drag and anchor on us that's creating the total number not being where we'd like it to be. But we also really think it's important that we, you know, put a number out there, set up our cost structures and our strategies around hitting, you know, making money at the lowest possible level that we're talking about, and then going out there and trying to beat those numbers. And that's really what our goal is and how we structured this year's guidance. No, that's very helpful, Bill. And I guess maybe a question just following up on that, just the positive Adjusted EBITDA, like, kind of following up on Andrew's question. Like, I guess obviously positive is anything above zero. So can you maybe provide some guardrails in terms of how we should think about our model? Like, should we expect kind of similar, you know, EBITDA profit dollars versus what we saw this year? Should we expect sequential improvement? Just trying to, you know, understand, because, you know, both we and consensus have something that's more in the high single-digit $ million range, and I'm not sure if that's far too optimistic at this point, given the weaker revenue outlook. Yeah, I think it is optimistic at this point because you've got... You know, you had a higher fourth quarter and a higher 2024 building off that that created that sort of consensus. And at this point, you know, we said modestly positive last year, and it was very modest. It was more modest than we'd like it to be. We're saying positive this year. Yeah, I think we'd like to do better than we did certainly in 2023, but we're not nearly in a position yet to start putting any kind of, you know, guardrails around, you know, how much that'll be, how many millions of dollars or where. But you know, a lot of it depends on what range we come in on the top line. In fact, all of it depends on that range, because we've got our costs very much under control. But we're not ready to kind of put any finer point on that. But we expect to be and want to be, and are going to work to be positive EBITDA this year. Got it. Thanks so much. I'll pass it on. Thanks, Peter. Thank you. Our next question is from the line of Bill Chappell with Truist Securities. Please go ahead. Hi, good morning. This is Davis Holcombe on for Bill Chappell. You all had mentioned the seven new legalized adult use states in 2023, and we're just kind of wondering what sort of demand you might be seeing out of those newly legalized states and what kind of maybe regulatory environments they may have compared to some of the existing states that you all are operating in? Yeah, I think the, you know, the newer states, whether it's the Ohios or Missouris, they are some of our better performing states right now. The challenge is, first of all, scale-wise, they're very small compared to your Colorados or Californias or, you know, Oregon or Michigan, so it takes a while to do it. There's a lag between legalization and implementation, and then, of course, there's kind of the political dynamics that have slowed implementation, even in places like in New York and New Jersey. But they've actually been finally picking up. It's just a matter of scale, that you've got these long legacy states that are a lot bigger than the new ones, but you're definitely seeing that shift now. I mean, California used to be by itself, you know, 50%-60% of the total business. Now it's probably in the, you know, you know, low 30s or less. And I think that's true for everybody in the industry as it shifted, you know, the overall business to the newer states and to a more balanced thing. And you also got that unique dynamic in Oklahoma, where Oklahoma at one point had, you know, nearly, there were just under 20,000 licenses in the U.S. Oklahoma had half of them at one point, but fortunately, Oklahoma's regulatory folks have gotten a little more strict, and they're cutting that down. Licenses are cut in half from what they were in Oklahoma, which is encouraging because you need a good balance of production and consumption. The newer states are seeming to learn from the mistakes of others, and they're doing a much better job of regulating, the number of dispensaries tied with the number of grows, tied with the actual population and ultimate demand. So people are learning, but it's just been very, very slow and a lot more interruptions than it should be. The lack of federal guidance and federal, you know, sanity, if you will, in this has really kind of cast a huge, you know, shadow over the whole category for the last three or four years. That's excellent color. Thank you so much. I'm gonna pass it on. Thanks, Davis. Thank you. Our next question is from Jesse Redmond with Water Tower Research. Please go ahead. Good morning, guys. I had a question on the catalyst side. We're looking at the multi-state operators and just the plant-touching businesses. Certainly, the potential for Schedule Three and descheduling is the biggest thing on the horizon. Can you talk a little bit about how Schedule Three could be helpful to you, although you aren't a plant-touching operator? Do you see that freeing up budgets and potentially increasing CapEx, or do you see that as not being a meaningful catalyst for your business? No, we think that can be a very important catalyst in terms of particularly durable orders, but also just a confidence and a sentiment around the whole category that it's now time to lean in and invest again. I think you've got investors staying on the sidelines. You've got MSOs staying on the sidelines. You have people holding capital back. Interest rates have obviously been harder, so debts, if you can get debt, it's hard to put on these businesses. And so everybody is, you know, kind of in a holding pattern as we're waiting for this big move from Schedule One to Schedule Three. As you, as you indicated, the biggest benefit there, of course, is the plant-touching legalized businesses don't have the tax burden they currently have today. And once that frees up for them and they can retain a lot of those, that cash flow for themselves, they'll be able to lean back in to the category. So we definitely see that as a benefit to us. It's certainly going to take a little time from when it turns to when people are actually placing orders, but we've seen a number of projects that have been delayed, delayed, delayed over the last year or two that are kind of ramping up and starting. So we're hopeful that this catalyst is gonna happen and/or that people are gonna get back in as supply and demand has come more in balance, as I referenced a moment ago regarding Oklahoma. So all that stuff speaks to, yes, the rescheduling, descheduling would be a benefit to the whole industry, and it also, and I think, give people a lot of confidence that now we're gonna get back to a more normalized category, trajectory and normalized growth pattern. That's helpful. Thanks. On the state side, the two biggest markets that could flip rec this year are Florida and Pennsylvania. Yep. Can you talk a little bit about those states and if they were to move to adult use sales, how you would see potential spending increasing there? Yes, both are incredible opportunities. You know, Florida is one that has been, you know, kind of on the docket for a while, and in terms of people's expectations, it looks like it is. The governor has said it's going to be on the, on the ballot here in November, which is fantastic. Pennsylvania, I think, is in a similar situation. Both of those, you know, with population of over 20 million in Florida and around 10 million in Pennsylvania, you can see that these are, you know, very, very important catalysts for us. We're gonna drive that population number up probably closer to 60% or greater of category. So we do expect that to be a big part of the growth going forward. Jesse, both of those states have been comping better for us than the overall population has. Okay. Great, guys. I appreciate it. Thank you. Thanks, Jesse. Thank you. Thank you. Thank you. Our next question is from the line of Harold Weber with Aegis Capital Corp. Please go ahead. Good morning, guys. How are you doing? One of my questions is in regard to the previous issues in regards to inventories, how's that doing? Is there any more benefit to see out of that? Is that in balance presently, are you satisfied with that? Yeah, I'll, I'll start there. There's really two sides of the inventory thing. Both are trending in the right direction. We've reduced our total inventory in a two-year period by close to $100 million, okay? Some of that was inventory write down, but the vast majority of that was simply getting the inventories down to manageable and workable levels. And so we still think we have another, you know, bit to go. We'd like to be able to run this industry or this company on, you know, 90 days worth of inventory. Right now, we're at a higher number than that, and we think we've got probably 15-20 million more we could take out of the total. So that's a terrific thing. The other piece of inventory improvement from 2023 compared to 2022 is we had, you know, far, far, far less write downs in 2023, compared to what we had in 2022, as we are again, we're dealing with the supply chain whipsaw from even back to COVID days and the industry, high volume days back in 2020 and 2021. So the inventory had gotten, you know, exaggerated in everybody's balance sheets. So we've worked all that down, so we didn't have those sort of write down issues in 2023. Don't expect them again in 2024, which is great, although you still have to manage it every quarter and every month, and we do very, very aggressively to try and protect our, you know, protect the balance sheet and protect our inventory investments. Maybe just to add to... Yeah.... I'm sorry, go ahead. Yeah, just to add some math to what Bill's comment there a second ago, you heard him say, you know, we'd love to manage the business on basically 90 days or one quarter's worth of of demand. You know, we ended this past year, 2023, with roughly $75 million worth of inventory, and over the last four quarters, we've been averaging about $56 million in sales. So clearly, you know, there's real opportunity for us there, and, and that's why you hear us talking about sort of an ability to manage that further down in, into 2024. Okay. In regards to your, well, the cost cuts you've made and so forth, hopefully we're gonna see a turn up. Business improves 20%, are you gonna be able to fulfill that without having to add back a bunch of those, whatever costs, what you wanna call it, layoffs, cap capacity, right sizing, whatever you like? I would think that based on where you are, you should be able to increase the business by, what do you think, before having to start to add spending back again? Well, you have some variable costs, obviously, with staffing in the DCs. But importantly, as we have come down in top line, we did not dramatically alter our footprint. We still have six DCs in the U.S., we have two in Canada, and we have one over in Europe, and that was the footprint we had three years ago. What we've done instead is we've been subletting basic, you know, vacant space and underutilized space to allow us to provide, you know, a service to others, if you will. And so we're able to handle the volumes that we had back in 2021 and 2022, or 2020 and 2021, you know, very, very easily. We would have some costs on the way back up, as of course, you have more people touching more volume. Structurally, we've got our cost structure really screwed down now to where we can make money at these low levels, but also can scale up very quickly and be able to support our customers. So that would mean to me that hopefully, though, that that's gonna happen, that our margins should expand quite a bit based on an increase in the overall revenue, so they spread the cost more. Is that a reasonable expectation? Absolutely. Let's not forget that, you know, three years ago, we were roughly a 10% EBITDA business, when things were growing and better. And we think that with our mix change toward the more profitable, powerful, you know, brands that are ours, that could be, you know, a very achievable number over time. We're probably not gonna get there anytime in the next, you know, 6-12 months, but I think as industry growth returns and we're able to, you know, drive our profitable proprietary brands, that we certainly have a really good position going forward. Great. Thank you very much. Thank you. Appreciate the questions. Thank you. As there are no further questions, I will now hand the conference over to Bill Toler for his closing comments. Bill? Thank you, Ryan, and we appreciate all of you being on the call this morning, and thanks for your continued support of Hydrofarm. We look forward to speaking to you soon. Take care. Thank you. The conference of Hydrofarm Holdings Group has now concluded. Thank you for your participation. You may now disconnect your line.