VerifyMe Q3 2024 Earnings Report

VerifyMe EPS Results

• Actual EPS: -$0.60
• Consensus EPS: -$0.90
• Beat/Miss: Beat by +$0.30
• One Year Ago EPS: -$0.60

VerifyMe Revenue Results

• Actual Revenue: $5.44 million
• Expected Revenue: $5.46 million
• Beat/Miss: Missed by -$20.00 thousand
• YoY Revenue Growth: N/A

VerifyMe Announcement Details

• Quarter: Q3 2024
• Date: 11/12/2024
• Time: Before Market Opens
• Conference Call Date: Tuesday, November 12, 2024
• Conference Call Time: 11:00AM ET

VerifyMe (NASDAQ:VRME) (NASDAQ:VRME) provides brand protection, product authentication, and consumer engagement solutions for companies seeking to protect products and strengthen relationships with customers. Its technology is designed to help businesses identify counterfeit or diverted goods, improve product traceability, and collect actionable information throughout the supply chain.

The company offers solutions that can incorporate unique product identifiers, serialized codes, authentication features, and digital engagement tools. These capabilities support applications such as product verification, track-and-trace programs, marketing campaigns, customer loyalty initiatives, and supply-chain monitoring. VerifyMe serves brand owners and manufacturers in industries including consumer products, pharmaceuticals, nutraceuticals, cosmetics, apparel, and other packaged goods.

VerifyMe is based in Rochester, New York, and its solutions are intended for use by customers in the United States and international markets. The company has historically focused on combining physical security features with digital technologies to help brands authenticate products and interact with consumers. Its business has also included logistics-related capabilities through acquisitions and service offerings connected with shipment visibility and delivery management.

VerifyMe Q3 2024 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: VerifyMe expects to exit the serialized-codes portion of its authentication business, potentially ending its Amazon Transparency relationship before year-end 2024, after organic growth failed to materialize and the business required roughly $1 million of annual cash investment.
• Negative Sentiment: The company recorded a $2.3 million non-cash goodwill and intangible-asset impairment tied to the authentication segment, while Q3 revenue declined to $5.4 million from $5.6 million and gross margin fell to 35% from 37%.
• Positive Sentiment: Precision Logistics showed improving traction, with proactive-services revenue up $0.4 million year over year, proactive customers up 6% year to date, and a larger sales team generating increased proposal activity that nearly offset the lost premium customer.
• Neutral Sentiment: Management expects 2024 revenue to be slightly below 2023 but still anticipates full-year gross-margin improvement, positive Adjusted EBITDA, and roughly neutral net cash flow; it expects 2025 gross margins to be broadly flat as lower-margin proactive growth is offset by technology and automation savings.

Presentation

[Operator]

As a reminder, this conference is being recorded. I would now like to hand the call over to Nancy Meyers. Please go ahead.

[Nancy Meyers, CFO at VerifyMe]

Good morning, everyone, and thank you for joining us today for our earnings call presentation. On the call today, I'm joined by Adam Stedham, CEO and President, who will give an operations and strategic update. Following our management presentation, we will have a Q&A session. I would like to bring your attention to the note on forward-looking statements on slide three. Today's presentation and the answers to questions include forward-looking statements. It should be understood that actual results could differ materially from those projected due to a number of factors, including those described under the forward-looking statements caption and on the risk factors of the company's annual report on Form 10-K and quarterly reports on Form 10-Q. I will now turn the call over to Adam Stedham for some opening remarks.

[Adam Stedham, CEO at VerifyMe]

Thank you, Nancy. I'm pleased with our gross margin, gross profit, and Adjusted EBITDA improvement in 2024 versus 2023. These gains have been the result of diligent efforts by the leadership team, and I'm pleased with their results. In particular, I'm pleased to report in our Precision Logistics segment that we have seen revenue growth during the third quarter in our proactive services that has come very close to offsetting the loss of the premium customer previously disclosed. Our total year-to-date net cash is slightly down at the end of Q3, but we anticipate that we'll be net cash flow neutral for 2024. Looking at 2024 as a whole, we anticipate our 2024 revenue will be slightly below 2023 revenue, and I'm disappointed by the lack of revenue growth. A meaningful contributing factor is the FedEx insourcing of services provided to one of PeriShip's premium customers.

[Adam Stedham, CEO at VerifyMe]

As just mentioned, we're seeing the results of our expanded sales effort, but the loss of that contract will still drag on the full-year results. Now, a larger drag on overall expected revenue growth this year comes from our authentication segment, which, despite robust growth expectations at the start of this year, it hasn't grown in 2024. Now, this has led us to do a thorough analysis of our competitive positioning in this area. Now, VerifyMe has been focused on anti-counterfeit efforts for many years. Historically, these efforts were highly dependent upon technology partner strategies, which have presented many exciting opportunities, but which ultimately generated limited shareholder value. The partnerships that have created some value for shareholders have been in the distribution partnerships supporting our ink capabilities. Now, in 2023, as a way to reduce our reliance on third-party technology providers in the code business, we acquired TrustCodes.

[Adam Stedham, CEO at VerifyMe]

This transaction was completed with minimal cash, and during 2023, we integrated TrustCodes technology into our business. In addition, throughout 2023 and 2024, we focused on developing potential sales and distribution partners created by the TrustCodes acquisition. Now, coming into 2024, we anticipated significant growth of our authentication segment due to leveraging our sales and distribution partnerships and completing our service provider agreement with Amazon Transparency. Disappointingly, organic growth has not materialized for this segment in 2024. We've come to realize that traceability through serialized codes and supporting cloud technology is a very complex sale for customers in the U.S. market. We've also discovered that our authentication segment lacks the size and scope to compete effectively in the enterprise customer market.

[Adam Stedham, CEO at VerifyMe]

Then lastly, due to various marketplace dynamics and our company's size and positioning, we do not believe the Amazon Transparency arrangement presents the tailwinds for the authentication segment that we had previously believed it would. So, as we evaluate the current situation, I think we also need to consider that pursuing this vertically integrated code strategy requires approximately $1 million per year of cash investment by the company in 2024, again in 2025, and continued cash investments into 2026. So, and I want to help put that required investment into perspective. $1 million is approximately 8% of the entire market cap of the company, and our code services represent about 1% of our annual revenues. So, as a result, we've been working with multiple advisors to critically assess what are our various options.

[Adam Stedham, CEO at VerifyMe]

And we've concluded that a renewed focus on our ink product, which currently represents about 23% of our authentication revenue, or the pursuit of other strategic opportunities related to areas of company or board expertise will provide a better return for our shareholders than continuing to invest in the vertically integrated code strategy. So, as a result of this, we'll likely exit that portion of the authentication segment, which would also end our current relationship with Amazon Transparency prior to the end of 2024 by discontinuing the operation or divesting of the business. Now, when I introduced myself to you just over a year ago, I said we believed that our PeriShip business presents a strong cash flow business, and we believed we could create value through organic and strategic initiatives. We continue to believe this is the case.

[Adam Stedham, CEO at VerifyMe]

While the decision to change course on the authentication business is likely to be a surprise to you, I want you to know that we have not made this decision lightly. At the very core of our strategy and efforts is to drive to create shareholder value. We now strongly believe that we'll be able to best create this value by investing in areas outside of the codes portion of our authentication segment. We've engaged with bankers and advisors in seeking alternatives, and at this point, we're very optimistic about the opportunities that we see. So, I'd like to shift the conversation a bit to discuss Precision Logistics. We've increased the number of proactive services year-to-date customers in this segment by 6% over 2023. We also have continued to see increases in proposal activity in Precision Logistics since increasing the size of our sales team.

[Adam Stedham, CEO at VerifyMe]

Now, despite our total shipments for existing customers and proactive services being down 4% year-to-date, we're pleased by the shifting trajectory of these volumes. We expect that Q4 of this year will continue to face headwinds, but we believe our execution and differentiation positions us to navigate the situation well. In addition, we believe we're well positioned to benefit from the winds once the overall perishable shipments market shifts. So, at this point, I'll turn the call over to Nancy for detailed review of the third quarter financials.

[Nancy Meyers, CFO at VerifyMe]

Thank you, Adam. The third quarter revenue was $5.4 million versus the prior year of $5.6 million, a decrease of $0.2 million. Revenue in the authentication segment was down slightly year-over-year. In the Precision Logistics segment, premium revenue was down $0.5 million due to the previously disclosed discontinued contract with one customer, partially offset by a $0.4 million increase in our proactive services revenue. Gross profit decreased $0.2 million to $1.9 million in Q3 2024 versus $2 million in Q3 2023. As a percentage of revenue, gross margin was 35% in Q3 2024 versus 37% in Q3 2023. While the quarter did result in a decrease in year-over-year gross profit with the loss of one customer in premium services, which has higher margins, which we discussed in our last earnings call, the impact was partially mitigated by other process improvements the company has made.

[Nancy Meyers, CFO at VerifyMe]

We still anticipate our full-year 2024 gross margin to exceed full-year 2023, even though we expect Q4 gross margin percentage to be below Q3 due to the seasonality associated with our proactive revenue. During the quarter, as a result of the analysis of our competitive positioning in the authentication segment and likelihood that we will exit the code portion of our authentication segment, as discussed earlier by Adam, an event requiring a goodwill and long-lived intangible asset impairment analysis to be completed was triggered. As a result of the analysis, we recorded a $2.3 million goodwill and intangible asset impairment within total operating expenses. Operating expenses were $4.8 million in Q3 2024 versus $2.9 million in Q3 2023, but included this one-time non-cash goodwill and intangible asset impairment in the authentication segment. Excluding these items, total operating expenses improved by $0.4 million.

[Nancy Meyers, CFO at VerifyMe]

Segment management and technology expenses and sales and marketing expenses were flat year-over-year. General and administrative expenses improved by approximately $0.4 million, primarily due to the severance recorded in 2023 that did not recur in 2024. Our net loss for the quarter was $2.4 million, or a loss of $0.23 per diluted share. Excluding the non-cash items of the goodwill and intangible impairment, as well as gain on fair value of contingent consideration related to the TrustCodes global business, our net loss for the quarter was $0.6 million versus $0.9 million in Q3 2023, or a loss of $0.09 per diluted share. Our Adjusted EBITDA remained flat year-over-year at $0.2 million and improved $1.1 million to $0.4 million year-to-date 2024 versus a loss of $0.7 million in 2023. On the last slide is our balance sheet as of September 30, 2024.

[Nancy Meyers, CFO at VerifyMe]

Our cash as of September 30 is $2.6 million, a decrease of $0.5 million from $3.1 million on December 31, 2023. During the first nine months of 2024, our use of cash included $0.5 million in repayment of debt and interest. Due to the seasonality of our Precision Logistics segment, our AR, unbilled revenue, and accounts payable are higher at year-end compared to the other three quarters. As of September 30, 2024, we have $1 million remaining on our loan and $1.1 million on our convertible note. There are no borrowings under our line of credit, and we have $1 million available to us. With that, I would like to turn the call back to Adam.

[Adam Stedham, CEO at VerifyMe]

Thank you, Nancy. Now, as for the decision that's related to our authentication segment, I can't overemphasize the amount of evaluation and analysis that's gone into this decision. I'm committed to pursuing organic and strategic initiatives that will create value for VerifyMe shareholders. I continue to believe we can create meaningful value for our shareholders, and our best opportunity to create this value is to redirect our investment into areas other than the codes portion of the authentication segment, and over the last 15 months, we've been focused on creating this value for shareholders by strengthening the operations of our Precision Logistics business and investing in the codes portion of our authentication. However, more recently, we've begun to increase our investment in sales and marketing within Precision Logistics business, and I feel this focus is starting to yield results.

[Adam Stedham, CEO at VerifyMe]

I'm optimistic about the conversations that we're having with advisors and bankers, and so at this point, I'll turn the call over to questions from our analysts.

[Operator]

We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, you may press star then two. At this time, we will pause momentarily to assemble our roster. Today's first question comes from Michael Petusky with Barrington Research. Please go ahead.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

Hi. Good morning. Hey, Adam.

[Adam Stedham, CEO at VerifyMe]

Good morning.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

I'm curious.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

Good morning.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

So I'm curious on the remaining authentication business. Is that Adjusted EBITDA positive, or is it Adjusted EBITDA negative, sort of what will remain of that business?

[Adam Stedham, CEO at VerifyMe]

At this point, it would be Adjusted EBITDA negative at the beginning of the year, depending upon our current backlog of revenue that we're pulling into the year. But as we evaluate that, we're obviously looking to drive to a point of being Adjusted EBITDA positive in 2025.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

Okay. So, yeah, essentially, the road I want to go down is, does it make sense for that segment itself to exist, given that it's such a tiny part of revenue? I understand it's Gross Margin accretive, but if it's not Adjusted EBITDA accretive, I just wonder.

[Adam Stedham, CEO at VerifyMe]

Right.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

Yeah.

[Adam Stedham, CEO at VerifyMe]

Yeah. You bring up a very good question, and in terms of which is really more of a reporting and how we discuss the company and people view it. Given the low percentage of our total revenues, it may not make sense to discuss it in a discreet manner. But given the history of the company and authentication services and the patents that we have in that area, at this time, we still want to keep people informed by discreetly talking about it.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

Yeah. I wasn't questioning talking about it. I guess the question I had was, does it make sense as part of VerifyMe going forward, given how little it contributes and the fact that it's a drag on Adjusted EBITDA? But it sounds like you're hopeful it won't be going forward.

[Adam Stedham, CEO at VerifyMe]

Right. And we're definitely considering that. And if there was a path, whatever the path is that we think would create the most value for our shareholders relative to that portion of the business, that's the path that we're committed to follow.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

Gotcha. Makes sense. So, Adam, I also want to just ask real quick. I guess the FedEx premium decision, we're now maybe a couple of quarters removed from that decision. And obviously, there's still some premium business that you guys have. And I'm just curious because at the time of the FedEx announcement, I think you were hopeful that in the near term, the remaining premium business would sort of stick around, but maybe not as high. You maybe didn't have quite as high a conviction on the longer term. I'm just wondering, is there any update in terms of your sort of outlook on that piece of your business going forward? And I'm particularly asking around, hey, should I be thinking about this part of the business for 2025 and 2026 and going forward?

[Adam Stedham, CEO at VerifyMe]

Right. Great, great question. So, as a reminder, if we go back to our strategy days, we have two types of premium customers. And what a premium customer means is simply we get paid for our service independent of any shipping costs, whereas proactive, we get paid for shipping and our service. So there are direct premium customers. What that means is the customer pays us directly to provide our service, and they pay FedEx or whomever else directly for the shipping. That's direct premium. And then indirect premium is we are subcontracted by FedEx to provide a service that they resell. So we are actually seeing growth of our direct premium customers, and we have increased activity in our pipeline.

[Adam Stedham, CEO at VerifyMe]

And so we think that aspect of our premium business is going to grow, and it will grow at the same margin profile, gross margin profile as our indirect premium. So that's positive for us. To this point, the work subcontracted to FedEx has remained stable, and we haven't seen a significant shift of customers. With that said, FedEx has made significant investments in an AI product, and that AI product, as it evolves, has the ability to do some of what we are subcontracted to do. So we don't anticipate at this point there is any near future impact from this. And our current strategy is to grow the direct premium at a rate that would offset any decline in the indirect premium. So that's where we sit now. Does that answer the question? Does that make sense?

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

It does. It does bring one question. How much direct premium revenue do you guys currently sort of have exposure to?

[Adam Stedham, CEO at VerifyMe]

About 10% of the premium revenue is direct premium currently.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

That's what, like $2 million total that we're talking about?

[Adam Stedham, CEO at VerifyMe]

No. No. Because.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

No, no. I don't mean the 10% of, but isn't premium somewhere around $2 million?

[Adam Stedham, CEO at VerifyMe]

No. It's north of four, four to five.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

Okay. Okay. Even after the FedEx decision from six months ago?

[Adam Stedham, CEO at VerifyMe]

Yeah.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

Okay. Got it. Terrific. That's all I've got. Thank you.

[Adam Stedham, CEO at VerifyMe]

All right. Thank you.

[Operator]

The next question comes from Jack Vander Aarde with Maxim Group. Please go ahead.

[Jack Vander Aarde, Senior VP and Senior Research Analyst at Maxim Group]

Okay. Great. Hi, Adam. I'm Nancy. Thanks for taking.

[Adam Stedham, CEO at VerifyMe]

How are you?

[Jack Vander Aarde, Senior VP and Senior Research Analyst at Maxim Group]

I'm good. Thanks for taking my questions.

[Adam Stedham, CEO at VerifyMe]

Thanks.

[Jack Vander Aarde, Senior VP and Senior Research Analyst at Maxim Group]

So, Adam, I'm going to just kind of touch on this as well a little bit. So I apologize if I'm being redundant or if I'm asking things that just aren't ready yet. But in terms of the authentication segment going forward, which I understand you're still working through the strategy, obviously, but just a couple of things. So what pieces of that business are still in play for certain? Is it just the ink component of the business, or am I missing something else as well?

[Adam Stedham, CEO at VerifyMe]

Well, so right now, the ink component is in play and the relative patents and the technology and the equipment that supports the ink strategy. But keep in mind that historically, the company, as I said, has leveraged various partnerships that would allow the ink component to join up with other technologies or other strategies.

[Adam Stedham, CEO at VerifyMe]

So we do have that we're analyzing from a partner perspective. Now, we're very cognizant, as I said earlier, that the way those partnerships were created in the past on the code side didn't create a lot of value. But there were some partnerships that created value, so in terms of distributor partnerships and so on and so forth. So that's really where we're at. With that said, we do have expertise in anti-counterfeit, in authentication, and some of the various opportunities that we're looking at could be within the overall realm of authentication services.

[Jack Vander Aarde, Senior VP and Senior Research Analyst at Maxim Group]

Okay. That's very helpful. And then just in general, regardless of the specifics, I guess, is it maybe just a personality check? Do you indeed expect revenue from the authentication segment in 2025? Any sort of ramping up of any of the ink's revenue or anything else that's involved? Just to get a baseline there.

[Adam Stedham, CEO at VerifyMe]

Right. We do expect revenue in 2025, but if you look at it, I don't think it's going to be material for the company as a whole. If you look at our overall revenue, I don't think it'll be. This year, it's questionably material with the codes and the ink, so I don't anticipate it'll be a material amount of revenue in 2025, but there will be revenue in 2025.

[Jack Vander Aarde, Senior VP and Senior Research Analyst at Maxim Group]

Okay. That's helpful color. And then just switching gears to Precision Logistics, I did see you guys called out the proactive services piece was up 9% year over year. And just for a sanity check there too, so I have it correct, what actually is the mix of the proactive services revenue? Or what's the dollar amount? If you could just give us a sense there.

[Adam Stedham, CEO at VerifyMe]

Yeah, so I mean, from a dollar or from a mix perspective, you're looking at about 20% of the revenue is premium, 80% of the revenue is proactive.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

Gotcha. Okay. That's helpful.

[Adam Stedham, CEO at VerifyMe]

And keep in mind, as Nancy said, there's a strong seasonality component to proactive in Q4. So that mix changes in Q4 because the proactive goes up substantially and the premium doesn't move in the same way in Q4. In addition to that, just like everyone else, we're somewhat assuming what the seasonality will be this year, what Christmas shopping patterns, holiday shopping patterns, all of those things will be this year. We're making some assumptions on that, but no one really knows until after the season is over.

[Jack Vander Aarde, Senior VP and Senior Research Analyst at Maxim Group]

Sure. Okay. That's helpful, Adam. And then just your comments around gross margin. Obviously, there's some puts and takes here. It sounds like you're expecting the fourth quarter, just given, I guess, the higher volume, maybe also less of the TrustCodes business as well. But just in general, gross margin sounds like it'll tick down a bit. But nonetheless, you still expect positive Adjusted EBITDA for the year.

[Adam Stedham, CEO at VerifyMe]

Right.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

I guess looking forward, and then I just want to get your comments pieced together at the fourth quarter there. And then just kind of give us a sense of how do we expect gross margin to kind of play out from where you see things today next year? Are we going to expect kind of a gradual uplift just due to volume and overhead being absorbed? Or is this kind of give us a steady state, if you could? Thanks.

[Adam Stedham, CEO at VerifyMe]

Yeah. I don't think that we'll see a year-over-year gross margin uplift next year versus 2024 for two reasons. One is keep in mind our premium business is a much higher gross margin profile than our proactive. And so with the insourcing of the one customer that happened halfway through this year, that creates a comparison where we had a much higher gross margin effect the first half of the year due to that premium customer. On top of that, we expect to see our growth happening in the proactive business. So as the proactive business grows, the percentage of our total revenue that is of the lower gross margin type versus the higher will increase, which would have a downward effect on gross margin. With that said, we expect that through our investments in technology and automation, we are going to see some cost rationalization, which would offset that.

[Adam Stedham, CEO at VerifyMe]

Overall, I think we're looking at having a flattening of the gross margin profile going into next year with the exception of the comparison impact of the previously announced premium customer from the first half of the year.

[Jack Vander Aarde, Senior VP and Senior Research Analyst at Maxim Group]

Okay. Understood. I think that's it for me. I appreciate it. I'll hop back in the queue.

[Adam Stedham, CEO at VerifyMe]

Great.

[Operator]

Thank you. The next question is a follow-up from Michael Petusky with Barrington Research. Please go ahead.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

Thanks. I missed this last question of my first go-around.

[Adam Stedham, CEO at VerifyMe]

Oh, no. You're good, Michael. No problem.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

Thank you. Hey, so Adam, you alluded to, but if you gave me specifics, I apologize. I missed it. I know that you guys had hired a couple of salespeople for Precision Logistics in Q2. Had you added to that in Q3?

[Adam Stedham, CEO at VerifyMe]

Yes. We added another sales and marketing person in Q3.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

Okay. And do you have any plans as you sort of look out over the next six to 12 months to bolster that, or is that going to cover you for the near term?

[Adam Stedham, CEO at VerifyMe]

We don't have definitive plans. We're evaluating that. I mean, one of the things as we're redirecting investment dollars that have not resulted in revenue growth this year and have not resulted in the results we wanted, that part of that money could be deployed into sales strategies for the PeriShip business. I mean, it's a significant expense that is going away, which one of the very logical things to do with that would be looking at deploying a portion of that towards organic growth in Precision Logistics. But we don't have a final plan as of yet.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

Okay. And then just last question. Do you guys have any plans or have you discussed the idea of sort of doing some kind of reset investor day where essentially say, "Hey, a few things have changed in the past year. We want to sort of talk about our go-forward outlook"?

[Adam Stedham, CEO at VerifyMe]

We absolutely. My expectation is that our Q4 shareholder day or Q4 earnings call will likely be extended so that we have adequate time to not only share the year-end earnings, but we also are able to provide far more insight to the strategy for 2025.

[Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research]

All right. Awesome. Thank you.

[Adam Stedham, CEO at VerifyMe]

Thank you.

[Operator]

This concludes our question and answer session. I would now like to turn the call back over to management for any closing remarks.

[Adam Stedham, CEO at VerifyMe]

Thank you very much. As we said, some of the decisions that have been made are probably surprising to people, but with that said, hopefully, you understand and you realize how much thought went into it and that at the end of the day, we're making decisions that are just very, very laser-focused on growing the company, building shareholder value, and providing returns to our shareholders. Thank you, everybody, for attending today.

[Operator]

The conference has now concluded. Thank you for your participation. You may now disconnect your lines.

Participants

Executives

• Adam Stedham, CEO
• Nancy Meyers, CFO

Analysts

• Jack Vander Aarde, Senior VP and Senior Research Analyst at Maxim Group
• Michael Petusky, Managing Director and Senior Investment Analyst at Barrington Research