RKDA - Earnings call transcript Q1 2020 | Arcadia Biosciences, Inc.

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Operator

Good afternoon, and welcome to Arcadia Biosciences First Quarter 2020 Earnings Conference Call. Today's presenters will be Matt Plavan, President and CEO; Sarah Reiter, Chief Commercial Officer; and Pam Haley, CFO.

This call is being webcast, and you can refer to the company's press release at arcadiabio.com.

Before we start, we would like to remind you that Arcadia Biosciences will be making forward-looking statements on this call based on current expectations and currently available information.

However, since these statements are based on factors that involve risks and uncertainties, the company's actual performance and results may differ materially from those described or implied today.

company's and language today's on the recently their press review XX-K filed Page can safe in harbor most release. You X of

Matt I'll President that, now the over With turn and to CEO. call Plavan,

Matthew Plavan

Good and Victor. all distances by Sarah families saying to today loved safe Reiter, Haley, today Pam Chief of Commercial are in staying you, welcome. officer. your With afternoon Thank are Officer Financial open hope you me ones Chief listening that our and your our I at and healthy. and want everyone I safe

This we an that business crisis of has witnessed time. life have navigating extraordinary in moment The every health anything all global is in in our bigger are time affect we a us. for and the more Together world. than Coronavirus widespread

into to only Now emerge hit, the since I'll make and the stronger. had results been and well-positioned quickly perspective actions in business sure provide but pandemic have we to we on to our not the are we before manage taking getting through, what to seeing adapt the dynamics current some been

responsible priorities system regulations this maintaining Our and exceptionally granted field the to business safety our a and of local, maintain time interruption. same, following our operations continuity throughout advance people, remain the and as act objectives guidelines health essential work maintain governmental to to challenging while under and our corporate without to agriculture, business

into these plans we successful been which regions seamlessly. accomplishing for to we the we've goals. in preemptively able in mandate where that say, were rather in to happy put shelter-in-place March Beginning I'm we deployed effect operate,

and that by of changing smoothly. to in again they've shown operations and the dedication order our keep again adapt employees nimbleness impressed to to running creativity our been and I circumstances

that nutritional of who I'd also clear food growers, running crops the never quality ingredients at is and smoothly. industry the Its acknowledge workers our value truly been professionals farm more work our like Arcadia the we're enhancing essential. supply food food keep chain doing and to and

pandemic of disruption had on down to hemp we the Although month number ourselves last stand global time. certainly for among our seeds find our impact saw a to time, the GoodHemp business. a simply We growers poised economy COVID-XX our purchase has fortunate this some

their While better our economy. reopening gather bearings and they into the for visibility awaited of

However, weeks areas May when has in begin been most days U.S. we've in majority in active hemp in is and been past XX sales shipments historically did we production activity one combined, Western in which significantly experiencing seed the occurring. the than of are interest we prior forecasting six seed the and the the to greater months of

their market with As deal in beginning plantings. now forward as in decided a we with they a have to are are we're moving number expected, of increase re-engaging who growers see flow discussions spring

in processing partner shipments Our our CBD in harvest resulting delay impacted were restrictions initial Hawaii our quarantine Ventures delays beginning by in schedules sales and shipments, the of planned Vivion early which our in expected of grain the ports the consumption, close quarter. were world to we sales trade part Specialties. that several line of processing and and the of minimal around implications island harvesting, Archipelago the had through shipping looking closed activities The new of and in disrupted delays wheat weeks

commitments no in of backlog pause $X.X in to million. during we resulted in April change hemp as today. of The our aforementioned expect reported over increase Although prior the did an report amount

will from orders. ready here run take forward However, we of no order, rather since will number shipment these declining upon growers our are as now this through orders backlog to longer begin seed fulfill

HBX for project, progress soybean steady portends in be XX% our the approval acres produced how XXXX encouraged approval of of very and China feed having Verdeca granted. our regulatory soybean and food also global than that should sales HBX secured on soybean beginning We're the of by more

the we in our said, trajectory, the if and behind COVID to a ultimately coming alignment worst months on that positioned targets. sales that with regain remains recovery pandemic the So us growth is with recover delayed are and to believe those we

visibility seed our coming revenue CBD sales for $XX With QX, million into early sales, commence QX, good our we our to XXXX. reiterate expected total near-term Hawaiian third the in than more GoodHemp of quarter in our late online and guidance sales wheat in

our million. unusually high recent be as support to The for Archipelago our would quarter was call wheat I sales certain to as of million, about was not quarterly flow inventory cash to during $X.X for additional first targets. $X.X capital builds due of cash remiss the hemp, double well our operations XXXX average out burn which burn and expenditures

We expect to prior burn be our closer levels or the going forward. less cash to

burn seed, corresponding and through the discussed. be and reduced Our progressively as will expected flow incoming those by hemp sales wheat CBD inventories of

to in spend markets the sufficient we Out all resources have of execute of plan. uncertainty caution non-essential the cash reduced we and an our ensure to retain abundance given

quality vertically now strategic hemp we our value in best shareholder hemp important technology, forward in to growth manufacturing and processing, the the poised growth platform our addition the segments to and transparency opportunities to on derived Also chain value through products. of and strategy the creation brand accelerate are to a organic integrated hemp in highest create strategy, acquisitive focused leading and

and portfolio. health and those are Labs. High strategic and Capital emerging our of industries working market a accretive are us has see believe been investor is existing evaluating help Mile early strategic hemp Arcadia Holdings in Corner technology including this TILT an and with to has navigate number care reached into We the synergistic Group and who including advisors To we sector opportunities

supply to information those near future. play forward activities the full retail to supply from providing opportunities. is and for in we look hemp these field the more ripe consolidation see We an chain, chain in We role on to active expect the

commercial For Sara? now, to over call update. I'll turn the for Sara

Sarah Reiter

Matt. Thanks

with Buttonwillow Warehouse of partnerships terms of the businesses. announced two input strategic in largest nation's in retailers. Grow GoodHemp quarter agency and Ventures Archipelago first robust have independent crop West and Company We agreements We

our their California. further more agriculture advisors industrial line from best of Together specialists [Indiscernible] the crop Their the practices strategy agronomic team in GoodHemp to hemp engagement XXX our with as is matures. supply of serving teams add chain than

so begin during seeds significant seed next to second see GoodHemp revenue you'll quarters, hemp shipped when we report.

As Matt backlog previously, from to migrate talking second about our will in about described we quarter report. sales earnings speaking

the agricultural personal industrial Archipelago and VSI. for and food distribution quality production dedicated nutritional an Specialties joint Ventures in ingredients VSI sun-grown distributor of exclusive year-round venture in are agreement of quarter with announced Hawaii markets. pharmaceutical Inc. Vivion hemp a first is care, beverage, cosmetics, to

heavy Agreement VivAssure. grown North and CBD the free more exclusively America. Hawaiian our Under and will offer distillate VSI distribute pesticides for will this products and an organisms known contaminants purity like Tested THC XXX microbial as and industry-leading standards isolate metals than quality in

will Hawaii another with market XX quarter now ingredients in in market. in own to local Hawaiian also the land well Ventures under Archipelago Ventures the development. rights under state's an by production our as Archipelago on acres with producing as industrial international program partnering participants first maintain expanded Hawaiian pilot

facility to In to the we and travel expect delays related due second open restrictions. after the extraction COVID shipping quarter,

after-effects of strategy economy Hawaii, remainder continues painful XXXX the in forward suffer on tourism an focused through in of heavily the Hawaii. we pandemic. employment to additional about Looking the announcements anticipate our losses

in continue state for XX% nation Unemployment the a and as recovery be economic reached evolve to support we among highest the plans voice rates and the to of assistance. have hope

safe keeping employs neighbor We're acting committed team our Ventures as corporate communities which vibrant. people and Archipelago laborers the to Today to more than a from they in responsible and enrolls field live XX extract work scientists. and

We USDA's and Hawaiian better the state's Federal we in Hemp Program new to more the operations recovery will Hawaiian the plans. under future regarding of understand communicate Department AG's rules continue come our as to

we combines States. and regulatory and acres of more resistance XX% have to which Argentina our producing United soybeans, hurdles to cleared pleased drought Turning areas in herbicide report demonstrate strong harvest in than soybean to protection continue the results conditions. stress strong of The yield soybeans X,XXX soybean Brazil, with including are nearly here global in HBX where in Argentina fields drought tolerance already

in Argentina. of soybean our launch to continue joint Solutions Bioceres regulatory venture await in plans light advances of the commercial with the a global we impact in for of monitor as China. deregulation China, it status COVID-XX Verdeca, traits In Crop commercial requirement

agricultural In these for nearly America. the South first quarter show acreage in interest as more cycle premier which available. Expoagro next potential multiplication opportunity the and maximum trade register Argentina, tenfold throughout use by the growers than was to attended by product fair of the XXXX, was would as an from exceeded highlighted growers The seed XXX,XXX trade

HBX world of soybeans. and expect forward share to Looking regulatory throughout commercial efforts our XXXX with progress updates we HBX will in we the status from through the

Today, routes market. we capture three to

the as our As germplasm, through a and a Ag distributors program eco package proprietary traits, implementation license combines Tech joint of which seed growers. to to seed license as technology varieties venture biologicals, approach companies, to seed partners and

has licenses Argentina, Brazil for in in Verdeca countries Grupo America. Semillas Bioceres TMG Semillas And and [ph]. with [Indiscernible] in Uruguay, Bioceres technology South several as with well varieties Domaria ADP Argentina, announced GYC and Semillas previously in licenses in in

adoption quarter our of [Indiscernible] first market. and We're our and ingredients commercial traits, international in featured the advanced ingredients had in our were both In quarter we GoodWheat wheat. to early seed, now And U.S. panel. grain

the eight U.S. expanded covering fact additional press in secured GoodWheat patent our in key months. release announced U.S. and in a recent Our and market foreign coverage recent portfolio patents we

introduction We've the starch to our and continues Milling our fiber their quarter through relationship in shipments complete bread Bay sale. flour European product. second Company we'll revenue of high seed you from continue In wheat exclusive spring resistance progress should initial our HealthSense State expect to America see of distribution who North

which expand than also more flour component our gluten. plan reduces retail our will review line We by XX% allergenic to

outlook the basic the of will sales for the of ingredient. carefully of terms remainder pandemic monitor year impact we on In of

other shifted ensure focus shelves are But on some the hand away initiative. in sales innovation companies of retail food from increase As and replenished, see flours. on activities volume have grocery an that the we store

and delay, we see as of the So COVID-XX on impacts beyond Matt earlier, the business wheat mentioned our limited manageable.

the I'd turn Pam in review call over Pam. to results will to detail. like With the financial more who that,

Pamela Haley

first Sara. $XXX,XXX licensees Thank Revenue in milestone quarter XXXX quarter driven the the primarily by of you, first XXXX was than higher of achievements. in

the contracted favorable product GLA minimum. recognized Our revenue revenues annual part was as of well this as and quarter were royalty

operation joint to prior the related the million increase Total $X.X $X.X was as first the $XXX,XXX to and was expenses in line or GoodHemp was quarter cost increase for Hemp to employee Archipelago. year and and establish the quarter compared we've the first million the to product higher $X.X expense XX%. XXXX, venture, primarily Arcadia's last compared quarter R&D for of launch expenses of due an million

increase This additional XXXX. in expense is higher employee in consultant expense in with compensation the the activities first of mostly stock $XXX,XXX due on than is to SG&A expenses. first quarter higher related consulting

of was million Net liabilities common first fair the net the at a end to for compared a first non-cash the income of non-cash quarter of XXXX value the stockholder the of $X.X the XXXX. in of resulted to in quarter each attributable versus stock recognized XXXX. first of for million quarter for $X.X quarter million warrant A common the income expense of quarter XXXX of $X.X re-measurement loss million of $XX.X first

are in to The of a XXXX for for nine offering the footnote direct accounting and these refer can XX-Q common warrant description associated and liabilities our with XXXX registered stock in detail transactions. the you transaction

term hand, on the investment change Regarding end end our cash versus liquidity at resource, million. cash totaled $XX.X year short million $XX quarter the equivalents of of million a or and $X.X first and at capital

equipment was in net change quarter attributed the cash in activities million as operating significantly we property, expected wheat and in was with Hawaii. to invested to Archipelago primarily inventory $X.X for which Matt this and for operations as use million buildup both alluded and a supporting quarter, $X.X balance. of hemp, our and purchases in we And Archipelago along GoodHemp inventory The plant

into law end, loan within of Aid Security the the Act and Protection was Program Following under the contain on Paycheck Coronavirus March Arcadia Release secured XX million $X.X signed XXXX. that a quarter Economic

call the XXXX. of for to quarter And back financial up time over and that highlight you And today. for with the your I'd attention that, first turn Matt. like wraps our Thank to

Matthew Plavan

we're growth. to Thanks, we're with we working Pam. our achieve this of sustain for position our year and believe Together strength entered revenue and strong hard business guidance. to the We try position

accelerated in confident verticality initiatives, We're space our crops. R&D and the that give will to products hemp us commercial we proprietary edge hemp successfully as have to the establish in just other in continue leadership

call over to that, operator, the With to turn for the like questions I'd Victor.

Operator

the from come will question first National Securities of Now line Instructions] Ben [Operator you. Thank from Corporation. Klieve

begin. may You

Ben Klieve

for Hi. Thanks taking everybody. questions my

the your looking mean, expanding hemp, to expansion up than had capabilities. about growing chain vertical discussion what that supply you first down footprint you production really value vertically you're and horizontally regarding a within proposition acquisition rather how is horizontal see do The breeding bit I to kind of of seed expansion talk can Matt, the question substantial is, kind here? you grow than the rather of or more at

Matthew Plavan

of you risk whatnot. be the all to -- Yes, in our having to in to We to moment I want at there's hemp of risk wouldn't processing, they're throughout the because question. include Ben, the comes back extend to interesting think there. opportunities. right whether understand reach do of we genetics. applications to I grow the and bucket a the the improvement general that's chain out industrial need its to potential. for see actually And I is awakening manufacturing capabilities. out quality around the all a supply and that it's thank accretive is its company if brands think great could dire some without would full vertically the lot rule that in the opportunities genetics a chain them potential We horizontal of there When supply trying full this And

the supply perhaps ourselves anyone to the efficient we plays a that strong example So to space. that chain. all stronger through find growers, in processor the the way together position that in make make a would being in supply share chain genetics to bringing connection else between processors in capture us value for puts and allow to it a a greater with able the positioned chain, the us profitable number evaluate opportunities that that and well the than And of supply and more of by privileged

is that number of be I capabilities our horizontally, create because companies ability to but is rule So that extend more wouldn't and because want vertically our are there could value in is there a we're at value. talking candidly to accelerate the to expertise thinking there than are captured moment out it genetics to our genetics, we

Ben Klieve

And you you. I early, discuss talk kind acquisition I then, And as in are the of know initially Got quality Thank versus or strategy it. on can Mainland? you That's you're supply helpful. about Hawaii the can this the it's you of but guess the chain if a follow-up, Hawaii of Mainland? the targeting on -- kind on

Matthew Plavan

chain Well, we're fairing pretty Archipelago well in Hawaii and we kind of Ventures. are for the supply

We have the genetics.

you mold We have unit as the processing know.

it's the retail like aren't we've processing of space. announcement Vivion Specialties, the all So channel got And at channel into in we this sales the at time. into recent the -- have also not we with

I to -- So, know, you Hawaii, don't add lead to with to that right first pretty there, anything going well-equipped would and the is I to in No. likely would where verticality. to moves say, we're scale regard our Mainland market which to the that. you're see we're means going be Sara,

Okay.

Ben Klieve

Thanks Matt. Okay, perfect.

that go the to down or bagged fields over goods maybe crop build, you can inventory that's the either and are build versus inventory still ready that in Turning finished process? by by in to break

Matthew Plavan

I think, Pam, we Pam the the that the about visibility visibility in We you he's of Q? kind through. did Q of walk into degree can provide asking and -- file did

Sarah Reiter

wheat got and breakdown we've and got go, in in that and just include and process in of some that still -- is -- a our is sorry, a We we've process. Archipelago do information up raw or GoodHemp goods We but that's some was do. most some got bit process. we materials between in hemp it crop inventory to We and of got we've quite finished GoodHemp some footnote Hawaii and I'm ready

soybean a it's it's and some with So inventory -- good -- got also. mix we've that we're starting

Ben Klieve

Got it.

Okay. kind this. color Q Could queue weeks I'll better here for the talked for of But after outlook of and I comment. kind quarter. the the your revenue in a know your Last you acceleration a you for of visibility to do better full-year appreciate that regarding wait I'll bit back going balance from the how the I provide of of -- kind quarters one get breakdown in seasonality, me to recent of in you sequential side. revenue But on to QX are percentage three regarding an next you're expecting QX any improvement from nice about recent that total? look of post. have

Matthew Plavan

Yes. Sara?

Sarah Reiter

June we'll which our in majority also those though The offer Southern of Florida visible starting out wheat Thanks we opportunity May, in our States be third for United and third will quarter late Hawaii not July flow have so us the the part be Yes. areas Ben. until compelling will or business in production Year-round in planting and year-round Far fourth quarter. are sales in fall. businesses. large hemp

some seeing our wheat stuff European start that's actually in transit, in have We landed. already business hasn't that but we'll second. And

And you'll I amounts and until that to business. soya year And off or have could wish the second, fourth we'll wheat there's see deeper so, I but next third from XXXX. in in small hold say revenue,

Ben Klieve

Understood. helpful. Yes. good. Very you, That's really Thank Sarah.

think you And for all the in Congrats to line my that's of for progress. I'll Thanks now. all get it questions. I back taking me. on

Matthew Plavan

Thanks Ben.

Operator

Selvaraju come Wainwright next question the our & Raghuram of will from line And - you. Thank H.C. Co.

You may begin.

Unidentified Analyst

Selvaraju, Raghuram Hi, guys. the Wainwright. despite progress [Indiscernible] current Congrats H.C. behalf of on climate.

its me. the the towards question this see just recent from as Arcadia Consumer kind development a or partners forward can the and you important an home pandemic on going the restrictions. recent front Products baking on Just of trend by Do and home wheat-based How one thing? capitalized state transient

Sarah Reiter

important and consuming it, think as always We've we're talked baking a is and about the home strong indication a comfort actually seeing wheat part this that an see I way. experience. as of food absolutely No. We home wheat that

be will pace come our heard off We these compared to next the because definitely second allergenicity specialty flown have a at will and partnership retail quarter, supply regular we which retail to the fit we being in product shelves days. have we say we to encourage short shoppers have back increased everyone the flour where and about so in announcing same or have flour in flour quarter among reduced that what all hear would believe

So the that to opportunity year. later we're enter about this very excited market

Unidentified Analyst

You are congrats eliminating. and you Thank again.

Matthew Plavan

Thank you.

Operator

Welston come Stephen will And our from line of Thank question next you. from Zachs.

may You begin.

Stephen Welston

Good your release. mentioned stage press I At what model in hub afternoon. the hemp you you more are Could that California. you're locations. the in you assume in on Hawaii, expand of six advanced

Matthew Plavan

Sara?

Sarah Reiter

Sure. Happy to.

So our us that our farmers environment. our model this which year rolling new out a can successful for growing hemp ensure was is be business in to hemp brand regulated to

put to out. successfully serve contact they're the through and frequent ensure we very agronomists ground So on farming farmers our

have our we Northwest area. So footprint the in established Portland around Pacific the headquartered

headquarters Davis We in further have California of a our Central both California. footprint and then Valley here in south at the

to to a have which acres area a we We anywhere Florida to from have Imperial promise hemp West us and -- to growing continue farmers, the also agronomist only desert established rapidly. through as build industry, Yuma but capabilities in Arizona in also we strength West out And greater Obviously, Hawaii but Mountain the service for our in down foothold service own is Texas. is desert there. of point our the not into new

happening ground single day. the experience on real So every

question our the yes. position to continuing to We I right location. for that answered look hope are Midwest your place

Stephen Welston

Yes.

about like come now will developing another Hawaii just of come be number acres you that have When XX in XX. said sounds you you're fields. talking they It and online? have test number about on the the in you -- With

Matthew Plavan

we online speak. They're as coming

Stephen Welston

Okay.

Sarah Reiter

in That’s Far Hawaii County. Imperial also California and Southern research have we in station in field

Stephen Welston

how many are acres so question, next And there? my

Sarah Reiter

[ph]. XX

Stephen Welston

Could know people Last was some the came that to and year some pavilion of what the could to came the growers Moving they to you attend on XXX,XXX year about attitude over your and Expoagro. a your in XXXX were register? color the over well this that strength many give overall. color we what their pavilion to how said, was though soy, of the press you release give attendees wanted actually even over

Sarah Reiter

Sure.

you want tenor I top off exact wrong who get of the the of number in. head you me my participate about you Let give of some the folks to color the give can information. discussion. don't I

HP plots trials. year last suffered highlight through pretty also So agro we serves and smaller in fields demonstration strengths in to Argentina had test soybeans both for farmer's at where drought, were which a significant the the we that Expo of really running

we So a sense already with perceive a that traits that Expoagro to growers has highly this came valued good in

trait more we need. show tolerant, our resistant on coming wheat, a of the demonstrations begin produce then at and in August times in herbicide had or in which the September would we for focused us successful sign as strength so we up ten we in actually Expoagrow had this about fact against fall Additionally, season really so may starting to seeds growers

and development to have situation you innovation number they The lucky digging a to the support quickly ability It's new have we I'll you a really situation. get I where have partners. the possible. in our to have back apologize. lucky the So have Argentina as to number. pick today is through as desire growers we're and continue to going we come to a for with our to

Stephen Welston

growers, times later. it talk ten acreage? be offline as can That's versus acreage? much okay. When more you Would comparable times ten said growers We the

Sarah Reiter

it's times ten acreage growers. not more times much I ten misspoke, more

Stephen Welston

third legacy corporate way have the said just this Okay. your your it product my a looking over there million I that off? revenues Am is in you'll $X this of strong. the And with through I'm your already year. And like in GLA looks moving model and is to the year. guidance also GoodHemp. revenues you while million level, there But for $XX

Sarah Reiter

That's estimate. a fair

Stephen Welston

protection alone be And Do loan to expect you concerning there. to apply you be forgivable? if $X the received applied lastly do paycheck And and a so, forgiveness? this for plan over to program be Okay. to million you --

Matthew Plavan

that want you do Pam, one. take to

Pamela Haley

qualifiable and We have we to yes. -- that get will forgiveness believe will qualify for Sure. do expenses forgiveness. to the plan we apply would say that I that

Stephen Welston

Thank you much. very

Matthew Plavan

you. Thank

Operator

from Center Investing. question next will of Performance Robert line And Smith our come the for from

You may begin.

Robert Smith

Thanks are taking there can and well. questions. And my also possible I Argentina, because in Hope that Mike, the doing Good for Hello. are just financial you reference the headwinds virus? down winter renting, with afternoon. there you guys guess difficulties the

Matthew Plavan

question, that? concerned about your we is are So

Robert Smith

Yes.

Matthew Plavan

No.

very on We the Bioceres Sarah formidable and in to well who with is ground just the we the partner have and of introduction entrenched as the progress out, continue soybeans farmers. laid testing

we the for at any alarm or concern with unnecessary see forward reason we move So that moment plans. don't won't be to able

So remain I in would say plan. provided our nothing deteriorates on confident executing meaningfully we

Robert Smith

longer Okay. profit That's the good. beyond term the year remaining stated? company I you assume gross that looking for that this in

Matthew Plavan

you Sorry, time. can that more say Robert, one

Robert Smith

are longer targets XXXX you've haven't they all? deterred still I beyond The that mean, intact, at range stated

Matthew Plavan

Well, go outlined have point guidance visibility XXXX to believe. we've think not before. have projected line a think probably that significant the that provide want do prudent with this But we're would stick XXXX this point. its beyond the in successful on and release we the be executing not in with to that bit prudent earnings XXXX to the that we I as we today. thereafter at at be we reason growth won't careful more just If this It be years

Robert Smith

the figure kind beforehand. of stated you So that? you withdrawing Are

Matthew Plavan

-- get it. withdrawing I'm it reinforce.. not just I'm No,

Robert Smith

my several of think can I been questions have already answered. other And

So luck and further look forward to of progress. I wish best you hearing

Matthew Plavan

Great. Thank you, appreciated. Much Robert.

Operator

remarks. any closing like questions Matt showing any turn over at further not to back to call this for Thank I the you. time. actually I'm

Matthew Plavan

Have and everyone continuing Thank tuning forward in. hope stay for great look progress. you to And we We healthy. a our safe to report you Great. evening.

Operator

and you gentlemen, this Thank Ladies for concludes conference participating. today's call.

disconnect. You now may

Arcadia Biosciences (RKDA) 13 May 202020 Q1 Earnings call transcript