The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Gerry Sweeney - Roth Capital Partners, LLC - Analyst
: Hi, Steve, Bryan. Thanks for taking my call.
Question: Gerry Sweeney - Roth Capital Partners, LLC - Analyst
: In your prepared remarks, you discussed robust demand and prices. I think this has been a little bit different from the past couple of years. I'm just
curious, if this is driven by just more consistent supply out of Mexico, and what that supply is doing to the market and especially with the prices
with moving up with improved volumes of demand?
Question: Gerry Sweeney - Roth Capital Partners, LLC - Analyst
: Okay, taking volume over price to some degree. Is that fair?
Question: Gerry Sweeney - Roth Capital Partners, LLC - Analyst
: Also on the M&A side, you talked about gross margins being up in UK, couple of different reasons. Stable supply, early California season and then
I think some fee increases. Is there any way you can sort of either one bucket those out just to see what's driving? And then the follow-up that
would be just on the fee side. Are you at a level where you feel those fees are at appropriate level or is there still some catch-up to do on that front
due to inflation and some other cost ones head ones from the past several years?
Question: Gerry Sweeney - Roth Capital Partners, LLC - Analyst
: Got it, that's fair, and I get it. It's very, very extremely dynamic situation there. Final question, then I'll jump back in queue. You talked about the
International Farming side, specifically the Peru down 50% year over year, but offsetting that maybe some prices and then some efficiency that
you put into the operations there, but maybe essentially transfer some of this in terms of maybe adjusted EBITDA potential for the International
segment?
Question: Gerry Sweeney - Roth Capital Partners, LLC - Analyst
: Okay. I appreciate it. Thanks, guys. I'll jump back in queue. Thanks.
Question: Ben Klieve - Lake Street Capital Markets, LLC - Analyst
: All right. Thanks for taking my questions and congratulations on a nice quarter here. First question on the blueberry initiative, you talked about
kind of accelerating the investments into the expansion. And I'm wondering if you can, first of all, confirm that the targets that you had set for that
initiative, which I think was 2600 acres by the end of 2028.
Is that still kind of the end goal that you have for that segment, but maybe now that's just accelerated by a couple of years. And then second, the
CapEx going into that initiative on a total basis, is that unchanged and you're just accelerating it or have you increase the total level of CapEx you're
expecting to put on?
Question: Ben Klieve - Lake Street Capital Markets, LLC - Analyst
: Got it. That's super helpful. Thanks, Bryan. On the question regarding the blueberry outlook. You noted the last year you had just a phenomenal
performance out of that segment. I'm wondering if maybe it's too early to indicate one way or the other but the weather conditions that are
problematic for your other operations, is there any indication that the blueberry outlook is going to be compromised at all because of weather, or
is it too early to say or is there no effect?
Question: Ben Klieve - Lake Street Capital Markets, LLC - Analyst
: Got it. That's all good to hear on. One more question from me and I'll go back in queue regarding the cost reductions in the International Farming
operation $10 million of annualized savings, to what extent are those savings enabled by the lower volume that you're going to be getting out of
Peru. I'm just curious if there's if that $10 million you think is kind of a sustainable number going forward or if you get more normalized kind of
volume next fiscal year that you're going to see those costs pick up?
Question: Ben Klieve - Lake Street Capital Markets, LLC - Analyst
: Got it. Okay. Very helpful. Well, congratulations again, on a nice quarter here. Best of luck in the third quarter, and I'll get back in queue.
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