Hall of Fame Resort & Entertainment Company (NASDAQ:HOFV) Q3 2022 Earnings Call Transcript November 15, 2022
Hall of Fame Resort & Entertainment Company reports earnings inline with expectations. Reported EPS is $-0.09 EPS, expectations were $-0.09.
Operator: Good morning, and welcome to the Hall of Fame Resort and Entertainment Company’s Third Quarter 2022 Earnings Conference Call. This conference is being recorded and all participants are in a listen-only mode. We will open the conference for questions and answers following the prepared remarks. I’ll now turn on the call over to Anne Graffice, Executive Vice President, Public Affairs. Please go ahead, ma’am.
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Anne Graffice: Good morning, and thank you all for joining us for our third quarter 2022 earnings conference call. Our latest press release, supplemental slides, and Form 10-Q were posted yesterday evening after market hours. These documents can be found in the Investor Relations section of our website at hofreco.com. After my brief introduction, Michael Crawford, our President and CEO will give an overview of the quarter’s results and an update on our fiscal year. Benjamin Lee, our Chief Financial Officer will then provide analysis of the quarter’s financial results, and an update on the company’s financial outlook. During today’s call, we will make forward-looking statements that reflect the company’s current expectations about future plans and performance.
These statements rely on assumptions and estimates, and actual results may differ materially due to risks and uncertainties. I encourage each of you to read the full disclosure concerning forward-looking statements in the earnings press release. Additionally, please note that the company uses non-GAAP results to evaluate performance internally, as detailed in the press release. We have posted a supplementary slide deck summarizing the quarterly results. These slides can be accessed on our website and will be archived there along with a replay of this call. If you have any additional questions as always after today please contact me directly. It is now my pleasure to turn the call over to Michael Crawford.
Michael Crawford: Thank you, Anne. Good morning, everybody. I hope everyone is having a good week so far. I think you probably saw yesterday if you have on our Q3 earnings release. I thought it was fantastic. I really think what we’re showing here is an ability to overcome a lot of adversity, and I want to thank the team. I think the team has done an admirable job in the face of that adversity. We talk a little bit about some of the things that are happening. Obviously, we’ve come through COVID although I know COVID is still around and something that’s threatening people’s health and safety, supply chain issues, labor challenges, things with inflation, although we saw inflation moderate a little bit last week, and so that’s very encouraging.
We have had to overcome a lot of adversity, and yet, I think as you see the results quarter-over-quarter and you see the improvement and you see the execution of what was and what still continues to be our stated game plan. It’s pretty inspiring. And I think investors and shareholders and partners should take great comfort in this team’s ability to execute. From a macro standpoint, we maintain a focus on a couple of things. Number one, consumer spending. And while consumer confidence seems to have gone down a little bit, and I think folks are focused on inflation or recession. The reality is the consumer is still spending and they’re talking with their wallets. And I think regional destination like the village, virtual gaming opportunities, sports betting, those types of experiences are still very much in high demand.
And when you look at some of the evidence of that, the RevPARs for hotels are back to the 2019 levels. Business travelers are coming back. We’re seeing that in our own hotel in a fairly significant way. Entertainment, theme parks, they’re having record highs and attendance and people are spending money while they’re in those parks. So experiences are incredibly important. And while you may defer buying a home in this environment, or you may defer buying a more significant item in this environment due to interest rates, you still want to go out for meals and you still want to be entertained. And I like to say escape reality. Sports betting operators are also seeing by the way record highs. And especially here in Ohio, as I watched some of the reporting over the last couple of months, it is incredibly encouraging to see that people are enhancing the way in which they engage with sport, and we’re very much looking forward to the launch of our sports betting experiences Jan 1.
So from a company point of view, I’d just like to highlight some of the more recent news and some of the key areas of focus that we have had. First and foremost, let’s talk a little bit about financing. We have closed over $180 million worth of new financing this year alone. And this year is not finished by the way. That is a big number for a company our size. And in the environment that we’re in, I think people should say two things, wow, the team really had the opportunity to execute, and two, they didn’t do it haphazardly. They did it very pragmatically. And so what do I mean by that? When we looked at the debt that we’ve added, we’ve added longer-term debt. We’ve added debt that is not as costly as you may imagine might imagine in this environment.
So the average cost of the debt that we’ve added so far is 7.4% from an interest rate point of view, I think that’s a big win for us and our company. In Q3 alone, we did almost $64 million worth of new debt financing and we also were very pragmatic around the use of our ATM bringing in only $2.4 million. Now, one thing that I’d like everyone to remember, because I hear a lot about this in questions, isn’t the company taking on too much debt? If you remember the call that we had almost a year ago, we were in the phase of bringing in equity. And so this company to date has raised over $130 million of equity, which has helped support the build of assets, the creation of environments and experiences. We now are in the phase that we talked about at that time of needing to bring in the public and private financing to continue to build assets and build those experiences.
So I don’t think anyone should be concerned about the amount of debt we’re taking. It’s the debt that was needed and the debt that we stated we were going to target very early this year and the team has had great success in doing that longer-term lower cost. And so that is a big win for us as I said. So the takeaway is, we are all invested in the success of this company. And when I say we, one of the biggest parts of what the recent transactions we announced were about was the largest shareholder we have IRG. Now, IRG not only is the largest shareholder from a stock point of view, but they have lent money to the company. They have stood behind loans to the company. As a younger startup company, you need that sort of support from a more established entity.
They have now continued with that support providing a $28 million senior loan facility for our hotel onsite that we will start construction in the spring. And they’ve also provided a construction guarantee for our Waterpark a completion guarantee I should say. What that effectively means is if we weren’t successful in raising the money that we needed to build the Waterpark, IRG will provide the funding source that’s needed to complete it. It’s a guarantee. The Waterpark is now guaranteed. The hotel now has the senior lending that it needs to continue with construction. So again, the takeaway is the largest shareholder here has had significant commitment to this project and to this company and continues to do that. One last point I want to raise, when you talk about taking up residency and you talk about the community support that’s needed to do that, the city, the county, a lot of leadership in this community with community foundations have also stood behind the company and provided low cost, longer-term debt financing that was needed at a time for infrastructure.
And infrastructure is the stuff that banks don’t like to finance because they view it as non-revenue bearing stuff. And so that kind of support from a community, everyone is going all in on the success here. This is not an option to fail from the perspectives of our largest shareholder and our community. So we are incredibly appreciative of that and excited about that level of support. Let me talk now about the topic that I know everyone gets worked up about the reverse stock split. And so I’ve gotten many notes and many points of feedback about how horrible it is to consider a reverse stock split. Let me say a few things. Number one, the perception of a reverse stock split is one thing. The reality of what it does is very much different. A reverse stock split is a tool that if needed allows us to maintain our listing on the NASDAQ.
I think everyone agree would agree that it’s much better to have access to liquidity. It’s much better for our shareholders to have the ability to actually trade the shares that they’re holding today and it’s much better for us as a company to be at the right valuation from a stock price point of view. And today we’re not. We’re not at the right valuation at $0.60 or $0.70. The company has much, much greater value than what the stock price is reflecting. We are at the mercy of the indices themselves. We’re at the mercy of the inflationary environment, consumer sentiment. But at the same time, you see execution and you see assets being created both physically and virtually. And the revenue that’s now starting to be generated quarter-over-quarter, year-over-year shows the ability for growth and the business plan that we’ve put in place.
So let me just give everyone a couple of things to consider here. Number one, if you haven’t followed, we did file an extension with NASDAQ for 180-day extension an extension request for that 180-day extension. We don’t have a ruling on that. We won’t have a ruling on that until later this month, but we are confident that we meet all the criteria for that extension and we’ll continue to work very closely with NASDAQ on the same thing. We then had a special shareholder meeting because we can’t just do this on behalf of the company from a management point of view. We got to align with the shareholders. The shareholders voted in favor of that reverse stock split. And so it gives us the tools that we need to have confidence that if we need to do something we can to maintain our listing status.
And I won’t go back through the positives of that, but I will just say everyone needs to understand we are aligned in this collectively together. I hold shares in this company. Management hold shares in this company. The Board hold shares in this company. No one has sold a single share. I’m going to repeat that. No one has sold a single share in this company, and in fact, people have added shares in this company because of the belief of where we’re at, because of the execution and because of the valuation. We think there is a lot of upside in 2023, I believe will show that. JCI mediation is the next big topic that I’d like to talk about. And I know that there has been some time that has passed since the last update we provided. I have with me in the room, our General Counsel, Tara Charnes.
And so I’ll ask her to give just a few brief updates on this as well. But here’s what I would say we’ve taken the step of mediation. I think the outcome of that is yet to be determined, but the good news is Johnson Controls and the Hall of Fame Resort & Entertainment Company have come together at the table and there is a sense that both sides are looking for a resolution. Tara, would you?
Tara Charnes: Yes. Thanks, Mike. I think that that is a good summary as we previously stated, and again, in our recent filings. There is an ongoing disagreement between our company and JCI relating to the Naming Rights Agreement as well as the TAAS Agreement. And the parties have agreed to proceed with the dispute resolution that’s provided for in the Naming Rights Agreement. And that includes as a first step mediation with a neutral third party mediator. We have commenced that process. Discussions are ongoing and if for any reason the mediation should prove to be unsuccessful, then either party may then refer the dispute to binding arbitration in the State of Ohio.
Michael Crawford: So thank you Tara for that. So we’re looking forward to we’ve presented a proposal to resolve this. I think we will continue to work through the mediation process. We are prepared to go to binding arbitration. Our hope is we don’t get to that point. But as I said, and I’ll repeat, the good news is both sides seem to have a desire to resolve this from a productive and positive outcome point of view. The last thing I’ll talk about before I start to go through some of the more specifics by our business units is the construction update. And I think the reality in the construction environment and everyone is facing this with inflation things are slowing, in fact, things are getting canceled. We are not. And we hope to benefit from other projects around the world, not just in the United States and certainly not just in Ohio slowing down or stopping.
And when I say benefit, I don’t mean, because of those projects not having success, I really just mean because that should free up some of the supply chain constraints around critical construction elements. And that’s what we’ve been facing all year long. We’ve been very creative. I give a lot of credit to our construction and our project management teams. But we are also being very prudent about timing of construction, because we don’t want to overpay for something versus the loss of revenue by having a slight delay. So the waterpark in the hotel are the remaining two assets to be built for Phase 2. As I said, the waterpark will break ground this week, which is great news, and we have line of sight on all funding, as we’ve said publicly for that particular asset.
And we will be closing on additional funding over the next couple of months for that. The hotel, we’ve decided to pause until next spring. The hotel is a less construction period of time. And so we have more time to watch the commodities markets come down, hopefully, as other projects are delayed or canceled and items start to free up and supply chain constraints start to free up as well. So we will break ground on the hotel sometime late spring as we come out of winter, and then we anticipate both of those assets opening in 2024. The last thing I’d say is, the fact that we have completed assets in Phase 2 right now has been very important, but we’re working closely with a lot of our third party partners. And so you may recall some of the experiences that will be contained in areas like our fan engagement zone are really unique and different third party brands like Topgolf and Brew Kettle and Smoosh Cookies and Shula’s and others.
And in fact, we just signed a great deal with Donald Driver to bring his Driven Elite fitness program here, which is really innovative and speaks to what we need on property which is an ability to help create athletes on and off the field and help them further their goals both mentally and physically. And so we’re excited about those operating parties and operating participants opening, and in fact, you should start to see some of those openings very early in 2023 with the continuation throughout that entire year. From a business unit point of view, the Village has had a lot of success this year. We’ve built great assets. But recently, we’ve continued to talk about how do we position the Village as the destination. We were able to host the Ohio Governor here, Governor Mike DeWine and Senator Kirk Schuring a few weeks ago.
I can tell you that they were both amazed by the progress that’s been made, and there was a lot of positive energy around how the state and community could continue to support what we’re doing. That kind of support is irreplaceable. And so we were very appreciative of the opportunity to meet with both of them and other community leaders to talk about where things are going. Our stadium, we hosted record number of events in Q3 at Tom Benson Hall of Fame Stadium record revenue for that quarter as well. I think you’re going to see those types of events continuing to grow throughout the year in Q4. We have the Ohio High School Football Championships for the state of Ohio being hosted here. And we’re also going to be launching a brand new winter holiday festival called the Winter Blitz with more to come on that, but a really unique offering and opportunity for our community and others visiting to be in to have an enjoying experience throughout the holiday.
Center for Performance, our brand new dome destination, we hosted our first events there during enshrinement and we’ve hosted multiple since then, big wrestling tournament, other sporting events. The Center for Performance is now filled on a daily basis, and this is an amazing new asset as we’ve talked about that gives us that year round capacity that is very much needed. The Fan Engagement Zone, Build-A-Bear is open, we will be opening Shula’s with a soft opening late December, Brew Kettle and Topgolf will be opening hopefully in late December, early January as well. And then you’ll see others Smoosh Cookies, Visit Canton and others being opened over the course of Q1, Q2, Q3 of next year. And we’re really looking forward to bringing that asset to life and driving revenue and experiences for the destination.
Play Action Plaza, we kicked off that entire area with enshrinement and the NFL preseason game that occurred here on property. I thought it was incredibly well received. We have one attraction open. We will have another attraction open the Red Zone, our giant wheel here in another week. I believe is what the construction timeline is saying. And then we’re going to start to add a lot more outdoor programming and ambiance for the holidays as well. And then lastly, our DoubleTree Hotel, Downtown, occupancy and ADRs are up year-over-year. The hotel remains in the top 5% of customer service, business travelers by the way, are coming back on a very steady pace now, which is great for us that Monday through Thursday business. And it really does continue to prove our synergy model where we host large scale events where we have sporting tournaments and people just coming in town to visit the destination or the Pro Football Hall of Fame.
They’re staying at our hotel, which is driving revenue and frankly, driving revenue growth. And amazingly enough, that synergy model has allowed this asset to become operating profitable within one-year of coming out of COVID, which is fantastic. So the team there has done an excellent job. We’ve positioned this the right way and we have the asset that will allow that synergy to occur. We also have had that hotel become the official hotel for the Pro Football Hall of Fame and continued to grow the Hall of Fame business there as well. From a media perspective, lots of new deals being done, some to be announced in the near-term, but as I talked about very early on our company’s launch, media takes up to three years from the time you create something, you develop it, you produce it, and then you distribute it.
We’re now seeing media content all through those phases. And so we’ve as we’ve said, we’ve sold the rights to the Perfect Ten to Fox, you’ll see that Super Bowl week on Fox, which is fantastic national television there, a lot of revenue opportunity for us this week, launching Football Heaven podcast. This is a really unique video podcast that will include special guests, Hall of Famers. And I think we’ll really tell stories that are very different and unique. It shows our access to exclusive content can help us in creating one of a kind media content. When we look at the NFT space, we’re still very optimistic about what we can do there. We are going to be announcing over the next week or two, a unique opportunity for fans to actually own some type of pass that is an NFT that allows for experiences, unique experiences, exclusive experiences, and you’ll have the opportunity to buy in at different levels.
And so we think this does take NFTs to the next generation for us and encompasses our business along with making it a digital collectable and something that is usable by the guests coming in. And so it just really speaks to the breadth of what our media group can and has already done. And we’re excited about where 2023 is going to go there with multiple new development deals in the pipeline. Gaming, of course, we launched our second season of the Hall of Fantasy League, we launched a pay for play service in Legends Locker Room. This is a space where you can go and get the most updated information about your fantasy team and all the players that are there. You don’t have to go to multiple different websites and try to aggregate this on your own.
We felt like this was a really important tool for the success of fantasy players. And again, our fantasy experience is very unique and different in that you can back teams or you can now select your own teams and compete against experts in the industry. And so that’s done very well. Sports betting we’ve talked about, I couldn’t be more excited about our two partners there, Rush Street Interactive and Betr. I think Betr is going to change the face of mobile sports betting now and forever. With mobile betting, I can tell you that I have that app. I use the app. You’re not legally allowed to bet currency right now, but they’ve got a coin based betting platform. It is absolutely what we always talk about engaging to the nth degree being able to bet on the next step bat, the next run, the next play the outcome of a series.
To me it allows the sport to continue in a way and enhances the way in which I engage with the support that was never there before. I have had the opportunity on several occasions to meet with the Betr team. I know Jake Paul himself is very interested and focused on Ohio and we look forward to announcing some activations in the near future that may or may not include Jake. And so I’ll leave that to your imaginations. We are now also hosting esports tournaments. Esports will become a bigger part of what we do, virtual gaming, we’re building onsite virtual gaming as well. And so in 2023, our plan is to launch that in an even bigger way and host large scale fantasy events here as well. We’ve already hosted fantasy events in our stadium at our hotel in fantasy.
We think we have a unique environment to host multiple different types of fantasy experiences. Lastly, partnerships and sponsorships. We are clearly trying to maximize each and every category. We want this to be a win-win for both sides. We’ve employed a company called Allied Sports. They’re working with us to bring in sponsor partners in our Media division, our Gaming division, and of course here at the Village as well. And so we’re being very thoughtful about the types of partners that we’re bringing in and the timing of those partners in order to maximize the revenue each category has to offer. And also to maximize the brand partnerships and the uplift that both sides can experience there. We talked about JCI. I’m confident JCI will Johnson Controls will continue to develop.
They’ve been a good partner in the past. I anticipate the opportunity for us to settle this and move forward and look forward to continuing to grow our sponsorships in a very big way in 2023. And we’ve got multiple conversations going on to that effect right now. Let me pause there and I’ll turn it over to Ben to take us through the financials from Q3.
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Benjamin Lee: Thanks, Mike, and good morning, everyone. Moving on to financial results and as Anne mentioned earlier, we filed our third quarter 2022 Form 10-Q post market yesterday. That document is available on the SEC website as well as our Investor Relations site. Third quarter total revenue was $8.7 million, which represents an increase of 149% from the same period in the prior year, and an increase of 223% on the linked quarter. Revenue growth was primarily driven by higher event revenue at Tom Benson Hall of Fame Stadium, and significant increases in operating revenue at our DoubleTree hotel. While sponsorship revenue was down from the prior year due to the previously disclosed dispute with Johnson Controls, revenue growth and diversification have improved.
Third quarter adjusted EBITDA was minus $7.4 million. The company posted a net loss of $11.1 million, partially offset by the change in the fair value of our warrant liabilities, which increased by $1.8 million. Under U.S. GAAP the fair value of these liabilities will decline and income will improve if the company’s stock price declines. The company would experience the opposite effect when our stock price moves higher. While this line item in the financial statements will vary based on the company’s stock price, it does not impact our cash flow from operations, cash and cash equivalents or liquidity for all prior and future periods. Moving to the balance sheet. We finished the quarter with a cash balance of approximately $33 million compared to $18 million at the end of the second quarter.
Both values are inclusive of our restricted cash balances. The company’s primary usage of cash continues to be driven by construction expenditures with approximately $31 million spent during the third quarter. This cash usage was offset by proceeds obtained from various financing instruments during the quarter. Our net debt balance increased to $181 million compared to $123 million at the end of the second quarter. The increase in notes payable was primarily due to principal amounts related to a $33.4 million pace loan related to Tom Benson Hall of Fame Stadium and $12.5 million raised from the City of Canton, Stark County and Stark County Community Foundations. These dollars will be used to fund destination infrastructure and site work, both areas that traditional lenders do not typically provide financing for.
The financial support provided by the local community reflects our common goal of driving significant economic impact into the area. I’d like to go a little bit deeper on the detail on financing as we’ve continued to make significant progress subsequent to quarter end. In October, the company closed on a $7.5 million tourism development district financing through the State of Ohio’s Enterprise Bond Fund. As we’ve previously highlighted, we are in a tourism development district that allows for the collection of additional sales taxes in the district to support future development. Additionally, we closed on the final components of the capital stack for the Fan Engagement Zone, along with $50 million in financing necessary to begin construction on the indoor water park, the marquee asset of our world class destination.
Similarly, we announced the restructuring of a portion of our balance sheet extending maturities, while securing at lending commitments that will allow us to complete construction of all remaining Phase II destination assets. As you can see, we’ve been laser-focused on building a capital structure that allows the company to reach its long-term financial goals. In total this year, we’ve completed financing transactions of approximately $180 million as we align financing needs with construction schedules. Just as importantly, we’ve maintained a weighted average interest rate of 7.4%, even as credit markets tighten as evidenced by the rising interest rate environment. Our ability to complete these transactions at favorable rates shows that our thoughtful and pragmatic approach is allowing us to position our balance sheet for future growth.
Likewise, our ability to secure this critical financing is supported by our largest shareholder, industrial realty group and all of the active stakeholders throughout the local area and the State of Ohio. This continued support will help drive the long-term success of the company. For the rest of the fiscal year, we expect similar seasonal trends to last year for revenue and expenses. Looking to guidance for next year. We are expecting fiscal 2023 revenue growth in excess of 75% when compared to 2022. Adjusted EBITDA is expected to improve by 60%, driven by our focus on monetizing existing and newly developed physical and virtual assets. The company is intensely focused on expense management and staying lean where possible, while at the same time balancing the need to invest to support our continued growth.
We expect increased diversification of revenue and EBITDA across multiple streams with each one driving synergies to support the exciting ecosystem we’re working so hard to build. In closing, we remain committed to maintaining a balance sheet that provides financial flexibility through our growth phase to deliver long-term value to all of our shareholders. Finally, and as you’ve come to expect, we will continue to provide transparent and timely updates to our shareholders as we move ahead. Now, let me turn it back to Mike, who will provide some closing comments.
Michael Crawford: Thank you, Ben. A great update and really when you look at the numbers in Q3 and you look at the growth year-over-year, you have to walk away very encouraged. And Ben’s point about staying laser-focused on cost is exactly spot on. When you think about growth for next year revenue at a 75% projected level, EBITDA at a 60% projected level, you don’t usually do that in a startup company environment. You have to add resources, you have to construct, you have to invest in marketing and sales. We’re doing all of that, but we’re doing that with an eye towards being business savvy and pragmatic around matching expenses and lowering expenses versus revenue growth. So what are the key takeaways for me for this quarter?
Number one, we have the financing that we need to complete Phase II. That’s what everybody’s been waiting to hear. That’s what I’ve been waiting to tell you. You have it. So that’s a big takeaway. You should stand behind and feel very comfortable about. You not only have the financing, you have project completion guarantees from our largest shareholder. You have community investing with low cost longer-term loans, very committed to the success of this project. We’ve also worked, has been stated very hard at realigning or restructuring almost our balance sheet, working with IRG to extend debt, so that our debt profile matches our revenue profile so that there is no issue about or worry about can we repay debt at the timing that it comes due.
The shareholder support, the largest shareholder support that we have gotten is unprecedented. And I would say in gambling terms, going all in. They have committed that this cannot fail. We have committed as a management company that we will not let it fail, and that we are excited about the growth, but we’re excited even more about the future. When I think about the Hall of Fame Village revenue is now coming from multiple different areas. When I first started in 2018, predominantly coming from sponsorship, now it’s events and event growth. Now it’s sporting tournaments directly created by us and revenues generated by rental of our assets like our Stadium, like our ForeverLawn Sports Complex, like our Center for Performance. We now have full year round revenue coming in for different types of events with an indoor asset.
We have attractions that are going to generate and already generating revenue. We have food and beverage that is generating revenue. We have our hotel that is now growing in profitability, generating great revenue. And we now have multiple tenant leases where we either have a base rent or a percentage of revenue coming in. That only gets stronger in 2023. So the diversification of revenue from a Village point of view is very exciting. From a company point of view, it’s even more exciting. I want to reemphasize the conditional approval we received from the Ohio Casino Control Commission was paramount to the success of our sports betting efforts. The two partners we’ve selected are great at what they do. We think, as I said, better is going to revolutionize the way sports betting is done mobilely with micro betting as the primary focus.
And so we’re encouraged in 2023 by the revenue uplift that we’ll see and the bottom line contribution that sports betting will make and also the other pieces of our gaming industry as well, our gaming unit. Media is now starting to sell. We have a very robust pipeline of assets that we are either developing, signing deals with or getting ready to sell for distribution. So I think 2023 will be a breakout year for media. And we’re creating exceptional experiences across all of our platforms. And I think when you create exceptional experiences, both physically and virtually to host and entertain and more importantly engage audiences, you have to believe I certainly do that revenue growth and bottom line contribution will start to exponentially grow.
I’ve said, I feel we’re undervalued. We are undervalued. We will correct that in 2023. Maintaining listing compliance is important, but we will be smart about how and what we do to do that. And so investors should take that as a net positive. And by the way, we’re already thinking about Phase III and the planning of Phase III for the Village destination here. So I want to thank the team. I want to thank our shareholders. I know 2022 has been a bumpy road from a market point of view, from an inflation macro point of view. But this company continues to execute and show that it can grow in every way that we’ve talked about over the year and show that it can execute and obtain the financing. And the financing doesn’t just come. People don’t just give you money.
It comes because of the belief and the strategy. And I think the execution by the team shows the strategy as a winner. I’ll now stop there and open it up for any questions that folks attending the call may have.
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