Paragon 28, Inc. (NYSE:FNA) Q2 2022 Earnings Conference Call August 3, 2022 4:30 PM ET
Matt Bacso - Gilmartin Group
Albert DaCosta - Co Founder, President and Chief Executive Officer
Stephen Deitsch - Chief Financial Officer
Conference Call Participants
Craig Bijou - Bank of America
Kyle Rose - Canaccord
Mike Mattson - Needham
David Turkaly - JMP Securities
Good afternoon and welcome to the Paragon 28’s Second Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded for replay purposes.
Joining me from Paragon 28 are Alberta DaCosta, Chairman and CEO and Steve Deitsch, CFO. Earlier today Paragon 28 released financial results for the quarter ended June 30, 2022. Before we begin, I'd like to remind you that management will make statements during this call and include forward- looking statements within the meeting of federal securities laws which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements.
All forward-looking statements, including but not limited to those relating to the macroeconomic our operating trends and future financial performance, including our revenue guidance, the impact of COVID-19 on our business, supply chain disruption, expense management, expectations for hiring growth in our organization, market opportunity, commercial expansion, and product pipeline development are based upon our current estimates and various assumptions. These statements involve material risks, uncertainties that could cause real results or events to materially differ from those implied by these forward looking statements. All forward looking statements are based upon current available information and Paragon 28 assumes no obligation to update these statements.
Accordingly, you should not place undue reliance on these statements. For a list in description of the risks and uncertainties associated with our business please refer to the risk factors section of our public filings with the Securities and Exchange Commission including our quarterly report on form 10-Q filed earlier today with the SEC. This conference call contains time sensitive information, and it's accurate only as of the live broadcast on August 3, 2022. Paragon 28 disclaims any intention or obligation except as required by law to update or revise any financial projections or forward looking statements or the because of new information, future events or otherwise. During this presentation, we will refer to the non-GAAP financial measures of adjusted EBITDA a reconciliation of the most comparable GAAP financial measure net income is contained in our press release issued earlier today.
And with that, I'll turn the call over to Albert.
Thank you, Matt. Good afternoon. And thank you for joining Paragon 28 second quarter 2022 earnings call. I will provide an overview of our second quarter and give a business update. Steve will then provide additional detail regarding our quarterly results and provide an overview of our updated 2022 revenue guidance. We will then open the call for Q&A.
Beginning with our second quarter 2022 revenue performance. Total revenue for the
second quarter was $42.5 million, representing growth of 19% compared to the second quarter of 2021. Strengthening of the U.S. dollar reduced our second quarter net revenue growth by 140 basis points as compared to the prior year period. Second quarter U.S. revenue was $36.8 million, representing growth of 19% compared to the second quarter of 2021. U.S. growth was the result of increased revenue contribution from new product launches and benefits from exact medical education and training, resulting in strong salesforce productivity gains offset partially by modest COVID disruptions. Later in my prepared remarks, I will provide more detail on the quarter's revenue growth drivers.
Second quarter international revenue was a record $5.7 million representing growth of 20% compared to the second quarter of 2021. Strengthening of the U.S. dollar reduced our second quarter international net revenue by 10 percentage points as compared to the prior year period. Growth in the quarter was once again driven primarily by our three largest international markets of Australia, South Africa and the United Kingdom.
Moving to our foot and ankle sub segment revenue trends during the second quarter Paragon 28 experienced double digit revenue growth in each of the foot and ankle sub segments including fracture, ankle, flatfoot hallux valgus, including hammer toe and Charco. Ankle and fracture product lines, which both benefited from exact new product launches led our growth in the second quarter. Paragons comprehensive product portfolio, which addresses each of the foot and ankle sub segments continues to be a key driver of our success.
I will now provide an update on U.S. revenue growth drivers including salesforce expansion, salesforce productivity, new product contributions and medical education. Starting with the salesforce. We ended the second quarter of 2022 with 198 producing sales reps compared to 197 in the first quarter of 2022. The number of producing reps can fluctuate quarter to quarter due to various factors including, among other things, the seasonality of the foot and ankle market, and the timing of hiring and onboarding new sales reps.
P28 continues to be the destination of choice for sales reps who are foot and ankle specialist, as well as reps new to the industry. I am excited about both the quantity and quality of reps that have joined P28 in the last year, we expect the number of producing reps to increase over time and in the second half of 2022. Moving to salesforce productivity, which we define as average revenue dollars per producing sales rep increased by an impressive 17% as compared to the prior year period. Fueling this growth was new product launches, including nine new products so far this year and 90 new product launches since 2020.
New product launches, complemented by our medical education and salesforce expansion initiatives have increased our revenue with existing and new surge in customers. Specifically during the second quarter, we did business with 1829 U.S. surgeon customers, including 582 U.S. producing surgeons, both records for P28 and an increase compared to the prior year period of 11% and 18% respectively. With approximately 15,000 surgeons that treat foot and ankle in the United States we have only scratched the surface and have a long runway of growth in front of us.
Our broad and innovative product portfolio in the hands of our best in class and growing salesforce, combined with leading medical education and training is driving sustainable high quality revenue growth. Speaking of medical education and surgeon training, almost 700 surgeons attended in person FNA medical education events in the second quarter of 2022 bringing the total number of surgeons trained in person at FNA medical education events to almost 2200 in the last 12 months. We are very pleased with our ability to meet the very strong surge in demand for these training events, leveraging our best in class surgeon training facility at our headquarters in Denver, Colorado.
Thank you to all our medical education team for their commitment and passion to Strengthen patient outcomes, including many, many weekends worked over the last year. Building on this momentum in July, we announced the launch of our new mobile surgeon training lab housed in a 43 by 30 foot tractor trailer, which includes a state of the art six station categoric training facility. The mobile lab is currently on the road, and we'll be hosting over 50 training sessions in approximately 50 U.S. cities during the second half of 2022.
The mobile lab will highlight our broad and innovative product portfolio, including the nine new products and surgical systems launched so far this year.
Speaking of new product launches, in mid May, we expanded our soft tissue portfolio with the launch of our grappler suture anchor system. The grappler suture anchor system is offered in peak titanium, and an all suture option and a variety of sizes and configurations to address soft tissue repair in all the foot and ankle sub-segments. In May, we also launched TinoTac 2.0 for minimally invasive soft tissue repair for hammer toe and other complicated deformities, redesigned with an angulated washer to allow for greater capture of soft tissue TinoTac 2.0 streamlines tensioning and improves fit to the bony surface.
The addition of the grappler and TinoTac 2.0 bolsters P28 soft tissue product offering which includes the recently launched paratrooper plantar plate system, and react stabilization system, grappler interference screw system and release stabilization system. With this comprehensive portfolio, Paragon 28 provides its customers a broad array of innovative solutions for soft tissue stabilization and repair.
Lastly, in June, we launched our monkey rings circular external fixation system for trauma, deformity correction and limb salvage. Monkey rings is an external fixation device designed to maintain anatomic position while providing stability, preservation and soft tissue and allow for adjustability and functionality. The monkey ring system allows hospitals and surgeons to collaborate with a single vendor for internal fixation, external fixation, wound care and biologics. Combined with the launch of monkey bars pinned to bar external fixation system earlier this year, we are building out a strong external fixation portfolio and complementing our wide ranging internal fixation biologics and soft tissue options.
As we head into the back half of 2022 our product pipeline remains strong and is expected to continue to drive future growth. In summary, we continue to have success on all key strategic initiatives. And we will continue to invest in the business to drive sustainable and profitable revenue growth. We are grateful for the trust our physicians and patients have for Paragon 28. I would also like to thank our sales representatives and employees around the world for their diligent efforts and dedication to fulfilling our mission to continuously Strengthen outcomes and experiences of patients suffering from foot and ankle conditions.
I will now turn it over to Steve. Steve?
Thank you, Albert. Moving to our second quarter 2022 financial results. Paragon's revenue for the second quarter of 2022 was $42.5 million, representing 19% growth compared to the second quarter of 2021. Strengthening of the U.S. dollar reduced our second quarter net revenue growth by 140 basis points as compared to the prior year period. Second quarter revenue increased by $1.1 million, or 2.7%, compared to the first quarter of 2022. Gross profit margin for the second quarter of 2022 was 82% compared to 81.3% in the second quarter of 2021. The improvement was primarily due to lower excess and obsolete inventory expense in the second quarter of 2022 as compared to the prior year period.
Total operating expenses during the second quarter were $43.9 million, compared to $43 million in the first quarter of 2022. The sequential increase in operating expenses in the second quarter was the result of $1.2 million of onetime costs related to the successful second quarter launch of our new SAP system.
Opportunistic investments to drive long term durable growth were enabled by and began after our October 2021 IPO, resulting in a 45% increase in second quarter operating expenses compared to the pre-IPO prior year period. The return on these investments has been significant. Revenue growth for the first half of 2022 was 22% and was fueled by a 13% expansion of our U.S. surgeon customer base and 18% increase in U.S. salesforce productivity and record international revenue. This growth was driven largely by incremental investments in R&D to bolster our product offering an incremental investments in sales and marketing to expand our global medical education programs and salesforce.
Paragon 28 exclusive focus on foot and ankle, and passion for improving patient outcomes strongly resonates with foot and ankle surgeons and sales reps. During the second quarter, the opportunistic investments we made in medical education and salesforce expansion initiatives exceeded our expectations, further validating that our strategy is working and has momentum. Several factors drove these opportunistic investments and included that were not limited to increased visibility of Paragon 28 after our IPO last year, the resurgence of in person medical education activities in the last 12 months, and continued foot and ankle market consolidation. As we head into the back half of 2022, we expect to continue making opportunistic investments and we also expect second half 2022 operating expenses to be consistent with the first half of the year.
Moving to further details on the P&L. Research and development expense were $6 million, or 14% of revenue for the second quarter of 2022 compared to $3.6 million, or 10% of revenue in the second quarter of 2021 and $5.8 million, or 14% of revenue in the first quarter of 2022. The increase in research and development as compared to the prior year was primarily due to further investments in product development, clinical studies, quality, and the acquisitions of additive orthopedics in May 2021, and busier in January 2022.
Selling general and administrative expense was $38 million for the second quarter of 2022 compared to $26.6 million in the second quarter of 2021 and $37.2 million in the first quarter of 2022. The increase in SG&A expense as compared to the prior year was driven primarily by investments in sales and marketing including in person U.S. marketing and medical education events, commercial team expansion both in the U.S. and in our international markets, increased variable sales representative commission expense related to revenue growth, increased G&A expenses due to the cost of becoming a publicly traded company in the fourth quarter of 2021 and one time SAP implementation costs.
The $800,000 increase in second quarter SG&A expense, as compared to the first quarter of 2022 was primarily due to the $1.2 million onetime costs related to our successful second quarter SAP launch. Second quarter adjusted EBITDA was a $3.2 million loss compared to the $3.3 million loss in the first quarter of 2022. When excluding the second quarter, one time SAP expenses of $1.2 million adjusted EBITDA improved nicely as compared to the first quarter, despite continued strong investments in key growth drivers during the quarter.
Turning to liquidity. Total liquidity was $113 million at June 30, 2022 including $73 million of cash and $40 million of cash available via our senior credit facility. Additionally, in the second half of 2022, we expect to recoup $5 million of cash flow from accounts receivable balances which increased temporarily in the second quarter during the launch of SAP.
Our strong liquidity position, combined with our increased operating leverage moving into the second half of 2022 and beyond is expected to enable P28 to operate without future financings to fund operations.
Before turning to our updated 2022 revenue guidance, a few comments on macroeconomic and other external factors and their impact on P28. Notwithstanding the strong momentum in our business, we remain cognizant of the current macroeconomic environment, including the potential for reduced elective foot and ankle procedures. Our company and team are resilient and have delivered strong results in past difficult business environments.
Our comprehensive product suite addresses both the elective and the non-elective foot and ankle market sub segments of fracture in Charco which together account for over 1/3rd of the global foot and ankle market. With respect to inflation, we are not currently experiencing a material impact on our business. Also, the global supply chain remains challenging, but we are confident that our team and vendors will continue to effectively manage these risks. Consistent with remarks from our past earnings calls we have and may continue to opportunistically increased inventory and instrument purchases to ensure that we have product on hand to meet demand.
And finally COVID in hospital staffing, shortage headwinds on elective procedures remain but currently are not significant.
Now turning to our increased 2022 revenue guidance. Our 2022 revenue guidance assumes currency translation rates for our international business remain consistent with current translation rates. We have increased our 2022 annual net revenue guidance to $176 million representing growth compared to the prior year of 19%. The strength in U.S. Dollar as compared to the prior year is expected to reduce our 2022 net revenue growth by approximately 100 basis points.
We expect our third and fourth quarter net revenue to be $42.5 million and $49.6 million respectively representing growth compared to the prior year periods of approximately 19% and 16%, respectively. The strength in U.S. dollar as compared to the prior year periods is expected to reduce both third and fourth quarter net revenue growth by approximately 100 basis points. While we will not be providing specific adjusted EBITDA or cash flow guidance for 2022 we expect to continue to see sequential improvement and increased operating leverage moving into the third and fourth quarters of this year.
That is the end of our prepared remarks. Operator, please open up the lines for questions and answers.
Thank you. [Operator Instructions] The first question today comes from the line of Craig Bijou from Bank of America. Please go ahead. Your line is now open.
Good afternoon, guys. Thanks. Thanks for taking the questions. Maybe just to start wanted to touch on guidance. And I think you had 20 plus percent growth in the first half. You're looking for 20% growth in constant currency for the entire year, suggesting a little bit of a pullback on from a growth perspective in the second half. So we'd love to just hear kind of how you guys are thinking about the quarters. What's assumed in that guidance? It seems conservative to us, but we just love to hear some of the assumptions that you're making it.
Hey, Craig it's Steve. Thank you for the question. And maybe to start with just with respect to assumptions in the guidance, we've assumed operating conditions similar to where we're at today, related to COVID, supply chain, elected procedural levels, etc. And when we look at the third quarter, typically, the third quarter is pretty consistent with the second quarter in terms of procedural levels for us anyway. And our numbers are driven by growth, consistent growth quarter-to-quarter, but we start seeing vacations in the second quarter particularly in our European markets.
And then when we look out to the fourth quarter, as you know, our fourth quarter is traditionally the strongest quarter of the year for Paragon 28 really driven by the elective procedure, boldness that starts coming through late in the year. Last year, we grew 25% in the fourth quarter, and we expect to have another strong and finish to this year. And that, as you noted, would put us at 20% on an operational basis for the full year. And we feel really good about that, particularly where we're at and operating in a somewhat uncertain macroeconomic environment.
Great, thanks, Steve. And then maybe for Albert or for Steve, appreciate the color on the product growth by category and what the key drivers were. I wanted to see if you might provide a little bit more color on how we should think about the product category growth, foot and ankle category growth in the second half? And what, if anything may be different than what we've seen in the first half?
Yes, hey, how you doing Craig? This is Albert. I'll take a stab at this one. I think from discussions where we really tried to balance our portfolio and we feel like in times, like today, that balance of our portfolio has really benefited us. We've seen some of our more exact product launches that have impacted growth slightly disproportionate to other areas. But we were happy to report that all the sub-segments grew nicely in Q2. Second half of this year, I'd see maybe some impact from exact product launches like our soft tissue portfolio. Also the external fixator.
We recently launched the monkey rings circular fixator, which can be used in multiple segments of foot and ankle But primarily, the Charco segment could see a really nice pop from a product like that. So second half, I'd expect to see some of the usual suspects like our ankle franchise which includes fusion, total ankle replacement to tailor spacer from additive orthopedics. I'd also expect to continue to see nice movement on the fracture fixation line. But then I see the newcomer, I'd see Charco really seeing a nice pop with the influence of some of these new products.
Great, thanks for taking the questions guys.
Of course. Thank you Craig.
Thank you. The next question today comes from the line of Kyle Rose from Canaccord. Please go ahead. Your line is now open.
Great, good afternoon, gentlemen. Thank you for taking the questions. So you talked a lot about all of the soft tissue products that have launched in -- I guess the quarter or year-to-date. Our diligence that was one of the big most commonly cited product gaps, I just maybe the overall interest both in the sales force and maybe at some of your medical education around these new products launching when we should expect those to really pick up and then the secondary question there is where are the existing product gaps now that you have sold soft tissue? Thank you.
I'll take that. How you doing, Kyle? And thanks for the question. You're exactly right, I'd say two areas that we had gaps, where the soft tissue portfolio. Even though we had a few products in the soft tissue space, we were still mostly missing in that area. And if you remember, soft tissue really touches all the sub segments, as we've mentioned before. So that's, that was an important piece for us. We've recently launched things like the React stabilization system for ankle fracture.
We launched the grappler, soft tissue anchor devices, we also have the grappler, interference free devices, those are going to be really helpful not only in getting us into the soft tissue, but the complimentary effect it has on all the existing technology that we have. So areas like flat foot really see an influence there. The other area that you might remember, we were missing was external fixation. And in January, we launched the pin to bar, monkey bars, pin to bar stabilization system for primarily, trauma or fracture fixation.
And we saw a really nice pop from that. And then again, like I mentioned, the monkey rings is going to be a really nice complement for the ankle segment, as well as Charco. So we're really excited about starting to have the ability to participate in more and more of the foot and ankle ailments. And I'll tell you, our mission has always been if there's a condition below the knee, anything related to foot and ankle, we want to be a participant there, we want to Strengthen the technology and offer meaningful options to our surgeon customers. So we feel like the soft tissue and the experts really gave us that.
Great, and then just. Yes, I don't know if I missed it. Yes sorry go ahead.
Maybe the second part that you've mentioned, any areas that we still might be missing, I tell you that I still continue to expect to see some soft tissue products, introducing into the market. I'd also expect to see some external fixation products. And those would probably be some areas that we're still missing. And then if you remember the Smart28 is something we've got some real ambition for moving forward. So I'd say those might be some of the gaps.
Great. And then just the last question for me, is overall, I understand you have one net add from a from a productive sales reps prospective here. And I know that there's some rounding errors there as far as when are people roll on and roll off. But overall expectations with respect to hiring, I mean, should we expect that sales force on a rolling 12 month basis to increase in line with the top line. Obviously, you're launching new products or so just trying to understand what expectations should be for just new feet on the street as it stands.
You got it. Just to remind you, we report producing reps, which if you remember is a salesperson that's selling a product in every month of the quarter. our sales force actually did grow. And you can see due to seasonal changes and some other factors that can influence the producing rep count. It looks like it was steady. But we do expect that to increase and we really liked that measure moving forward as a target for us. We feel like adding, producing sales reps is a good target and will continue to be a focus for us moving forward.
Thanks for taking the question.
Of course. Thank you.
Thank you. Today's question today comes from the line of Mike Mattson from Needham. Please go ahead. Your line is now open.
Yes, thanks for taking my questions. Can you guys hear me okay.
Hi. Sorry, I'm using some headphones for the first time here. So, I guess first on the international business,. I think you grew 30% almost on a constant currency basis, based on some of the [orthopedics] company that does look like the international markets were particularly strong this quarter. Do you think that it was kind of there were just more procedures kind of a catch up going on there? Or do you think it was really just your own kind of products and execution in those markets? Combination of both.
Yes, Hey, Mike it's Steve. I think it's actually both and, as we noted in our prepared remarks, and in the earnings, release our three largest markets again, we're really driving our growth and we're just really, really pleased with the progress that we continue to make in those markets and expanding relationships with surgeons, growing with existing surgeons, and just really excellent in territory management, navigating in tough fire environments and continuing to be resilient.
And so we have continued to see some pockets of COVID challenges. And even some if you can believe this some rolling brownouts in South Africa from time to time, but our teams are pretty resilient, as we've talked about and they find a way to make the number and exceed the number. And so we're really happy with what we continue to see in those markets.
Okay, got it. And then it looks like your cash balance is down about 36 million year-to-date. I needed some M&A. So I can't remember how much of that went toward M&A versus operations. But maybe just comment on that. And then talk about your how much cash you think you'll use for the rest of the year if you're going to do that?
Yes, yes, that's right. And that's a good question, Mike. So for the first part of the year, we had cash use and operations of about $24 million. And 11 million of that was driven by inventory investments, most of it related to these new product launches that we brought to market, but also related to some opportunistic builds of legacy products. If we could find a slot on a machine that was extra somewhere, we would take it. And we built some inventory to be able to enable our growth as we move into the seasonally stronger second part of the year.
We also increased our accounts receivable balance not intentionally unintentionally related to our SAP launch. But we will recoup that that was about a $5 million impact for the quarter. so that will be recouped. And then when we look to the balance of the cash use for the year, it's about $24 million net. And that was really driven by instruments of about $6 million on a year-to-date basis and SAP of about $3 million and then other CapEx of about $3 million, principally the building.
Okay, thanks. And then with this mobile training lab that you're introducing, is that training done in that I guess vehicle can be kind of incremental to the existing training courses you're already doing either locally or at your headquarters, or will be kind of replacing some of the kind of regional local training courses you had offered?
That's a great question. I'll tell you, we're excited to expand our medical training capabilities. So the demand has been pretty high, especially with some of these new product launches, for in person medical education, really, for surgeons to get their hands on some of these new products, primarily some of the ankle products, external fixation, fracture fixation products. What we've always tried to do is find the most effective avenue to bring surgeons to our headquarters when possible, but in some situations, it's more appropriate to bring the medical education to them. And so this gives us the flexibility really to move that medical education hub around, and we expect it to be complementary to our in house facility. And we just expect to capture more surgeons who might not have the flexibility of leaving their territories to come here for some medical education and still get their hands on product. We're pretty excited about that mobile app.
Yes, okay. Great. Thank you.
Of course. Thank you.
Thank you. [Operator Instructions] The next question today comes from the line of David Turkaly from JMP Securities. Please go ahead. Your line is now open.
Great, thank you. Albert maybe you've talked about some I guess pretty impressive productivity numbers on your salesforce. Let's call it high teens 20 percentage last couple of quarters. I guess just remind us like where these guys stand today in terms of potential I can't imagine that you can keep seeing increases like that. But maybe with the new products, you can. I guess, help us think about those trends versus real just new ads.
Yes and thanks for the question Dave. Great to talk to you. I'll tell you there's a few things there. One is the history of Paragon 28 we've always had such an exciting cadence of new product introductions, and we're definitely a clinically oriented organization, which means we appeal more to that clinically minded salesperson. And medical education for us as two facets, it has the surgeon trainings, but it also has sales rep, education. And so as we increase these medical education opportunities for surgeons, it's also a really nice way for our sales reps to continue to get educated on our products, while we designed the instruments and implants and the options the way we have.
So I think there is really a twofold benefit there. We launch a lot of great products. And we have a history of doing that. And we continue to do that today. And it's not slowing down moving forward. And in addition to that, we have tons of medical education opportunities to continue to Strengthen our sales forces ability to represent these products and just really be a service in the operating room for those surgeons. So we attribute a lot of that productivity increase to those things there.
Got it. And I guess if you'd be willing to give us sort of an update on patient specific options, I know you mentioned Talus. and then Disior, the 3D planning, I guess, I'd love to hear sort of an update of where you stand on the Smart28 platform as well. Thank you.
Absolutely. Yes, you got it. Thanks for the question. We love we continue to be really excited about what Smart28 can mean to the future of foot and ankle surgery, impacting patients, impacting surgeons, impacting basically our knowledge of these deformities and best ways to treat these. So in and of itself, Smart28 really is driven towards more patient specific identification and solutions.
I will tell you that the exact acquisitions, both of Additive Orthopedics and Disior are moving well. The Additive Orthopedics line in particular, the Talus Spacer. Just showed us how powerful some of these options can be to surgeons. These were patients, in some cases, very young patients that suffer with a vascular necrosis. And the options just weren't great for these patients, in some cases, facing amputation.
So there's just such an amazing feeling when we can provide an option a meaningful option like that that gives our surgeons those options and also benefits patients. So we're excited about that. It's doing well for us. And then the Disior side of it, which we've commented before we still think is the software really can be the foundation of the Smart28 or enabling technologies.
And right now the phases of Disior are being used primarily internally for some of our research and development work. As we do two things, one, we prepare for more of a public launch next year, but also in combining Additive Orthopedics and the Disior platform to create a really powerful solution there. So that was sort of an answer that gives you an update on those acquisitions, but also let you know where we are with the Smart28. That's a chance for us to really change the game here and Strengthen options for patients.
I appreciate it. Thank you.
Thank you. There are no further questions registered at this time. So I'd like to pass the call back over to Albert DaCosta for closing remarks. Please go ahead.
You got it. Thanks. Thank you again for your time today. Steve and I look forward to seeing many of you at future investor and industry conferences as well as individual meetings. Have a wonderful day.
This concludes today's conference call. Thank you all for your participation. You may now disconnect your lines.