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Good afternoon and welcome to Shockwave's Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session toward the end of today's call. As a reminder, this call is being recorded for replay purposes.
I would now like to turn the call over to Debbie Kaster from the Gilmartin Group for a few introductory comments.
Thank you all for participating in today's call. Joining me are Doug Godshall, President and Chief Executive Officer of Shockwave Medical, and Dan Puckett, Chief Financial Officer of Shockwave Medical.
Earlier today, Shockwave released financial results for the quarter ended June 30, 2019. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during the call that include forward-looking statements within the meaning of federal securities law 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 without limitation our examination of operating trends and our future financial expectations, which include expectations for hiring, growth in our organization, and regulatory affairs in guidance for revenue in 2019, are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements.
For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factor section on our S-1 on file with the SEC and available on EDGAR. Shockwave disclaims any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and accurate only as of the live broadcast today, August 5, 2019.
And with that, I'll the call over to Doug.
Thanks, Debbie. Good afternoon, everyone, and thank you for joining us today. I'm pleased to welcome you to Shockwave's call to review our second quarter 2019 results.
It has been encouraging to see that the positive trends we witnessed at the end of 2018 and in the first quarter of this year, have continued through the second quarter. We reported $10 million in revenue for the second quarter of 2019, which is up $2.7 million over the prior quarter and was a fourfold increase over our second quarter of 2018.
As we saw in the first quarter, growth in the U.S came principally from M5 our -- above-the-knee peripheral catheter and internationally from C2 our coronary catheter. This mix of products and geographies continues to confirm our thesis that intravascular lithotripsy has the potential to play a significant role in addressing a meaningful global patient population.
Based on these encouraging results and despite the predictable summer seasonality of U.S peripheral and international coronary procedures, we now expect revenue for the full-year of 2019 to be in the range of $38 million to $40 million. Dan will provide more financial details later in the call.
Before turning the call to Dan, however, there are a few highlights from the quarter that I would like to share. Since drug-coated balloons or DCBs and the FDA's position relative to their use has been top of my mind for many. I want to start by addressing that topic and what if any impact it has on Shockwave. And the short answer is that it has had little to no impact. While the FDA panel meetings back in June were inconclusive, the general feeling was that they were by somewhat positively in favor of DCBs and we assume that the FDA will be less negative than in their most recent statements when they update their position publicly.
We continue to believe that the future usage of DCBs will be higher than it has been in the past six months, but lower than usage it had been in 2018. In recent months there was a rather meaningful reduction in DCB volume and yet we did not witness an obvious impact on IVL usage, even in the sites that have completely stopped using DCBs. This suggests to us that IVL usage has been and will continue to be largely uncorrelated with DCB utilization.
Organizationally we’ve elected not to focus on this saga and have continued to concentrate our efforts on maintaining great outcomes, adding new sites and educating new users within existing sites. Our recent results suggest that these were the right things to focus on.
While the DCB challenges did not affect our business they did have an impact on the randomized arm of our disrupt PAD III study, which is our global post-market study evaluating the benefits of Shockwave prior to drug-coated balloon versus angioplasty followed by drug-coated balloon. Given that both arms of the trial include DCBs, we had suspended enrollment of the study pending the FDA panel meetings in June.
We've reviewed the FDA panel results with our principal investigators and anticipate FDA will require additional risk language and patient information -- informed consents for DCB studies. Once we’ve the final FDA position, we will revise our study documents and restart the study.
As a reminder, there are two arms of the Pad III trial. The 400 patient randomized arm just discussed and a 1,000 patient registry. Given that we’ve enrolled over 800 patients to date, we are now planning to expand this registry arm beyond 1,000 patients to ensure that we are able to accumulate enough below the knee patients to create a meaningful data set for this important population that has a very high incidence of complex calcification. This expansion is still in the planning stages, but we anticipate a revised protocol will be at our sites in the next few months.
Turning to our coronary studies, our 442 patient U.S IDE study disrupt PAD IIII, enrolled 76 patients in the second quarter, bringing our total patient enrollment to 108 as of June 30. Of the 50 sites that will ultimately participate in the study, 27 were activated by the end of the quarter and we remain on track to complete enrollment in the second quarter of 2020.
In Japan, we continue to move forward in discussions with the countries pharmaceutical and medical device authority or PMDA to gain share and approval of intravascular lithotripsy for coronary use based on the combined data from our disrupt CAD III and CAD IV studies.
As a reminder, the CAD IV study is a 60 patient pre-market clinical trial notification or CTN. We expect to initiate enrollment this fall with ultimate approval in mid-2022 in Japan, which is a bit later than originally planned since PMDA is requiring one-year follow-up.
One final comment on coronary trials. We look forward to TCT where data from our 120 patient post-approval European registry CAD II has been accepted for presentation and will represent the largest IVL coronary data set to date. We're pleased with the progress we've made on the clinical study front and there have been many recent opportunities to conferences to share the capabilities of Shockwave's technology and the data our investigators have generated.
EuroPCR was the biggest event this past quarter and was a whirlwind for our team. There were four live Shockwave cases, intravascular lithotripsy with the subject of roughly 45 presentations and we witnessed standing room only audiences at many of the Shockwave sessions, including at our Abiomed Shockwave combined trading events.
One of the IVL cases that was presented by a physician from Belfast was voted by the Congress to be the best case presentation at PCR this year and that was out of 1,300 case presentations of all different types, quite flatter in this at least. In addition, we hosted a Coronary Top Shock IVL Case contest where we ask customers to submit their toughest Shockwave cases to be judged by a panel of physicians. The winner was a great case where Rotablator and Shockwave were used synergistically to manage a very challenging patient. Our international customers really seem to enjoy this event.
This year's PCR was a great representation of the versatility of intravascular lithotripsy in the coronaries and demonstrated how rapidly our European customers have integrated Shockwave's coronary system into their practice in just one year. In addition to EuroPCR, we also had great visibility of many other conferences including NCBH, SBS, C3, TBT [ph] [indiscernible]. And Shockwave was used in multiple live cases as well as 11 symposia at the various conferences this quarter.
We experiment with a new concept of TBT where we held our first large bore access session. TBT does not have any coronary or peripheral content, so the physicians who attended the symposium were not the peripheral or coronary users who are ordinarily frequent in our sessions, but rather was a group of practitioners focused strictly on using Shockwave to expand the calcified iliacs for TAVR or Impella placement.
This focus large bore symposium nicely complements our commercial strategy where we are increasingly using iliac access as our entry point at many U.S accounts. And once on the shelf, we broaden to other peripheral applications. Also on the commercial front, our field staffing efforts are tracking consistently with our goal to expand Shockwave's direct presence in U.S and Europe by roughly 50% over the course of 2019.
We also added two regions in the U.S., which brings us to four, so we now have more local management to help support our specialists and sales teams. Internationally, we're selling in 33 countries and while we have witnessed encouraging adoption in many countries, the vast majority of sites and physicians have yet to even try Shockwave. We're just getting started.
We also continue to see steady progress in our collaboration with Abiomed. We held a joint Shockpella advisory board meeting in June, conducted training at multiple conferences and are piloting field-based partnerships to refine how we will jointly approach local customers. We anticipate there will be an increasing frequency of training sessions locally and at medical conferences. The more Impella users become aware that they can use IVL to easily and safely expand the iliac arteries to place Impellas in the presence of calcium, the more Impellas Abiomed should sell and by extension the more M5s Shockwave should sell.
There are additional benefits from this partnership for Shockwave, of course. First, many Impella users also do TAVR cases where IVL can help avoid alternative access or #state femoral is one of our customers has coined. And even if those we train with Abiomed choose not to use Shockwave for large bore access. The vast majority of Impella users also treat coronaries. So there will be meaningful exposure and awareness of Shockwave well in advance of our U.S coronary launch in 2021.
With respect to our below the knee product, we're still highly encouraged by the clinical response to our S4 device, which will remain in limited launch mode, while we prepare to roll out smaller sizes and to fully launch S4 in the fourth quarter of this year.
A quick note on intellectual property. As you may have seen, the U.S Patent and Trademark and Appeal Board or PTAB has decided to officially Institute the IPRs and three of our patents. While the decisions do unfortunately draw out the IPR process and requires us to go to trial, we remain quite confident in our broad patent portfolio and strategy and are not concerned about the impact of these IPRs on the viability of our business as we move forward.
Turning to operations. Behind the scenes, our team has really impressed me with their dedication and performance. Our operations team has been on fire since January. We’ve had a twofold increase in production, our second shift is now fully up and running and almost matching the first shift in daily output. And we double our clean room space with a move to our new Santa Clara facility that we just completed.
On top of all this, we successfully managed audits from FDA and our European notified body just as we were preparing to move. The FDA was extremely complimentary which is a good sign to say the least. Together the move and inspections were great tests of our capabilities and the team passed with flying colors. Despite the risk of disruptions for move preparations and inspections, we continued steady improvement in production on both shifts without any associated quality issues. Again, a strong testament to the strength of the team and integrity of our systems and processes.
And in conjunction with increased sales, larger facility in production increases, we have also grown our team. As of June 30, we had over 210 employees, an increase of 52 from the beginning of the year as we added key organizational areas such -- across the board including program management, marketing and sales, clinical R&D, regulatory and operations.
We also are delighted to have recently announced the addition of both Haj Tada as General Counsel and Keith Dawkins as Chief Medical Officer. We will continue to enhance our capabilities to ensure that we are in the best possible position to take advantage of the meaningful opportunities in front of us.
With that, I would like to turn the call to Dan.
Thank you, Doug. Good afternoon, everyone. Shockwave medical's revenue for the three months ended June 30, 2019 was $10 million, a 339% increase from $2.3 million in the same period of the prior year. U.S revenue was $5.2 million in the second quarter of 2019, growing 239% from $1.5 million and this impaired last year, all of which was derived from peripheral products. This increase in U.S revenue was driven primarily by M5 or above the knee peripheral catheter.
International revenue also saw a nice increase in the quarter, growing 543% to $4.8 million in the second quarter of this year from $752,000 in the same period last year. The main driver of our international revenue was our C2 coronary product, which is supported by a network of 18 distributors for selling in 33 countries, including newly added territories in Eastern Europe and Asia.
Looking at revenue by product line, peripheral products accounted for $6.2 million of total revenue compared to $1.9 million in the same period last year, a 223% increase. Coronary products accounted for $3.5 million of the revenue compared to $348,000 in the same period last year, all of which was international.
In addition, the sales of generators most of which was international, contributed $297,000 in revenue in the second quarter of this year. And there was no generator revenue in the same period last year. Gross profit for the second quarter of 2019 was $5.9 million compared to $1.1 million for the second quarter of 2018. Gross margin for the second quarter of 2019 was 59% as compared to 48% in the same period last year.
Contributors to the gross margin improvement included continued increase absorption of fixed cost and productivity gains through work flow improvement and fixturing. Total operating expenses for the second quarter of 2019 were $17.1 million, a 52% increase from $11.3 million in the second quarter of 2018. R&D expenses for the second quarter of 2019 were $6.9 million compared to $5.5 million in the second quarter of 2018. The increase was primarily attributable to clinical study expenses for ongoing PAD III, CAD II and CAD III trials.
Sales and marketing expenses for the second quarter of 2019 were $7 million compared to $4.4 million in the second quarter of 2018. The increase was primarily due to sales force expansion in the U.S and internationally as well as increases in marketing program spending.
General and administrative expenses for the second quarter of 2019 were $3.2 million compared to $1.4 million in the second quarter of 2018. This increase was primarily due to additional costs associated with being a public company.
Net loss for the period was $10.6 million as compared to a net loss of $10.1 million in the same period of last year. Net loss per share in the second quarter of 2019 was $0.38. We ended the second quarter of 2019 with $125.1 million in cash, cash equivalents and short-term investments.
Turning to our outlook for 2019, we're continuing to see strength in our peripheral products and accelerated use by our existing and new customers globally. In addition, we're expecting to see continued geographic penetration of coronary product internationally. Based on these trends, we expect full-year 2019 revenue to be in the range of $38 million to $40 million, representing a growth of 210% to 226% over full-year 2018.
At this point, I'd like to turn the call back to Doug for closing comments.
Thanks, Dan. Thank you all again for taking the time to join us today. We are so pleased with the progress our company and technology have made and are grateful for the exceptional support we've received from physicians around the world. These accomplishments each quarter of building upon each other to establish Shockwave as an effective solution that can help transform the way that calcified cardiovascular disease is treated.
With that, I would like to open the line for questions.
[Operator Instructions] Our first question or comment comes from the line of Lawrence Biegelsen from Wells Fargo. Your line is open.
Good afternoon. Thanks for taking the question. And Doug congrats on a really nice quarter.
Thanks, Larry.
Doug, I wanted to just ask upfront within the U.S in peripheral, can you hear me okay, Doug?
Yes.
Good. Sorry, I wasn’t sure there. So, just maybe in U.S., in peripheral, could you tease out a little bit SFA use versus large bore access? How much use you’re seeing in need to those? And I had a couple of follow-ups.
We don't -- we're not at this juncture splitting out vessel specific, but I would say the momentum we saw in this quarter was certainly driven a bit more by sort of common femoral iliac acceleration. Although SFA certainly continue to contribute very nicely, but the acceleration getting on the shelf and broader visibility and awareness of the applicability in the iliacs was the -- sort of bigger contributor this quarter than it was last quarter. It sound like it was started to dominate the SFA. SFA is still very significant part of the business.
That’s helpful. And, Doug, I heard your comment on below the knee, which were encouraging. That’s obviously a pretty important catalyst for you guys in growth driver. Maybe just a little more color around your confidence in the smaller sizes. I think it's the 2.5 and the 3 were waiting for by year-end and just from a process standpoint what’s left in front of you before bringing these smaller balloons to market? And I just have one more follow-up.
Since we had to make the balloons a bit thicker and move the spec outside of the original range, we’ve to wait -- we had to submit to the FDA, so we're waiting for FDA approval. It's certainly not a complicated submission. It's essentially the same balloon just a little bit more durable. And so we're pending that approval and then we'll do a limited launch to make sure that we were right. But given that we're already getting nice feedback from the limited launch of the 3.5 and the 4.0 [ph] will not be as lengthy a limited launch once this is available.
That’s helpful. And just last for me, Doug or Dan, since you’re a new public company, it would be helpful to hear from you just kind of the cadence that you expect for Q3 and Q4. You talked about seasonality a little bit. I’m sure everybody is aware of that, particularly, in Europe. But the low-end maybe what -- the low-end of the guidance rate, I think the second half is about $21 million to 23 million implied from doing the math right. The low-end implies somewhat flattish growth sequentially from Q2, but just maybe hope to hear from you, how you’re thinking about the guidance and maybe any conservatism at this point, given that you’re new public company and seasonality. Thanks for taking the questions.
Sure. Larry, maybe I will comment on. This is Dan. Yes, we do expect some seasonality in Q3 due to the summer holidays internationally and in the U.S. So -- but we do still expect sequential growth and then seeing the growth pick up significantly again in Q4.
And I will add some color. The -- what’s encouraging about broad acceptance of coronary also puts us a little bit earlier on the seasonality trend and then maybe other companies at our stage. And so while we have not lived through a European seasonal trend yet, it seems predictable that when you have a fairly wide geographic distribution as we now do in 33 countries, which is led by coronary. And just getting on the shelf at new sites, which would enable you to overcome that procedure while that happens in, especially in August, it's a little bit harder to overcome the seasonality. So we're mindful of the fact as we're still looking to add as many sites as we can, but we are -- our new enough that we're not -- we don't have as much experiences, say, a larger company would to have as much granularity on seasonality, but it seems predictable that we will be seeing it.
Thanks for taking the questions, guys.
Thank you. Our next question or comment comes from the line of Jason Mills from Canaccord Genuity. Your line is open.
Hi, Doug and Dan. Congrats on a great quarter. Can you hear me okay?
Yes. Thanks, Jason.
Thank you.
Great. Wanted to ask, Doug, first about coronary. Could you talk about what trends you’re seeing -- obviously at a good quarter in coronary OUS. Is it a potential leading indicator of what we might expect in 2021? What can you say about the adoption trends? Any dynamics you’re seeing in Europe using the coronary catheter, that you think are applicable as we think about the coronary launch in the United States in a couple of years?
Sure. We seem to be thus far highly complementary to atherectomy. In that we are enabling physicians to treat a lot of vessels and vessel types that are -- they are either reluctant or unable to treat with atherectomy and we are just as was evidenced in that case that won the contest at PCR, we’re seeing a reasonable amount of Rotablator Shockwave combo, so cases where maybe they could have gotten across a tight lesion with Rotablator [indiscernible], but then they couldn't treat left main or they couldn’t treat a really tortuous anatomy or an osteo lesion or the like now they can do both, and they can interventionally get a patient with more fully revascularized and complete the procedure. So we're -- we -- all the evidence that we’ve seen thus far in Europe and in other geographies is that we are meaningfully expanding the treatment of calcified coronary vessels and not in a position rather they send a patient to surgery or they deploy a stent and hope for the best and end up with sense that aren't fully deployed. So we're -- I think that should have a fairly direct corollary when we launched in the U.S it ought to be a pretty similar practice pattern. Certainly, in the U.S there is more atherectomy utilization than there is in Europe sort of twice as much utilization on a per procedure basis, but it's still circa 5% versus circa 2.5% Europe. So given that we think based on everything we’re -- all the feedback we’re seeing from Europe, the sort of 20%, 25% calcified artery estimate is not inaccurate, not that we’re predicting we are going to get all 25%. But that’s a real sort of incidence prevalence. So there's a huge amount of upside between 5% and 25%.
Got it. That actually proactively answered one of my follow-up questions, which is any change [indiscernible] from market expectations you laid out. So let me move on to another coronary question. You meaningfully accelerated, Doug, the CAD III study enrollment in 27 of the 50 sites here in the United States. Just in those sites with the current run rate, it looks like you’re on track to meet Q2 '20 completing the enrollment. Should we expect though that enrollment might accelerate some as more sites come on and is there a potential upside to enrollment completion for CAD III?
Yes. With the straight line, the enrollment from the second quarter you probably be tail end of second quarter. So we are hoping to see an increase in patients per month. Certainly, we had some really encouraging early strong enrollers, but we're also now going to continue to expand and hopefully get to the full 50 in the not-too-distant future. So where our clinical team is doing a remarkably good job, they're really tight similar to our operations team. And they're well aware of our desire to get this trial enrolled as expeditiously, but with spectacular data obviously. And the sooner we get enrolled, the sooner it will be approved, so they're not unaware of the desire of our collective desire to get it enrolled as fast as we can without sacrificing quality.
That’s helpful. I will ask one more, I will get back in queue, specifically below the knee in the S4, the soft launch, our checks [ph] would suggest that there's quite a bit of demand and interest in getting access to that product. Could you talk about how quickly you might go or how you might roll that out when you do have the 2.5 and 3s available and what sort of qualitatively you can say about physician interest in that product, specifically in the United States. But I would be interested in what you’re seeing in terms of interest outside the U.S where obviously peripheral atherectomy is not as superfluous used. Talk a little bit about S4 and qualitatively what you're hearing?
Yes. So we’ve still been in a narrow set of accounts and are looking to broaden the limited launch outside of some of the hardcore Shockwave sites. The feedback has certainly been encouraging. The product is giving them a tool that they don’t otherwise have. We are also being used in a complementary fashion to atherectomy below the knee, a bit more than I had even expected frankly, so you’re -- we are able to treat with CSI and finish with Shockwave or treat part of it with Shockwave, treat part with CSI with [indiscernible]. So interesting correlate to what we’ve seen in the coronaries. Although certainly that's a subset of the cases, there are lots of sort of Shockwave only cases in our limited launch as well. So, yes, I'm -- we're really eager to see how differently the rollout is below the knee versus the -- versus our M5 rollout above-the-knee, given that it's in some ways more straightforward because it's not sort of iliac for TAVR access or EVAR access or the like at the straightforward peripheral case. And these are amongst the most critically ill patients that we deal with even more so than some of our coronary patients, because you're trying to avoid an amputation, which is I think probably some of what you're hearing in terms of the interest in having our product. Once the smaller sizes are available, as I mentioned before, we will do a limited release hopefully early in the fourth quarter and then some really good peripheral meetings as you know in the fall and we will look to have at least a broader splash year launch there in the sort of mid fall. Internationally, we are -- we got a bunch of distributors who are very focused on coronary right now for good reason. Distributors tend to see the path of least resistance and probably your customers are telling you they want coronary, then you sell that because it's easier to sell. We are adding some market development capabilities to support those distributors to help generate peripheral demand and below the knee demand, specifically. And so we will have sort of a hybrid, some direct support of distributors to make sure that we help educate them that there's a great Shockwave opportunity in the periphery, which some of them are already starting to look to iliacs as their next Shockwave market and we would like to then have below the knee being the one to follow. So little more nascent in internationally and it's in part because we are really early in the launch in coronary and it will be a little hard to get their attention away from coronary, particularly distributors. Our direct personnel we will be able to juggle both with the distributors less so [ph].
Got it. Thanks, Doug.
Thank you. [Operator Instructions] Our next question or comment comes from the line of Bob Hopkins from Bank of America. Your line is open.
Great. Thank you. Hi, guys. Just a very couple of quick questions here. First on the PAD III trial. Not surprised to hear your commentary about the need for additional risk language required from FDA on paclitaxel drugs going forward. I’m just curious, have you talked directly to FDA about this point? Have you had conversations with the FDA post the paclitaxel panel? Just kind of curious as to what you’re hearing and how long you think it will take to you get restarted there?
We’ve not. Since we are …
Okay.
… not in the -- we are not trying to get -- well, this is a post-approval study. I think they would probably not -- they will probably tell us, yes, go ahead and do your trial, but I don’t want to go out with our guess of what risk language should be and then go back to the IRB's and revise it again. And thankfully we’ve got -- we're looking forward to getting it started, but it's not as if this is mission critical or what are we going to do without PAD III. In some ways it helps us because our clinical specialists are all getting certified for coronary support right now and that's our key clinical mission. And if we were trying to both re-ramp PAD III, which are clinical specialists, do a great job supporting, but it takes time, I would frankly rather than spend time on coronary than on peripheral right now. So a little bit of a rain delay from FDA is not actually inconvenient or its kind of convenient. We think -- initially we thought from our -- from the folks who are very involved with the FDA may come out with a position very quickly like last month, which obviously didn’t happen. And now we’re hearing it might be September, but I don't have any direct knowledge or feedback from the FDA.
Okay. And then just one quick follow-up on below the knee in smaller sizes. I heard your comments about, obviously, first limited launch and given your experience to date you’re seeing more cases maybe than you expected with atherectomy, but is it safe to say that the majority of the cases are probably going to be either or [indiscernible] therapy or atherectomy therapy rather than together?
Probably. I think the Venn diagram will have a reasonable intersection though, because they’re different and if you got a bifurcation you might really want your Shockwave for bifurcation and if you’ve got a single vessel run off, you might really want your Shockwave, but if you got a long straight segment you may want to just spin something down there and treat that with atherectomy. We are -- that’s one of the things we’re trying to digest and internalize from our limited launch is what -- how well we be positioned, where is the best place to do Shockwave versus angioplasty versus atherectomy if it is versus atherectomy. My hunch is we’re going to be, just like the coronaries, we're going to be a new tool that enables them to better treat patients who were primarily getting balloons or in the coronaries case we're just getting drug stented. So I anticipate that the primary move will be from at least based on what we’re seeing so far in the legs, primarily would be balloon to Shockwave versus atherectomy to Shockwave in terms of a share shift.
Got it. That’s helpful. Thank you.
Thank you. I’m showing no additional questions in queue -- comments in the queue at this time. I would like to turn the conference back over to Mr. Doug Godshall for any closing comments.
Okay. Thanks everybody for your attention. Obviously, we are encouraged by the progress, but we have a lot of work in front of us and are grateful to the tremendous work our team put in the past quarter and the really significant clinical support we’ve had around the globe. So thanks for your time and I will speak soon.
Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day.