Avanos Medical Inc
NYSE:AVNS
Earnings Call Analysis
Q4-2023 Analysis
Avanos Medical Inc
The company has witnessed improvements in its pain business between the third and fourth quarters, yet remains approximately two quarters behind its original sales projections. This lag has been attributed to sweeping changes within its go-to-market strategy, structure, and talent within the pain business, compounded by supply chain difficulties. Despite these challenges, the company is confident in the strategic direction set for 2024. Noteworthy is the Surgical Pain unit, which has stabilized after years of decline, anticipating low single-digit growth in the coming year. The successful launch of Trident RF in the U.S., coupled with the revitalization of its Game Ready business and COOLIEF reimbursement tailwinds in markets outside the U.S., including the U.K. and Japan, contribute to this positive outlook. As these strategies gain traction, the company targets sustainable mid-single-digit growth over the mid- to long-term horizon.
The company's financials for the fourth quarter and the full year show a robust framework with $173.3 million in Q4 net sales, and $673.3 million for the year. Adjusted gross margins clocked in at 58.6% and 59.1% respectively, accompanied by adjusted diluted EPS of $0.36 for Q4 and $1.03 yearly. Achieving an adjusted EBITDA of $32 million for Q4 and $99 million annually, the company has improved its EBITDA margin year-over-year by 140 basis points to 14.7%. With a combination of disciplined spending, a decrease in SG&A as a percentage of revenue, and diligent management of restructuring expenses and litigation settlements, the company has fortified its financial position. There is an anticipation to capitalize on this with approximately $20 million in annual capital expenditures, alongside progressing inventory management for working capital improvements leading into 2025.
Looking into the future, the company has laid out its expectations for 2024, with forecasted revenues ranging from $685 million to $705 million, achieving the mid-single-digit organic growth target. The adjusted gross margin is projected to be between 59.5% and 60.5%, with SG&A costs anticipated to be between 41% and 42% of revenue. This financial guidance supports an adjusted diluted earnings per share between $1.30 and $1.45, along with an adjusted EBITDA margin improvement of at least 200 basis points. By 2025, the company aims to propel its organic revenue to approximately $750 million, with overall margin expansion by 400 to 500 basis points, gross margin surpassing 60%, and SG&A percent of revenue between 38% to 39%. A targeted free cash flow generation of around $100 million in 2025 is on the cards, propelled by strategic operational financial metrics, consistent capital expenditure spend, and significant working capital advancements.
The company is expecting to stabilize its business towards the end of the current year, particularly within its HA division, with growth looking feasible in 2025. There's acknowledgment of the $20 million lower revenue base owing to the HA segment's impact, but the leadership is confident in striking over $100 million in free cash flow by 2025. This confidence is strengthened by about $25 million to $30 million in inventory opportunities that the company aims to leverage. With significant portions of these opportunities within their control, these initiatives are anticipated to augment the company's free cash flow prospects for the subsequent years.
The company has reported approximately 10% sequential growth compared to the previous quarter, signifying that the business, including its quality and supply chain issues, is on the mend. Notably, sales from capital equipment in Q4 are expected to contribute positively to future revenue. The Diros segment, in particular, has been performing exceptionally well, surpassing expectations as a newly launched segment within the U.S. market, and is anticipated to remain a high double-digit growth contributor, setting a positive trajectory for the overall performance of the company.
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Good day and welcome to the Avanos Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded. I'd now like to turn the conference over to Scott Galovan. Senior Vice President, Strategy and Corporate Development. Please go ahead.
Good morning, everyone, and thanks for joining us. It's my pleasure to welcome you to Avanos 2023 Fourth Quarter and Full Year Earnings Conference Call. Presenting today will be Joe Woody, CEO; and Michael Greiner, Senior Vice President, CFO and Chief Transformation Officer. Joe will review our fourth quarter and full year results, the current business environment as well as provide an update on our transformation efforts. Michael will share additional detail regarding these topics and our 2024 planning assumptions. We will finish the call with Q&A. A presentation for today's call is available on the Investors section of our website, avanos.com. As a reminder, our comments today contain forward-looking statements related to the company, our expected performance, current economic conditions and our industry. No assurance can be given as to future financial results. Actual results could differ materially from those in the forward-looking statements. For more information about forward-looking statements and the risk factors that could influence future results, please see today's press release and risk factors described in our filings with the SEC. Additionally, we'll be referring to adjusted results and outlook. The press release has information on these adjustments and reconciliations to comparable GAAP financial measures. Now I'll turn the call over to Joe.
Thanks, Scott. Good morning, everyone, and thank you for joining us to review our operational and financial results for the fourth quarter and full year 2023. Net sales for the fourth quarter were $173.3 million, impacted by the company's hyaluronic acid pain relief injection products as a result of continued pricing pressure due to the Medicare reimbursement changes and lower-than-anticipated sales across the company's North America Digestive Health products due to a major distributor's ordering pattern change. Net sales negatively impacted our margin profile. However, we were able to mitigate some of these top line challenges through our transformation initiatives and deliver $1.03 of adjusted EPS with adjusted gross margins at 59.1% and SG&A as a percentage of revenue of 43.3% for the full year. For the fourth quarter, we delivered adjusted gross margins of 58.6% and SG&A as a percentage of revenue of 38.9%. Separately, we remain focused on reducing our back order and ended the year with less than $2 million back order, and we have continued to reduce this through our first 2 months of 2024. This is a significant improvement over last year's back order levels of over $10 million, serving as tangible proof that our supply chain organization is executing effectively on its transformation initiatives. As we have consistently communicated since I first presented our transformation plan at the January 2023 JPMorgan conference, 2023 would be a bit uneven given the transformation priorities, the realignment of our commercial organization, M&A execution and our other portfolio optimization activities. But we are continuing to make steady progress against each of our transformation priorities. And as always, our primary focus is on getting patients back to the things that matter as we meet the needs of our customers. As I just noted, our sales from continuing operations during the quarter were approximately $173 million. Adjusted for the effects of foreign exchange and the impact of our strategic decision to discontinue revenue streams that did not meet return criteria specified by our portfolio transformation priority, organic sales were down 4.5% compared to a year ago. For the quarter, we generated $0.36 of adjusted diluted earnings per share and above $32 million of adjusted EBITDA from continuing operations. For the year, our sales from continuing operations were above $673 million. Adjusted for the effects of foreign exchange and as I mentioned above, the impact of our earlier strategic decision to discontinue revenue streams that did not meet our return criteria, organic sales were down 0.3% compared to a year ago. We delivered adjusted diluted earnings per share of $1.03 and adjusted EBITDA of $99 million. Although we are disappointed with our fourth quarter sales results, we were pleased with our overall execution, which was driven throughout the year by our 3-year transformation priorities. This performance gives us confidence in our ability to be within the range of the 2025 financial targets we established last year during our Investor Day. Now I'll spend the next few minutes discussing our results at the product category level. As we mentioned during our third quarter earnings call, we anticipated that our Digestive Health business would have a tough comparison in the fourth quarter given the release of back order products in the fourth quarter of last year. Additionally, as we have noted, we experienced distributor inventory rebalancing in the fourth quarter. As a result, our Digestive Health portfolio grew 3% in the fourth quarter on a constant currency basis below our full year trending. Our CORTRAK portfolio continues to overperform globally, growing double digits compared to the previous year driven by the sustained expansion of our U.S. CORTRAK standard-of-care offering. Separately, our NeoMed product line delivered another robust quarter, growing mid-single digits sequentially but faced a tough comparison as the previous year benefited from the noted back order relief and was flat year-over-year. Despite lower-than-anticipated sales in our fourth quarter, we are extremely pleased with the full year performance of our Digestive Health portfolio, growing double digits globally, excluding the slight negative impact of currency. We continue to anticipate mid- to high single-digit growth organically for our Digestive Health portfolio. And our ability to deliver above market growth will be supported by innovations we plan to launch during the back half of the year, expansion into additional global markets with attractive growth prospects and low-growth product rationalization. Now turning to our Pain Management and Recovery portfolio. Sales for this quarter were down approximately 12%, excluding the benefit of Diros-related sales, the impact of foreign exchange and our previously announced strategic decision to discontinue certain low-growth, low-margin products. As previously communicated, our HA portfolio was the main contributor to the decline primarily as a result of continued pricing pressure due to Medicare reimbursement changes. We anticipated and communicated near-term volatility along with the sequential and year-over-year quarterly declines. However, the impact in the fourth quarter was greater than anticipated. That being said, we believe we have the right strategies in place to capitalize on our HA opportunities over the long term, some benefits of which will be seen in the current year, meaningfully slowing the pace of decline in that portfolio. Our overall Surgical Pain business was flat sequentially with our combined ON-Q ambIT portfolio growing 13% versus the third quarter. These are early signs that our new go-to-market strategy and structure for this part of the portfolio supports our low single-digit growth expectations for 2024. Similarly, our IVP portfolio showed sequential gains, posting 10% growth versus the third quarter, excluding the positive impact of Diros revenue as supply constraints alleviated in the latter part of the fourth quarter. We are encouraged by the double-digit growth seen in IVP generator sales in the U.S. this quarter versus the prior year driven by our renewed ambulatory surgical center strategy and fully deployed sales structure. Our Game Ready portfolio performed very strongly in North America, achieving double-digit growth compared to the prior year, boosted by capital sales. The favorable performance in North America was offset by a decline in international sales due to transient registration delays. Finally, our newly acquired Trident product line has produced results in line with our expectations. Upside opportunities were limited in the fourth quarter as we scaled up manufacturing capacity in our Toronto facility to support our growth objectives, including capitalizing on our U.S. market launch, which kicked off in November of last year. For the full year, sales of our Pain Management and Recovery portfolio were down approximately 11%, excluding the benefit of Diros revenue, the impact of foreign exchange and our previously announced decision to discontinue certain low-growth, low-margin products. As previously shared, this decrease was primarily driven by our HA portfolio, down almost 35% year-over-year. While we are disappointed by the decline of performance in our Pain Management and Recovery portfolio in 2023, we are encouraged by the progress we saw in the second half of the year. In particular, the organic sequential improvement in our fourth quarter that I just highlighted reinforces our expectation of mid-single-digit growth for 2024. Again, this expectation excludes HA, which we anticipate decreasing at approximately 20% in 2024 versus 2023. Now moving to our 2023 to 2025 transformation priorities and efforts. As a reminder, we have 4 key priorities for the next 2 years that will optimize our go-to-market opportunities and meaningfully enhance our financial profile. These priorities are: strategically and commercially optimizing our organization, transforming our portfolio to focus on categories where we have attractive margin profiles and the right to win, taking additional cost management measures to enhance operating profitability, and continuing our path of efficient capital allocation to meaningfully improve our ROIC. As you can see, we've made substantial progress against our transformation priorities. We're particularly excited by our commercial optimization and portfolio transformation accomplishments, which I will review now. Later in the call, Michael will discuss the other transformation priorities he's leading in his role as Chief Transformation Officer. In 2023 notably, we made significant leadership and go-to-market changes to improve our commercial effectiveness; executed the acquisition of Diros Technology as well as the divestiture of our respiratory health business; exited low-margin, low-growth product categories; and delivered double-digit growth across our DH portfolio. While we've seen improvements in our pain business that accelerated between the third and fourth quarter, we remain about 2 quarters behind our original sales expectations, as I shared in January at the JPMorgan conference. This 2-quarter delay is due to the pain commercial reset necessary to address the breadth of strategy, structure and talent changes in the pain business, although it is taking longer. Supply chain challenges impacting product availability slow the ability of our commercial teams to execute on the new go-to-market strategies. The sequential sales improvements I just referenced give us confidence in our strategies as we move forward into 2024 and include the following. Our Surgical Pain business has reversed several years of decline to flattish results in the back half of this year, supporting low single-digit growth in 2024. Our U.S. Trident RF launch exceeded our expectations, and we were able to maintain double-digit growth in our U.S. -- OUS markets. Our Game Ready business returned to growth due to renewed focus on capital sales and international expansion. We're seeing tailwinds from COOLIEF reimbursement OUS, including the U.K. and Japan. We've addressed most of our supply and quality issues, which has given confidence to our commercial team. We've established programs to help stabilize the HA business in the second half of 2024. While 2023 was a year of transition and transformation, we believe we established a foundation that will yield dividends in 2024 for our Pain Management and Recovery business to gradually return to sustainable mid-single-digit growth over the mid- to long term. Now I'll turn the call over to Michael, who will provide further insights into our fourth quarter and full year financial results.
Thanks, Joe. From a continuing operations standpoint for the fourth quarter and full year, net sales were $173.3 million and $673.3 million, while adjusted gross margin was 58.6% and 59.1%, respectively. We generated $0.36 of adjusted diluted earnings per share during the quarter and $1.03 for the year. Adjusted EBITDA in the fourth quarter was $32 million and $99 million for the year. For the year, we generated $15 million of actual free cash flow, which included onetime cash outflows of $10 million to settle an outstanding litigation during the fourth quarter and approximately $33 million of restructuring expenses related to our transformation efforts as well as our RH divestiture. As I just noted, adjusted gross margin for the quarter was 58.6%, which is slightly favorable compared to the third quarter. We previously expected gross margin above 60% in the fourth quarter. However, with the nearly $4 million underperformance in our HA business, combined with the lower sales in our North America Pain Management and Recovery business, our mix unfavorably impacted our fourth quarter gross margin. In the fourth quarter, SG&A as percentage of revenue stood at 38.9%, reflecting a sequential improvement of 270 basis points and marking the fourth consecutive quarter of disciplined spending. As you know, this is part of our ongoing journey to further enhance our financial profile with continued improvements in 2024, ultimately leading to our 2025 goal of between 38% to 39%. These improvements are driven by reduced head count, third-party cost savings and business process optimization, to name a few. Overall, for the year, adjusted EBITDA margin improved to 14.7% compared to 13.3% in 2022, a 140 basis point increase year-over-year. Now turning to our financial position and liquidity. Our balance sheet remains strong and continues to provide us with strategic flexibility with $88 million of cash on hand and $168 million of debt outstanding as of December 31. We have maintained bank debt leverage levels of 1x or less over the past 8 quarters, and we'll continue to be good stewards of our balance sheet. As we have noted in the past, we will look to deploy capital against both strategic M&A that meets our returns criteria as well as opportunistic share repurchases. We repurchased a total of $15 million worth of shares during the second half of 2023, leaving us $10 million of buying power for additional shares that can be repurchased under the current Board authorization. Finally, from a free cash flow perspective going forward, we anticipate approximately $20 million of capital expenditures annually while seeing meaningful improvement in working capital primarily through inventory reduction in both 2024 and 2025. As Joe noted earlier, we made meaningful progress in 2023 against our transformation priorities, including product portfolio rationalization, the divestiture of our respiratory health business, the acquisition of Diros, repurchasing of shares, organizational changes and meaningful cost management initiatives. As a result of these, we established a solid financial framework to build towards our 2025 goals, which I'll touch on again in a few minutes. But first, let me highlight our 2024 planning expectations. As already announced, we expect 2024 revenue in the range of $685 million to $705 million, in line with our target of mid-single-digit organic growth. Separately, we expect our adjusted gross margin to range between 59.5% and 60.5% and our SG&A as a percentage of revenue to be between 41% and 42% for 2024. Those financial metrics support an adjusted diluted earnings per share between $1.30 and $1.45 for the year as well as adjusted EBITDA margin improvement of at least 200 basis points. As I mentioned earlier, we are excited about our transformation journey, and I'm confident we will improve on each of these metrics as the year progresses with the first quarter starting off slow and accelerating in the back half of the year, similar pacing to what we have experienced in 2023. With regards to specific execution of our 2024 transformation priorities, we are maintaining a sharp focus on our Digestive Health and Pain Management and Recovery business strategies, as Joe just described, executing on additional business process efficiency and cost management initiatives. And we'll seek opportunities to allocate capital that enhance our overall return on invested capital. Year 2 of this transformation journey is critical to ensure that we can deliver on the 2025 financial metrics we outlined on Investor Day, which include: consistent mid-single-digit growth that would take our organic revenue to approximately $750 million in 2025; overall margin expansion of between 400 and 500 basis points, supported by gross margin surpassing 60%; and SG&A as a percentage of revenue being between 38% and 39%; and free cash flow generation of approximately $100 million in 2025, supported by these operational financial metrics, consistent CapEx spend and meaningful improvement in working capital. We still anticipate consistent mid-single-digit organic growth for '24 and 2025, albeit this growth rate will be off a lower base due to the decreased sales in our HA business that we have already discussed. That being said, we remain confident in our ability to achieve the other components of the 2025 financial profile as a result of the progress we are making against our overall transformation priorities. Operator, please open the line for questions.
[Operator Instructions] Today's first question comes from Daniel Stauder with JMP.
First question for me, you've commented that M&A is still a very important pillar. But just wanted to ask with the recent updates you gave earlier this year as well as in this call, do you feel you have to wait a little bit for some stabilization before committing to acquisitions? I know you commented that share repurchases will also be a big part. Just any thoughts on how you're looking at M&A in 2024 would be great.
This is Joe. We thank you for the question. I mean, obviously, we've kept a really strong balance sheet and are leveraged extremely low in this environment. That said, we do think we'll conduct some sort of a bolt-on this year. Like we have in the past, we have enough capability inside to onboard these well and to get these integrated. So I don't see it detracting really from us being able to deliver our plan or actually do some of the share buyback if we so choose as we progress. So full pipeline, we still want to make sure we're executing in particular on the strategy around Digestive Health.
Great. And then just one follow-up on the HA business. You talked about it a bit as well as some of the programs you're implementing to stabilize that part of the business. But just any more thoughts on what gives you confidence in getting this to level out or any macro color that you could give that you should think about throughout 2024 would be pretty helpful.
Yes, yes, yes. So a couple of things. One is we have been maintaining a disciplined price strategy purposefully and strategically. And we do know that ultimately, some of the specialized reimbursement for a couple of companies where people are going because they can make more money and making decisions that way, customers -- that's going to go away as you sort of end the year. We think we can also do some things with market access through some of the commercial programs and cross-selling initiatives that we have. And there are new markets as well for us that we think that we can achieve. So again, what we believe will happen -- this is a strategic area for us because of the focus on orthopedic pain and recovery. And it fits nicely into our channel, has a great gross margin. We think it's a low single-digit grower once we make our way through this year.
And our next question today comes from Rick Wise at Stifel.
Joe, hate to keep pushing on the HA side of things, but I want to make sure I better understood your thinking about the potential for stabilization. I appreciate what you said about your strategy and your discipline. But maybe talk to us a little more depth about -- you talked about some of the commercial team sales changes. And did I hear you correctly, you're thinking that in the second half of this fiscal year, we're going to see the business stabilize or return to growth? I just want to make sure I understood what you were saying there.
Sure. No, I see stabilization toward the end of this year, towards the end of 2024. I see growth possible in 2025. And again, sort of the -- obviously, the biggest market volumes have somewhat remained about where they were. And so this -- really the price affected by the Medicare changes, that's really hurting the business. And in particular, I think everybody is fighting this a little bit with -- in some cases, a couple of competitors have specialized pricing that's going to go away about the middle of the year. And that creates more of a level playing field. And so we think with the customers that we'll be also selling to in terms of Game Ready and really, frankly, our Surgical Pain business and our Diros business, that we're going to be able to get this to more of a low single-digit lower as we get into 2025. And I can see it based upon some of the progress, some of the [ new hire ], some of the programs and the traction. But at the moment, we're also protecting our price for the longer term.
The other thing to consider, Rick, is that volumes, although different in 3 and 5 and how these have developed over the last year, 3-shot and 5-shot, they have been relatively stable. The majority -- heavy majority of the revenue decline has been due to pricing. So the volumes can remain stable and we can get pricing into a more stable environment, which we believe will happen, as Joe just mentioned, in the back half to exiting 2024. Then we have something to build on going into '25.
One of the things, too, Rick, that we said at the JPMorgan conference was that we can achieve the mid-single-digit organic to the total global company with this type of decline in HA and still achieve mid-single-digit growth in the other parts of the pain business on a global level. So we feel good about that portion of it as we manage through it, quite frankly, is a tough aspect with the HA piece.
Got it. On operating margins, if I'm doing my math correctly, sales and EPS guidance midpoints imply operating margin something like 14% for the full '24 year. Maybe could you all help us think through how that's likely to set up for the first half versus the second half? In the past, you've started typically with operating margins more in the high single-digit range. Is that the right way to think of -- all that to think about '24, Michael?
Yes. So you're right. I mean, I think we'll be a little bit north of 14%, but you're in the range there. And yes, first half is always going to be lower than the second half. I'd like to believe we can at least squeak in 10% operating profit in the first quarter. But yes, that will be our lowest operating profit quarter, and then it will build a couple of few hundred basis points per quarter from there.
Great. And just I'm going to sneak in one more. On a more positive note, the digestive business is doing well. You talked about second half product launches. Maybe talk about some of those products, the kind of impact they have. Does this sustain the current performance or has the potential to accelerate? How should we think about it?
It's more sustaining in terms of the MIC-KEY* area, maintaining our technology position and helping us there primarily. And then we do see continued growth in NeoMed this year, as an example, double-digit again, even though we've talked about the infant conversions are starting to get completed on a global level, so primarily sustaining that leadership position in the legacy business. And then we still see good runway ahead for CORTRAK, frankly, and for NeoMed.
And our next question today comes from Kristen Stewart with CL King.
I just wanted to clarify, Michael, you talked about the 2000 -- or 2025 kind of goals for the full year. Are you still reaffirming that $750 million target because we are growing at a lower base now? Or is it just the mid-single digit that you're reiterating?
The mid-single digit, yes. What I was trying to convey was what we originally laid out was the $750 million, you're correct. And that $750 million is not, we don't believe, currently attainable with the growth rates we see. But we still believe that the growth rates we're going to have are mid-single digits. It's just off of that $20 million lower base due to the HA impact.
Okay. And separately, how do you feel about free cash flow generation and getting to that over $100 million of free cash flow in 2025? What are kind of some of the measures that you're looking for to achieve that objective?
Yes. I mean, if you think about this year, we had $50 million of total cash outflow for litigation settlements, restructuring, the RH divestiture. That will be around $25 million to $30 million in '24. And then '25, we'll have hopefully minimal to no onetime cash payments. So that's a huge tailwind. On top of that, our operational cash flow will be improving just by nature of the revenue going up mid-single digits and the margin improvement with the cost management takeout. And then on top of that, we've got working capital opportunities in inventory. As you know, we've struggled a little bit with our inventory management over the last couple of years for a range of reasons, some macro and some self-inflicted. We have about $30 million -- $25 million to $30 million of inventory opportunity between now and the end of '25. So if we execute on each of those pieces, which are -- many of them are very much in our control, I feel very good about the $100 million opportunity and free cash flow for 2025.
Okay. Perfect. And then last question just on the IVP portfolio. Can you maybe just talk through if you have any supply constraints still there with COOLIEF? And then on the Trident launch in the U.S., I think you'd mentioned that was better than expected. Can you maybe just provide additional color on that?
Yes. So again, we saw about a 10% growth versus the third quarter. And the business and the quality issues and the supply chain issues are behind us. We're also happy with the capital sold in the fourth quarter that lends itself to the next year, the following year. Diros has really been exceeding our expectations in terms of a launch. But we just remind everybody that we sell into the U.S., which is a new market now, and we're going to be double digit for the full year globally, high double digit. But it can take you 6 months or so then to get those accounts up and running for the full revenue streams. But we think Diros is going to be a big contributor to the business this year. And again, it will be high double digit as it has been.
And Kristen, just wanted to -- so the 10% Joe is referring to is the sequential growth Q3 to Q4 specific to our RF business. So that includes COOLIEF, our standard RF probes and, as Joe just mentioned, the capital sales. That does not include Diros. Diros grew more than 10% Q3 to Q4.
Okay. Perfect. And then the organic growth expectation for this year, I just want to make sure that does not include Diros or does that include Diros?
It includes Diros against the time period that we owned Diros, so the back half of the year. It does not include any revenue in the first half of the year -- first half of the year through partially the third quarter where we did not own Diros. So it's pure organic growth.
And this concludes our question-and-answer session. I'd like to turn the conference back over to the management team for any closing remarks.
So look, our primary focus is getting the precise execution that we need in the business. We have successfully executed product exits, divesting our RH business and acquiring technology with Diros. We obviously approved an additional share repurchase program and delivered on most of our financial objectives. I think we've established the necessary foundation to deliver on the midterm financial commitments and confident that our transformation priorities, coupled with our market-leading portfolio and attractive markets, does position us for sales growth, margin expansion and meaningful free cash flow generation. So we appreciate everybody's continued interest in Avanos, and I'm sure we'll speak further throughout the week. Thank you.
Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.