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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good afternoon, everyone. Before the conference call begins, let me remind you that during this call, management will be making comments and statements regarding its financial outlook and its plans and objectives which represent forward-looking statements that involve risks and uncertainties as those terms are defined under the Federal Securities Laws.
Investors are cautioned that any such forward-looking statements are not guarantees of future events, performance or results, and the company's actual results may differ materially from its current expectations. Please refer to the risks and other uncertainties disclosed under forward-looking information in today's press release as well as the company's SEC filings for more details on risks and uncertainties that may cause actual results to differ materially. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call, except as may be required by applicable law.
You will also hear management refer to certain non-GAAP adjusted measurements during this discussion. While these figures are not a substitute for GAAP measurements, management uses these figures to aid in monitoring the company's ongoing financial performance from quarter-to-quarter and year-to-year on a regular basis and for the benchmarking against other medical technology companies.
Adjusted net income and adjusted earnings per share measure the income of the company is excluding credits or charges that are considered by the company to be special or outside of its normal ongoing operations. These adjusting items are specified in the reconciliations supporting the company's earnings releases posted on the company's website. Further, you may hear management refer to capital strategies and plans on this call. Any such comments shall not constitute any offer or solicitation to buy or sell any securities, nor will there will be any sale in any jurisdiction where it would be illegal.
With these required announcements complete, I will turn the call over to Curt Hartman, CONMED's President and Chief Executive Officer for opening remarks. Mr. Hartman?
Thank you, Jonathan. Good afternoon and thank you for joining us for CONMED's Fourth Quarter and Fiscal Year 2018 Earnings Call. With me on the call is Todd Garner, Executive Vice President and Chief Financial Officer. Today I'll provide a brief overview of the financial and operating highlights for the quarter and full year. Todd will then provide a more detailed analysis of our financial performance and discuss our 2019 financial guidance. After that we'll open the call to your questions.
Turning to our results. Our total sales for the fourth quarter were $242.4 million, representing a year-over-year increase of 8.9% as reported and an increase of 10.8% in constant currency and as adjusted for the new revenue accounting standard. This was an extremely strong finish to what was already a very good 2018.
The fourth quarter was a highest growth quarter in recent memory for CONMED, even up against the toughest comparable quarter we have faced to-date. We're very pleased with the impact our teams are having globally. For the full year, sales reached $859.6 million, representing a year-over-year increase of 7.9% as reported and an increase of 8.4% in constant currency and as adjusted. I'll remind you that we began the year guiding the constant currency growth of 4% to 5%. The consistent execution from our teams around the world have been very impressive throughout the entire year.
From an earnings perspective during the fourth quarter, our net income of $15.7 million decreased roughly 66% from the fourth quarter of 2017. Excluding special items that affected comparability which Todd will discuss later, our adjusted net income of $21.2 million increased 8.3% year-over-year and our adjusted diluted net earnings per share of $0.73 increased 5.8% year-over-year. For the full year, adjusted diluted net earnings per share were $2.18 compared to $1.89 in 2017, a growth rate of 15.3%.
2018 was a defining year beginning with our stated commitment to achieve mid-single-digit topline growth and double-digit bottom-line growth. I'm pleased to report that through strong execution by the entire CONMED team, we're able to not only achieve, but exceed these goals.
Our solid wire-to-wire performance proves that our people and our products continue to make a difference and are sustainable defining factors that will continue to drive growth and profitability moving forward.
We are committed to capitalizing on the momentum generated by our 2018 performance and 2019 presents an opportunity to continue driving profitability. We have several exciting projects in front of us, including the integration of our recently announced acquisition of Buffalo Filter as well as a solid organic R&D pipeline and new product cadence, which positions us well for the future.
Our acquisition of Buffalo Filter remains on track to close during the first quarter of 2019. We are excited about both the near and long-term opportunities in smoke evacuation market and we believe Buffalo Filter's product portfolio, combined with CONMED's existing channels, will allow us to quickly grow and gain share in this expanding market.
The team that will integrate Buffalo Filter is the same team that did an outstanding job integrating SurgiQuest three years ago and all of us at CONMED are committed to capitalizing on this exciting transaction.
In summary, for 2018, CONMED delivered 8.4% constant currency adjusted growth on the topline and 15.3% adjusted diluted net earnings per share growth on the bottom-line. We exceeded the commitments we made to you a year ago, while the same time strengthening the growth and profitability engine of the company.
We believe we are positioned to continue to outpace market growth moving forward, as we remain focused on execution, bringing new innovative products to the marketplace, and increasing profitability.
I will now turn the call over to Todd who will provide a more detailed analysis of our financial performance and discuss our 2019 financial guidance. Todd?
Thank you, Curt. Before I get started, I wanted to let you know that we have posted a refreshed investor slide deck on our website in conjunction with this call. As Curt mentioned, our fourth quarter sales totaled $242.4 million, which represents an increase of 8.9% on a reported basis for the quarter and 10.8% in constant currency and as adjusted for the new accounting standard ASC 606. We did have one extra shipping day in Q4 2018, 64 days compared to 63 in the prior year.
For the full year, sales totaled $859.6 million, which represents an increase of 7.9% as reported and 8.4% on a constant currency and adjusted basis. All remaining sales growth numbers I reference today will be given in constant currency and as adjusted for ASC 606. The reconciliation to GAAP numbers is included in our press release.
For the fourth quarter 2018, our domestic sales increased 12.9% versus the prior year period, while the International sales increased 8.7%. Worldwide Orthopedics revenue increased 4.6% in the fourth quarter. Domestic Orthopedics revenue grew 6.7%, posting a fifth consecutive quarter of growth. Internationally, Orthopedics revenue increased 3.3%.
Worldwide General Surgery revenue grew 18.4% in the fourth quarter, driven by strong performances across the product portfolio. Domestically, fourth quarter General Surgery sales increased 17.2%, and internationally General Surgery sales increased 20.6%.
Turning now to full year results. Our domestic sales increased 11.4% versus 2017 while International sales increased 5.3%. 2018 Worldwide Orthopedics revenue increased 3.9% year-over-year. Domestic Orthopedics revenue grew 4.5% while internationally Orthopedics revenue increased 3.5% year-over-year.
Worldwide General Surgery revenue grew 13.8% in 2018, driven by strong performances across the product portfolio. Domestically, 2018 General Surgery sales increased 16.1% compared to 2017, and internationally, General Surgery sales increased 9.3%.
As we look to 2019, we expect total company worldwide constant currency revenue growth between 5% and 6% with currency being a headwind of approximately 100 basis points based on the current exchange rates.
Now let's move to the expense side of the income statement. For comparative purposes, I will discuss the P&L performance excluding special items, which include impairments, charges related to acquisitions, restructurings, legal matters, the impact of tax reform on 2017 deferred tax balances and amortization of intangible assets net of tax. A reconciliation to GAAP numbers is included in our press release.
Adjusted gross margin for the fourth quarter was 54.7%. Our gross margin started the year at 54.2% and increased sequentially every quarter culminating in a 60 basis point improvement for the full year when compared to 2017. The timing of manufacturing variances can occasionally create lumpiness in gross margins in a given period. This was the case a year ago when we recognized an abnormally high amount of favorable manufacturing variances, causing the fourth quarter of 2017 to be an aberration in the trend line.
The improvements in gross margin in 2018 occurred against the backdrop of an active and increasing new product development pipeline. The execution of that pipeline remains a priority for our operations teams, and against that same backdrop in 2019, we expect adjusted gross margins to improve again by 50 basis points to 100 basis points compared to 2018.
Research and development expenses for the fourth quarter were $10.4 million or 4.3% of total sales, which is a 23.8% increase over the $8.4 million in the prior year period. For the full year 2018, we increased our adjusted R&D expense by 17.5% over the prior year and came in at 4.4% of sales for the full year.
Looking forward, we will continue to increase investments in R&D and expect that line to be between 4.5% and 5% of the sales in 2019. Fourth quarter SG&A expenses on an adjusted basis were $90.7 million or 37.4% of total sales, reflecting an improvement of 80 basis points compared to Q4 2017. Full year 2018 adjusted SG&A was 39.1% of sales, which increased slightly compared to 2017, due to the increased investments aimed at getting closer to our customers that we have discussed throughout the year.
Looking forward, we can now leverage higher sales on our infrastructure and we expect SG&A as a percentage of sales to improve by approximately 50 basis points in 2019.
Interest expense for the full year 2018 was $20.7 million. Our cash flow allowed us to pay down more debt than expected at the beginning of the year, but rising rates caused the total expense to be in the upper half of our original guidance for the year.
As we look to 2019, we expect interest expense to be between $21.5 million and $22.5 million. And to be clear this is excluding the incremental impact from the debt related to the pending Buffalo Filter acquisition.
Excluding the impact of tax reform on 2017 deferred tax balances and adjusted expenses, our non-GAAP effective tax rate in the fourth quarter was 23.3% compared to 24.5% in the prior year period. This was a little better than we had forecasted due to the resolution of some open items.
For the full year, the adjusted effective tax rate was 21.9% compared to 28.0% in 2017. As a reminder, our 2018 tax rate was positively impacted by the tailwind we received from Belgian tax reform in the first quarter. As we look forward to 2019, we expect our full year adjusted effective tax rate to be between 24% and 26%.
Fourth quarter GAAP net income totaled $15.7 million or $0.54 per diluted share compared to a reported income of $46.7 million or $1.65 per diluted share a year ago, which was positively impacted by the Tax Reform Bill.
Excluding the impact of special items discussed earlier, our fourth quarter adjusted diluted net earnings per share were $0.73 versus $0.69 in the prior year period, representing growth of 5.8% for the quarter. That brings the full year adjusted cash EPS to $2.18, representing growth of 15.3% over the prior year, which was above our original guidance for 2018. We forecast full year 2019 adjusted diluted cash earnings per share in the range of $2.42 to $2.47, representing growth of approximately 11% to 13%.
As we look at Q1 2019, we do have one less selling day than the prior year quarter. So, we would expect our organic revenue growth to be a little lower than our full year guidance.
Due to the sizable benefit from Belgian tax reform recognized in the first quarter of 2018, we would expect our adjusted diluted cash EPS growth during the first quarter of 2019 to be in the single-digits.
We do expect the Q1 tax rate to be again a little lower than the annual average due to the timing of potential resolutions of outstanding items, but we don't expect the Q1 tax rate to be as low as it was a year ago.
So, a year ago we told you that CONMED would be at minimum a mid-single-digit revenue growth and double-digit cash EPS growth company, and our 2019 guidance is a validation and continuation of that engine.
The adjusted diluted cash earnings per share estimates for 2019 exclude amortization of intangible assets, which is estimated in a range of $18 million to $20 million net of tax and the cost of special items including charges related to acquisitions and restructuring costs.
To be clear, this guidance excludes any impact from our Buffalo Filter acquisition which is expected to close during the first quarter of 2019. We anticipate providing updated guidance for 2019 that includes the impact from Buffalo Filter on our Q1 earnings call.
As a reminder, we believe that the financial impact from this transaction will be neutral to 2019 adjusted cash EPS and be accretive to 2020 by between $0.10 and $0.15. Acquired intangibles are expected to be a significant component of the purchase price allocation and my comments are based on preliminary valuation estimates which are subject to change.
Looking at the balance sheet. Our cash balance at the end of the year was $17.5 million compared to $29.7 million as of September 30. Accounts receivable days as of December 31, 2018 were 67 days compared to 69 days a year ago. Inventory days at year end were 127 days compared to 129 a year ago. Long-term debt at the end of the year was $438.6 million versus $471.7 million at the end of 2017. Our leverage ratio at December 31, 2018 was 3.07 times.
Cash flow from operations for the year was $74.7 million compared to $65.6 million in 2017 and capital expenditures were $16.5 million compared to $12.8 million in the prior year. In 2019, we expect operating cash flow to be between $85 million and $95 million, with capital expenditures between $15 million and $18 million.
With that, we'd like to open the call to your questions. And I'll turn it back to Jonathan.
[Operator Instructions] Our first question comes from the line of Matthew O'Brien from Piper Jaffray. Your question, please.
Good afternoon. This is Will on for Matt. Thanks for taking the questions. I guess the first question would be regarding your domestic business. That was clearly a stand-out in the quarter and given the tough comps, just wondering what you attribute that strength to, both ortho and surgery were strong, but anything that you'd like to highlight?
I think it's just a continuation, Will, of everything we've been working on to get to the 2018 results. Great new product cadence across the board, better sales people, better marketing people, better engagement with customers, it's really candidly no more complicated than that.
We're just a lot more engaged as an organization with the markets we serve and the product cadence has been really well received by our customers and it’s just basic. As Todd has discussed in other settings, we're kind of in that boring execution mode, just getting out and interacting with customers and doing a good job at it and especially in the fourth quarter.
Great. Thanks for that. And then, in 2018 you were talking a lot about just kind of reinvesting some of the upside into SG&A and R&D. And just wondering in, on 2019 it sounds like it will still be kind of the same story. But just wondering when you'll start to see some meaningful pull-through to the bottom-line that's kind of more 2020 or kind of back half of 2019?
Well, thanks for the question, Will. I will point out that we grew the bottom-line 15.3% in 2018. So that's a pretty good number. Now we're guiding to 11 to 13 on the bottom. But I'm really glad you asked the question because I would like to point out a slight nuance. Curt and I were clear all year along in 2018 that we have some holes in the infrastructure that needed more support and we needed to make some investments to get closer to our customers.
And so, we made a statement last year that any over achievement would be invested back in the business and that you shouldn't expect drop through to the bottom-line. We are not carrying that same statement into 2019. We feel like those needs to the infrastructure have been dealt with.
There were -- obviously, there's still investments to make. There will still be additional investments that we will make along the way, but we now feel like the health of the company is such that we can -- to the extent hopefully, we have the situation where we overachieve. If we do. you can expect in 2019 to see more drop through the bottom-line.
We are all very interested in getting the profitability of the company up, as soon as we can. We're going to do that in a prudent way. We're going to stay focused on the revenue growth and making sure that the revenue growth is strong and durable. But we now feel like we can do that with the team and infrastructure we have and still deliver the bottom-line commitments we made. So thanks for the question
Thank you. Our next question comes from the line of Kristen Stewart from KeyBanc -- from Barclays, sorry. Your question please.
Hi, I haven't moved banks yet. No intentions there. So anyway, congratulations on a good year, really strong finish. I was wondering if you could just comment a little bit just about, I guess kind of on the notes that you were talking about in terms of improved profitability. What are some of the targets that you're kind of thinking about as you were to look out over multiple years?
Is it just simply about getting the revenue and leveraging that or are there other things like restructuring that could be taken that could maybe accelerate the margin improvement story here?
Sure. Thanks Kristen. It definitely starts with the revenue, right? The revenues got to stay strong above market and we feel like we're in a position to do that. We have good momentum. But we'll continue to fuel that engine to make sure that the revenue growth can stay strong.
Then it comes to gross margin, right? Volume will obviously help gross margin. I will remind everybody like I said in my prepared remarks, the priority in 2018 and continuing into 2019 the priority for the operations team is to launch this new product pipeline. It's much larger and more differentiated than CONMED have seen in the past.
So we want to make sure those products get out on-time with high quality and we are able to meet the demand we expect. So we don't have any restructuring or kind of step function plans to announce at this time for gross margin. But we do see a long runway of improving gross margins.
We've guided 2019 to be 50 to 100 basis points, again an improvement, and we'll continue to look for opportunities to make gross margins better.
Then as we go to operating margins, obviously, we've talked about leveraging, now the improved SG&A infrastructure, and so that should drop a little more to the operating margin growth.
As far as the metrics we look at those are them, and of course, the bottom line growth. But we know that CONMED is a little below average for this sector and we're doing everything we can. And we think we're doing it in the right way for sustainable long-term growth that will increase profitability that you can count on, on a sustainable basis.
Okay. And then just a follow-up on some of the pipeline that you're talking about it, I appreciate you guys are usually kind of singles and doubles. But is there anything that you can call out that might be more meaningful as we look to 2019 or beyond? And the increase in R&D investments, is that more weighted towards Orthopedics, General Surgery or pretty well-balanced? Thanks so much.
Sure. Kristen, the R&D cadence has really been a big part of the transition of the company to the performance we are able to deliver in 2018. And that's been a work in process, because it just takes time for ideas to come from the original concept to be in present in the marketplace. So we've been picking up the cadence of delivery year in and year out.
And if I look at 2018 some of the items that were really exciting and encouraging, the MicroFree platform that we released in Orthopedics, the TruShot, the Y-Knot Pro, CRYSTALVIEW Pump, those last two or three are more recent in the back half of the year. If you jump over on General Surgery side, we also had a good cadence of products there, a bigger one in General Surgery was the Anchor Tissue Retrieval bag that came out.
So those things are all continuing to pick up and do well in the marketplace. And if you look at the investor presentation, you'll see our new product revenue again increased in the fourth quarter as a percentage of the total revenue.
As we look to 2019, I candidly think it's going to be our best year yet. And I'm not one to speak about things that are coming; I would just encourage everybody on the call to show up at academy. I think it's going to be our best academy certainly since I've been here in terms of the breadth of the offering and the totality of the systems that we plan to put out in the marketplace. And I'll leave it at that. But there's is a lot coming, a lot coming and we're excited about it.
Thank you. Our next question comes from the line of Matthew Mishan from KeyBanc. Your question, please.
Fair enough, still KeyBanc. Curt, in General Surgery, can you help me understand how broad this is? I think it's probably a fair assumption to assume that AirSeal and the related accessories are growing double-digits still. But what other products or areas are also growing double-digits in General Surgery? And then were there any other, any one-time large distributor orders, we should be paying attention to?
Great question, Matt, and I would just -- my answer is going to be the same answer and where I started on the first quarter, same thing I said in the second and third. We have three unique businesses in General Surgery, the legacy portfolio business, cardiology critical care, the endoscopic technologies business and the Advanced Surgical business, which is where AirSeal sits.
Every one of those businesses grew at/or above the market every single quarter this year. All of them are benefiting from improvements in product cadence, improvements in sales and marketing and engagement with our customers. And it truly is a lot of singles and doubles. Obviously, AirSeal is a platform product, but when you put a salesforce back on offense with a lot of products to go talk to customers, good things happen and this year all three businesses performed growth rates at or above the market.
So, I'd like to point you to one or two, but we have a much broader offense in that. We have hundreds if not thousands of SKUs and it's the ability to go in and talk to customers about those and provide them solutions for whatever challenge they are facing and our sales teams are doing a great job supported by our marketing team and R&D pumping out a new cadence of products for all those organizations. So, it really is a broad-based offense.
Okay, that's helpful. And then Todd any update on the financing for Buffalo Filter? And are you guys considering anything that could accelerate the deleveraging process from what you communicated on that conference call?
No, no updates from that conference call on this subject of financing the acquisition. The focus is definitely to improve our EBITDA and cash generation and get the debt paid down as quickly as possible.
Okay. Thank you.
Thank you. Our next question comes from the line of Richard Newitter from Leerink. Your question please.
Hi. Thanks guys for taking the questions and nice finish on the topline here this year. So, I wanted to start-off -- I think Curt you had -- and Todd you mentioned that you started off the guidance range last year like 4% to 5% and you beat the high-end of that by about 300 basis points for the year and you're starting off this year at about 5% to 6% organic and you're talking about any outperformance relative to that range, you will drop through to the bottom-line on some level this year.
So, just to try to think about what that could mean in terms of drop through? Is it right to think because you're starting off with about two times the topline on the bottom-line? Is -- that's the ratio of a bottom-line to topline growth we should think about? And if you outperformed on the topline, kind of, think of that two times delivering on the bottom-line from a growth perspective, is that a fair way to think about it?
Yes, Rich, I don't think that's crazy that's -- we did pretty close to that this year and you're right; our guidance is similar to that. So, that's not a horrible ratio. We're -- we don't want to get ahead of ourselves, right? We did have a great 2018. Much of that was up against much easier comps than what we're facing now.
We're very pleased with the momentum in the business. And so we don't want to get ahead of ourselves too much on the overachievement side, but I did want to make sure everybody understood we had such a hard stake in the ground last year that we have removed that particular stake and we are interested, of course, in driving the profitability up as the revenue allows it.
Okay. Thanks for that. And then the -- just thinking back to -- on your last conference call in December with respect to the Buffalo Filter deal, I think you had mentioned that we should be thinking about 100 basis points of EBITDA margin accretion on top of the roughly 50 to 100 basis points underlying that I think you just guided to -- for 2019 and then cumulatively, that would equaled to about 200 basis points over the three-year periods or probably something north of a 100 basis points in 2020.
Is that math all correct? And is that right that your guidance implied about 50 to 100 basis points not just a gross margin improvement, but operating margin improvement as well as a baseline to 2019 to which we layer 100 basis points from the deal?
Yes. I'm going to restate it, just to make sure. So, yes, I think you got it right. The organic guidance is at least 50 to 100 basis points improvement in operating margin, that's without Buffalo. Adding Buffalo, we believe will add another 100 basis points of growth to operating margin in 2019.
And then, to correct -- you’re correct on the statement for the next two years, so 2020 and 2021 of the Buffalo acquisition, we estimate will add another 100 basis points to that. So 200 basis points over a three-year period added to the organic growth trend of the business and that's what we've said.
Okay. That's helpful. And just one last one, I know you've alluded to a really strong product pipeline that we'll hear more about at AAOS. But is the right way to think of the split here for the guidance range? Is it a little more orthopedic heavy? Is that where most of the product cadence is coming from? Or is there some general surgery mix too?
2019, we'll see our products cadence across all the businesses. Obviously, I've alluded to the fact that it's going to be strong year for Orthopedics in the front half. And I don't want to get too far in front of our self, because the R&D is always full of surprises. Things don't always go as you plan. But we have a nice cadence of products across the business. And candidly we think that's necessary.
Customers like new items. They like items that demonstrate clinical efficacy along with patient benefit and health savings and efficiency and our R&D efforts are targeting all of that. So we've got a good cadence across the company. AAOS just happens to be first to really big show that we're going to and we're excited for that offering.
[Operator Instructions] Our next question comes from the line of Mike Matson from Needham. Your question, please.
Hi. Thanks for taking my question. Just wanted to go back to the gross margin in the fourth quarter. I was a little confused about the commentary around the manufacturing variances. Were you saying that the manufacturing variances hurt the gross margin in the fourth quarter of 2018 or 2017, or both? And it was a little lower than we expected, so is that the main I guess kind of delta there?
Yeah, thanks. Mike. It was a story of the prior year, Q4 2017 being inflated due to some strong builds in kind of the late summer early fall time frame in the prior year. So this year, we did a much better job of controlling those inventory spikes. And therefore, we did not have as much lumpiness, right? So this year gross margins increased sequentially every quarter of the year and we grew 60 basis points on a full year basis year-over-year. But the specific comparable in Q4 was an aberration.
So it was a tougher comp, because you had a positive benefit from the variances last year basically?
Correct.
Okay. But I mean I understand that you had good gross margin performance, but I guess why was it – I mean, your revenue was way ahead of what we've been modeling or consensus was, so why didn’t more of that kind of fall through and drives on a sequential basis gross margins higher?
Like Curt said, there is 100s of SKUs in there Mike, it really -- it wasn't big enough to overcome that spike in the variance business. We look at what explains the difference that is 80% of the answer is the timing of those variances.
Thank you. And our final question is a follow-up from the line of Kristen Stewart from Barclays. Your question please.
Hello, again. Todd, I was just wondering, just if you could estimate what the extra selling day in 4Q might have contributed? I appreciate probably little difficult, just given the mix with kind of the disposables and capital. But any kind of guess in terms of what that impact might have been?
Yes. So we do spend some time doing some math. I don't love doing that. I certainly wouldn't love putting the precise number on it because I think the world is a little more fluid in that. But certainly having one extra day is better than not and having one less day like we're going to have in Q1 is worse.
You are correct and that it is -- we see less of an impact on the capital side. The capital cycle seems to be really heavy at the end of months and quarters And so, it's less relevant how many days are in that month.
But on the disposable side, our business is pretty consistent. It's trending upward but it's pretty predictable. So having said all of that, we estimated something like between 100 and 150 basis points of benefit to the total company in Q4.
And then you would kind of that similar number and apply it to Q1 of 2019. That's not a subject 2019 are days are equal for the full year, but we are one day short in Q1 and we make it up in Q3. So Q3 of 2019 will have one extra day, Q1 of 2019 has one fewer days and we will be even for the full year.
So again think of that as the 100 to 150 basis points as the headwind or tailwind depending upon whatever quarter it is?
Yes That's the kind of magnitude we think it is.
Okay, perfect. Thanks so much.
This does conclude the question-and-answer session. I would like to hand the program back to Curt Hartman for any further remarks.
All right thank you Jonathan. And I want to thank everybody for your time today And we look forward to speaking with you on our next earnings call. Thank you
Ladies and gentlemen for your participation at today's conference. This does conclude the program. You may now disconnect. Good day.