IRIDEX Corp (IRIX) 2016 Q3 法說會逐字稿

Greetings and welcome to IRIDEX Corporation third-quarter 2016 earnings call. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Will Moore. Thank you. You may begin.

Thank you, operator. Good afternoon and thank you for joining us as we discuss the results of the third quarter of 2016. My name is Will Moore and I am the CEO of IRIDEX. I am joined on today's call by Atabak Mokari, our CFO. Before we get started Susan Bruce will read the required Safe Harbor statement. Susan?

This conference call will contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Act of 1934 as amended, relating to IRIDEX's business, economic and market outlook, business strategy, future financial condition and operating results, product plans, safety and efficacy, regulatory and clinical matters and overall future prospects.

Forward-looking statements include our guidance concerning the Company's growth rate and revenue guidance in the fourth quarter of 2016 and for fiscal year 2016; statements concerning backorders with respect to certain retina products and related corrective measures; and the availability of funds under the Company's loan facility. These statements are not guarantees of future performance and actual results may differ materially from those described in these forward-looking statements as a result of a number of factors.

These factors include the effectiveness of the remediation measures taken by the Company in response to the supply chain and sales force training issues in the third quarter of 2016; risks associated with international sales, economic and political changes; development and adoption of new products; and other organizational and operational risks that may affect the Company's business and its stockholders.

Please see a detailed description of these and other risks contained in our annual report on Form 10-K for the fiscal year ended January 2, 2016 and our quarterly reports on Form 10-Q for subsequent fiscal quarters each filed with the Securities and Exchange Commission. Forward-looking statements contained in this conference call are made as of this date and will not be updated. I will now turn it back over to Will.

Thank you, Susan. This is a very exciting time at IRIDEX as our opportunity in glaucoma is possibly one of the largest addressable markets I have been involved in in my entire career and it is rapidly transforming our business. I look forward to providing you with an update on our progress, but before we discuss the quarter I want to provide you an update on the business dynamics of our three product categories.

First is the G6 platform for glaucoma. This business is powered by our proprietary MicroPulse Laser technology and is experiencing rapid adoption. We have the right business model in this segment with significant recurring revenues and we are experiencing success in both system placements and proprietary disposal probe utilization. This business now represents about one quarter of our revenue. Recall, that we only launched the product in March of last year and it has tremendous upside to continue to transform our business.

Second is our medical retina business for the treatment of DME. This business is also powered by our proprietary MicroPulse Laser technology and has been a good driver of growth for us over the past several years and continues to have nice growth prospects. However, this business has inherent lumpiness given the capital equipment nature of the business model and it has been impacted by the success of G6 resulting in capacity constraints for our sales team. This business also [represents] about one quarter of our revenues.

Third is our surgical retina business for the treatment of retinal tears and detachments which makes up the balance of our revenue. This business is powered by our legacy laser technology and is a mature segment with [fastly] declining revenues. It does however generate nice contribution margins.

Now on to the third quarter. Revenue for the third quarter was $9.8 million, which is flat to the comparable quarter last year and below our initial guidance range as we previously announced. The good news is that our G6 platform for glaucoma continues to exceed our expectations and we are really excited about this opportunity. However, the medical retina side did expense a short-term issue that impacted our rate of shipments in the third quarter which we resolved and we are now working to our backorders.

Now let's get into both these dynamics in more detail. Let's start with glaucoma. We are seeing rapid market adoption with our G6 platform revenues increasing 442% in the third quarter related to the comparator period in the prior year. The success is based on the following four key attributes of our G6 platform.

One, strong safety profile. It's easy to perform, it is non-incisional and it does not limit future treatment alternatives. This profile has been further strengthened in the physician community as there are no reports of major safety issues to date while we have shipped over 27,000 probes since launch.

Two, proven and durable efficacy profile. We have data from numerous sources across the globe that illustrate the consistent clinical efficacy and results. Also at the recent European Glaucoma Society meeting data was presented that illustrated the durability of outcomes out to 6.5 years. We will get into this and more detail shortly.

Three, our procedure is repeatable and titrateable, which is an important attribute in the area of personalized medicine and also enables us to address the full continuum of care for the treatment of glaucoma.

Lastly, we believe that our technology cannot only yield better clinical outcomes but it can reduce cost, thus supporting the importance of value-based medicine. The establishment of reimbursement code provides significant economics to the physician and medical facilities to support the adoption of our technology.

These attributes enabled us to outperform our expectations in the third quarter for both system sold and probe utilization. We sold 90 G6 systems in the third quarter which brings our total systems sold to 401 since our launch in March of 2015.

We shipped approximately 7,000 G6 probes in the third quarter which brings our year-to-date 2016 total to approximately 19,500. Note that this compares favorably to a very successful recent launch in the glaucoma market, specifically the leading player in the [mig] sector at a similar point in their launch.

We remain very bullish over the prospects of our positioning in the glaucoma market. The global glaucoma market is one of the largest in healthcare with more than $5 billion spent annually on pharmaceuticals and device treatments with significant market growth driven by the aging population, improved treatment alternatives, enhanced diagnostic technologies and increased patient awareness.

We believe that we can capture a significant portion of this market given: one, that our business model, which includes a captive single patient use disposal enables us to participate in approximately the value created by the technology; and two, that over time we are optimistic that the G6 platform can become the standard used to treat patients across the full continuum of glaucoma care as a first-line therapy through refractory glaucoma.

Initially the G6 was primarily used by our physician customers to treat mid to late stage glaucoma. As physicians have become more comfortable with our technology, in particular with the safety profile and efficacy profile relative to other treatment alternatives, many physicians are migrating to treating patients earlier in the treatment continuum with success.

A big driver of this evolution towards treatment earlier in the continuum of care is the volume of data that we have [amassed] to date and continues to be generated. As a reminder, our landmark study was conducted by Dr. Paul Chew at NUSH (sic), which is the National University Hospital System in Singapore, illustrating a 33% drop in IOP at 18 months.

A few months ago Dr. Chew presented data on the subset of those patients that he was able to follow for 78 months, that is 6.6 years, which illustrated a drop of 43% in IOP. What is interesting is that on average each of those patients were treated 3.6 times during the timeframe.

This is really exciting data and unusual for a medical technology company to have less than two years into a launch but has served to support the safety, durability and repeatability attributes of our technology.

Furthermore, there are numerous leading physicians in the US and across the globe that have studied the use of our technology with consistent results. This includes studies completed and presentations by Dr. Noecker from Yale, Dr. Moster from Wills Eye, Dr. Lin at UCSF and several other leading physicians. Note that all of these studies were completed without any funding by IRIDEX.

A few other highlights to note on glaucoma. One, we recently received FDA observation for our third probe for the G6 platform. Recall that the 6 in the G6 refers to the number of probes that we are developing for this platform. The latest probe is the first illuminated probe for the treatment of late stage glaucoma which will be a nice addition to our portfolio of treatment alternatives across the continuum of care. And two, we recently received authorization to begin marketing the G6 in Singapore.

Note that while we have sold G6s in over 40 countries to date, we are still actively working on obtaining approvals in several key markets such as China and Japan. I hope that our excitement in our G6 platform for glaucoma is coming across loud and clear. We have high aspirations for this business and are focusing our Company's resource on executing on this mission.

Now let's turn our attention to the medical retina business. We continue to be optimistic about the growth prospects for this business as the demand continues to be strong for our products. For example, at a recent AAO meeting numerous presentations were made by physicians on the advantages of our technology and customer interest remains high.

We did have a temporary issue in the third quarter which resulted in record high backorders. Toward the end of the quarter we experienced some error alarms upon installation of one of our medical retina products. We reacted swiftly to this issue with the goal of delivering a positive experience to our physician customers. Our analysis indicated potential supply chain and sales force training issues.

We recently concluded our analysis and have implemented a plan to resolve these issues. I am happy to say that we are now working through our backorders. It is a big credit to our team for the rapid rate of response in identifying, analyzing and resolving the issue.

The long-term growth prospects for this business are clear. For example, we recently initiated a National Institute of Health research study and a National Institute of Health and Care Excellence, NICE, funded study in the UK at 10 centers to evaluate the clinical and economic benefits of our MicroPulse technology for DME.

As studies like this are published we feel our business will be well positioned to achieve sustained long-term growth. However, in the near-term we do expect some lumpiness in the business given the capital equipment nature of these products and our sales force focused on the G6. The latter point will be addressed as we expand our sales force which I will get to shortly.

Shifting gears for a moment to our third segment, our surgical retina business. In the third quarter this business performed as planned as market dynamics were consistent with the prior several quarters in that we continue to expense competition in a mature segment and realize declining revenues. We continue to expect flat to declining revenues for this segment.

Lastly before I hand the call over to Atabak to review our financials I wanted to provide an update on our previously discussed plans to expand our sales infrastructure. As a reminder, given the success of the G6 platform, our sales force has been capacity constrained and it has been a challenge to retain optimal focus on all our product areas given the broad geographics that each of our representatives covers.

In the US we recently hired a new Director of Sales. We think this is an important addition to our sales team to help plan and implement the expansion of our sales force up to 24 representatives in the next several quarters. We also hired a new sales professional at the end of the third quarter so we are up to 13 direct reps in the US at this time.

Outside the US we recently promoted one of our four area managers to the position of Director of International Sales. This will be important given the following issues that we have under way. One, expanding our team to improve our ability to actively manage their growing book of business by our international distributors. And two, establishing direct sales capacities in selected countries.

For example, we recently established IRIDEX GmbH that we may directly market the G6 in Germany and other nearby countries where we do not have currently distributor relationships.

Now I will turn the call over to Atabak for more financial details. Atabak?

Thank you, Will. Our revenues for the 2016 third quarter were $9.8 million compared to $9.8 million in the prior year period. Revenue growth in our G6 platform for glaucoma, which increased 442% compared to the third quarter of 2015, was offset by lower revenues and certain retina products due to the issues that Will just discussed.

Our domestic system sales decreased 5% from $2.3 million to $2.2 million while our international system sales decreased 14% from $2.5 million to $2.1 million. On a global basis increased revenues from our G6 laser system were more than offset by lower revenue from our retina laser systems.

Internationally we experienced some additional weakness in our retina businesses due to the strengthening dollar which effectively increases our price to our customers and heightened competition.

Our recurring revenues, which include sales of our consumable products, service and royalties, increased 9% to $5.4 million from $5.0 million in the prior year period. The increase is mainly attributable to an increase in the sales of our proprietary G6 MP3 probes which offset the decline in the sales of our legacy EndoProbes.

Gross margin in the 2016 third quarter came in at 43.4% compared to 49.3% for Q3 2015. Gross margin was impacted in the third quarter by an increase in manufacturing overhead spending and an increase in manufacturing variances. This was primarily due to lower-than-expected revenues given the issues we discussed that arose in the last few weeks of the quarter and due to additional expenses as we worked to rapidly respond to the issues.

Our operating expenses for Q3 2016 were $5.5 million, up from $4.7 million in Q3 2015. The level of our operating expenses met our expectations as we have made investments to support our commercial infrastructure.

Consequently, our operating loss in the third quarter of 2016 was $1.2 million compared with operating income of $0.1 million in the prior year's third quarter. The net loss for this year's third quarter was $0.7 million or $0.07 loss per share compared to net income of $0.4 million or $0.04 income per share for the prior year period.

In terms of guidance, we are maintaining our guidance for the full year 2016 of low double-digit revenue growth. For Q4 2016 we anticipate revenues of $12.4 million to $12.9 million, which is primarily driven by growth in our G6 platform.

Lastly, today we announced that we obtained a $15 million revolving credit facility with Silicon Valley Bank. The facility, which is currently undrawn, provides availability based on an accounts receivable borrowing base formula. It is a three-year facility at a rate of prime plus 1.5 and does not include any financial covenants. We believe that the facility provides us with an extra layer of liquidity as we embark on our growth initiatives.

With that I will turn the call back over to Will.

Thank you, Atabak. In my closing remarks I want to reiterate our excitement for the G6 platform and its potential to transform our business and the treatment of glaucoma. We are fortunate to pursue this opportunity with an established base of revenues in our medical retina and surgical retina business.

While we expect some lumpiness as we transform our business I am confident that we have the right technology with the right people to execute on a strategy that will deliver long-term sustainable and profitable growth.

I want to personally say thank you to all of our employees for a job well done. With that I would like to turn the call over to the operator for questions. Operator?

(Operator Instructions). Lisa Springer, Singular Research.

A question regarding the retina products, the little problem with that. Was that with products that had already shipped to customers or was that found before they shipped? And if it was shipment to customers, how many customers were affected?

It was three customers that were affected that we talked about which is really on the error alarms [you'd say]. The device worked as prescribed but they were not -- the customer was not in serviced appropriately to be able to understand that. But given what happened to us last year we were very conservative. And so we stopped to verify that that was the only thing to do.

Okay. And could you also comment on international sales for the G6 during the quarter?

Can you be a little more specific?

Were there international sales?

Yes.

And could you tell me how many units?

So, Lisa, this is Atabak. I know historically we've provided some breakout of the G6 units by geography, but for competitive reasons we are no longer going to provide that. But I think, as Will said, I want to make clear that we had nice systems sold in both the US and international.

Okay. And one more question for you. I get a lot of questions from investors when new glaucoma drugs come out. Could you briefly comment on the economics of the G6 versus glaucoma treatment with drugs?

So the economics from the patient's standpoint, the drugs are generally about $100 a month per med. So depending on how many meds the patient is on, it is roughly $100 to $200 per month. And with our treatment it is one time, maybe 12 to 18 months. And I don't really know exactly what the doctor charges. But the economics for that doctor is approximately $399 for his services or her services and another $800 for the facility fee.

Okay. Okay, thank you.

Larry Haimovitch, HMTC.

So with the increasing impact of the glaucoma business do you guys have a sense about where your gross margins could be over the next couple years? Obviously they are going to be higher. Have you been able to model it out in some way that gives you a sense of where you are going with gross margins?

Well you are right, Larry, in that we do expect to see some nice margin expansion given the relatively high margin profile of the G6 probes. So we haven't got into detail where we think we can -- how that is going to play out over the next few years. But as you can imagine, the model is pretty powerful as those -- as that becomes an increasing part of our revenue.

Okay. And then the second question, I know you went into the quarter with a bit of a backlog, at least that is what I understand, because you didn't ship near the end of the quarter. Are you able to provide any magnitude of how much that was and how much that will fall into Q4?

No, that is not something that we -- that we plan to disclose. But I think the one thing we wanted to make sure to communicate as that we have resolved the issues that arose at the end of the third quarter and should be in a position to work through those back orders his quarter.

Okay, and then internationally on glaucoma, I know you have had some shipments, you have got some big markets out there like China, Japan and others that have yet to be penetrated. Can you give us an update there?

Well, the registrations -- are you talking about the timing of the registrations or are you talking about the market we penetrated?

Oh no, I want to know the exact dates of approval.

(Laughter) yes, okay. So I will come back and say the Chinese thing usually takes somewhere between 18 months to two years. We have been and it for just about a year. So we are expecting some time during next year late at the end of the year we should see China come on board.

Okay.

(Inaudible) generally takes about 18 months, that is in line as well. That one -- I don't know the exact date that the regulatory files. I do know that we have two people in the country that have devices that they are using underneath the protocols of working with IRBs in their universities. So I would say end of 2017/early 2018.

Okay, thanks, guys.

[Dan Main], private investor.

[Stan Manning]. I guess my question is frustration at us not attacking this opportunity in a stronger way. We have not used our capital; we still have close to $10 million of cash, which earns us nothing. And I would like to kind of get a feel for how we are going to get first step is $100 million and it looks like we are just -- I don't even want to say trodding, I would say slow walking a slow --.

So can you kind of talk about our ramp up and when we are going to get into a significant move up in utilizing some of the capital to build an organization? It seems to me we can't get there without a build and spending some of the money properly. Can you speak to that, the ramp up and your vision and timing?

I think in the prepared remarks we said we were going to go up to 24 reps within the next several quarters. We hired a Director of US Sales who comes to us from [Leica, Zeiss] and I'm trying to think of the other --.

[Heidelberg].

Heidelberg. So we have hired him, he has already hired his first person and we start marching through the process. We have elevated a gentleman that is a biomedical engineer; he's been with us for four years. Before that (inaudible) to become the director of OUS sales and he is already looking at a couple of country managers as well.

I will come back to what I have always said, sometimes with these products you can get out and run really fast and end up having an adverse event that derails the product. I will stand by my decision that said I'm going to be very conservative and make sure nothing happens and at this point in time. Now that we have roughly 30,000 probes used and roughly 400 customers, we are not going to get derailed by a single one or two type of adverse events if they come about.

But to do it before hand and run into a point where you have got doctors that are not well trained and end up with a possible adverse event, I would be shooting myself in the foot. So I think you and I just have a difference of agreement in regards to whether we are trotting or running.

No, I don't think that that is true. I think you are not running. I think my question is do we have a probe -- do you feel confident that we have a product design that we can ramp up and get a training force and a manufacturing operation and build an inventory, are we to that point yet?

Yes.

We are?

Yes.

So we can expect that we are going to see a building of an organization, of an inventory and the use of cash properly to accelerate and move the program forward properly? And call it conservatively, how you want, but that we are going to see a ramp up before some other laser company comes in, or many, and steals the market based on price and give away?

Well, when you use terms like properly I probably take offense of it. That is your opinion, my opinion is slightly different. I think we have done a good job. I think we will continue to do a good job. I think we have put together the plan and we said we have 6.5 year data with a product that is less than 2 years old.

This was all strategically put together to come out and anybody comes in the market today has to justify that they have got that kind of long-term data and safety profiles that we do. So I think it is going to be tougher for them. Ophthalmology is a very conservative market and people just don't take and use a product because they say I am as good as somebody else's.

So I think we are in pretty good shape, you can have an opinion and I will respect it, but I think the pace that we are going is fine. I would not -- I didn't like what happened this quarter, but I was conservative in my nature and said I'm going to call a quick voluntary hold because I don't want to get into some kind of other issue. And therefore the revenues slowed down. I think the discussion would have been different if we hadn't had it but that is what happens.

I am perfectly happy with where we are and what we are doing. The team has come together, the sales force is coming together, we have added 20 some odd people in the organization inside here trying to be able to deal with stuff. So it is just maybe stuff that you don't see or I don't talk about, but I think we are doing a good job.

[Note taken] you are not doing a good job. Are we going to see a build in inventory near-term and are we going to see an acceleration (multiple speakers)?

Define what you mean by that. What do you mean by build an inventory?

A build of inventory so we can ship (multiple speakers).

Okay, look, Stan, I am doing what I can do and we have inventory. We are not having a situation where we are back ordering people because we don't have product. So I don't know where you want me to go with this.

I can see. Thank you.

All right.

(Operator Instructions). Joel Westerstroms, Redeye.

Congratulations on the great growth in Cyclo G6 and sorry to hear about the other issues, but I get those things happen sometimes. I had some questions regarding the gross margin. The long-term gross margin, where do you think you could end up when you transition to the new business model? Can you give us a ballpark figure?

Sure, so historically we have been operating in call it the sort of 50% gross margin level. And with the G6 launch, the probes in particular, come at a significantly higher margin than I think we had previously guided to around 80% gross margins there. So that was my comment earlier and if that becomes an increasing part of our revenues you can see a pretty meaningful increase in our gross margin.

And just a follow-up on that one. You previously had some impact from starter kits and so on when you shipped new systems. And it seems like you shipped more systems now than in Q2. So is that part of the reason you still ship the starter kits where you sort of discount the system and get away from probes for cheap?

I wouldn't say that we give -- the starter packages are not necessarily a price break, they are more of that we want to bundle them together so that the customer gets a system with some probes on the shelf to encourage them to utilize the product.

So that is -- I think we had early in our launch is what I think you are referring to in that our introductory launch prices were lower than what they are now which impacted our margins. But that is not something that has impacted us over the last several quarters.

Okay, so that is really good to see that you are still [building] quite a lot despite not discounting them so much. And another question, what is your ability to push forward cost increases or FX effect, etc., to other markets?

It depends on which one of our product lines you are talking about. For example --.

Mainly Cyclo, I guess the competition is tougher on the legacy business. So I am more thinking about the probe.

So on the G6, I mean that -- given where we are in the launch there and lack of competition we have been able to have a decent amount of pricing power. We have been -- I think there is some additional upside there that we could realize. We have been careful in sort of rolling out and managing that just in terms of making sure that we get -- that we encourage systems placements as well as utilization at this early phase that we are trying to become part of the standard of care.

Okay, thanks a lot. May I go on with a few more questions?

One more.

Okay. So I had some questions regarding the demand and a bit like Stan talking about what you see as your biggest challenge and how you can see you can expand production of probe. Because my impression from being over here in Sweden is that you can't really meet demand at the price now.

And connected to that -- I'm trying to take all of my questions in one basically. Connected to that it seems like some really want to avoid CapEx over here in Europe since it's mostly publicly funded. So are you looking at sort of also changing the business model to basically give away the systems and then just selling them the consumables or the probes?

Sure. So to answer your question, it is I don't think we have a dynamic that we have a capacity constraint on probe manufacturing, just to make that clear. Clearly as that business grows for us we will need to make some investments to -- whether that is internally or through outsourced manufacturers, to be able to meet the demand there. But currently we have adequate capacity to meet our customers' demand.

Okay, great. Thanks.

And then the latter part of your question in terms of CapEx needs, I mean this isn't a major CapEx requirement because, like I said, a lot of this is -- even if we do some of this in house this is largely an assembly operation. And so, even if we do it in-house or do it with an outsource manufacturer we are not looking at a lot of capital outlay.

Oh, no, sorry. I meant for the healthcare institutions over here. They usually want to avoid CapEx and instead have higher OpEx. So I know your probes save a lot of money compared to other kinds of surgery. So it might be an idea to sort of price down the systems and then just take more -- charge higher for the probe.

So, Joel, I understand where you are coming from. In the areas where we go through distributors we work with them and they all have their own specific plans on how they market in their market. And there are distributors that we work with that take and provide the -- provide contracts if you will through the hospitals. And so they move it to a cash flow business versus a capital equipment business. And that our distributors handle.

We have not had that request in the US. Most of the times here in the US the hospitals are -- they understand if you are going to up charge the probe you are going to pay more in the long run and they have been -- and because it is only $20,000 for a full system they tend to buy them. But we see it especially in Europe and I am sure that business model will continue to have varying pricing and varying strategies in varying countries.

And that is great to hear. And you don't have to put it in your balance sheet if I am understanding you correctly.

Correct.

Your distributor can do that? Okay, great. Thanks a lot and congratulations once again. I think it was really good to hear on the progress.

(Operator Instructions). [Paul Svett], private investor.

Good progress.

Thank you.

With the build out of the sales force in front of us and support people and the training in both the sales force and customers outside the US there is a big challenge and I am sure a big use of cash. So you put a credit line in place for inventories, I assume it throttles the ramp up depending on how you allocate all this stuff.

But I am wondering if we normalize this, if we look at today before this build out occurs, so take out the extraneous items, do have any idea what it costs in terms of working capital for an incremental dollar of sales so we have a starting point to try to assess this stuff?

I fully follow the question, but let me attempt to give you a framework to think through our cash requirement. So as you look at our business, we have -- a large portion of our business is from our legacy product lines generates substantial contribution margins for us and give us a base of business to fund our operation.

And so we are fortunate in the sense that we are going after a really high-growth opportunity but have internal cash flows to support a lot of that growth. So as we look out to our income from operations over the next several years we have that as a nice starting point and, depending on the pace that we make investments, we can have a range of outcomes there.

And then in terms of, as you rightly point out from a -- as you grow rapidly there is a need for growing a -- for building out and making some investments in working capital. And we are doing some things on that side to realizing that we are going after such a high-growth opportunity that we need to make some investments and put different processes in place so that we become more efficient in managing our working capital so that we -- so that doesn't become as much of a use of cash for us going forward.

So, I think coming back to the point, as I said earlier, somebody said we have $10 million of cash, we have been profitable and so we should have a fair amount of cushion in terms of going after our growth initiatives. But we put on this credit facility to add another layer of liquidity as necessary.

Well the question, if I look back -- backwards in time, not forward, not with the special requirements for ramping a sales force and training and all that. What does it cost you in terms of working capital to generate an incremental dollar of sales?

I don't really follow the question. So we can maybe take it off-line and (multiple speakers).

That is fine, that is fine, thank you.

Thank you. Ladies and gentlemen, we have no further questions in queue at this time. I would like to turn the floor back over to Will Moore for closing comments.

Thank you, operator. Thank you all for attending and listening to the call today. And we look forward to speaking to you at the end of our Q4 results.

Ladies and gentlemen, this does conclude our teleconference for today. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day.