Trupanion Inc (TRUP) 2014 Q4 法說會逐字稿

EventID. Good day, and welcome to the Trupanion fourth quarter and 2014 earnings conference call and webcast.

(Operator Instructions)

Please note, this event is being recorded. I would now like to turn the conference call over to Kimberly Esterkin, investor relations. The floor is yours.

Thank you. Good afternoon and welcome to the Trupanion fourth quarter and FY2014 financial results conference call. Joining me today to discuss Trupanion's results are Darryl Rawlings, Chief Executive Officer, and Mike Banks, Chief Financial Officer. Each will be available for question-and-answer following today's prepared remarks.

Before we begin, I'd like to take this opportunity to remind everyone that during today's conference call, we will make certain forward statements regarding the future operations, opportunities and financial performance of Trupanion within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements involve a high degree of known and unknown risks and uncertainties that could cause actual results to differ materially from those to be discussed.

A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in our earnings release, which can be found on our investor relations website, as well as the Company's most recent reports on forms 10-Q an 8-K filed with the Securities and Exchange Commission. The forward-looking statements made in today's conference call are based on information available as of today, February 12, 2015, and Trupanion assumes no obligation to update such statements to reflect events or circumstances as of today's date.

Also I would like to remind everyone that during the course of this conference call, we will be discussing non-GAAP measures and talking about the Company's performance. These non-GAAP measures are in addition to, not a substitute for, measures of financial performance prepared in accordance with US GAAP.

Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the most directly-comparable GAAP results, which can be found in today's press release or on Trupanion's investor website under the financial information tab.

Lastly, I would like to remind everyone that today's call is also available via webcast on Trupanion's investor website. A replay will also be available on the site. And with that, I would now like to turn the call over to Darryl, Trupanion's Chief Executive Officer.

Thank you, Kim. Good afternoon, and thank you for your continued interest in Trupanion. I look forward to providing you with the 2014 results and our 2015 outlook. Starting with our growth, we had a strong year, as we continue to build the new category of medical insurance for cats and dogs in North America.

Total revenue for the year increased 38% to $116 million. Our direct-to-consumer monthly subscription revenues comprised over 90% of our total revenue in 2014. This means we have a highly visible recurring revenue business model. We continue to experience exceptional renewal rates with average monthly retention of 98.68% for the full year.

Trupanion and its affiliates had 232,000 enrolled pets at the end of 2014. 218,500 of these came from our subscription business segment, our direct-to-consumer monthly subscription pets. This is up 29% from the end of 2013.

Average monthly revenue per pet, our version of ARPU, increased slightly over 4% for the year to $44.27. This was affected by the Canadian foreign exchange rate. Our ratio of LVP to PAC for the year was 5-to-1, which was in line with our target. Gross margin, excluding stock-based compensation expense, for our subscription business was 18.1% for the year, down 1.6% from the previous year.

In Q4, this segment delivered a 300 basis point improvement over Q3 and came in as expected at 18.2%. We expect our subscription business to reach gross margins of 18% to 21% in Q4 of 2015. The first half of the year will have lower gross margins in our subscription business as we realize a greater impact from our pricing increases in the second half of the year.

Our overall gross margin is slightly lower, as it includes our other business segments. This segment, which is our B2B segment, averages a 7% to 10% gross margin. In 2014, we had a combined gross margin excluding stock compensation expense of 17.4%, a 1% miss to our 2014 target. Although it creates a near-term pressure on gross margins, we remain committed to the rollout of our direct pay initiative. In 2015, we expect to double our deployments of Trupanion Express, as we continue to learn how to effectively rollout this technology and member experience.

Adjusted EBITDA came in as planned for 2014 at a loss of $10.3 million. With our large addressable market in North America we will continue to invest in our foundation, technology and member experience, all well ahead of the curve. But unlike 2014 where we saw our fixed expenses increase to 18% of revenue, in 2015 we expect to see these fixed expenses swing in the other direction and begin to reduce as a percentage of revenue. Long-term, our goal is to reduce our fixed expenses to approximately 5% of revenue.

One of the biggest differentiators for Trupanion is our approach to the market. We fundamentally believe that the support from veterinarians is critical to driving broader acceptance of medical insurance for pets in North America. Garnering this support is not without its challenges. There are over 28,000 vet hospitals in the US and Canada, 2000 of which are owned by corporate entities.

The remaining 26,000 vet hospitals are independently owned and operated. Reaching this audience will take considerable time and resources. In 2014, we estimate that we made 85,000 face-to-face visits with veterinarians and their staff. In total, we estimate that we have made approximately 360,000 face-to-face visits since we entered the US market for our national sales force of territory partners.

Equally as important to expanding our reach with veterinarians is enhancing the Trupanion experience for both veterinarians and the consumer. At the heart is our direct pay efforts, where we are trying to eliminate the outdated, ineffective and unloved reimbursement model.

We are using the relationships we have with our active hospitals, our technology, and a change in process to rollout a member experience where we pay the veterinarians directly. Usually within five minutes of the invoice being created and before the pet owner departs the hospital.

With Trupanion Express, we will be removing a major point of friction that has been permeating the traditional reimbursement pet insurance category. And for Trupanion, by integrating with the veterinarian practice management software, we get access to better data. We reduce our claims handling expense and delight our members with a significantly better experience.

Our ability to price across 1.2 million price categories is a key differentiator and one of Trupanion's most important competitive advantages. Our goal is to price everyone fairly, based on the unique characteristics of their pet.

If a member has an average pet within their price category, we should pay 70% of their money on claims for their pet. If their pet is unlucky, they will receive considerably more than 100%. And if they have a lucky pet, they will subsidize the unlucky group. We have built this capability over the past 14 years, and investing in data analytics has been and will continue to be a key focus for us.

Investment in our marketing, infrastructure, and technology will continue to be a prevailing theme in 2015. Data analytics, eliminating the reimbursement model, and the expansion of our territory partners are all strategic investments aimed at scaling our business and building our foundation as we continue to build a new category in North America.

We are frequently asked what our business model looks like at operational scale. And since we think about it slightly different than others, I want to take this opportunity to walk you through our margin profile. As we have discussed previously, we believe we will reach operational scale at 650,000 to 750,000 pets. At this level, our goal is to have a discretionary margin, which is gross margin minus our fixed expenses, before sales and marketing, of approximately 15%.

Looking at the components of revenue more closely, approximately 70 points of revenues is used to service and pay veterinary invoices. Our cost of goods. We incur another 10 points of revenue in variable expenses. And finally, at operational scale, we expect to incur another 5 points of fixed expenses in technology and G&A.

The result will be 15 points of discretionary margin before sales and marketing from our direct-to-consumer monthly subscription business. This is our long-term target. With these 15 points of discretionary margin, we could choose to add more geography, acquire more pets, pay dividends or buy back stock.

Today, and for the foreseeable future, we will grow by cost-effectively acquiring pets. Which we measure by understanding the ratio between our lifetime value of a pet to our pet acquisition costs. When we reach scale at 650,000 to 750,000 enrolled pets, and assuming we maintain a 35% market share, we project the North American market will still only have 1.2% penetration rate.

With time, a high-value proposition, a great member experience, and the support from veterinarians, I believe the North American market is also capable of reaching the 25% market penetration rate found today in the UK. Remember, the UK took 20 years to hit 5% penetration rate and another 20 years to grow to today's 25% penetration rate. It's not going to happen overnight.

So how do we get there? We have been laying the groundwork over the past 14 years, but 2014 we saw the advancement of several strategic initiatives. We will build upon these foundations in 2015, and have already made good progress. Trupanion is the only company in North America with a national sales force, a key competitive differentiator and an area we will continue to invest.

Just last month, we announced the partnership with VCA, in which Trupanion was named the preferred vendor of medical insurance for cats and dogs across VCA's approximate 600 hospitals throughout the United States. It's a great validation of Trupanion's business model, and we're thrilled that our territory partners will now have a direct line of communication with the VCA's hospitals. Building those relationships will take time, and that's why we expect minimal revenue impact in 2015, but expect to scale the relationship more meaningfully in 2016 and beyond.

In summary, our performance in 2014 was largely as expected. We've met our revenue, LVP-to-PAC ratio, and cash flow goals, but we missed our target gross margin by approximately 1%. Our foundation continues to strengthen as we build more relationships with veterinarians, improve our member experience, and maintain our already high retention rates.

This momentum continues into 2015, which is off to a strong start. As Mike will cover, we expect 2015 will show strong revenue growth and improve operating margins. Continuing to cultivate relationships with veterinary hospitals will remain our focus in 2015 and 2016.

With that, I'll hand the call over to Mike Banks to discuss our financial results in greater detail. Mike?

Thanks, Darrell, and good afternoon everyone. 2014 was a busy year for Trupanion. We entered the public markets and delivered strong performance in revenues, enrolled pets, and average monthly retention. I will focus my commentary today on our fourth-quarter results, as well as provide our outlook for the first quarter and full year 2015.

Unless I state otherwise, I will be talking about non-GAAP expenses that exclude stock-based compensation, both in terms of dollars as well as percentages of revenues at margins. We delivered yet another quarter of robust sequential and year-over-year revenue growth with fourth-quarter total revenues up 33% year-over-year to $31.9 million.

Total subscription revenues, which comprised 91% of total revenues in the fourth quarter, were $29.1 million, up 36% year-over-year. Total subscription pets at the end of the fourth quarter were approximately 218,500, a 29% increase over the prior-year period and representing 94% of our total enrolled pets. The remaining 13,000 pets fall within our other B2B business.

Next quarter, there will be a small re-class of our subscription pets, as we move some employee-benefits pets from our direct-to-consumer monthly subscription business to our other business, which we have determined will be more appropriate for future periods. In local currencies, our average monthly adjusted revenue-per-pet grew at 6.6% in the United States year-over-year, and at 7.8% in Canada.

Adjusted revenue-per-pet was $44.88, up 4.2% from $43.07 in Q4 2013. But down slightly from the third quarter of 2014, due to the decrease in Canadian foreign exchange rates. In the fourth quarter, the Canadian FX rate dropped to an average of 88% compared to an average FX rate of 92% in the recent third quarter. If the average Q3 foreign exchange rate held constant into our fourth quarter, our fourth-quarter ARPU would've been for $45.40, or $0.52 higher, and Q4 revenues would have been approximately $300,000 higher.

And while the average revenue-per-pet increased in local currencies in Q4, our monthly member retention rates remain strong at an average of 98.68% for the quarter. Subscription business gross margin was in line with our expectations at 18.2%, compared to 15.2% in the 2014 third quarter. Subscription gross profit was $5.3 million, a 36% increase over the prior-year period.

Our other business segment had revenues of $2.8 million, an increase of 8% over the prior-year period. This segment's gross margin was 11% for the quarter, consistent with the prior-year period. Our total gross profit was $5.6 million, an increase of 35% over the prior-year period.

Our fixed expenses, which are comprised of general, administrative, and core technology expenses, excluding expenses related to our Trupanion Express initiative, were $4.6 million, 15% of total revenues. This was consistent with our expectations and down slightly as a percentage of revenue, from 16% in the fourth quarter of 2013. We expect to see our fixed expenses begin to scale in 2015.

One measure of profitability we consider is the gross margin minus these fixed expenses but before sales and marketing. Internally, we refer to this as our discretionary margin or profit. We think of this margin as the profits generated by our existing portfolio of pets. Under this view, our discretionary margin for the quarter was 2% of subscription business revenues. Our long-term goal is to achieve a discretionary margin of 15% of subscription business revenues.

Today, we are choosing to spend our discretionary profit on acquiring new pets and developing Trupanion Express. During the fourth quarter, Trupanion spent an average of $141 to acquire a pet that has an estimated lifetime value of $590, a 4.2x return on that acquisition cost. As expected, pet acquisition costs increased over the prior-year period, though fell in line with our expectations. As Darryl mentioned, our overall 2014 lifetime value of pets to pet acquisition cost ratio remained in line with our target of 5-to-1.

As we discussed last quarter, the increase in PAC was primarily due to our ongoing investment in our territory partners and our go to market strategy, costs associated with our national sales conference for our territory partners which was held in the fourth quarter, and lower pet enrollments during the fourth quarter due to seasonally fewer veterinary visits.

This effect naturally inflates our acquisition costs per new pet, given the majority of our sales and marketing spend is not seasonal in nature. We expect pet acquisition costs to decline slightly from Q4 levels in 2015, though be up over the prior-year periods. In the fourth quarter, we incurred $1.1 million net of capitalization on the development of Trupanion Express.

In the fourth quarter, we generated a net loss of $4.3 million compared to a net loss of $3.2 million in the fourth quarter of 2013. This Q4 net loss included non-cash charges totaling $1.3 million, comprised of depreciation and stock-based compensation. Adjusted EBITDA was a loss of $2.9 million for the quarter, consistent with our expectations, but a decrease of 63% year-over-year.

Turning to our balance sheet, the end of the fourth quarter with $53.1 million in cash and cash equivalents and $14.9 million in debt. We're pleased with our overall financial position and believe we are appropriately capitalized to fund our operations until we reach cash flow breakeven on a quarterly basis, an important milestone we expect to achieve within 18 months.

Let's move on to discuss our outlook for Q1 and full-year 2015. For the full-year 2015, we expect total revenue to be the range of $145 million to $150 million. For the first quarter, we expect total revenue to be $31 million to $33 million. To provide more details, I'll address our subscription business first, then I'll turn to our other business segment.

For the full-year 2015, we expect subscription revenues to be in the range of $135 million to $139 million, which equates to year-over-year growth of 28% to 32%. For the first quarter of 2015, we expect subscription revenues of $28 million to $30 million. These revenue projections are impacted by the recent decline in the Canadian currency conversion rate. Our Canadian business represented 28% of our 2014 subscription business revenues.

The average currency conversion rate for 2014 was 91%, and we used 80% conversion rates in our 2015 projections, which was the approximate conversion rate at the end of January. Our subscription business revenue growth rate and local currency is expected to be between 31% and 36% for 2015. These revenues converted at our assumed 80% Canadian currency exchange rate for 2015, result in a revenue growth rate in US dollars of between 29% to 34%.

To put these 2015 revenue projections in the context of the recent currency exchange rates, if the average conversion rate for the recent third quarter of 2014 was applied to our revenue projections for 2015, the revenues in our 2015 guidance would be approximately $4 million to $5 million higher. We are expecting our pricing increases will wash through our subscriber base throughout 2015, benefiting that second half of 2015 more than the first.

In the first quarter, we expect our subscription gross margin to be between 16% and 19%. We expect this to improve to 18% to 21% in the fourth quarter of 2015. We expect that our fixed expenses will begin to scale going forward, and our long-term goal is for them to reach 5% of total revenues.

Technology expenses will be higher in the first half of 2015, as we continue our investment in the development of Trupanion Express. We are forecasting to incur expenses net of capitalization of $4 million to $5 million on the development of this platform over the next three quarters, at which time the development will be substantially complete and the associated expenses for Trupanion Express will become part of our core technology.

During 2015, we plan to continue to invest in expanding and improving our network of territory partners. We will also be incurring expenses to support our new partnership with VCA. In 2015, we expect our LVP-to-PAC ratio will range between 4-to-1 and 5-to-1, as our gross margin returns to historical norms.

We expect our other business segment to maintain its gross margin of 7% to 10%. This segment has minimal fixed expenses or sales and marketing associated with it, so the gross margin approximates total operating margin. For the first quarter of 2015, we anticipate an adjusted EBITDA loss of $3.5 million to $5.5 million. For the full-year of 2015, we currently expect an adjusted EBITDA loss of $10 million to $50 million.

Regarding our tax rates, our income tax expense is primarily associated with our Canadian business, and we expect to pay minimal taxes for the foreseeable future. Our federal net operating loss carry forward as of December 31, 2014, was approximately $44 million. We ended 2014 with 34 million shares outstanding on a fully diluted basis. Lastly for 2014, stock-based compensation totaled $4 million.

In closing, I'd like to emphasize that in 2015 we expect to accomplish strong growth, return our gross margin to normal levels, begin to realize scale in our fixed expenses, and be in position to become cash flow positive in 2016.

Thank you all for your time today. We will now open up the call for questions.

(Operator Instructions)

Jon Block, Stifel.

Maybe two or three, and then I can follow-up the rest offline. But the first one, you gave a lot of metrics and color on 2015. Anything from just a total pets enrolled or new pets enrolled that you guys were targeting that you want to share?

Jonathan, we were not planning on giving specific numbers on the total enrolled pets. But, if you look at the revenue projections in our average ARPU, you should be able to do the reverse math.

Yep, got it. Okay. And then, if I think about the $4 million to $5 million hit in revenue that you called out from the strengthening dollar, I'm just trying to think about how that would flow through to hit on adjusted EBITDA.

It's clear on the dollar per dollar because you are sort of paying out claims in the local currency, as well. Is it, rough math, $5 million hit in revs would be about $1 million-and change hit to EBITDA, if I think about 20% of flowing through? Can you talk to that Mike or Darryl?

Yes, Jonathan. Our expenses in Canada have a gross margin of let's say about 30%. So, the hit to EBITDA is going to be about 30% of that revenue number.

So, about arguably, $1.5 million then to EBITDA?

That's right.

Okay, got it. And then, Darryl, you actually got the claims expense a little bit more in line, quicker than at least we were anticipating. But, Mike, you talked about 16% to 19% in 1Q, which arguably would be a, if it were at the lower end of that, a modest step back.

Why would we take a modest step back before continuing to move forward? Is that just some variability in the business? Or is that contingent on the rollout of Trupanion Express and some of the fluctuations that might occur with that?

It's mainly to do with fluctuations in Trupanion Express, the roll on of our new rates, and Q4 was a little light on the claim side.

Okay, got it. Very last one, I promise. Just at a high level, Darryl, can you tell us where you want to be with Trupanion Express? I don't know whether that's exiting 2015, entering 2016, just when do you really expect to feel comfortable with the claims expense that accompanies Express, and when you really expect to hit on the gas? Thanks, guys.

Well, with the last question, I would say that we're pretty comfortable understanding the impacts of it today. But, we're going to roll through and plan on doubling the number of hospitals with the technology installed during 2015, so that we are prepared, in 2016, to start to hit the gas. Rough numbers, going from about 150 or 200 hospitals to about 300 to 350 hospitals. And then, in 2016, we look at being able to roll on 250 to 500 hospitals per quarter, if our plans go well.

Thanks very much guys.

Chris Merwin, Barclays.

This is David Lee calling in for Chris. I just had a quick question on, as you expand your territory partner program and establish new partnerships like the one you established with VCA, have you been seeing the same level of engagement and referral volume from the new hospitals relative to the hospitals you had relationships for a longer time? And then, I have a follow-up question.

We have been heavily focused since the IPO about trying to build out our national sales force, which we call territory partners. We're finding similar up trends in the time it takes to onboard a hospital and get them comfortable to be able to initiate conversations about Trupanion. And, we're excited about our partnership with VCA, but expect the similar type of roll-on pattern that we have seen over the last four or five years.

Got it. That makes sense. Then, just quickly on, also, how many of the active hospitals today have an exclusive one-to-one referral relationship with you guys versus having multiple insurance partners that they recommend?

Well, we don't lock anybody in with exclusives. But from a practical standpoint, many of the hospitals only recommend Trupanion. So it's not a number that we calculate or we say we have a contract.

Veterinarians can choose to recommend whichever company they feel is best serving their clients' needs. I would say that of our active hospitals, you might see somewhere between 20% and 40% of those hospitals would only have Trupanion in their hospitals, and other ones may have a few others, but might be recommending us first.

That's very helpful, thank you.

Michael Graham, Canaccord.

I have two questions. The first is on just the dynamic around the Express, the connect product, and my understanding is that increases claim activity, which therefore, because of your cost plus model, pushes up ARPU. And it seems like, as you mix in more pets that are doing that, you are going to continue to drive up ARPU.

And I'm wondering if that's true? And what kind of churn activity, or I know your retention rate was really good this quarter, but are you seeing anything in terms of sign-ups or pet owners balking at what are effectively higher prices? Just wonder if you could talk about that? And then, I have one more.

Sure. David, good question. So, the inflationary cost of veterinary medicine is something that we have been dealing with for the last 12 to 15 years since the company started.

It's actually one of the reasons that Trupanion is more relevant today than it was in the past. As the cost of veterinary care goes higher with more diagnostics, more testings, more availability, there is a greater demand or need for our product than the ability for pet owners to be able to budget for the healthcare risks if their pet becomes sick or injured.

As Mike described on a current foreign currency exchange in the US, we had about a 6% to 7% ARPU increase last year, and in Canada it was about a 7% ARPU increase. And as you saw from our retention rates, we've had very, very sticky customers. In fact, I'm a little uncomfortable with how high our retention rates are, but they've been occurring as we've been increasing the rates 6% to 7% last year.

Okay. And then, I just wanted to ask on the VCA partnership, it seems like they are making a decision that they would like to see more of their pets that they're caring for have insurance. I'm just wondering how they think about the unit economics of switching a pet from uninsured to insured? How does that impact VCA's economic model?

Well, I think overall, VCA is saying that if you provide medical insurance for cats and dogs, which is the product that we are offering, that those clients are going to be able to come in more frequently and choose a higher path of treatment. Instead of the doctor having to say, you can choose plan A or plan B, they are going to be able to choose the plan recommendation by the veterinarian with cost not being a big driver.

VCA, as well as other hospitals, have different wellness components in their system, so this is really about medical insurance and having the pet owners be able to come in earlier, more frequently, and get the proper level of care.

Okay. Thanks very much. Just a last quick one is, if it's possible for you guys to make your prepared remarks available? There were lots of numbers in there. It would be really helpful to be able to get those on your website, or if you could email them out or something, that would be great. Thanks very much.

Absolutely. We will make them available.

(Operator Instructions)

Rohit Kulkarni, RBC.

This is Andrew Bruckner on for Rohit. I have two questions, if I could. The first one on your VCA partnership. I'm wondering how many pets were already at VCA hospitals that you have subscribed? And if you can --?

It was a very small number. VCA has 500 to 600 hospitals across the US, which is a small incremental to the whole 28,000, so it was a small segment before our relationship.

Okay. And, do those hospitals tend to be larger in nature or about the same average?

That's probably a better question for VCA, but in general, they have a higher number of doctors, so that they are larger than the average hospital.

Okay. And then, the final question is, now that you have kind of a louder microphone as a public company, have you seen any changes in competitor responses as you're going out there and telling your story?

I don't think so. We have competed over for about 15 years. Today, there's about 20 brands, and I haven't seen any dramatic changes in response since going public.

I think because we're kind of leading the growth in the category, many competitors are saying that having a higher value proposition to the consumer is a better thing for the entire category, and I expect more people will kind of follow in our footsteps.

Great, thank you.

Next, we have a follow-up from Jon Block of Stifel.

Darryl, it's funny, you sort of just took it, but I guess I'll ask it anyway, and then I might have one other. I was just going to say, in terms of that competitive landscape, we did hear some chirping from VPI, which is sort of fee-based to moving as a percent of invoice. Are you hearing some of that, and can you specify still how you keep the motor on your business if you saw arguably that number-one player start to move towards a percent of invoice?

I have been hearing that, actually, for a number of years. So if it becomes true, it wouldn't overly surprise me. But, with 99% of the pets in North America currently not having medical insurance, we are less focused on our competitors and more focused on trying to build the category.

I think over a period of time, the higher caliber of our competitors means that more pet owners are going to tell their neighbors that this makes sense. So, we will make sure that we have a focus on our customer experience. Make sure that our value proposition, where we're paying $0.70 out of $1, in the way of veterinary invoices, providing the highest value proposition, making sure that we are paying claims quickly, answering the phone, hello, will help separate Trupanion from the pack.

Okay, great. And then maybe the last one. I think someone mentioned earlier the retention was very, very good. You called it out. If you were to try to break it apart a little bit, in the markets where you pushed through a price increase over the past three to six months, can you maybe comment on the retention in those specific markets?

I think some markets may have incurred as much of an 8% or 10% increase on the ARPU. What are you seeing specific to those markets? Thanks, guys.

So, let me try to be clear that putting rate increases is something we are doing every single month nonstop. It's a regular part of our business, and a regular part of our business for the last 10-plus years. When we see higher rate increases go into a certain market or a certain category, we haven't seen a large drop in retention rates, historically. So we don't expect to in the future.

I will tell you this, that if you looked over the last five or six years, our retention rates have been about 98.5%. And in the last year and a half, while we've been increasing our rates, they've climbed to 98.68%. I'm a little uneasy in that I wish my five-year average was that high.

Maybe I'd feel more comfortable if people backed it down just a little bit. But, I'm not concerned about backing it down because of any rate changes moving forward because that's been the normal course of business for a long time.

Perfect, thanks guys.

We're showing no further questions. We will conclude today's conference call.

We would like to thank the management team for their time today, and thank you all for attending today's presentation. At this time, you may disconnect your lines. Thank you, and have a great day, everyone.