Xtant Medical Holdings Inc (XTNT) 2012 Q4 法說會逐字稿

Greetings and welcome to the Bacterin International 2012 results call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Rich Cockrell, President, The Cockrell Group. Thank you. Mr. Cockrell, you may begin.

Good morning and thank you for joining us today for Bacterin's full-year 2012 financial results call.

On the call today are Guy Cook, Bacterin's Chief Executive Officer, and John Gandolfo, Chief Financial Officer. Yesterday the Company issued a press release announcing calendar year 2012 financial results within which the Company reported record 2012 revenues of approximately $33 million. That was a 9% increase over the reported 2011 revenues.

Today's call is being made available via the Investor Relations website at investor.Bacterin.com. Following remarks by management, we will open the call to your questions. We expect the duration of the call to be approximately one hour.

During the course of this call, management may make certain forward-looking statements regarding future events of the Company and its future performance. These forward-looking statements reflect Bacterin's current perspective on existing trends, and information can be identified by such words as expect, plan, will, may, anticipate, believe, should, intends, and other words of similar meaning. Any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in the Risk Factors section of the Company's annual report on Form 10-K. Actual results may differ materially from those projected in these forward-looking statements.

For the benefit of those of you who may be listening to the replay, this call was held and recorded on March 27 at approximately 10.00 am Eastern time. Since then, the Company may have made additional announcement related to the topics discussed. Please reference the Company's most recent press releases and current filings with the SEC. Bacterin declines any attempts or obligations to update these forward-looking statements.

And with that, I'd like to turn the call over to Guy.

Thanks, Rich, and good morning, everyone. Thank you for joining us today to discuss our fourth-quarter and full-year 2012 results. I'll begin by providing highlights of the year, and John will conclude with a more detailed review of results.

2012 had both positive and negative developments for Bacterin. We successfully grew our business in the wake of a competitive and evolving healthcare environment. We significantly expanded our processing capabilities, exiting our backorder situation in second-quarter 2012, which was a significant constraint in early 2012. As we continue to develop our market for innovative, biological scaffolds for tissue regeneration, we introduced 10 new allograft product lines and recently introduced our amniotic tissue product into the marketplace. We now have a more robust portfolio of regenerative biologics that addresses the spectrum of specialty biologic needs, and we continue on our path of becoming a preferred direct biologics supplier for both our surgeon and hospital partners.

Our products are supported by excellent clinical evidence with fusion rates in the high 90th percentile, and as such, our first two peer-reviewed articles were published this year.

On the reimbursement front, our hMatrix product received its Q code on December 31, 2012.

We also improved our distribution capabilities by signing two new GPL accounts, Novation and Premier. Furthermore, we completed a $20 million financing with OrbiMed. This provided the Company with working capital to achieve its near-term strategic objectives.

We also expanded our sales and marketing capabilities and currently have one national sales manager, five executive VPs, 12 regional managers, 26 direct sales representatives, three distribution managers, and three associate sales reps. Our sales infrastructure now supports over 200 independent distributors, and during the year we completely reworked our sales and marketing materials. We expanded our sales pipeline with opportunities that position the Company for growth during 2013 and beyond.

Our progress on execution operationally during the year was generally solid, but we were challenged in our execution on the sales side. In 2012 we generated approximately $33 million in revenues, which was a 9% increase over 2011.

During the year, we were able to maintain gross profit margins of approximately 69%. After strong results in the third quarter of 2012 with revenues of approximately $9 million, the fourth quarter saw our revenues slow a bit to $8 million, a decrease from $9 million in the fourth quarter of 2011. The lower results reflect not closing anticipated larger sales to corporate accounts, as well as increased pricing pressure in the markets.

I would be remiss in not addressing our performance during the year without commenting on our expected performance for 2012. Putting it straight, we didn't execute well on our 2012 sales plan. This resulted in adjusting guidance during 2012.

As most of you are aware, the marketplace in biologics continues to be increasingly crowded with competitive products, and there has been a proliferation of distributorships that seek to enter our markets. The impact of healthcare reform has created a price-sensitive environment which has caused intense pricing pressure in the marketplace.

As a result, we expect to experience ongoing pricing pressure as customers seek lower-cost solutions. To address these matters, we have aligned our sales force to work with certain channel partners that will help further penetrate and grow our market share.

We've also begun bundling products to enhance our customer offerings, to stabilize pricing and margins by entering into single-source and dual-source agreements with our hospital partners. We are reeducating the market about the clinical success of our products and their superior outcomes relative to our competition.

We recently disclosed that the Company received two warning letters from the FDA and a subpoena from the OIG. The Company has contracted with outside professionals to assist with this cooperation in response. The Company has responded to all requests at this time.

In summary, Bacterin will continue to distinguish itself as a leading company in regenerative medicine through a relentless focus on service and innovation. Our goal is to provide biologic products that are essential to improving the quality of life of patients around the world that are well regarded and preferred by the medical community and surgeons.

Although we are in the midst of a challenging environment, we remain optimistic about our business, and we are proud to be a leading player in the markets we serve.

As a result of our continued innovation and efforts to enhance commercialization domestically and internationally, we continue to grow despite increased competition and pricing pressure. I'd like to thank our employees and management team for their tireless efforts and dedication.

I'll now turn the call over to John to further discuss our financial results.

Thanks, guys. I'd like to remind our listeners to refer to the 2012 earnings press release issued yesterday and also our Form 10-K for the calendar year 2012 which will be filed later today.

As Guy mentioned, we were able to increase our yearly revenues from $30.1 million in 2011 to approximately $33 million in 2012. The increase of approximately $2.8 million was largely the result of increased sales generated from our direct sales force and independent distributors compared to 2011.

Gross profit for the year increased $1.6 million from $21 million in 2011 to $22.6 million in 2012, an increase of 8%. Our gross margin percentage for the year was 69%, a 1% decrease from the year before.

For the fourth quarter of 2012, we reported gross margin of 56%, up from 44% in 2011. The fourth quarter of 2012 includes $671,000 for an increase in reserves and the write-off of expired products.

Excluding these adjustments, gross margin would have been 65% in the fourth quarter of 2012.

In addition, fourth-quarter 2012 gross margins were negatively impacted by increased price discounts for hospital accounts and higher sales of lower gross margin products compared to the prior quarter. Going forward, we anticipate gross margins to be 65% to 70%, excluding the impact of sales to corporate entities.

Sales and marketing expenses decreased to $15.6 million during the year as compared to approximately $18.5 million for 2011. As a percentage of revenue, selling and marketing expenses decreased to 47% in 2012 from 61% in the prior year. The decreases were primarily the result of more variable compensation paid to our direct sales force compared to fixed salaries earned in the comparable period of 2011, as well as the lower corporate sales commission structure for direct sales reps and independent distributors.

G&A expenses increased to approximately $11.1 million for 2012 as compared to approximately $6.9 million for 2011. G&A expenses consist primarily of corporate personnel, non-cash-based stock option compensation related costs, and corporate expenses for legal, accounting, and other professional fees, as well as occupancy costs.

In addition, we incurred higher administrative costs supporting the higher revenue, in addition to added rental and maintenance expense for increased operational space.

On a sequential basis, the fourth quarter of 2012 general and administrative expenses increased approximately $1.3 million due to a decrease in corporate overhead applied to cost of goods sold, the recording of royalty expense as part of the OrbiMed financing, an increase in the allowance for doubtful accounts, and increases in non-cash compensation expense and a small increase in salaries and wages.

2012 nonoperating expense was $2.8 million compared to nonoperating income of $3.4 million in 2011. The 2012 figure reflects increased interest expense associated with the OrbiMed financing, as well as the non-cash write-off of debt discount from prior financings the Company did.

In addition, the warrant derivative liability decreased by $5 million between the two periods due to a decrease in the Company's stock price.

Net loss was $7.7 million or $0.18 per basic share for the year, and this compares to net loss of $2.7 million or $0.07 per basic share in 2011.

EBITDA for 2012 totaled negative $2.6 million compared to negative $3 million last year. Please see the definition and important discussion about the use of EBITDA, a non-GAAP term, in today's earnings release, which is available in the Investor section of our website.

As we mentioned in our press release, we have initiated a Company-wide expense reduction program to align our expense levels with our 2013 revenue guidance. The program will reduce our actual expense levels by $1.7 million for 2013, as well as an additional $1.3 million of planned expenditures which will no longer be made. The reductions are across all the departments within the organization.

Now turning to the balance sheet, in the third quarter of 2012, we announced the closing of a $20 million non-dilutive financing with an affiliate of OrbiMed Advisors LLC. The Company received net proceeds between $9.5 million and $10 million after repayment of existing indebtedness, as well other transaction-related fees and expenses. Net proceeds will be used by the Company for general working capital purposes.

At December 31, 2012, the Company had approximately $4.9 million in cash and cash equivalents and $7.2 million in accounts receivable. If the Company is successful in achieving its revenue guidance, our cash balance is expected to be sufficient to allow us to execute our strategy. However, there is very little cushion to allow for deviations around planned events.

Accordingly, we are currently reviewing a number of alternatives to generate additional cash for the Company, and we will continue to look at ways that we can reduce costs and become more efficient from an operational standpoint.

For a more detailed and complete analysis of our results for 2012, I would like to direct everyone to our Form 10-K we plan to file with the SEC later today, which will be available at www.SEC.gov and via our website.

At this time, I will turn the call over to the operator for questions. Thank you.

(Operator Instructions). Bruce Jackson, Northland Capital Markets.

First, I know this is a tough metric to come up with, but do you have a rough idea of how much of your revenue came from direct sales versus distributors?

About -- it's the same amount that was in the prior quarter -- about a third is coming from the direct sales reps, a third from distributors, and another third coming from the reps working with distributors in certain markets.

Okay. And then there was a stocking order last year. Were there any stocking orders in this current quarter?

No. No stocking orders. That was part of the -- and we highlighted this when we preannounced our revenues. That was part of the reason for the negative variance was that we did expect some large sales to corporate entities to close that did not close.

And then with those particular orders, were they deferred? Do you think that you might get them in future quarters?

They were actually -- there were a couple of them. Some were executed in the first quarter, and others -- I wouldn't say they were deferred; I think another one that we were looking at ended up being a lost opportunity.

Okay. Was there any effect from Hurricane Sandy in terms of your ship days or your sales?

Yes, there was some. Our Northeast sales did suffer by 10% to 20% in that Q4. I think probably two to three weeks were actually probably lost of our Northeast sales.

Okay. And then with your repurchasing contracts, so we brought on Novation in May of last year when we brought on Premier in July. Can you talk to us a little bit about what the pricing dynamic has been with those contracts?

It's mostly good with those contracts, but it gives us a quicker access. It speeds up the sales cycle. But the downside is that more of our sales move through a discount of approximately 15%.

In the beginning of 2012, probably only 20% of our sales moved to the GPO accounts. And by the end of the year, almost all of our major accounts, probably 90% of our sales moved to the GPO accounts. So that was quite a bit of a headwind as well.

And that -- so we would expect that to annualize in the back half of this year.

We do. I think almost all of our sales are moving through them now, I think you've only seen the bulk of that headwind.

Okay. Last question on the operating expense cost savings with the $1.3 million reduction, just to be clear on this, are you expecting your operating expenses to be down $1.3 million year over year or down $1.3 million from what you originally planned for 2013?

No, we expect it to be down $3 million from what we initially planned for 2013. $1.7 million of that is savings of current expenses, and $1.3 million of it are planned expenditures which will not be made.

Okay. Got it.

And that, just to clarify, that those, as I mentioned, those are across the whole organization in terms of those reductions.

Okay. Got it. Thank you very much.

Thanks, Bruce.

Thanks, Bruce.

Anthony Vendetti, Maxim Group.

Just a couple of questions. Guy, I was wondering if you had any update on the antimicrobial products, how that is proceeding.

Yes, that is still moving through. We're still doing our testing on that, but I think given the current regulatory environment, I think we would be looking to a partner to help commercialize that product, to continue the trials and the studies that need to be done to justify or to show efficacy. So I think at this point, as it continues to move through the FDA, we will look for a partner.

Okay. And then can you talk a little bit about the physician-owned distributors, how that is impacting the competitive landscape and what you are doing to try to address these new competitors and just general pricing pressure?

We see most of our competition from distributorships rather than from other processors and other tissue banks. They are a force in the market. We did lose one of our major accounts to a pod. That was probably almost 5% of our 2011 business, somewhere in that range. They continue to get stronger in the market, and we continue to see more of the sales move through the pod channels.

But we are beginning to counter that. We have begun to allow our direct representatives and our sales infrastructure to work with them to supply the various pods around the country. But it's an interesting dynamic in the marketplace. I know the OIG just recently put out a special alert; I think that was yesterday. But it will be interesting to see what the future of those organizations may be, but they are definitely a dynamic in the market right now.

Okay. And then just lastly, the two warning letters from the FDA, you said that's through the OIG. You have a team or consultants working on the response to that, and what is it really surrounding? And is this just -- you have to go through the process, but you expect a successful resolution, or give us a little more color on that?

Yes, sure. The two warning letters -- one was for devices and one was for biologics. We did honor some outside professionals to help us draft that response. We have completed all responses at this time. They have acknowledged the response. We do expect a successful outcome for the two warning letters. They are mostly systems, internal systems, and we had begun already updating our internal systems from the original audit date, and we have put that in our response. I guess the FDA chose not to acknowledge that in the response before they issued the warning letter.

So we have already updated and incorporated a lot of those recommendations into our systems at this point, so we do expect a successful outcome.

Independent of that, we also received an OIG letter specifically referring to a surgeon referral network that had a limited life. It affected a small number of surgeons, approximately six surgeons. It was discontinued quickly after it was started. So we also expect a successful resolution for that.

Okay. Great. Thanks.

Matt O'Brien, William Blair.

I was hoping that we could talk a little bit more about the dynamics in the market right now with your current user base. Guy and John, I think you typically provide the number of surgeons that are using your products. Has that changed? Have you been losing accounts versus gaining more accounts? And just a bit more on the pricing environment. Is it strictly a pod issue, or is there something more going on that you are facing?

In terms of the hospital accounts, we have increased the hospital accounts in the fourth quarter. I think the figure was 1164 for the hospital accounts in the fourth quarter, and that was up from, I think, between 950 or 900 in the third quarter. But as Guy referred to, we did lose a very high, probably top five account for the Company to a physician-owned distributor in the quarter.

So, when you look at the hospital account numbers, your logical conclusion would be, well, why didn't your sales increase if you sell them to more hospitals, but that is certainly skewed by losing that one large hospital account, as well as a few others. But that gives you the metrics from the overall hospital accounts. So we are increasing penetration, but we were negatively impacted by the loss of that key account.

And I think you were dancing around it a little bit before, but can you give us a sense from a revenue perspective how big of a loss that one account was?

Approximately 5%. It's about $1.5 million, $1.7 million.

Okay. So, as we think into 2013 and the guidance you're providing is something like 15% to 20% growth, you just grew 20%; you are losing the bigger account -- I'm sure you lost bigger accounts in 2011, as well, but losing the bigger accounts. You've got the OIG issue to think about, as well as the warning letters, in a more challenging environment from a pricing perspective. Just how can you get comfortable around that guidance that you provided? Is there something on a product line basis that we should be focusing on that will drive a big chunk of that growth?

Yes, the hMatrix product, our dermal scaffold, we do expect that to be 5% to 10% of our sales. We are gaining excellent traction with those surgeons. We have signed up some major accounts already. So that is -- we already signed up an individual account that is about $2 million to $3 million. And so we do think that it's going to be a big driver for us.

We've also partnered with a major hospital chain in the Southwest where we've become a preferred vendor for that chain. Their spend is about $20 million to $25 million on biologics, so we think it's going to be a big driver for our top line as well.

And we continue to partner with some large corporate entities that have the ability to help drive that top line. So at this point, we feel pretty comfortable that we have enough growth initiatives in place, and the major setbacks we've had, lots of those accounts have been attenuated.

Okay. And then, Guy, you mentioned that you were doing some work in Europe. Can you give us a sense for what kind of impact that should be here in 2013 and then maybe even into next year?

Yes, as part of the group we just signed up, they do have access in the EU. And so we expect to get into both the Middle East, the EU, and Russia with that account. So we think that's going to help drive international growth.

We're also expanding quite a bit in South America, Latin America, and also forming a partnership with an Australian group. So yes, we expect our international sales to grow significantly in this year, as well.

Okay, sorry, and just one quick one back on hMatrix. How fast does that product grow in Q4?

I think it was a small percentage in Q4. We really started to see the increase in Q1 of this year, Matt.

Okay. And then last one, John, I think this one is for you. Can you just give us a sense -- I think in the release you mentioned getting to operating profitability here in 2013, and there is a bunch of moving parts. I'm trying to figure out how international impacts the gross margin and then your cost reduction initiatives. But just how with a revenue base of, call it, $39 million we get to profitability this year?

Okay. So if you take a look at it, the gross margins, as I mentioned, we expect to be between 65% to 70%. And that's excluding anything we're doing with these corporate, larger corporate stocking orders.

The corporate accounts will have a negative impact on that number because they are discounted much higher because there is a much higher sales transaction that they are taking risk on. The offset or the mitigating factor against that will be that we will not be paying any sales commission on that.

So the overall gross margin you will see for the year will really depend upon what the mix is of those corporate accounts. But if you take the guidance we have given, if you take a midpoint margin of 67% as the gross margin on that guidance, if you factor in that we expect our sales and marketing expenses to be probably around 39% of sales this year and G&A to come in roughly at 20% to 23%, that would get us that a point where we would have positive operating income, as well as generating positive EBITDA for the year.

Okay. That all makes sense. Any idea for -- with these commission reductions, have you seen any turnover within the salesforce so far?

No, not voluntary turnover. We have eliminated some positions for some low producers. But no, we feel like our turnover issues are behind us, and we feel pretty confident moving forward.

Okay. Great. Thank you so much.

Thanks.

Nathan Cali, Noble Financial.

Just a couple of questions. A lot of them were answered. On the last call, you discussed additional regen medicine technology. Are there any updates there, and do you guys plan to move forward with those -- the amniotic membrane and the nerve products?

Yes, we did just begin commercializing the amniotic product. We are still doing some internal valuations with our key doctors. So we do expect to see an uptick from those products in 2013, the remainder of the year.

The nerve guides are still in development. They are probably going to be in 2014. We continue to work with that, that research partner, but we do expect it to be a minimally processed tissue. And so we do think it will come to market quickly; we are just doing the internal evaluations right now.

Will that be in competition with your hMatrix product, or how does that come into the mix?

No, we think the amniotic can be used in conjunction with hMatrix. We think the hMatrix product has the right handling properties, the right structural strength for filling a lot of those defects where the amniotic does not.

So it can be used as an outer layer membrane. The amniotic can also be morselized and infused into the matrix. So we're looking at it a few different ways. But again, we want to see some clinical efficacy before we jump fullbore into that.

And then back to the pods for just a quick follow-up question there, what are they doing, do you think, to -- what is the dynamic there that they are able to take away accounts from a company like yourself with 75 reps on board? What are they doing different, or what's -- what do you think the aspects are there?

I will leave that to the OIG to investigate. But the pods -- it's well known that physician-owned distributorships participate in the profits of the distributorship. But that's a dynamic. They have been out there for a long time, and that's part of the landscape that our salespeople have to deal with, and we compete on price, quality, and service.

All right.

What we are seeing is that -- Nathan, this is John -- but what we are seeing in certain accounts is that physicians who are no longer part of physician-owned distributorships are deciding because maybe their income is being cut to join with a physician-owned distributor. And that's where in some of these specific instances where the landscape changed for us.

It is not unique to Bacterin. It is really impacting the whole industry at this point in time.

And then the international business, do you guys -- is there any expectation there when you may make an announcement on your first distribution there, or are you already distributing? Can you give us some color on expectations for 2013?

We don't make announcements for every country that we get into, but we have -- particularly we are starting up larger distributors now that might have access or sub-distributorship relationships in, say, 10 or 12 countries at a time. But we have not traditionally made announcements for any specific country that we have recently gotten into.

Is that factor -- is the international business factored into your guidance?

Yes, it is.

And then just one last question. On the international business, what do you expect for margins there? Gross margins?

It will depend upon the product mix, but you're probably looking at probably I would say a gross margin on those sales of about 50%. And correspondingly, what you lose on the gross margin you will not be paying a sales commission on. So you'll make -- the overall impact to operating income is usually only, believe it or not, like a 1% or 2% difference between a traditional sale and one of these sales. But that's how the economics work.

And percentage of business, can you give us some guidance on that for 2013 on international, your percentage of business there, percentage of revenue?

Yes, I don't think it's expected to be a large material portion of it. Maybe 5%.

Okay. All right. Thanks a lot for taking the questions.

Thanks, Nathan.

Thanks, Nathan.

Greg Garner, Singular Research.

A follow-up on some of the discussion on the pods. I'm just trying to better understand that distribution channel. So they are distributing different products, and as the leading product, Infuse, which, you know, is losing share, if that's much more expensive than Bacterin products, I'm wondering is this distribution channel not that price-sensitive then?

I think that it is price-sensitive. We're still obviously less costly than Infuse is, but the price sensitivity comes from the other biologic players that might be selling to that physician-owned distributor.

Okay. And any sense for what percentage of the market share that the pods are doing a good job addressing in the bone replacement?

I think it is typically thought about 20% to 30% of the spine market is moving through the pod distribution channel.

Okay. And given that Bacterin's products are so much less expensive than the Infuse products, what is the current discussions there for the marketing people and the dynamics in talking to new clients or even existing customers? Is performance just assumed and so pricing happens to be the main focus of attention, or is there something else? I'm just trying to understand -- it seems as if there's been a movement in what the criteria is to place orders in the last year, year and a half from performance to more of a pricing.

Yes, I would say, Greg, the market shifted as we expected away from Infuse into allograft tissues and how they -- a safer and robust performance. You're getting statistically equivalent results with our product with Infuse from our small clinical trial that we did, our small clinical study that we did.

And since that market has shifted into that area, the hospital has been more forceful in ensuring pricing. So we are competing against a host of competitors in that space and not necessarily against the Infuse product anymore.

Okay. And your guidance for revenues, does that include any stock orders, corporate stock orders?

Well, the guidance we gave is $38 million to $40 million without the impact of those stocking orders.

Without any -- okay.

And it was also mentioned in the pre-release something about a potential upside with additional sales channels. Is that referencing the international, or was there something else there?

No, that is referencing the sales to the corporate accounts, the stocking order sales to corporate accounts.

Okay. All right. Thank you much.

Bruce Jackson, Northland Capital Markets.

Just one quick follow-up on the product side. So you launched the subchondral bone product at AAOS. Do you have any of that in your guidance for 2013?

Yes, we do. We're getting a pretty healthy response, surgeon response for using the product. We do think that product is probably going to be in the little bit less than 5% range for this year. But we are seeing -- it's going to get good traction, and we do have some papers coming out regarding the success of that product. So we remain quite hopeful for that.

With those papers, where and when do you think those might come out?

It's always a little bit of a crapshoot, Bruce. But I think we do expect them to come out this year. That's about as best of a forecast I can give you.

Okay. Great. Thank you.

[Danny Gettis], private investor.

I was just wondering since we are already near the end of the first quarter if you have any preliminary numbers on what the revenues might be for this first quarter and when your next quarterly earnings report will be for this quarter?

We don't have any preliminary quarterly number for this quarter. The visibility in this business -- and I've mentioned this previously -- is that you find out about the quarter pretty much two weeks after the quarter ends because a lot of the hospital accounts don't get the information as to their usage back to you. So right now we don't have any update from that.

We do plan on -- we don't have a firm date yet, but it will probably be around the first week of May that we would do the conference call.

Thank you.

(Operator Instructions). Nathan Cali, Noble Financial.

Just one quick follow-up question on capital. So expectations for cash burn for 2013, and what was the current debt balance with OrbiMed?

Well, the current debt balance hasn't changed at all because the payments are four years of interest only and three years of principal and interest, so it is still $20 million debt outstanding.

I think from a burn standpoint based upon the guidance that we've given, we're looking at net cash flow -- and this is after repayment to OrbiMed of the interest payments and the royalty payments, you are probably looking at a negative cash flow of about $2 million for the year with the back part of the year becoming positive.

So the long-term portion on the balance sheet of the OrbiMed royalty, that is part of the debt, correct?

Yes. If you go to -- and it's a little complex from a GAAP standpoint, but you would expect to see $20 million as the total debt amount, but if you go to the footnote on long-term debt, you'll see that you take out a debt discount portion of it to get to the balance sheet number. But the cash that has to be repaid is still $20 million.

Okay. Thanks a lot.

Since there are no further questions at this time, I would like to turn the floor back over for closing comments.

Okay. Thank you very much. We appreciate you guys joining us for the call today, and as John mentioned, first-quarter call will be in the first or second week of May. We will have an announcement out to give you the exact date. Again, thank you very much, and we look forward to hearing back from you.

This concludes today's teleconference. You made disconnect your lines at this time, and thank you for your participation.