Enovis CORP Q3 FY2024 Earnings Call

Good day, and welcome to the Enovis Third Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. Please note this event is being recorded. I would now like to turn the conference over to Kyle Rose, Vice President of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us today for our third quarter 2024 results conference call. I'm Kyle Rose, Vice President of Investor Relations. Joining on the call today are Matt Trerotola, Chair and Chief Executive Officer; and Ben Berry, Chief Financial Officer. Our earnings release was issued earlier this morning and is available in the Investors section of our website, enovis.com. We will also be using a slide presentation on today's call, which can be found on our website. Both the audio and the slide presentation of this call will be archived on the website later today. During the call, we're making some forward-looking statements about our beliefs and estimates regarding future events and results. These forward-looking statements are subject to risks and uncertainties, including those set forth in the safe harbor language in today's earnings release and in our filings with the SEC. Actual results might differ materially from any forward-looking statements that we make today. The forward-looking statements speak only as of today, and we do not assume any obligation or intend to update them, except as required by law. For further details regarding any non-GAAP financial measures referenced during the call today, the accompanying financial reconciliation information relating to those measures can be found in our earnings press release and in the appendix of today's slide presentation. With that, let me turn it over to Matt, who will begin on Slide 3.

Thanks, Kyle. Hello, everyone, and thanks for joining us this morning. Let's start on Slide 3. For the first 9 months of 2024, our results are in line with our expectations and reflect the commercial trajectory we expected to see. We've made tremendous progress on the integration of Lima and delivered on our plans for sustainable profitable growth. In the third quarter, we delivered reported growth of 21% year-over-year and 6% on a comparable basis, with a slight FX tailwind. We expanded our adjusted EBITDA margins by 220 basis points, reflecting the mix impact of Recon, the step change impact from Lima, and overall productivity improvements. Overall, we are pleased with our accomplishments through the first 9 months of the year and are confident that we have the new product pipeline and commercial teams in place to close the year strong and set us up for an exciting 2025. Moving on to Slide 4. In Recon, we delivered 57% reported global revenue growth. Recon grew 9% on a comparable basis in the quarter or about 10% when adjusted for our estimated impacts from band integration-related dis-synergies. In the quarter, U.S. Recon grew 9%, including 11% growth in U.S. Extremities and 8% in Hips and Knees. Our U.S. business rebounded in the quarter, in line with our expectations, as our combined commercial organization shifted back to offense, benefiting from the very early stages of our new cross-selling opportunities and key new product launches. In the international market, we grew 8% in a more normalized market environment, while we continue to execute our integration plans. As we've previously communicated, we've been intently focused over the first 9 months on getting our commercial channels aligned and putting the teams and processes in place to execute on our proven strategy of driving sustainable long-term growth. Our integration plans are progressing nicely. We believe we executed beyond the most material revenue-related integration milestones. With the progress we've made, we expect to be comfortably within our initial guidance range of $20 million to $30 million of negative revenue impact. From a pipeline perspective, we are approaching a very exciting period of new product introductions across our Recon business as we lean into the cross-selling opportunities of our combined product portfolio and move into broader commercial launches of our revision cones and knees, augmented glenoid system and shoulders, and fill key portfolio gaps in hips. In the third quarter, we also dated our 2023 acquisition of Novastep. I'm incredibly proud of our Foot and Ankle team. Over the last 4 years, we've successfully integrated 5 lower extremity assets into a comprehensive business unit and global commercial channel that's on track to eclipse $100 million in revenues with consistent growth well above market and an innovation pipeline capable of driving double-digit growth for many years to come. Overall, we're excited about our commercial momentum and product development pipeline. While the third quarter was a strong step forward, we still have significant acceleration opportunities in the coming quarters. Turning to Slide 5 and P&R, our 3% comparable growth reflects a stable market environment and disciplined execution. We continue to work on improving this portfolio and strengthening our market-leading positions. We're doing this by launching new innovations in bracing and recovery sciences and shifting our investments across both portfolios towards higher growth, high-margin, higher-value segments. We look to continue to leverage EGX tools to drive consistent productivity gains, sustainability, and improved portfolio mix. Overall, I'm pleased with our performance through the first 9 months of the year. I'm confident we're positioned for a strong finish to 2024 that sets us up well for 2025 with a renewed focus on growth fueled by a robust lineup of important new product introductions across the business. Now I'll let Ben take you through the P&L details. Ben?

Thanks, Matt. Hello, everyone. I begin on Slide 6. We are pleased to report second quarter sales of $505 million, up 21% versus the prior year and up 6% on a comparable basis, which includes approximately 50 basis points positive currency impact. We are encouraged with the growth acceleration in our Recon business across anatomies, especially in the U.S. market as we've seen positive results from our channel integration efforts executed earlier in the year. Overall, our Recon business grew 9%, with approximately 150 basis points of growth headwinds from integration as we anticipated. Our underlying growth in P&R remained stable, growing at 3%. We continue to realize the benefit from the improving global mix of our business and our margins. Third quarter adjusted gross margin was 58.9%, up 70 basis points year-over-year. This growth was driven by favorable segment mix that includes the addition of Lima. Lima cost synergies continue to positively impact our operating expenses as well. As a result of these benefits, our third-quarter adjusted EBITDA grew 38%, delivering a margin of 17.9%, up 220 basis points versus the same quarter last year. The third quarter effective tax rate was 21% compared to 24% last year. Interest expenses were $11 million for the quarter versus $6 million in 2023. Overall, we posted adjusted earnings per share of $0.73, an increase of 30% versus prior year. Turning to Slide 7, we are narrowing our prior guidance to reflect the results through the first 9 months of the year. We expect revenues of approximately $2.1 billion, tightening our guidance range, and we expect comparable revenue growth of 5% to 5.5%, which contemplates impacts from the recent hurricanes and IV shortages that we've seen in our results thus far in the fourth quarter. As a reminder, the comparable growth rate includes approximately 100 basis points of integration headwinds that we outlined earlier in the year. We remain excited about the ongoing momentum we're seeing across the business and continue to expect acceleration in 2025 with the integration headwinds behind us. We are narrowing our expected adjusted EBITDA range to $373 million to $378 million, resulting in 200 basis points or more of margin expansion versus prior year. We expect interest expense and depreciation to come in at the lower end of the prior range, which is approximately $60 million and $115 million, respectively. Guidance for tax rate and share count remains unchanged from the prior guidance. Taking all of this into consideration, we are raising our adjusted earnings per share range to $2.75 to $2.80, resulting in strong double-digit earnings growth versus last year. To summarize on Slide 8, the third quarter marked a modest acceleration in our growth as our Recon commercial channel stabilized and we began to see some early benefits from cross-selling. We continue to be pleased with our improving business mix and are excited about the new product innovations ramping in Q4 and early 2025. Overall, our 2024 performance continues to track within or slightly ahead of the guidance that we set at the beginning of the year, and we are looking forward to taking another solid step forward as we finalize our plans for 2025. Now I'll hand it over to Kyle to start the Q&A. Kyle?

Thanks, Ben. In an effort to accommodate everyone in the Q&A session and keep things to a reasonable time, we're going to ask the analysts to keep the questions to one question and one follow-up. We'll welcome them to rejoin the queue, and we'll fit them in if we have time. With that, operator, can you please open it up for questions.

The first question comes from Vik Chopra from Wells Fargo. Please go ahead.

Two questions from me. So first was on the synergies. It was nice to see the dissynergy step down in Q3 compared to Q2. Maybe just talk about what we should expect for Q4 and if you expect any of dissynergies in 2025?

Yes. Thanks for the question, Vic. I think what I've said in the past, what continues to be true is that we continue to see a stabilization of the peak of Q2 now being offset by some of the cross-selling that's coming into play. So what we expect to be another step down in terms of impact in Q4, but still a little bit of impact, and then we clear it in 2025 to start off the year clean as we go into 2025.

And then my follow-up question is, as we look at our models for next year for 2025, maybe just talk about how you're thinking about Recon growth next year and any other potential headwinds or tailwinds to call out in 2025?

Yes. From an overall standpoint, again, we've consistently talked about this year having that point or so of negative drag from the integration. As Ben just said, that clears as we step into next year. And then as we put together our guidance for next year, we'll consider the rest of the considerations around market growth rate assumptions, execution, new products, et cetera, to set our plans and the guidance range around those plans, but we remain consistent on the fact that this year has some headwind on it that's going to clear as we step into next year.

The next question comes from Vijay Kumar from Evercore ISI. Please go ahead.

Matt or Ben, could you provide more details on the fourth quarter guidance, specifically regarding our assumptions for the segments? It seems you had some extra days, which suggests we might see at least a couple of hundred basis points of benefit. Is that benefit being countered by IV fluid shortages and the hurricane? Have you already noticed the effects of the fluid shortage, or is this more of an assumption for Q4?

Certainly. As we mentioned earlier, entering Q4, there are many positive developments. However, in the U.S. market, we faced some disruptions in early September due to storms and a slowdown related to the IV fluid shortage. We've accounted for these factors conservatively in our quarterly outlook, not assuming a return to normalcy immediately. As we moved through late October and into November, the market environment has improved significantly, and we're optimistic about the remaining weeks of the year. We anticipate a strong finish in the U.S. markets. We've also been cautious regarding the extra days in this period, as they occur at a unique time when it's difficult to predict their contribution, leading to some uncertainty. Thus, we've aimed to provide conservative guidance as we enter Q4, ensuring we build momentum for the upcoming year.

And I guess, Ben, are we operating above plan in terms of margins? The execution of the operating margin was quite impressive despite the revenue tightening. Regarding the $40 million, is that amount still relevant? Is that range possibly higher now? How much of that was recognized in fiscal '24? As you think about fiscal '25, how much potential for upside is there from synergies?

Yes. Thanks, Vijay. I think what we're seeing is really good consistent execution against our integration plans, which have identified a lot of great opportunities for us and ability to really execute against those. So we're definitely seeing that play out in terms of helping our margin picture, especially in the quarter from some of the actions that we took there. I think as we said earlier in the year, we expected $10 million to $15 million of benefit in this year's synergies. I'd say we're seeing at least that, maybe a little bit more in the year. How much of that plays out into next year, we'll see, and we'll give you updated information on that as we get into 2025. But as I think about the $40 million, I'm very confident that we've identified all of that. If anything, we're working to make that better as we go along.

Next question comes from Robbie Marcus from JPMorgan. Please go ahead.

Maybe to ask this a different way, kind of tie off some of the questions asked already. I guess, how are you thinking about the integration and your process and your success there so far versus the health of the end markets? And I ask because this is now the second quarter in a row where you've had a good quarter but lowered the forward quarter guide, and the fourth quarter is coming in below the consensus on fourth on top and bottom line for fourth quarter. So is there something kind of changing in the underlying growth? Is there any sort of reset? And what gives you the confidence that you'll accelerate into next year when we've seen kind of the forward course move down a touch?

Yes. Thanks for the question, Robbie. So first, for sure, the integration efforts are very much on track, going very well, and we've importantly gotten all the channel integration in the U.S. behind us, which we set out to do quickly and put it behind us. We've gotten about 90% of the channel integration outside the U.S. done. So that larger risk of channel integration is something that we've worked most of the way through, and we've done it within the range of impact that we had signaled from the start. But we always talked about those impacts, the net impact of them being more in the earlier part of the year and less in the later part of the year. As we turn the corner into next year, there is an acceleration opportunity. Now what's going on in the market, I would say, outside the U.S., the recon markets have normalized through Q3 into Q4. They were very strong in the first 2 quarters of the year, and then there's been more of a normalization that took place, and that's continuing here. And we expect that to turn into next year. That's part of what has affected our trajectory through the year for sure. I think the U.S. markets this year have been fine, but they certainly haven't been great. Some of the sequential progress through this year from the market standpoint has been a little bit of an issue as well. Not anything that is changing our ability to execute and deliver within our guidance for the year, but we just try to be as transparent as possible as we step through the year about what our plans are and how we're executing that. We feel very good about how we're executing through the year.

Yes. And I would add to that, Robbie, that we have seen some slowness in the start of the quarter, just given the hurricane impacts and the cancellations of elective procedures due to IV shortages. So we don't expect that to be recovered in the quarter in our latest guide. But if it does, there's some upside there. Overall, I mean, there are some near-term market conditions that we are facing, which we had to contemplate.

Maybe just a follow-up, given that Extremities growth is crucial to the forward progress of the company. I was wondering if you could give us a little more detail on what you're seeing there, broken out by shoulder and ankle, especially within the ASC.

The strong extremities growth; as you can see, the Foot and Ankle performance is extremely strong. We've been driving very strong above-market growth for several quarters here, and we expect that to continue. The shoulder growth has been improving towards market growth when you adjust for some of the integration headwinds that are particularly hitting on the Shoulder front, and we've got our ARG reverse product just starting to ramp. We had a little bit of impact in Q3 from that, and it will really start to ramp in Q4 and into next year. We're confident that with that ARG product in the marketplace, getting beyond the integration headwinds and benefiting from nice synergies with some other shoulder products, we have a great opportunity to get Shoulder quickly back above market growth rates and hold it there. We see very healthy shoulder growth in the ASC. A meaningful part of our Shoulder products are starting to come into the ASC environment, so we're certainly participating in that trend.

The next question comes from Xuyang Lee from Jefferies. Please go ahead.

I guess maybe to follow up and put an echo a little bit, it's $100-plus million NAV growing double digits. I think last year, the business has been around double-digit EBITDA. You recently showcased some new products at conferences and made some updates to start. So wanted this year a little bit about your Foot and Ankle portfolio, where do you think it stands versus the competition, and how is that expansion going in that business? Any thoughts on timelines to get it to the mid-20s range?

We're definitely very pleased with what our teams have been able to do in the Foot and Ankle space. We're doing very well there for a couple of reasons. First is, we have a tremendous product line there between the things we've acquired and the innovation that the team has developed, with a number of very strong flagship products like our DynaNail, for example, and the minimally invasive products we got with Novastep for bunion correction. So we have a good number of flagship products that are true game-changers for our customers. Additionally, we have a high-quality broad range of products like plates and screws. They are crucial in ensuring our channel can serve surgeons completely. Secondly, we have a strong channel alignment. We've worked hard over the first couple of years of that integration to create a strong aligned channel that now is fully dedicated to our product offerings, which drives teamwork and focus enabling us to succeed significantly in the marketplace. Finally, we have great KOL partners helping us with design. We're very pleased with the path we're on and have a really nice pipeline of innovations. Most of our innovations appear to be make-or-buy opportunities, and in some cases, there are acquisition opportunities to consider versus developing things ourselves. While we do not need to buy anything else to succeed in Foot and Ankle, we will likely find bolt-on opportunities that accelerate our path of filling in other opportunities we have there. Margins have been improving as the gross margins are strong at the upper end of our portfolio, and the EBITDA margins have started to climb over the past couple of years. There is still some room to grow in scaling that business.

I guess just in terms of growth next year, it will be fueled by cross-selling and channel integration, but you also highlighted a robust lineup of new products across pretty much all segments. Which new products would you highlight as being more meaningful for next year, and how's the ARG vendor launch going? What should we expect for ARG in 2025?

Yes, thanks. So first, for Shoulder, the ARG is extremely important, and we already see meaningful impact that we can expect in Q4 and significant impact in the first half of next year. The ARG is critical for us in Shoulder; we've received great feedback on it, and we're very excited about its rollout. Second, there are some excellent cross-selling opportunities in shoulder that we'll be pursuing, such as the custom Promat product that is tailored for specific cases. Regarding ARG in shoulder, those who have worked with it have given us fantastic feedback, and I believe it will be a significant contributor next year as we continue to develop that product and roll it out alongside our excellent planning, which will sustain our strong innovation leadership in the shoulder segment. Additionally, revision is still contributing nicely and presents nice opportunities. We expect the next version of ARG to emerge early next year to expand market reach. We've been increasing the number of people utilizing it this year, and we think our NAV platform in knee will become an important element as we progress through next year. Finally, in hip, we've not yet had the complete portfolio necessary in the U.S., but as we enter next year, we will fill in key areas of that portfolio, creating ample opportunity in hip. Currently, only about half our knee surgeons use our hip products, which offers a tremendous opening for us as we expand our hip offerings. We're genuinely excited about our lineup of products. On the P&R side, we have additional knee and spine braces coming through, plus next generations of our laser and chocolate therapy products between this year and next. We've also made strides in clinical and regulatory efforts with some of our Recovery Sciences products, which will help us expand indications and market space. We're thrilled about our product pipeline, contributing to our acceleration from this year into next and beyond.

The next question comes from Jeff Johnson from Baird. Please go ahead.

Ben, I would like to start with two model clarification questions and then ask a broader question. Regarding model clarification, the dissynergies this quarter were around $3 million, correct? Year-to-date, I have you at about $18 million. Did you mention about 100 basis points in the fourth quarter, which would equate to another $3 million to $4 million, putting you at the lower end of the 20% to 30% range? Are my figures on the dissynergy side fairly accurate?

Yes, you're definitely thinking about it correctly.

And did you at all quantify the headwinds you're expecting in 4Q from the storms and the IV fluid, that's the other clarification question? But then from a higher level, I guess, for Matt, not historically, I guess, just conceptually you guys have guided longer term to upper single to low double digits on Recon, 3% to 4% in P&R, we're talking about all these new products for next year but markets may not be quite as strong as you were hoping to hear. As I put together all the puts and pulls, should next year just kind of be conceptually within that longer-term range you've talked about before?

Yes. We're not quantifying at this point the absolute dollars of impact that we've seen. I'd say that it has impacted and it's considered in our guidance and updated guidance that we've given. Overall, I would say we don't expect it to return right now in the quarter. We don't expect any additional impact from future storms or issues. What we've updated our guidance to include is primarily just the tangible impacts we've seen in terms of cases that have been canceled or volume impacted due to the start of the quarter.

Yes. Jeff, in response to your questions about our growth, I believe your description of our long-range plan aligns with our current thinking. We plan to provide guidance that is in line with our previous statements, and despite the challenges we've mentioned this year, we do anticipate a recovery. Last year benefited from favorable market conditions, so it may take some time to adjust our portfolio to achieve the same level of growth we experienced last year.

The next question comes from Brandon Vazquez from William Blair. Please go ahead.

Maybe first one to follow up on a short-term trend; we have a couple of questions about already. As you look into Q4, it sounds like you're baking in the kind of IV shortage and hurricane impacts, maybe a delta a little bit on the Recon growth expectations coming down slightly. I guess, just to push on it and make sure we're understanding it correctly. Typically, when we see an impact like this, ortho cases get rescheduled quickly. Am I understanding it correctly that you're not assuming they'll come back in the quarter? Is there any reason there wouldn't be, or is this simply some conservatism as you wait to see when they come back?

Yes. So first, it's important to mention that many of our businesses were impacted, not just our ortho businesses. When you have things like bracing clinics down due to the storm, that piece of the impact takes a lot longer to recover as patients aren't rescheduled for surgery immediately. They might defer for some time, whereas if a surgery is canceled, it may get rescheduled later. We've seen in such situations, surgery delays can come back quickly for some but take longer for others. Hence, we're observing how that overall plays out. It's also the end of the year, which is typically busy, allowing surgeons to work with packed schedules. Some surgeons will be able to move cases to the end of the year; others may not have the room and have to shift them to early next year. Thus, while we're transparent about how the quarter will unfold, we remain confident about how we'll end the year and the momentum we can build next year.

Okay. And then maybe bigger picture as the businesses are becoming integrated now, and it seems like things are rebounding a little bit. You're moving past the trough of dissynergies; where are you seeing the most strength in terms of new surgeons signing on versus just going deeper into the current surgeon installed base? And how should that trend as we go through 2025?

Yes. We see great opportunities in both adding new surgeons and selling deeper into our current surgeon base, particularly with products like hip. We're optimistic about how our growth can continue as we engage new surgeons and strengthen our penetration within the installed base while still capturing market growth, especially outside the U.S.

The next question comes from Caitlin Cronin from Canaccord Genuity. Please go ahead.

Just starting with Foot and Ankle, you guys are obviously doing well and growing above the market. But what do you see in terms of end market dynamics and procedural demand in that segment?

Yes. I think the question was about Foot and Ankle end market dynamics. We really like the fact that Foot and Ankle is a high single-digit growth end market, and there's still plenty of unsolved issues concerning better solutions. The segment is more fragmented, presenting several unsolved or partially solved problems that we can tackle. This creates positive market growth dynamics and an innovation opportunity, which we find attractive. There is typically a month-to-month or quarter-to-quarter variability in Foot and Ankle compared to larger joints, but we remain confident in our growth fundamentals and innovation potential.

Okay. Given you are launching your improved Hip portfolio of products this quarter and into 2025, how long do you expect the recovery to take in that segment?

Yes. In Hip, our Hip products outside the U.S. perform very well. We have key products launching at the end of the year and into the first quarter. By the time we reach the second quarter, we anticipate seeing a meaningful impact from those efforts. The second half of the year should see an even more substantial contribution from them. Additionally, the acceleration of our Knee line, along with the Shoulder innovation from ARG, will contribute positively to our growth trajectory as we prepare for next year.

The next question comes from Danielle Antalffy from UBS.

Congratulations on a successful quarter. My initial question was going to focus on market growth, but a better way to frame it is this: you're in the process of integrating Lima, which is your largest acquisition to date. It seems like 2020 is shaping up to be a year of accelerating growth. Looking ahead, what are your priorities for capital deployment and where do you see your product portfolio heading? This is a broad question, but...

Thank you for the question. It's an exciting arc that we've been on, transforming our MedTech business from just over $1 billion back in 2018-2019 to now becoming a dedicated company, Nova, with over $2 billion in revenue. We're now comfortably more than 50% in the high-growth, higher-margin Recon segment, which is stabilizing well above market growth rates, and we've cultivated a strong P&R business that consistently grows with single digits and generates solid cash flow. Importantly, our company margins have improved significantly, with even more room for growth ahead. Looking to the future, our core execution fundamentals remain unchanged. We have a much bigger Recon segment focused on rapidly growing through innovation, which drives growth while systematically expanding our gross margin. We are also keen on optimizing our P&R business to grow from low single digits to potentially mid-single digits. Moreover, we will seek bolt-on acquisitions in the ortho space that can accelerate growth, open new markets, and bring key technologies and talent into our operations. Long-term, we envision accessing segments that offer attractive growth and margin fundamentals, as well as adjacent sectors where we can provide immense value. The path from $1 billion to $2 billion has been remarkable, and we're enthusiastic about the journey from $2 billion to $3 billion, which will bring pronounced value to our shareholders as we capitalize on organic and inorganic growth, margin expansions, and ascending cash flow over time.

The next question comes from Mike Matson from Needham & Company.

I just wanted to ask one on the international side. So the Lima integration there, is that sort of lagging where you are in the U.S. a little bit? And do you see any risk of dissynergies there carrying into next year?

No, it's not lagging the U.S. The difference is that we did all the direct channels quickly and really got them behind us by the middle of the year. We started planning for them immensely last year, even before the close. The difference in some hybrid markets where we were direct in one business, being indirect in the other. We've had to step through market by market what's the best solution and timing to maximize the potential. Most of those are finished, though. As I said, about 90% of revenue outside the U.S. has been integrated effectively. While we've been through much of that, there are a few hybrid markets where the right strategy is to take a little more time, but we don't foresee meaningful risk carrying into next year. We're just trying to be transparent that we have a few more markets to work through.

And then just on the Knee side, I know several of your larger competitors have seen a significant mix benefit from cementless knees. Do you have any plans to enter that segment of the market?

Yes. We have cementless knee offerings and have also experienced strong growth in our cemented offerings.

We have a follow-up question from Vijay Kumar.

Ben, maybe one on free cash flow here. The year-to-date trends, is that just due to deal timing? When you look at free cash performance, what is the bill underlying free cash performance if you exclude the noise? And what's the right way to think about free cash flow trends? Should there still be an 80% free cash run rate business?

Yes. Like I've said, we're focused heavily this year on ensuring that we're making the right investments to set ourselves up to integrate Lima well and lean into the growth opportunities as we bring this transformative acquisition into the company. Throughout the year, we've progressed, and I’d say we expect to see even more improvement in Q4 as we finish these heavy investments. We firmly believe we have a pathway to achieve 70% to 80% plus free cash flow conversion over time. Again, next year, we'll still be spending on integration-related items and investing for some of the growth as well. But I'd say, as we think about seeing that progress, you're going to see us take a step forward next year and another step forward a year after that as we work toward that 70% to 80% more steady-state cash flow conversion.

Sorry. Will free cash flow be positive in fiscal '25? Is that a fair statement?

Yes, that's a fair statement.

This concludes our question-and-answer session. I would like to turn the conference back over to Kyle for closing remarks.

I want to end the call by thanking our team members for their commitment to excellence day in and day out. We have a lot of momentum and excitement across the organization and remain committed to delivering value for all of our internal and external stakeholders. Thank you for listening today and for participating, and we look forward to sharing our third and fourth quarter results with you in the new year.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.