Lemaitre Vascular Inc Q3 FY2024 Earnings Call

Welcome to the LeMaitre Vascular Q3 2024 Financial Results Conference Call. As a reminder, today's call is being recorded. At this time, I would like to turn the call over to Mr. J.J. Pellegrino, Chief Financial Officer of LeMaitre Vascular. Please go ahead, sir.

Thank you, operator. Good afternoon and thank you for joining us on our Q3 2024 conference call. With me on today's call is our CEO, George LeMaitre; and our President, Dave Roberts. Before we begin, I'll read our safe harbor statement. Today, we will make some forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, the accuracy of which is subject to risks and uncertainties. Wherever possible, we will try to identify those forward-looking statements by using words such as believe, expect, anticipate, pursue, forecast, and similar expressions. Our forward-looking statements are based on our estimates and assumptions as of today, October 31, 2024, and should not be relied upon as representing our estimates or views on any subsequent date. Please refer to the cautionary statement regarding forward-looking information on the risk factors in our most recent 10-K and subsequent SEC filings, including disclosure of the factors that could cause results to differ materially from those expressed or implied. During this call, we will discuss non-GAAP financial measures, which include organic sales growth as well as operating income, operating expense, and EPS excluding special charges. A reconciliation of GAAP to non-GAAP measures discussed in this call is contained in the associated press release and is available in the investor relations section of our website, www.lemaitre.com. I'll now turn the call over to George LeMaitre.

Thanks, J.J. I believe this is our first ever Halloween earnings call, so I'll start my remarks appropriately. If a shareholder rang our doorbell tonight, we would have a few treats for their bag: 16% sales growth and 49% EPS growth. With that out of the way, I'll focus on five topics: number one, our top line; number two, the growth of our RSM team; number three, our brick-and-mortar international sales offices; number four, our latest Go Direct efforts; and finally, number five, our MDR, CE Mark progress. 16% sales growth in Q3 was led by graphs, patches, and carotid shunts, which were up 24%, 13%, and 18% respectively. APAC was our strongest region again with growth of 24% thanks to Thailand and Korea, our two newest direct markets. EMEA sales were up 22% in Q3, while the Americas were up 12%. Our 16% sales growth in Q3 was comprised of 10% pricing and 6% unit growth. We ended Q3 with 146 sales reps. As of today, we're at 140, and we're still targeting 155 to 160 for year-end. Of course, as we increase our rep headcount, we get to build out our sales management team. We now have 28 RSMs, ASMs, and managers, which is up 17% year-over-year. As for our brick-and-mortar sales offices, we continue to hire staff in our new Paris office, which contributed to 21% French sales growth in Q3, and we're set to lease our first-ever Swiss office near the Zurich Airport. In China, we recently signed a lease which will bring together our Shanghai Sales office and our Shanghai warehouse into a new larger facility. While we continue to wait for XenoSure cardiac patch approval, our efforts in China are starting to bear fruit, with sales up 62% in Q3. We've also begun to push forward with GoDirect projects in Portugal and Czechia, where we expect hospital sales to begin in 2025. These will be LeMaitre's first European GoDirect project since 2016. Both countries utilized the CE mark and are members of the EU, making the transition less complex. Turning to regulatory matters, we've now received 15 of the 22 MDR CE marks we're currently seeking. The seven remaining MDRs should be received in 2025. One of these approvals is for allograft, our largest U.S. product. We have now received allograft approval in New Zealand, South Africa, Thailand, and Malaysia, and we expect to receive approvals in Singapore, Australia, Canada, and Korea in 2025. Bringing this device to international markets was a key consideration at the time of the 2020 allograft acquisition. I'd also like to take a moment to thank J.J. for his 19 years at LeMaitre. As discussed in our August 8-K, he'll be stepping down as CFO in March 2025 after a fantastic career. J.J. was elected to our Board of Directors in June 2024 for another 3-year term. He is also helping to select and train the next CFO. We retained Russell Reynolds for the search, and interviews are ongoing. In conclusion, 2024 is shaping up to be another year of healthy sales and profit growth. With that, I'll turn the call over to J.J.

Thanks, George. In Q3, pricing and operational execution continued to drive our story. Our differentiated product portfolio enabled a 10% price increase, which helped improve both sales and the gross margin while we continue to restrain operating expenses. In Q3, we posted a gross margin of 67.8%, up 280 basis points year-over-year. The increase was a result of higher average selling prices (ASPs), direct labor efficiencies, and improved RestoreFlow Allograft yields. Higher ASPs were driven by our differed allograft, valvulotome, RestoreFlow, and shunt devices. We are guiding a Q4 gross margin of 68% as direct labor efficiencies continue. For the full year, we expect a gross margin of 68.3%, which is up 260 basis points year-over-year. Operating expenses in Q3 2024 were $24 million, an increase of 11% versus Q3 2023. Year-to-date, our worldwide headcount is up only 4% to 637, reflecting our shift from significant post-COVID rehiring to a more conservative hiring strategy. As a result, Q3 2024 operating income increased 43% year-over-year to $13.1 million, with an operating margin of 24%. For the full year, we also expect an operating margin of 24%, which is significantly up from 19% in 2023. We ended Q3 2024 with $124 million in cash and securities, an increase of $10.8 million. On the August 1 earnings call, we addressed pricing floor questions. Over time, our executive team has become more responsible for pricing decisions as sales representatives have sometimes cut prices on their own. In 2020, we began implementing pricing floors in key European sales managers' bonus plans. In 2021, we began printing U.S. price floors on our company-wide gold cards. And in 2024, we began printing price floors for Europe, Canada, and Japan on these gold cards. As a result, from 2021 to 2024, our average annual price increase has been 9%. For comparison, from 2015 to 2020, our average annual price increase was only 3%. We will continue to utilize this rule as an effective way to realize annual price increases. Generally speaking, this pricing strategy is consistent with our small niche market business plan. Regarding guidance, we are raising our Q4 sales and bottom-line estimates, which are also reflected in our updated full-year outlook. For more details, please see today's press release, but a few Q4 highlights include sales growth of 14% on a reported basis and 15% organically, a gross margin of 68%, operating income of $13.3 million, which is up 30%, and EPS of $0.14 per share, also up 30%. Separately, we would like to welcome Ross Osborn from Cantor Fitzgerald, who initiated coverage on us earlier in October. With that, I'll turn it back over to the operator for questions.

Thank you. Our first question comes from Suraj Kalia with Oppenheimer. You may proceed.

Hi, George. Can you hear me all right?

Yes, Suraj. How are you doing?

I'm doing wonderful. Hope all is well. So George, splitting out the different geographies by growth rate, right? U.S. was approximately 10%. EMEA was about 22%, APAC was 24%, and the composite growth rate was 16%, fine. And 10% of ASP, 6% of units. Can you give us a little more granularity on OUS price increases versus unit increases? How does that split work out?

I don't know if we're going to be able to do that for you live here, Suraj, and I apologize. We've looked at it globally, not by major geography buckets. So I think unless I get a yes from J.J. over here, who usually has more technical answers than me, I’m going to have to say we can pass on that question. It sounds like a reasonable question to ask, and maybe at the next meeting, we should be prepared for that.

Fair enough. I appreciate that. George, in terms of EMEA and APAC. As you ramp up your direct distribution, how should we think about inventory? Obviously, there are going to be fewer distributors, right? Is the logical way just to think about it that inventory currently is not a factor to be considered as we look forward to 2025?

Yes. Certainly, I would say we have so much inventory because we focus on this no backorder promise to our hospital and distributor customers. But yes, in short, we've got plenty of inventory, and we're really only running effectively one shift worldwide right now. So if you really wanted to, you could triple the output at the factory. So inventory is not a problem for us.

Okay. Fair enough. George, my final question, I'll step back in a moment to let others ask, but your operating margin growth has been consistently strong. Can you explain the factors affecting this as we approach 2025, particularly regarding operating margins? What are the drivers? Pricing floors are certainly one aspect that will have an impact. Please provide more insight into how you expect operating margins to expand in 2025 and what the various factors are. Thank you, gentlemen, for addressing my questions.

Suraj, this is J.J. Thanks for the question. So we don't give guidance, obviously, on the upcoming year, and we haven't done that yet. I would say at a high level, you can think of last year and the year before as the rehiring years. And so you saw operating expenses grow pretty quickly. I think it was 20% last year and 16% or 17% the year before. And that slowed down this year nicely. We're looking at 11% in the recent Q3, and then maybe around 10%-ish for the full year. We've done a nice job bringing operating expense growth in line. So you can sort of think about that as you move forward. The gross margin line, you've seen that be in the 65% range in the rearview mirror and more recently over the last three or four quarters coming up into the 68% range. We're not providing guidance on going forward, but hopefully, we can keep up the direct labor efficiencies that are driving that largely. If we do that and grow the top line nicely, then maybe you can expect a nice answer on the bottom line. We'll see where that goes. Thank you.

Thank you. Our next question comes from Rick Wise with Stifel. You may proceed.

Good afternoon, George, and congratulations, J.J., on an impressive performance. To begin, I would like to consider some of the key drivers you mentioned earlier, without any specific order. As we think about 2025, I understand you aren't providing guidance yet, but what kind of bank should we start to think about in relation to unit and price growth and mix? J.J. referenced what occurred in 2020 and 2021, as well as 2022. What is the next lever that will continue to support the price story?

I'll take the high-level side of that, Rick. The strategy itself, I think, is conducive to nice price hikes, generally speaking. The niche product element to our story where you're going to get a valvulotome as part of the story. It's a nice piece of the ASP driver. The fact that we're sort of in the $200 to $2,000 range and not a $30,000 device helps our positioning. The fact that there's no direct reimbursement for our devices means we live under DRG codes for procedures, which I think is beneficial as well. We've sort of now, oddly, it took us this long, we were a little slow on it, but okay, we've got this tool now called pricing floors. We think we can use that going forward to be more precise and more direct about the hikes that we get. It used to be you asked for an 8% hike, and you actually got a 4% hike or whatever the number was because reps were discounting. Maybe we'll be a little more precise with that. I don't know if you want to add to that, George.

No, that's pretty good. That's about what I would say, J.J.

And thank you, J.J., and George, maybe expand on your sales expansion goals. I might have thought you would be able to add more this quarter. I mean, it's an ambitious goal to add that number by year-end. I don't know if it is, just curious about your perspective. How confident are you that you'll get there? And do we expect similar kinds of expansion numbers? Or as we think about next year?

I'll handle the back part of the question first and say, yes, you can. We're not guiding into next year, but we know we have a lot of people lined up currently to be hired. If every last one of them is successfully hired, we would be above that 160. So yes, I would say you can expect further expansion. We see ourselves more and more as a sales channel, and that's what sales channels do as they acquire and leverage resources. That's a little bit why you see us focusing on the brick-and-mortar offices and increasing operations in countries like Czechia and Portugal. Yes, I agree it's a bit slower than we thought, but it's a very reasonable goal. We pointed out today that we're currently at 149, and we're about to bring on five more people in the month of November. I feel comfortable we’ll get there. I keep telling my team that we won’t get thrown in jail if we don’t reach our goal of 155 sales reps. It’s been a topic of conversation, but we feel that our sales numbers and our EPS numbers are paramount and that this will follow as a secondary consideration. I'm not overly worried, but I think we will make it.

Yes, I'll stop there. It's great to see another terrific quarter. Thank you.

Thanks a lot, Rick.

Thank you. Our next question comes from Brett Fishbin with KeyBanc. You may proceed.

Hey, guys. Thanks for taking the questions. Just wanted to ask one on the R&D line, which came in lower relative to the past several quarters. I was curious if there was any type of transitory benefits that you may have seen there or if you're starting to see more of a permanent reduction around some of the higher spending concerning the ERP implementations and regulatory costs that you've been absorbing for the last few years?

Yes. Great question. Yes, I think on the R&D line, the regulatory expense had a lighter quarter. I think we've been spending about $4 million or more per year for the last two to three years. Maybe we're sort of at $12 million or $13 million addition to this spend for MDD MBR. It's coming to a conclusion now, and we might start seeing some benefits from that going forward. We'll see; we certainly did in this quarter.

All right. Super helpful. And then just one follow-up. Maybe I guess the question was reiterated earlier, but if we take it on a global basis, the 6% volume growth of the total portfolio was impressive. I was wondering if there were any products you could call out from a unit volume growth perspective that supported that level of performance this quarter.

Sure. Thanks a lot for the question, Brett. The standout contributor was the RFA and allograft product, which was up 26% in units, while the XenoSure product line was up 10% in units. Together, that accounts for the overall growth percentage.

Thank you. Our next question comes from Jason Wittes with Roth. You may proceed.

Hi, thank you. You guys mentioned some brick-and-mortar developments OUS. Does that also include buying out distributors? Or is that purely de novo in terms of your distribution changes or investments?

Hi, Jason. Yes, the way we ordered it might have been a little confusing, so to clarify, we are targeting two distributor buyouts, one in Czechia and one in Portugal. That's new information for this call. We mentioned it in the last call, but it’s real now, and we’ve had discussions with those distributors. So you'll see us pursuing buyouts in both countries. Separately, markets like China and France have been direct for a very long time. In France, for instance, we opened an office about three to four months ago. In Switzerland, we're about to rent an office near the Zurich Airport. In China, we’re now combining our warehouse and office into an enlarged facility in Shanghai. So the two distributor buyouts are separate from the brick-and-mortar developments you're hearing about this call.

Okay. That's helpful. And then I know we're always asking about pricing because it's impressive. I understand your positioning as a niche player and sort of the only provider for a lot of these unique products. But based on what J.J. said, it sounds like you feel that the change in approach, limiting the sales force's ability to discount, is really what's behind this. It sounds like you also think there's a fair amount of sustainability in the kind of momentum we see—not necessarily the absolute numbers, but at least seeing some impressive pricing. Is that the right way to think about it?

Yes, I think you're right. I believe that in the last six months, we’ve realized that the pricing floors we implemented 3.5 years ago are effective. I don’t think we fully understood the scope of that until we began studying it. Shame on us for not recognizing what we were doing well enough a year and a half ago. But yes, I agree with your assessment.

Okay. That’s good to hear. And then I guess related to that, if I can push you, you may not want to answer this, but when considering your price increases, are they across the board? Or you mentioned your three lead products, which are definitely leadership products for you and the market itself. Is that where most of the price increases have happened, or is it really something that is widespread?

It's a good question. No, it’s not across the board. Roughly speaking, price increases are in about 50% of the categories, particularly in areas where we have higher market share and distinct devices. As you might expect, valvulotomes, shunt, some of the latex-free catheters, and the bovine and ovine grafts are prime examples of priceable products. Meanwhile, products like PTFE and Dacron grafts, where we're ranked third or fourth in the market, do not see the same pricing power.

Okay. Great. And J.J., yes, congratulations on a great run. I agree with the comments here. I just joined again, and I will miss you. But all that said, I got to go trigger-trigger.

Enjoy. Thanks very much.

Thank you. Our next question comes from Danny Stauder with Citizens JMP. You may proceed.

Yes, great. Thanks. I wanted to start on the top line. 16% growth in your hardest comp of the year. You talked about some key drivers for your product categories and regions. But is there anything else you can point to or provide color on that's supporting this progress throughout this year? Are there any unexpected tailwinds in the market in terms of demand? Or is this really just a blocking and tackling story broadly? Thanks.

Underneath the graft category that we referenced earlier, it's worth noting that grafts grew 24%. Specifically, one subcategory called allografts was particularly notable as it was up 47%. We produce various products under RFA and allograft in Chicago. I would say that's a significant driver. Additionally, over in Europe, we continue to observe the exit of companies that have decided not to file their MDRs. This indicates that the product category is not large enough for some and has led to reduced competition. This trend benefits us especially in the shunt category and some biologic patch companies. So allografts, RFA, and the exit of competitors in Europe are major topics for us this year.

I was going to add that you could also mention that Korea and Thailand contributed positively to growth, albeit on a smaller scale. China, which we haven't discussed much recently, is also gaining momentum after a lengthy period. There are some nice developments emerging from China that are starting to show results.

And Danny, this is Dave. I usually don't jump in on these topics, but you heard George mention that we've increased the number of sales managers in the company. We've shuffled some of the upper management organization and our sales managers are now at 28. These are country managers, VPs, area sales managers, and regional sales managers. That's up 17%, which means the ratio of reps to managers is declining. Consequently, the sales reps are likely being managed more tightly.

Great. Appreciate the answer. Just one follow-up for me, more on the sales rep side. Do you have any plans to add more sales reps in Europe given some of the regulatory updates and progress there? I think when you updated your range last quarter, it was more North America-focused. How many of these positions are earmarked for the EU, and do you feel the need to have more bodies in the field with all the progress you've made there?

That's a good insight. Yes, it gives me the opportunity to say that we've shifted our focus a bit. In May and June, we were prioritizing a surge in the Americas, but our perspective has evolved. Currently, I think we have about nine open territories in Europe we're looking to fill. We also have reps to hire in Czechia and Portugal. So yes, we are focusing more on Europe now compared to when we were mostly focused on North America.

Great. Thanks a lot. You all had a great quarter.

Thank you.

Thank you. Our next question comes from Michael Petusky with Barrington Research. You may proceed.

Good evening, guys. George, I'm wondering, I had a note that you guys would make a final submission for XenoSure, the cardiac indication in China in November. Is that still on track for the next 30 days?

Yes, that's a good question. The final submission is in, and now we await confirmation from our regulatory team. They estimate it will take about six months, but you've heard that for six years on these calls, so I'm not certain about the timeline.

Fair enough. So I'm curious in terms of how J.J. transitions to the board over the next six months or so. What are you guys looking for in terms of a potential new CFO? Is it important that they have public company experience, med tech experience, with M&A? What are some of the key criteria you’re evaluating?

You raised a valid point. We are fortunate at LeMaitre. Many companies operate with just a CEO and CFO, but we also have Dave Roberts, our Mega VP of Business Development. We are blessed to have three key leadership figures at the company instead of just two in most firms. Thus, we won't chase down all acquisitions solely through CFOs; we can approach it from a more technical angle. We haven’t sorted out exactly what the split should be concerning IR yet; we'll decide based on who comes to the interview rounds. It's important to note that many companies experience significant loss when they lose their CFO, but for us, having a trio does help.

Excellent. And then, I guess, a quick one for J.J., the subject of the last question. Regarding gross margin, I keep writing, I think these gross margins are sustainable, but I would much rather hear you say that than me. What are your thoughts?

Well, Mike, I'll tell you they are sustainable through Q4 because that's what we guided at 68.0%. So you got that out. Going forward, we’ll see. Price is definitely a significant driver for gross margin, and if we can continue to benefit from pricing, that will positively impact margins. However, RestoreFlow is experiencing high growth, and it has a lower gross margin than corporate, which can drag down overall figures. We also need to manage manufacturing efficiencies and quality costs to get leverage as sales grow. So there are many moving pieces, and we’ll see how that plays out, but these are some larger drivers to consider.

Okay. Great. And could I ask a part B to my last question? If you found that deal, that larger deal—which would be one of the bigger or probably the biggest deal you've ever done—how levered are you willing to get given current interest rates, etc., how deep would you go on a transaction if you thought it was the right one?

We might need to keep our discussion on this one a bit reserved. It sounds like any answer we could provide might scare people off, whatever we say. So I think that’s a hypothetical question we probably shouldn’t delve into, unless one of you feels inclined to address it generically.

The banks will lend you up to 3.5 times combined EBITDA, which serves as a reference point. Beyond that, becoming comfortable with possible scenarios will differ based on the circumstances.

If our EBITDA is 60, then 3.5 turns of that means looking in the $200 million range. We also have excess cash on the balance sheet. So without getting into any complex discussions, we're looking upwards of $300 million in purely financeable means, without worrying about EBITDA or target valuations.

Are there deals available like that? Dave?

Yes. While there are smaller deals around the $5 million and deals in the hundreds of millions, I tend to focus on strategic fit. There are targets out there, and we're at various stages of discussions with some. Meanwhile, we feel confident in our ability to pursue larger acquisitions going forward.

Okay. Could I ask a follow-up to my previous question? If you pursued a larger deal, how receptively leery are you regarding the current economic climate, especially regarding the interest rates?

It's certainly something to consider, but we maintain a focus on strategic fit first. If both strategic acquisitions and pricing align, we'd prefer to pursue larger ones, but that's not always how it plays out. However, there are indeed larger deals under consideration.

Very good. Thanks, guys. Another great quarter!

Thanks a lot, Mike.

Thank you. Next question comes from Frank Takkinen with Lake Street Capital Markets. You may proceed.

Great, thanks for the questions. Congrats on the quarter. When you're explaining the price floor rollout, are there any geographies that you haven't implemented that pricing floor strategy in? Or at this point, is it pretty much rolled out company-wide?

We've gotten through the more significant markets. To enumerate a bit, we have Australia, Japan, Canada, the U.K., and Europe, as well as the U.S. We may have a few others to address and will assess which product lines should apply pricing floors to moving forward. If there are geographical opportunities, we will expand those initiatives.

Fair. Okay. That makes sense. And then just to clarify, and I may have missed it in the prepared remarks, but allograft, in previous calls, you said Ireland and Germany as expected to receive approvals in 2025 and 2026, respectively. Does that still remain the case?

Actually, no. We encountered a few hiccups on both fronts. The hiccup in Germany is minor but noteworthy; the regulator was expected to assess our factory in Chicago around October 15, but they called a week earlier, indicating they would be unavailable that day. They have yet to reschedule, which has put things on hold. I’m uncertain what that means for the timeline; I would consider leaving the year as tentatively 2025 or 2026. Regarding Ireland, a different issue arose. The State of Ireland stepped in and expressed excitement about our intent to launch allografts, but instead of merely performing a paperwork exercise, they now require us to set up a facility and stock the product in Dublin while also granting Ireland's healthcare system the first right of refusal. We find that this process has become quite complicated. We're currently evaluating our next steps with Ireland, which we haven't fully formulated yet. That will take some time.

Got it. Okay. I'll stop there. Thanks.

Thanks a lot, Frank.

Thank you. Our next question comes from Jim Sidoti with Sidoti & Company. You may proceed.

Hi, good afternoon. Thanks for taking the questions. Of the seven approvals waiting for, are there one or two that you think will be more impactful? Or do you view all as being of similar importance?

In fact, I would say the only one that is truly a game changer is the allograft device, as it represents our first-ever approval in Europe. The other six approvals we already have an EU MDD CE mark for, meaning they remain durable until 2027. We are not in a bind to sell those devices. The MDR process is required going forward, and once approved, it becomes changeable, allowing us more flexibility.

Okay. When do you expect that one to come through?

2025. We're starting to estimate that it could be in the first half of 2025.

Good afternoon, George, and congratulations, J.J., on your impressive achievements. I'll begin by discussing some key drivers you mentioned, not in any specific order. As we look toward 2025, and understanding that you may not be ready to provide guidance, what type of bank should we begin to consider regarding the unit and price growth driver and mix? J.J. pointed out the developments from 2020 to 2022. What will be the next factor to maintain the price momentum?

I mean I'll take a high-level side of it, Rick. The strategy itself, I think, is conducive to nice price hikes, generally speaking. So the niche product element to our story where you're going to get a valvulotome as part of the story. It's a nice piece of the ASP driver. The fact that we're sort of $200 to $2,000-ish device and not a $30,000 device helps that as well. And the fact that there's no direct reimbursement really for our devices. We live under DRG codes for procedures, I think that helps that as well. And then as we said in the script, we've now sort of, oddly, it took us this long; we were a little shrugging that, it took us this long but we were like, okay, we've got this tool now called the pricing floors. And so we think we can use that going forward to be more precise and more direct about the hikes that we get used to be; you asked for an 8% hike, and you actually got a 4% hike or whatever the number was because reps are out there discounting. Maybe we can be a little more precise with that. I don't know, George, if you want to add other comments around that.

No, that's pretty good. That's about what I would say, J.J.

Thank you. Our next question comes from Ross Osborn with Cantor Fitzgerald. You may proceed.

Hi guys. Congrats on the strong quarter and thanks for taking our questions. So starting off, I would be curious to hear how you are progressing and targeting cardiac surgeons. And as a follow-up to that, does it make sense to add cardiac-focused reps?

That's a great question. I think we're up to about 14% of our sales now through cardiac sales as opposed to vascular and still some interventional radiology and stuff like that. So we’re at 14%, and we do not have any dedicated cardiac reps right now. It’s something we contemplate, but we haven’t made that leap yet. I still tend to think that we have a larger imperative to fill out our peripheral vascular sales force. As we’ve already discussed, the world is a big place, and 145 reps isn't sufficient. Plus, we've already got 9 products for vascular surgeons as opposed to only two or three for cardiac. Therefore, it's a more efficient call point. However, it is inevitable we will need to develop two distinct sales channels. This need seems imminent, but we shall see.

Got it. Thanks for taking our questions.

Thank you very much and welcome.

Thank you. Ladies and gentlemen, that concludes today's conference. Thank you for your participation, and you may now disconnect. Have a great day.