Orthofix Medical Inc. Q4 FY2024 Earnings Call

Thank you for standing by. My name is Jeannie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Orthofix Q4 2024 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I would now like to turn the call over to Julie Dewey. Please go ahead.

Thank you, operator, and good morning everyone. Welcome to Orthofix's fourth quarter 2024 earnings call. We appreciate you joining us. I'm Julie Dewey, Orthofix's Chief IR and Communications Officer. Joining me on the call today are President and Chief Executive Officer, Massimo Calafiore; and Chief Financial Officer, Julie Andrews. Before we get started, please note that our earnings release and the supplemental presentation accompanying this call are available on the Events and Presentations page of the Investors section of our corporate website at Orthofix.com. Also, this call is being broadcast live over the Internet to all interested parties, and an archived copy of this webcast will be available in the Investors section of our corporate website shortly after the conclusion of this call. During this call, we'll be making forward-looking statements that involve risks and uncertainties. All statements other than those of historical facts are forward-looking statements. We do not undertake any obligation to revise or update such forward-looking statements. Factors that could cause actual results to differ materially are discussed in our most recent filings with the SEC and may be included in our future filings with the SEC. In addition, on today's call, we will refer to various non-GAAP financial measures. Please refer to today's news release announcing our fourth quarter and full-year 2024 results for information regarding our non-GAAP results, including our reconciliations of these non-GAAP financial measures to our U.S. GAAP results. Additionally, all revenue percentage changes discussed will be on a constant currency year-over-year basis, and all results of operations that we will refer to will be on a non-GAAP as adjusted basis. Moving to today's agenda, Massimo will open with comments on our performance and business updates. Julie Andrews will then review the specifics of our fourth quarter results and our financial guidance for 2025. With that, I'll now turn the call over to Massimo.

Thank you, Julie. Good morning everyone and thank you for joining us for our fourth quarter earnings call. 2024 was a year worth celebrating for Orthofix. We executed against our guidance, strengthened our market position and accelerated innovation across the business. We continue to invest in our most important differentiators, our people, to support our ability to best service our surgeons' needs and deliver excellence and our technology to advance our portfolio pipeline and fuel our growth. We put a new leadership team in place that defines a cohesive, long-term profitable growth plan for our company and aligned our organization with our go-forward strategy. Throughout 2024, this team capitalized on Orthofix's competitive advantages to advance our strategic initiatives, taking advantage of significant gross portfolio commercial opportunities and profitably growing our business. In Spine, we grew our U.S. spinal fixation business more than doubled the market growth rate, including 24% growth in our top 6 implant systems, twice the market growth rate in thoracolumbar fixation, and tripled the market growth rate in interbody and cervical fusion. Demand for our enabling technology was strong and included a record number of 7D FLASH Navigation System placements. 2024 was a record-setting year for our Bone Growth Therapy business. We generated more revenue, manufactured more devices, and supported more surgeons and patients with our life-changing technology than any year in the company's history with BGT. Collectively, we continue to expand our capabilities and build upon our best-in-class status, market share leading position, and market expander in spine and orthopedics. Our orthopedics business also had an excellent year, setting a record for both global and U.S. sales. We are redefining the category of limb reconstruction with a unique portfolio of solutions addressing the most challenging orthopedic conditions in patients of all ages. Under our new business unit leadership, we are executing towards an exceptionally focused strategy that optimizes the impact of our innovative portfolio and enables Orthofix to meaningfully gain traction in the U.S.A. market while growing our position internationally. Across the business, we continue to transform our commercial organization and strengthen relationships with our surgeon partners and their patients. Additionally, we are delivering on an exceptional pace of innovation with a number of key new product introductions across each of our portfolio areas and leveraging our strengths in enabling technologies to continue to differentiate our products in the market. Organizationally, we sharpened our focus and launched new project teams to tackle our Vital Few initiative, the most essential priorities that will enable us to strengthen our market position, equip us to explore new growth opportunities, and win in 2025. With our focus on innovating technologies, a commercial organization dedicated to delivering unrivaled customer experience, and disciplined planning and execution strategies to guide our efforts, we have significantly improved our operating financial position and paved the way for sustainable growth. During 2024, we made significant strides in improving our financial strength, including $21 million in positive free cash flow in the second half of 2024 and negotiating a new term loan with extra capacity, lower rates, and increased flexibility to further optimize the company's capital structure. Finally, we set long-term financial targets that reinforce our commitment to long-term profitable growth, and we are just getting started. Looking ahead, we will continue to focus on our Vital Few initiatives in our long-range plan that we believe will fuel profitable growth and propel our business forward. This includes an innovation focus and continued development of differentiated products to meet the ever-changing surgeon preferences. Our commercial strategy enhancement to drive deeper market penetration through comprehensive portfolio offerings, a technology leadership that harnesses advanced systems for improved surgical outcomes and efficiencies, emphasis on high-quality revenue streams, and operational excellence through growth sustainability and disciplined cash flow management, and strategic financial planning to sustain positive free cash flow. I'm excited and energized about the path we have set for ourselves and the opportunities for the business to deliver exceptional value to our surgeons, their patients, and our shareholders in 2025 and beyond. Now on to the numbers for the fourth quarter of 2024. Our fourth quarter net sales of $215.7 million represent year-over-year growth of 8% on a constant currency basis and reflect record above-market performance across all three major product lines, providing further evidence that Orthofix's balanced and complementary product mix offers a differentiated advantage across multiple markets. We had another quarter of strong adjusted EBITDA margin expansion with positive free cash flow of $15.2 million, far exceeding our original expectations that we set at the beginning of last year. I can confidently say that the business fundamentals are excellent and we have positive momentum to continue leveraging our strategic advantages in 2025 and beyond. U.S. spine fixation grew 12%. Revenue growth was driven by continued strong market demand of the recently launched Reef and WaveForm Interbody products along with the strengthening of our distributor network. More specifically, our lateral portfolio grew 33%, and our ALIF and MIS portfolio both grew at over 19%, all significantly outperforming the market due to increased focus on procedural selling, the addition of new larger, more dedicated distributors, and expanding our relationship with our top distributors. Growth within our Spine segment has been supported by a 30% increase in our global 7D FLASH Navigation System placement in 2024, including a 150% year-over-year increase in the number of earnout agreements. We are leveraging this differentiable platform to create long-standing relationships with our surgeon partners. With continued investment, our next generation advancements in enabling technology and our hardware portfolio will build upon this unique foundation and establish us as a partner of choice for surgeons seeking real-time data-driven intraoperative solutions in the OR. At the end of the fourth quarter, we received FDA clearance for our FLASH EVD, an external ventricular drain cranial navigation product. EVD is a common neurosurgical procedure but can result in a higher rate of catheter placement errors using the standard freehand technique as well as a high rate of infection. FLASH EVD is designed to address these drawbacks. Although the cranial market is not a strategic focus for us, this clearance supports an increased footprint and presence at the hospital for our 7D system. As our enabling technology strategy continues to evolve, we are more confident than ever in its increasingly significant role in our portfolio. New product introductions are a driving force and continue to open doors to new surgeons. Beginning in Q2, we have several product launches planned, including the full launch of Reef L Lateral Lumbar Interbody, an additional solution in our Meridian ALIF portfolio. This new interbody design features our proprietary advanced surface technologies and expands our portfolio of lumbar interbody fusion products to address varying surgeon preferences and patients' anatomies. In parallel, we will integrate our hardware products with access and navigation, creating a comprehensive procedural solution to enhance efficiency and predictability in the OR. We believe that our comprehensive portfolio of spinal hardware, biologics, and enabling technology and a steady cadence of innovation will enable us to attract top sales talent, increase exclusive distributor relationships, and drive stickier relationships with surgeons and hospital accounts, which we expect to result in incremental product pull-through as well as ASP lift from mix benefit. Now to Bone Growth Therapies. Even as we continue to own the #1 market share position in Spine, BGT net sales still grew an impressive 9% overall in Q4. We continue to take market share with more than 50% of the growth coming from new customer conversions, validating our strategy of capitalizing on multiple access points. In addition, investment in the structured market sales channel drove 10% growth in BGT Fracture, with the AccelStim bone growth therapy device continuing to outperform the market. As a reminder, the fracture market represents an opportunity of more than $200 million, and we are still in the very early innings of building our position in the market with a clear goal to become the #1 player. Our BGT business is focused on maximizing our market-leading position with the most comprehensive portfolio and most indications of bone growth stimulation devices in the market. We will continue to focus on cross-selling with orthopedics and spine, add a new market channel with established sales representatives, and drive penetration in the fracture market with AccelStim. Later this year, we anticipate FDA approval for our AccelStim 2.0, which we expect to redefine the recovery experience by engaging patients and surgeons with their prescribed treatment through the STIM on Track mobile app. Our global orthopedics business delivered record net sales in Q4, representing constant currency growth of 18% compared to the prior year. U.S. sales orthopedics benefited from strong execution and grew a record of 21%. Growth was led by the combination of our TrueLok and Fitbone products, as well as growth in the GALAXY fixation product family. We are in the very early stages of expanding into the U.S. sales orthopedics market, which presents incredible growth opportunities given our unique and innovative product lines. Our focus is on areas where we can win, specifically in redefining the category of limb reconstruction, an underserved market that includes Limb Preservation, Deformity Correction, Limb Lengthening, and Complex Fracture Management. As the only company thoroughly focused on limb reconstruction, we have a growing, unique portfolio solution to address the most challenging conditions in patients of all ages. I am excited to announce that we received FDA clearance and CE Mark registration for the TrueLok Elevate Transverse Bond Transport or TBT system, the latest addition to Orthofix's flagship TrueLok family of external fixation devices. TrueLok Elevate is the first FDA-cleared device for TBT and is indicated to correct non-unions and bone tissue deformities or defects, which could include non-healing wounds, ulcers, and deep tissue wounds. According to the American Diabetes Association, over 160,000 amputations occur each year in the United States as a result of diabetic-related complications, representing a sizable market opportunity of approximately $1.2 billion. In addition, published studies have shown that patients with diabetic foot ulcers who receive an amputation have a five-year mortality rate of 7%, and their lifetime healthcare costs amount to just over $640,000 directly related to the amputation. Thus, TrueLok Elevate offers the potential to not only be a limb- and cost-saving device but, most importantly, a life-saving solution to a challenging patient population. The TrueLok Elevate TBT system is currently in limited market release at select centers in the USA and Europe. Orthopedic growth in 2025 will be fueled by a number of new product introductions that we expect to capture additional market share with existing and new customers. These include the TrueLok Elevate TBT system, the Fitbone bone transport and lengthening nail, the ALIF transport nail available in the United States, and the Fitbone Trochanteric Nail. We expect all of these products to be in full market release in the second half of 2025. Underpinning our business strategies are significant cross-portfolio commercial opportunities. The breadth and depth of the Orthofix spine and orthopedics offering provides multiple paths to growth, which the business can sustain above-market rates. We continue to take advantage of opportunities to cross-sell our BGT products into spine accounts as well as introducing spinal hardware, biologics, and navigation to our spine and BGT surgeons. Overall, Orthofix is in a great position to capitalize on our recent product launch success and deliver meaningful innovations to improve outcomes and efficiencies for our surgeon customers and their patients. We remain the market leaders in bone growth therapies, have a comprehensive market-leading biologics portfolio, and differentiated products in several special orthopedic markets, such as complex trauma reconstruction and limb deformity correction. Additionally, our broadened spine portfolio is world-class and is fully supported by highly differentiated and compelling enabling technology. In summary, it's clear that Orthofix's focus on our main strategic pillars and executing a clear strategy for profitable growth is delivering compelling results, and I remain optimistic about the opportunities ahead. At the same time, we are confident that our emphasis on disciplined capital deployment within our business and deemphasizing areas where we have less scale or share will also drive our transformation, support profitable growth, and increase penetration of our technology and product platforms in areas where we can win. As we look to 2025 and beyond, we plan to build on our progress by number one, further sharpening our commercial focus and discipline for margin expansion. Number two, continue to innovate our enabling technology platform to support our renewed procedure focus on spine in particular, deformity; and number three, ensuring we are well positioned to create value for our shareholders over the long term. Our full-year 2025 financial guidance reflects our confidence in sustainable growth trends, the strength of our differentiated and expanding portfolio, which continues to win share, and our commercial strategy and focused execution. I believe we are very well positioned to accelerate our positive momentum and deliver on our commitment to drive disciplined profitable growth and innovation while increasing long-term shareholder value. With that, I'll now turn the call over to Julie to review our fourth quarter financial results and outline our 2025 guidance.

Thank you, Massimo, and good morning, everyone. We delivered record fourth quarter and full-year results in 2024, well above the guidance we set at the beginning of the year and fortified our business for the future. We continued to prioritize investment in innovation, rigorously allocating resources to high-return opportunities to further sustain our share capture in U.S. Spine and U.S. Orthopedics and focus on improving margins and cash, positioning the company for near- and long-term profitable growth. As we look ahead to 2025, we will maintain a heightened focus on disciplined profitable growth and free cash flow generation to build on our financial foundation and prudently deploy capital to create long-term value for our shareholders. I'll now review financial results for the fourth quarter for each of our business units and then discuss our full-year 2025 guidance. Global spinal implants, biologics, and enabling technologies fourth quarter revenue was $116 million with year-over-year growth of 4.5%. The U.S. spine fixation revenue grew 12% over twice the market growth rate, driven by deeper penetration of existing accounts and expansion of our customer base. Moving now to Bone Growth Therapies. BGT revenue grew 9% to $63.9 million in Q4, driven by above-market performance in both the spine and fracture channels. BGT fracture growth was 10% in the quarter driven by investments in the fracture market sales channel. We do expect our BGT growth to remain above market growth rates, but should continue to moderate somewhat as we move forward in 2025 due to our #1 market share position in the BGT Spine business and lapping the gains from surgeons acquired last year. We will continue to focus on adding new surgeons and competitive surgeon conversions in BGT Spine and continue our commercial focus in the BGT fracture market, where we are significantly less penetrated and see a substantial opportunity to drive new business with orthopedic surgeons. The global Orthopedics business grew 18% to $35.8 million in the fourth quarter, led by 21% growth in the U.S. as a result of strong performance across our portfolio as well as distributor expansion and sales channel investments. The international business grew 17% versus prior year. As we've previously said, due to the nature of this business, particularly around the timing and volume of stocking distributor and tender orders, we expect to see variability from quarter to quarter in the growth rate. Non-GAAP adjusted EBITDA of $23.9 million was driven by leverage on sales growth and represented growth at nearly 3x revenue with 130 basis points of margin expansion. We remain encouraged by these results as we are seeing our ability to drive leverage on sales growth materialize as we continue to focus on disciplined profitable growth. From a cash standpoint, our total cash balance, including restricted cash at the end of Q4 increased to approximately $85.7 million. Our free cash flow generation was $15.2 million in the fourth quarter and $21.1 million in the second half of the year, a significant improvement over the negative $30 million in free cash flow in the first half of 2024. This was a result of higher EBITDA as well as improvements in working capital usage. As part of our commitment to prudently deploy capital, we are continuing to actively evaluate and manage our portfolio to ensure that we remain focused on our most profitable growth opportunities. In line with this process, we wanted to highlight a couple of updates that we believe will positively impact our results. First, as we align our orthopedic product portfolio with our focus on redefining the category of limb reconstruction, we are sunsetting noncore products in the U.S. that do not align with this strategy. This impact has been included in our 2025 guidance. We will also be discontinuing the M6, the artificial cervical disc, and the M6L artificial lumbar disc product lines. This product phaseout is in line with our commitment to direct resources to more profitable growth opportunities and as Massimo mentioned, it is another milestone in our transformation and supports our strategic focus on driving profitable growth in areas where we have a differentiated advantage. It is important to note that the sales of the M6 disc have been a headwind to the company's top line growth rate for the past few years, which also factored into our decision to discontinue the product. Global net sales for the M6 artificial discs were $23.4 million in 2024. We plan to provide a full update on the accounting treatment and financial impact for the discontinuation of the M6 product lines on our first quarter 2025 earnings call. I also want to point out that we plan to file an automatic shelf registration statement today. We are putting the shelf on file merely as a matter of good corporate housekeeping and do not have any plans to issue additional new equity at this time. As a reminder, with the debt facility that we put in place in November, we are adequately financed for our current operations. We currently have approximately $83 million in unrestricted cash on our balance sheet along with an additional $115 million in available capacity in our debt facility. We remain focused on pursuing the vital few initiatives that we outlined in our long-range plan that we believe will fuel profitable growth, support achievement of our three-year financial targets as we outlined in November, and propel our business forward. Overall, we are very pleased with our fourth quarter results and our performance in 2024 where all key financial metrics exceeded our expectations. We delivered above-market growth across all business lines, demonstrating the strength of our portfolio. We sequentially improved adjusted EBITDA every quarter, became free cash flow positive well ahead of our plans, and significantly strengthened our balance sheet, all of which underpin our confidence in our ability to deliver long-term profitable growth. Moving on to 2025 full-year guidance. We expect full-year net sales of $818 million to $826 million which excludes sales from the discontinued M6 artificial disc product lines and includes a negative impact from foreign currency of approximately $4 million or 50 basis points on a reported basis as compared to the full-year 2024. These expected net sales represent implied constant currency growth of 6.5% year-over-year at the midpoint of the range. This guidance range is based on the current foreign currency exchange rates and does not take into account any additional potential exchange rate changes that may occur this year. We expect full-year 2025 non-GAAP adjusted EBITDA of $82 million to $86 million. This represents 180 basis points of EBITDA margin expansion at the midpoint of the range compared to 2024. We also expect to generate positive free cash flow for the full-year 2025, excluding the impact of restructuring charges related to the discontinuation of the M6 artificial disc product lines.

This represents a great opportunity for us. We feel very good about our current positioning in the market and the potential for growth, especially in 2025. We expect to drive strong performance across all business units, as reflected in our guidance. I'm excited about the trajectory of our business and the value we can deliver for our surgeons, their patients, and our shareholders.

Hi, good morning everyone. Congrats on a great end to the year. Just a few questions from me. So starting out with the discontinuation of M6. Appreciate that this exit will help improve your overall growth rate, but can you provide us with some more color on why the exit to the business at this time, given your work on the two-level M6 study? Was it the increased competition in the space or other reasons?

Good morning, Caitlin. We are reviewing our overall product portfolio and considering where to invest in 2025 and beyond. We determined that the declining demand for M6 no longer made it a worthwhile investment, especially given our focus on rehabilitation for spine deformities. We wanted to begin 2025 with a much clearer strategy. The decision to discontinue M6 is part of a broader evaluation of our orthopedic products. We felt that the limited two-level indication and reduced demand did not justify its retention. Although this was a difficult choice, our aim is to start 2025 on a stronger foundation with a potential for higher growth moving forward.

Got it. And then with the M6 and other portfolio updates and with others in the industry really throwing their hats in the ring with M&A, what are your current thoughts on M&A? What would be your investment hurdles and what areas would you look to bolster and add to?

Yes. This is a great question. We worked very hard to improve our balance sheet in 2024. So between the strengths that we have right now and the new credit facility, I think that it creates the opportunity for us to look at the market, be patient, and take advantage if something that fits our portfolio comes up. So it's not, let's say, something that we're going to be focused on this year. We are really focused on executing. But compared to 2024, let’s say that we are creating the pace to be ready in these opportunities in the market that fit us, and I feel very good about where we are.

Great. And then just one more quick one on 7D. Any color on the installed base or even the net adds in 2024? Or should we continue to see traction in earn-out agreements?

Yes. We don't give specific numbers, but I can tell you that it was a record year for 7D. The demand stayed very strong. If you see at the beginning when we started with this new management in 2024, we decided to be focused on creating earn-out agreements with different partners around the United States, and the team executed very well. What is crucial is that we keep monitoring how these earn-outs are performing in the marketplace. What I can say is that the vast majority of everything we've done is exceeding our expectations. The fact that we are exceeding the earn-out commitments is creating a higher stickiness between our devices, our products, and the enabling technology. So we are very, very pleased with the performance. That has been 150% higher year-over-year. So 7D is one of the pillars of our strategy moving forward, and I can clearly say that it's delivering.

Hi, good morning, everyone. This is Izzy on for Ryan. Just to start out, I wanted to continue on with the M6 update. I was curious if there is any margin impact that we should be aware of from exiting these product lines?

We will provide more details in terms of the impact that it had on our historical financials on our Q1 call. But we have contemplated the impact in our guidance that we've provided in terms of our EBITDA margin that we've provided this morning.

Got it. Thank you. And then do you guys feel that there are going to be any gaps in the U.S. spine portfolio? And how do you feel about that as a whole?

No. I think that we are not actually discontinuing; we are phasing out the product. So it's going to be available for a little while. But in general, I don't think that it's going to create a big gap for us. Actually, it's freeing up the resources that we need to double down on the pillars of our future strategy, starting with deformity. We felt very hard about this decision, and we believe that it is the most prudent long-term for what we want to accomplish here in Orthofix.

Helpful. And then last one for me. Massimo, you outlined several upcoming product launches throughout 2025. I was curious if there's any one in particular that you're excited for or which you expect will provide the most impact to top line growth? Thanks for taking the question.

Yes. I think, look, I think that if you see our portfolio as a whole, in every single one of our business units, we're going to have some strategic new initiatives and new products this year. Of course, I think that thinking about spine, the introduction and the full commercial launch of our new interbody product is going to create significant leverage for us. If you see 2024 has been a great year for adoption of our cases, so I see this keep continuing. In orthopedics, the launch of our new Elevate system that augments our TrueLok is already creating, just in the chemical space, a lot of positive demand. So a very good level that we're going to have in orthopedics. And of course, in BGT, even being the #1 player in the market, we keep delivering new solutions to our surgeons. I see with AccelStim 2.0 a good boost in the structure side to keep fueling our rate to be the #1 also in the three markets. So I'm very positive and bullish about 2025 and beyond for all our business.

Good morning everyone. Thank you for taking my questions. I have a couple. Julie, to start with you on the 2025 guidance, could you provide an overview of the total revenue challenges included in 2025? I believe there is approximately $20 million from M6 and a $4 million foreign exchange headwind. You mentioned some orthopedics franchise phase-outs. Additionally, did you account for any disruptions in that guidance, particularly regarding potential backlash from existing high-volume M6 users? I have a follow-up on that.

Okay, thank you, Matt. So, yes, our guide, the $818 million to $826 million, it assumes, again, 6% to 7% kind of growth, 6.5% at the midpoint. Last year 2024, M6 revenue was $23.4 million, and then it also assumes about a 50 basis points or $4 million impact from FX. Those are the base assumptions in the guide. We don't expect any significant disruption or dislocation from M6, just in terms of the way that it's sold in the market with, often with different distributors. And then we feel confident in the numbers that we put forward.

Okay. And then I know you haven't guided to 2025 EBITDA, but I think you still landed roughly with all of those aforementioned revenue headwinds in '25. You roughly landed in the same spot we were modeling and consensus was modeling. So I guess the question there is, should we read that as M6 maybe being less profitable than we perhaps thought or are we actually seeing your ability to offset some of that EBITDA dilution with underlying margin outperformance you may be seeing elsewhere?

Yes. So the EBITDA guide for the year was $82 million to $86 million. I think consensus out there was just over $80 million, a little under $81 million. And again, yes, I think this shows the progress that we're making on expanding our EBITDA margins above expectations as well as some of the headwind that was in the M6 profitability.

Okay. And then Massimo, just hoping to get a little bit more out of you on 7D adoption and what you're seeing on that front. I guess, are there any common themes of who is adopting? Are these Orthofix portfolio users today? Are these accounts that perhaps are under-indexed to the broader Orthofix portfolio? And I guess really the most important piece I want to ask is, are you starting to see yet any sort of portfolio pull-through or step up in utilization of 7D at these sites? Really just trying to gauge the long-term portfolio pull-through opportunity as you place more 7Ds. And I can't help but notice spine business has been really strong in the last couple of years. Are we seeing that sort of tailwind from the 7D pull-through? Or is that opportunity still all in front of us? And that's all I had. Thank you.

Thank you, Matt. Look, the opportunity that we have is very large for us. So the 150% year-over-year increase in the earn-out agreements is driven by primarily new accounts. So for us, it's all pretty much new revenue. As I said earlier, what is very encouraging for us is that all of these earn-outs are performing well above where the earn-out was set. All of this translates into higher utilization of our 7D technology with our implants. The further we go with 7D, it’s clear to me that the larger the number of implants that we're going to sell, or the larger the opportunity where the implant and the big is our opportunity to convert surgeons. So for you, for every quarter, every time we talk about earn-outs is an indication of customer conversion.

All right. Thank you so much, everybody.

Thanks, Matt.

Thank you, Matt.

Due to time constraints, that concludes our Q&A session. I will now turn the conference back over to Julie Dewey for closing remarks.

Thanks, everybody, for joining us today. We appreciate your time and interest. If you have more questions, please reach out, and we look forward to talking to you next quarter. This concludes our call.

Thank you everyone for joining. You may now disconnect.