Invacare Corporation
Q3 2019 Earnings Call Transcript

Published: 10 Nov 2019

[Operator:]

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Invacare Third Quarter 2019 Conference Call and Webcast. After the management overview, we will open the call to questions. Investors and analyst interested in asking a question will need to dial-in as questions cannot be submitted via the webcast. For the first part of the call, all phone lines have been placed on mute. The conference is being recorded today Thursday, November 7, 2019.And I would now like to turn the call over to Lois Lee, Invacare's Director of Treasury and Investor Relations.

[Lois Lee:]

Thank you, Savannah. Joining me on today's call from Invacare are Matt Monaghan, Chairman, President and Chief Executive Officer; and Kathy Leneghan, Senior Vice President and Chief Financial Officer.Today, we will be reviewing our third quarter 2019 financial results and providing investors with an update on our transformation. To help investors follow along, we have created slides to accompany this webcast. For those dialing in, you can find a link to our webcast slide presentations at invacare.com/investorrelations. Further information can be found in our SEC filings.Before Matt begins, I'd like to note that during today's call we may make forward-looking statements about the company that by their nature, address matters that are uncertain. Actual future results may differ materially from those expressed in our statements today due to various uncertainties. And I refer you to the cautionary statements included on the second page of our webcast slides and in our first quarter earnings release.For an explanations of items on today's call that are considered to be non-GAAP financial information such as constant currency net sales, constant currency SG&A, free cash flow, adjusted EBITDA, and adjusted net loss, please see the notes in the appendix of our webcast slides and the related reconciliations in the earnings release posted on our website.I'll now turn the call over to Matt Monaghan.

[Matt Monaghan:]

Thank you, Lois and good morning. In the third quarter, we continued to make significant progress in our transformation plan. Our operating and financial results this quarter keep us on track to meet our annual 2019 and our long-term 2020 goals.On slide 4, you'll see we achieved significant improvements in key financial performance metrics over the prior year. The company delivered consolidated operating income of $2.4 million in the quarter, an improvement of $7.7 million compared to last year, driven by a $9.6 million improvement in North America.Consolidated adjusted EBITDA increased significantly to $9.6 million, an improvement of $8.5 million or close to 800%. Stronger profitability was driven by reduced SG&A expenses and higher gross profit despite unfavorable foreign exchange and the impact of tariffs.Constant currency net sales excluding respiratory were up sequentially as expected and essentially flat over prior year as we prioritize margin. And in respiratory with lower sales we again delivered higher margins. Importantly revenue and profit for powered mobility products grew globally as we continue to focus on providing value-added products at the right margins.In North America, mobility and seating revenue grew 4.3% sequentially and modestly compared to the prior year as growth in powered mobility was offset by lower sales of custom manual as we discussed last quarter.Our strategy to pursue higher quality sales and to focus on operational improvements led to stronger profitability on essentially flat revenue. While pleased with the improved margin this quarter, we acknowledge we need to also grow sales. Over the next year, we expect our planned profits improvements and new products will make our portfolio even more competitive and our go-to-market actions will increase commercial effectiveness and grow revenue.Lower SG&A expenses benefited from process improvements and cost reductions that simplify how we do business improve customers' experience and strengthen our competitiveness.Turning to slide 5. The company generated positive free cash flow of $12.3 million, an improvement of nearly $15 million compared to last year and a $12 million sequential improvement. This significant increase was due to higher operating profit and reduced working capital. As a result of our strong free cash flow, we repurchased $16 million of convertible notes during the third quarter at a discount to par reducing the outstanding balance of the 2021 tranche by nearly 11%. This will result in annual cash interest expense savings of $800,000 and the elimination of approximately one million shares of potential dilution on conversion.We believe delevering the balance sheet this way was a good use of cash and increase shareholder value. As we look forward, the expected continued improvement in operating results and free cash flow will give us additional opportunities to strengthen our capital structure.Some of the key initiatives to accelerate our transformation plan are outlined on slide 6. We continue to lead in many product categories with award winning clinical solutions and a very full product pipeline, which is expected to drive incremental sales and stronger profitability. This quarter we again launched industry first in manual mobility with technology that allows us to produce manual wheelchairs with significantly higher performance without increased weight.In addition, we introduced a remarkably well-performing standing positioning system on our center-wheel drive power wheelchair, which gives patients the clinical and social benefits of vertical positions. We also launched the world's first wirelessly remote controlled portable oxygen concentrator, making it the only true hands-free device that users can wear or leave in a stationary position and change setting, check status and battery charge with their smartphone. And our development teams are working on a full lineup of new products across all categories for 2020.Another pillar of transformation is improving operations to expand margins and accelerate profitability. In particular, we are starting to realize the benefit of continued improvements from two plant consolidations into an existing facility in France and we expect additional efficiencies to be achieved. Meanwhile although tariffs remain a slight headwind, we saw a net improvement compared to prior year and we continue to take actions to mitigate the remaining impact.Also a key enabler of our transformation is our recently announced partnership with Birlasoft Solutions, which will give us the platform and modernize our business with flexible IT systems. Working with Birlasoft, we expect to drive operational efficiencies, improve our customers' experience and generate substantial cost savings.Building on system improvements we've made over the past five years in Europe, we plan to roll out the next wave of system improvements regionally with North America scheduled to go live in mid-2020 followed by Asia Pacific and finally linking back to Europe in 2021. Our strategy to adapt our process to how core software works will vastly simplify the implementation and enable us to move swiftly.In summary, our third quarter results reflect the many improvements we have made in the business to drive profitable growth and our continued success in our transformation gives us confidence we remain on track to achieve our annual guidance and long-term objectives.Turning to slide 7. The path to reaching our 2020 long-term remains unchanged. We have a diversified plan that encompasses different regions, product lines and offers many opportunities to transform the business. We continue to drive all business segments and product lines based on their potential to achieve a leading market position and to support our profitability goals. This quarter we made significant progress against many of our objectives including stronger free cash flow and improved profitability in North America, which neared breakeven in the quarter.Turning to our long-term objective, we remain confident in our ability to achieve $85 million to $105 million of run rate adjusted EBITDA by the end of 2020.I'll now turn the call over to Kathy Leneghan to discuss the performance of the segments and additional financial results for the third quarter.

[Kathy Leneghan:]

Thanks Matt. Turning to slide 9. Reported net sales decreased 3.6% and constant currency net sales decreased 0.9%. Excluding respiratory products, constant currency net sales were essentially flat. Consolidated gross profit increased 190 basis points to 28.7%, primarily driven by improved product mix and cost reductions related to material, freight and R&D, partially offset by the negative impact of foreign exchange.Constant currency SG&A improved by $5.3 million or 7.6%, driven by previous cost reduction actions. Operating profit returned to positive territory and improved by $7.7 million to $2.4 million, primarily due to reduced SG&A expenses and increased gross profit, offset by higher restructuring costs and unfavorable foreign exchange.GAAP loss per share was $0.24 as compared to $0.36 last year and adjusted net loss per share was $0.15 as compared to $0.40. The company generated positive free cash flow of $12.3 million, a significant improvement of nearly $15 million due primarily to higher profitability and reduced working capital.Adjusted EBITDA was $9.6 million, an improvement of $8.5 million driven by higher operating income. Finally, convertible debt decreased $16 million as we repurchased 10.7% of the convertible notes maturing in 2021 at a discount to par.Turning to slide 10. During the third quarter, reported net sales in Europe decreased 4.8%, primarily due to unfavorable foreign exchange. Constant currency net sales decreased 0.6% as higher mobility and seating product sales were more than offset by decreased sales of lifestyle and respiratory products. Operating income decreased $400,000 due primarily to unfavorable foreign exchange. The negative impact from foreign currency translation was $800,000.Moving to Slide 11, North America reported net sales decreased 1.9% and constant currency net sales decreased 1.8%. Gross profit increased 410 basis points driven by improved product mix and favorable material costs, despite the impact of tariffs as we continue to focus on higher margin products within the portfolio.Sales of mobility and seating products increased 4.3% sequentially and grew slightly compared to the prior year with growth in powered mobility offset by lower sales of custom manual products. We achieved improvements in gross profit in each of the main categories including respiratory, despite respiratory product sales declines of 8.3% or $1.1 million.Importantly, operating loss improved by $9.6 million or 85% primarily due to reduced SG&A expenses improved gross profit and a focus on higher quality more favorable mix of sales. Returning this segment to profitability is key to our transformation and we continue to make great strides.Turning to Slide 12. Reported net sales in all other which is entirely composed of the Asia Pacific region decreased 0.8% and constant currency net sales increased 3.8% driven by higher sales of lifestyle products.Operating loss increased $700,000 driven by an increase of $1.5 million in non-Asia Pacific expenses related to employment costs including higher stock compensation and onetime professional service costs. However, the Asia Pacific business operating profit improved $800,000 driven by sales growth, gross profit expansion and reduced SG&A expenses.Moving to Slide 13. Free cash flow generation was positive $12.3 million a significant improvement of nearly $15 million compared to last year and a $12 million sequential improvement primarily due to improved profits and reduced working capital.Total debt of $284 million excludes operating lease obligations of approximately $20 million capitalized on the balance sheet as a result of the adoption of the new lease accounting standard which became effective January 1, 2019.During the quarter, the company repurchased $16 million of convertible notes that mature in 2021 at a discount to par. The company's revolving credit facility remains undrawn.The company believes that continued generation of adjusted EBITDA, driven by operational performance, cash balances on hand and expected free cash flow will support the company's ongoing transformation plan and enable us to address future debt maturities.As you can see on Slide 15, we continue to make progress towards meeting our annual guidance. As previously discussed, our second half is historically stronger and this quarter was no exception.During the quarter we delivered significant improvements in gross profit, lower SG&A expenses which resulted in the generation of operating income, higher adjusted EBITDA and positive free cash flow.Based on our visibility into the transformation and the encouraging trends, we are seeing in the fourth quarter, we are confident in our ability to achieve our 2019 annual guidance. Through this quarter, we have accumulated $14.7 million of adjusted EBITDA which puts us on-track to meet our annual guidance of achieving at least $20 million.In addition, we reaffirm our annual guidance of free cash flow usage at or below $25 million. I will now turn the call back over to Matt.

[Matt Monaghan:]

Thanks Kathy. Turning to slide 16. Our path to long-term adjusted EBITDA remains unchanged. Through the first nine months of 2019 in Europe we realized higher profitability from sales growth and the benefit of cost reduction which has been partially offset by unfavorable foreign exchange of $2.3 million.North America operating profit improved to $17.7 million driven by revenue growth in lifestyle products, higher gross profit across all three product categories, cost reduction, including material and operating costs, as well as significant improvements in SG&A spending.These operational and process improvements expanded gross profit by 220 basis points and leveraged SG&A driving favorable results in the region with North America nearing breakeven operating income in the quarter.We've made substantial progress in our transformation and we continue to strengthen our foundation with a solid plan in place to deliver significant improvement throughout the remainder of this year and beyond.We're pleased with the improved performance and remain confident in our ability to meet our long-term objective of $85 million to $105 million of run rate adjusted EBITDA by the end of 2020. We appreciate the continued support of our shareholders and our associates through this process.Thank you for taking the time this morning to participate on our call. We have time to take questions. Savannah?

[Operator:]

[Operator Instructions] And we will take our first question from Bob Labick with CJS Securities.

[Bob Labick:]

Good morning and congratulations. Very nice quarter, obviously strong EBITDA and free cash flow a key proof point in the journey right now. More to come, but congratulations.So I wanted to start -- obviously you've guided for the at least $20 million of EBITDA and just because we're in this transformation kind of getting closer to the end, could you talk a little bit about some of the key revenue drivers and deltas and some of the key cost take outs over the next 12 months?And specifically, kind of how we should be thinking through seasonally softer first half just to give us a sense of timing of what's going to help pick up that North American revenue because as you said costs have come out very well, but you're looking to get that revenue growth. So talk a little bit about that? And then when we might see the next chunks of costs come out?

[Matt Monaghan:]

Yes. Thanks for the question, Bob. Over the next five quarters, we have let's say two layers of kind of cost reduction activities and nearly every day we're looking for ways to improve costs around our enterprise and those happen often in a small fashion.One of the next big bolus of cost to come out will be as we implement our IT system in the various regions which we'll do a lot to integrate business processes of these very disparate business units, we've operated which have resulted from many years of acquisition without integration.So I think it's in North America at the end of the first half, kind of mid way through second quarter. We're going live in North America. We have the normal cut over processes and extraordinary care that goes on as you do some of those things then we would assume we start to see the benefits of that streamlining in third and fourth quarter in North America on that basis.Asia Pacific, along the way although that's more minor. And then Europe at the beginning of 2021, when they go live with the next round of their process improvement.In the meantime we have brand-new products coming out in all categories, I mentioned three today on the call. There are categories -- products coming out in each category that are quite novel over the next year. And I think they come out in relatively uniform fashion nearly every 60 days.So we'll have some small costs coming up uniformly. We'll have some big chunky costs coming out with IT implementations and other consolidation efforts and then we'll see sales growth that's more than seasonal next year with more new products.It will generally be an amplification from now through the end of 2020, as we expect to meet that year-end objective, but not just because things are pushed to the end of our schedule, we may need cost reductions and new product launches to converge here in the first half of 2020 to make that happen.And those products are either nearly complete in design or already under regulatory review. We feel very confident about our product pipeline.

[Bob Labick:]

Okay. Great. Super. Appreciate that color. And then taking kind of a half step back could you expand upon the Birlasoft arrangement and the agreement there? And talk about some of the risks of outsourcing the ERP implementation versus doing it in-house? And what you're doing to minimize those? And how you came up with a plan to work with Birlasoft?

[Kathy Leneghan:]

Yes. So Bob Birlasoft we've entered into an agreement and it has two parts

[Matt Monaghan:]

I think the other thing that made Birlasoft right partner for us. There's so much of IT where we're ambivalent about the specific software that's being used. And we can leverage the expertise for other clients that a provider can do.So Birlasoft isn't just the normal implementation team. They're going to provide really our entire suite of IT solutions as a service to us, where we get the benefit of what they're doing. There's essentially nothing that we do as an enterprise that requires proprietary software. So we're looking at their field as being a world-class provider of the best solutions. And give to us cost effectively.

[Bob Labick:]

Okay, great. That's really helpful. Thanks. And then, last one for me. And I'll jump back in queue. Obviously, you bought back some of the debt at a discount which was great. My question is, are you ready to discuss plans for the 2021 maturities yet?Or is that more of a Q4 thing until we hear -- I know you have plans, but just until we hear about those more is it a topic for discussion now? Or we're going to have to wait until Q4?

[Matt Monaghan:]

I think, we'll talk at the end of Q4. And then we'll update our outlook for 2020. And I'm sure that will be a discussion point that we'll cover in detail.

[Bob Labick:]

Okay, fair enough. Great, thank you very much. Congratulations on a very strong quarter.

[Matt Monaghan:]

Thanks Bob.

[Operator:]

Next we will hear from Matthew Mishan with KeyBanc. Please go ahead.

[Brett Fishbin:]

Hey guys. This is Brett on for Matt. Just two questions from me. First, as we think about the mobility and seating categories specifically, can you provide some thoughts on your ability to accelerate growth in this area particularly in the Americas into 2020?

[Matt Monaghan:]

Sure, Brett. Good question. We have a lot of confidence in our portfolio. And the things that we're doing to be easier to do business with and lower costs so that we can be as competitive as possible in that category. These are complex devices that are configured to a particular individual who's going to use the product. And so there's a fair amount of detail that goes into ordering.We believe we've got tests in place that will occur over the next two quarters to make our ordering process much easier for our customers so that our -- their customers the end users of these products will have a much easier quicker time of getting into our products which should converge around the same timing that we're bringing costs out. And we have many new products in the pipeline.Some of those products were -- one of the key ones that I mentioned right now is a vertical standing system, which is nearly unique on that center-wheel drive power wheelchair which gives the benefit of verticalization.And also the compact design good performance at center-wheel drive, which is pretty novel in the marketplace. So we're looking forward to that. We have other products in the pipeline that we expect to come out in the first and second quarter, to drive that also.

[Brett Fishbin:]

And then, one of your major competitors has been going through some disruption lately? Has this presented any opportunity for market share gains in any areas of the business? And if not could it be an opportunity over the next several quarters?

[Matt Monaghan:]

We always like to be out in the marketplace selling on the strength of our products. Sometimes those conversations are a little easier when product availability isn't universally the same as it has always been.But generally, we look at long-term growth potential of our product portfolio, and the ever-growing skills of our commercial team to be growing revenue over the next year. And we've got a lot of good things not only from products, but from our team members who are doing in the marketplace to make that growth happen more quickly.What you saw in the quarter third quarter on seating and mobility with margin improvement was a real great shift from second quarter, where the sales team did a remarkable job of getting out some new products at that point, which were a little simpler at lower cost and margin.So we've changed that in the third quarter. And while sales didn't grow the margin equivalent was on our after sales margin something like three times that. So we're really pleased with the shift, that the sales team has made in a relatively short period and we think that will result in increasing sales growth and profitability over the next five quarters.

[Brett Fishbin:]

All right, thank you very much, I appreciate it.

[Matt Monaghan:]

Okay, thanks, Brett.

[Operator:]

Next we'll hear from Mike Matson with Needham & Company. Please go ahead.

[Mike Matson:]

Hi. Good morning. Thanks for taking my questions. Just wanted to start with, the chart of slide 15 on the right side, pretty impressive progress there with EBITDA and cash flow year-to-date, I guess what I'm wondering is, I know you're not raising your targets for the year. But just looking at that chart, I'm wondering is there any reason that EBITDA or cash flow would be down sequentially from Q3 in the fourth quarter?

[Matt Monaghan:]

Yes. Actually we have not changed our guidance for the full year. But if you take a look at the seasonality of the business, normally you would see historically that EBITDA is stronger in the third quarter than it is in the fourth quarter.There are also some expenses from a seasonality perspective that you would see in the fourth quarter, and not necessarily in the third quarter. And then, from a cash perspective Q3 cash was very strong. But we would anticipate while we're very comfortable we will not use more than $25 million.Cash flow in Q4 could be less than Q3 because of just timing of sales and the receivables on the balance sheet, investments that we will make on the CapEx side of the house either related to the ERP, or demo equipment. So there can be seasonality when you look at Q3 versus Q4.

[Kathy Leneghan:]

But I think importantly Mike, we -- there's still a ton of moving parts to the transformation. And long ago, we didn't give any guidance at all. So what we want to get in the habit of doing is giving the annual guidance and continuing to maintain that as long as we have confidence in that, even if we see potentially upside or favorability.We want to stick to our annual guidance so that we can drive forward with that consistency and be managing the different moving parts within the business behind that. As Kathy mentioned in our prepared comments we look forward to the fourth Q with reasonable strength and we have a lot of confidence for finishing up the year as we had expected.

[Mike Matson:]

Okay. That's helpful. And then, just another question on Birlasoft, so I guess it was supposed to be $240 million I think over 10 years. So, can you give us any insight into how that's going to ramp over time? Is it pretty -- can, we just kind of straight-line it? And then any comments around the mix there between CapEx and OpEx in that $240 million number?

[Kathy Leneghan:]

Yeah, you really can't straight line the contract. There's going to be higher cost in the first part of that contract, because if you think about it they're going to deliver not only IT as a service, but a new ERP system for the entire company. So costs are much higher in the first part of that contract and then they ramp down towards the end of the contract.In relation to CapEx versus OpEx a portion of it will be software as a service so that would be in OpEx. There are licenses that you have to buy which would be CapEx. So there's a combination really between the two. But probably the majority of it is software-as-a-service that would fit into our FX plan.

[Matt Monaghan:]

Look, Kathy, I think, maybe for a little extra commentary. Because I think, a, lots of companies go out and potentially spend huge dollars on IT implementations and there can be a huge bolus in expense at one period that's very different than a later period. Maybe help Mike understand, the relative balance of expenditures in the near-term compared to what we normally spend on IT.

[Kathy Leneghan:]

Yes if you think -- we don't disclose that specific details of our total IT cost. But if you take a look at the costs that we will taper in regards to this particular contract it actually is still a savings versus our baseline spending. So while $240 million over 10 years seems like a lot of money we currently spend a lot of money on a global basis related to the IT cost.

[Matt Monaghan:]

So at no point Mike, it should have been much different than our historic spending and the savings that we get from this new implementation. We'll start accreting once the implementation is fully up and running which will take us a couple of years.I don't want the listeners to think, it's one of these extravagant projects that cost a fortune in the near-term. And then takes a long time to implement. We've got a very smart program that amazingly keeps IT implementation costs within our normal budget, on an annual basis at every period of time.

[Mike Matson:]

Okay. Thanks. And then, North American respiratory was down about 8% which is -- it's, down but it's down less than we've seen for a while. So do you feel like you're starting to be out of the woods there with regard to these, kind of large double-digit declines?

[Matt Monaghan:]

Yeah. There are kind of two things going on in respiratory I would say. Generally, there's a price -- very price-sensitive part of the market very transactional and then there's a part of the market that's really based on total cost of ownership. Our devices demonstrate typically quite high reliability and continuing to get better.And we like playing a little above the commodity transaction pricing, which is why despite being down 8% again over prior year and prior year was down. Margin continues to go up, which I think demonstrates customers' appreciation for the variability of the devices that we're putting out.And we continue to put technology in our devices to make it more useful for end users, and much better for fleet operators, our customers, over the life of those units. So, I don't know that our sales really reflect, what's going on in the marketplace. But among competitors I think we are finding what the value of our brand and our product is in margins as that kind of segregates out.

[Mike Mason:]

Okay. Great. Thank you.

[Operator:]

And we will take our final question from Chris Cooley with Stephens. Please go ahead.

[Chris Cooley:]

Thank you. Can you hear me okay?

[Matt Monaghan:]

Yes. Good morning, Chris.

[Chris Cooley:]

Thank. Good morning and congratulations on the continued progress. Maybe just one quick one for me, following up there on the respiratory front. Clearly there's good progress being made in terms of reducing operating costs and driving cash flow throughout the business. But on the respiratory side, help us better understand on the deceleration. How much of that was should we say self-inflicted as you focus more on profitable sales versus end market? And then, how should we think about that going into '20 with potential changes there in the monthly oxygen and distributor fleets and the bundling I think we're now seeing you do between HomeFill as well as POC? Thanks.

[Matt Monaghan:]

Yes. Let's see if I can get those two in orders. So, respiratory progress, I guess I'd say it's self-conflicted in the sense that there was no external change in the quarter that drove sales down. There is always a torrent of opportunity in the respiratory marketplace to sell units at very low cost. And around the world, there are various suppliers who have different levels of quality and may be willing to transact at costs lower than we think our products deserve for the value that they provide.And as we continue to add technology into our products, so that they are very reliable even years and can be deployed in our customers' fleets for a very long time, leading to a very low total cost of ownership, we continue to be rewarded with reasonable prices and better margins. And I don't know that we're taking a lot more cost out of the business, we're just seeing margin accretion based on the value of the product.

[Kathy Leneghan:]

Yes, the mix was definitely more towards the 10 liter and the HomeFill products, which are much higher margin products than a five liter which is highly commoditized and we made a decision not to chase volume. We would prefer to have better profits on that line.

[Matt Monaghan:]

And then, your second question I think was maybe hinting at the upcoming competitive bidding and rounds with how those things are being packaged, if I understand that right?

[Chris Cooley:]

Correct.

[Matt Monaghan:]

Yes. So, I don't know if Lois or Kathy want to add to the comments. But I think generally, we think customers have the tools available to meet the right kind of bid responses with the portfolio of products and how that interacts with the pricing that they're awarded and we believe that there's relatively near-term minimum disruption. We don't see anything in the long term, but people are talking about within the near term that seems relatively decent.If product -- if prices and reimbursement goes down any amount what will be rewarded by OEMs are reliability because reliability is improved total cost of ownership and it's less reimbursement anybody would have to really rely on fewer trips, fewer unscheduled trips, fewer things that are not reimbursed for service where we think our brand will be very well regarded.It also helps for HomeFill and non-delivery modalities of oxygen, especially where a lot of miles are required to drive to and from customer locations especially in rural areas to be able to drop off a HomeFill device, which allows many hours of ambulatory oxygen. We have to believe of a battery powered device and complete silence is really attractive. And for people who want a very competitive battery power device, we've got yet another industry first and something that's truly hands-free where someone can wear it on their back because they don't have to touch the button, they can use their smartphones and go about being and living with practically complete independent.And if they want to set it down in a room some place and walk around and do things, they can change the setting of it remotely with their smartphone and has independence within a 25-foot radius in their home, which is really quite a novel feature for us. So, we think we've got good solutions in ambulatory and modalities of care despite potential reimbursement changes and we have good and increasing reliability that supports our brand at the price and margins that we're [indiscernible].

[Chris Cooley:]

Thank you.

[Matt Monaghan:]

Thanks, Chris.

[Operator:]

And that will conclude today's Q&A session. And at this time, I would like to turn the call back to Mr. Matt Monaghan for any additional or closing remarks.

[Matt Monaghan:]

Thank you, Savannah. I'd like to thank everybody for their time and attention on today's call and following our story over the many periods it has been developing. Kathy, Lois and I are available for follow-up questions. You can contact Lois to coordinate that. Thank you. Have a good day.

[Operator:]

And this concludes today's conference. Thank you for your participation and you may now disconnect.