Luminex Corporation
Q2 2015 Earnings Call Transcript

Published: 4 Aug 2015

[Operator:]

Good day, ladies and gentlemen. And welcome to Luminex Corporation Second Quarter 2015 Earnings Conference Call. My name is Bridget, and I will be your coordinator for today. Today's call is being recorded. At this time, all participants are in a listen-only mode. Following the prepared remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the call over to Matthew Scalo, Senior Director of Investor Relations for opening remarks. Please proceed.

[Matthew Scalo:]

Thank you, Bridget and good afternoon and welcome to Luminex Corporation's conference call for the second quarter 2015 financial and operational results. On the call today are Homi Shamir, President and Chief Executive Officer; and Harriss Currie, Senior Vice President and Chief Financial Officer. We will be following our standard agenda today. Homi will review our second quarter 2015 corporate highlights. Harriss will review the financial performance and our guidance update. And after that we will open the call to your questions. As a reminder today's conference call is being recorded and a replay will be available for six months on the Investor Relations section of our website. Certain statements made during the course of today's call may not be purely historical and consequently maybe forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and the company claims the protections provided by Section 21E of the Securities Exchange Act for such statements. These forward-looking statements speak only as of the date hereof and are based on our current beliefs and expectations, and are subject to known or unknown risks and uncertainties, some of which are beyond the company's control that could cause actual results or plans to differ materially and adversely from those anticipated in the forward-looking statements. Factors that could cause or contribute to such differences are detailed in our Form 10-K for the year ended December 31, 2014, and our quarterly reports on Form 10-Q filed with the SEC. We encourage you to review these documents and we undertake no obligation to update these forward-looking statements. Also, certain non-GAAP financial measures, as defined by SEC Regulation G, maybe covered in this call. To the extent that any non-GAAP financial measures are covered, a presentation of and reconciliation to the most directly comparable GAAP financial measures is included in our earnings release, which is available on our website in accordance with Regulation G. I’ll now turn the call over to our President and CEO, Homi Shamir.

[Homi Shamir:]

Thank you, Matt. Good afternoon. And welcome to our second quarter 2015 earnings call. It has been an extremely productive second quarter and I'm happy to report that Luminex continues to successfully execute against our goals set at the beginning of 2015. Second quarter financial results was strong with total revenue reaching $58.9 million, a new quarterly record and worth pointing out is our fourth quarter is historically the strongest quarter. Second quarter revenue was driven by 22% assay growth sale and 17% growth in royalty revenue. Assay revenue performance was well balanced across the entire portfolio and reflects effective execution of our molecular diagnostic strategy. In addition to a strong topline performance, the favorable product mix continued to drive our industry leading gross margins at 73%. When you combine these with the focus on expense management, Luminex more than doubled its operating profit compared to a year ago. Harriss, our CFO will discuss the quarterly financial results in more detail shortly. Importantly, these results underscored the momentum we are gaining in reaching our goals or focusing the majority of our businesses on molecular diagnostics. You saw the recent settlement announcement with Enzo Biochem and Harriss, our CFO will discuss its one time impact on our second quarter result but this outcome is an overall positive for the company as it removes a significant distraction to management, and enable us to use those resources to execute on our businesses strategy because we are no longer defending any pending litigation. During the quarter, we also made significant progress on advancing our product pipeline. Luminex remain on track to deliver on key development timeline for products, and we will be expanding our customer base. As recently announced in early July, Luminex achieved a major milestone, the submission for FDA clearance of our elegant, game changing, proprietary samples to answer platform ARIES and ARIES HSV 1&2 Assay. We’re pleased to report that this submission was completed ahead of schedule and we anticipate FDA clearance in the fourth quarter. In regards to ARIES assay menu, the clinical trials for the ARIES C.diff assay and Group B strep assay are ongoing. We expect to complete the FDA submissions for both assays before the end of the year. Regarding NxTAG RPP we are planning to submit to the FDA before the end of this month with clearance targeted for the fourth quarter of 2015. During the second quarter, we launched the research use only version of the product and the early customer feedback has been very positive. Luminex is now at a stage in its pipeline program where providing the level of detail per assay like we did with ARIES HSV is not practical. Going forward, Luminex will provide investor a comprehensive and broader view of our pipeline and the company's ongoing progress to update on our quarterly calls and press releases when major milestone are reached. In conclusion, Luminex heads into the second half of the year focused on continue to execute with our differentiated portfolio of platforms and assay, as well as preparing for successful commercial launch of ARIES and NxTAG. Now Harriss, our CFO will review the financial data and afterwards I will offer some closing comments.

[Harriss Currie:]

Thanks, Homi. As Homi mentioned, financially we had a great quarter. Let me tell you a little bit about it. Total revenue for the second quarter increased by 6% over the prior year period. The quarterly growth was predominantly attributable to growth in our assay product portfolio, which grew by 22% for the quarter and growth in royalty revenue, which grew by 17%. For the quarter, the infectious disease assay sales comprised approximately two-thirds of total assay sales with genetic testing sales accounting for the remainder, a similar distribution to the prior year. Second quarter assay growth reflects continued broad based momentum in our infectious disease assay franchise, as well as continued growing demand for our pharmacogenomics product offering. Consumable sales were down 6% for the quarter, slightly better than we expected, however, as we’ve mentioned in previous calls we continue to work through the inventory management issues with the top customer and expect to for the remainder of 2015 and into 2016. Royalty revenues were up for the quarter by 17%, approximately 1.5 of the increase was organic and directly attributable to an increase in reported end user sales by our partners and the remainder is attributable to partner mix, audit findings and minimum payments. In the aggregate, our higher margin items, consumables, royalties and assays comprised 80% of current quarter revenue and influenced the current quarter's favorable gross margins. System revenues were down 21% for the quarter, reflecting changes in system and partner mix, but as expected, our 234 system placements were within the top half of our quarterly range of 200 to 250. Gross margins for the quarter was 73%, sequentially up from 70% in the first quarter, largely due to a shift within our higher margin revenue items. As a function of our higher margin items representing a consistently higher portion of our total revenue, we remain confident in our ability to sustain gross margins at or around 70%. GAAP operating expenses were flat for the quarter. R&D expenses increased 2% from the prior year period and represented 20% of revenue for the quarter. Given our expectations of continued investments in the development of additional ARIES assays we currently expect consolidated R&D expenditures for the full year 2015 to be around 20% of revenue, based on our current revenue guidance range. SG&A costs were essentially flat compared to the prior year period and represented 36% of revenue for the quarter. We anticipate overall SG&A to increase in the second half of 2015 as we expand our customer facing sales and support groups in advance for the launch of the ARIES platform. For the second quarter, GAAP operating margin was 17%, almost double that in the prior year. Non-GAAP operating margin was 24% for the quarter, a 6 percentage point increase over the second quarter 2014 non-GAAP results. The effective tax rate for the second quarter was 10%. We currently expect our full year effective tax rate to be approximately 25% as is reflected in our ETR for the year-to-date period. Absent any other significant discrete items we expect our long-term effective tax rate to settle in the high 20s. For the quarter, we achieved GAAP net income of $2.6 million or $0.06 per diluted share compared with net income of $4.7 million or $0.11 per diluted share in the second quarter of 2014. Please note that GAAP net income for the second quarter includes an expense associated with onetime litigation settlement with Enzo Biosciences of $7.1 million that had an after-tax EPS impact of approximately $0.12 per diluted share. On a non-GAAP basis, we generated net income of $11.6 million or $0.27 per diluted share compared to $8.5 million or $0.20 per diluted share in the prior year period. Now turning to the balance sheet. We generated $16 million of cash and investments for the quarter and ended the quarter with $127.1 million in cash and investments. At June 30, DSO on accounts receivable was favorable at 34 days. Our ongoing expectations are for DSOs to settle in at approximately 45 to 55 days. Considering our first half performance, we're raising the lower end of our 2015 revenue guidance by $2 million to $232 million resulting in a revised revenue guidance range between $232 million and $236 million. Our new 2015 revenue guidance range balances continued execution with respect to our molecular diagnostic assay portfolio, which we expect to grow in the mid to low teens in 2015 offset somewhat on the timing of consumable reorders from our largest partner. Given our run rate for assay revenue over the last four quarters coupled with our expectations for growth, it would appear to be reasonable to expect that annual assay revenues could approach or exceed $100 million for 2015. While we manage the business for the long-term, we want to continue to provide a bit more color on the upcoming quarter. For modeling purchases, we expect total revenues for the third quarter to be between $56 and $58 million slightly down sequentially but predominantly reflecting both seasonality and the timing of our partner and customer orders. I'll now turn the call back over to Homi for some final comments.

[Homi Shamir:]

Thanks Harriss. At the beginning of the year we announced our renewed focus on execution and set specific goals related to the development of our product pipeline. In early July Luminex accomplished a major milestone with the FDA submission of our sample to answer platform ARIES and its first assay for HSV and we continue to work towards the completion of additional FDA submission is outlined at the beginning of the year. Having just come back from the American Association for Clinical Chemistry meeting in Atlanta, I was involved in discussion with potential customer regarding the ARIES platform and was impressed with the eye level of interest from industry participants. I heard lab directors use words like game changer, to describe the platforms functionality and ease of use. It's great to hear that kind of feedback and provides us with additional confidence in a successful market launch upon FDA clearance by year end. Financially, the Company continues to hit its goals and is positioned well to reaccelerate growth through investments in both internal and external activities. In summary, we are focused on execution and delivering our pipeline products to the market. We remain dedicated to transforming the Company into a key player in the molecular diagnostic space, and are tremendously excited about the opportunities ahead. This ends our formal comments. Operator, please open the line for questions.

[Operator:]

[Operator Instructions] Our first question is from Tycho Peterson with JPMorgan. Your line is open.

[Patrick Donnelly:]

Hey, it's actually Patrick Donnelly in for Tycho. Thanks for taking the question. Homi, I guess to start maybe just with the ARIES trial sites, can you talk through the initial feedback, what people are highlighting, whether it is ease of use, throughput time just what you are hearing there?

[Homi Shamir:]

Yes, I think I mentioned it in the script, we're getting very not only in the [shows] [ph] so from some of these sites we installed the machine a few of them are competitive sites with couple of our competitor solution, but we are getting a very good feedback mainly about the workflow, and a few of them even calling it a game changer in workflow. They find it very easy to use, very friendly, and they like what they are seeing it. Again, bear in mind it's not tremendous amount of sites. It's only limited and to remind all of you, at the moment probably a dozen site already with close to 2 dozen system, and we continue to put more system in those sites and as we continue to do the clinical trial in other site as a testing site, but so far it's very, very positive feedback from those sites.

[Patrick Donnelly:]

Okay. And then just on the re-agent rental contracts for ARIES, how are those going to be structured in terms of length? And then what utilization level is going to be needed to reach that corporate margin you guys talked about?

[Harriss Currie:]

Yes, this is Harris. We - likely there'll be three to five year contracts which is typical for a re-agent rental contract and then the length obviously is dependent upon the utilization, and the utilization required obviously to generate the corporate margins we talked about is going to depend on pricing, and pricing is not finalized yet. So, I really can't go any further than that with you right now, until we get ourselves out in the market, finalize pricing and then I can give you a much better feel for the pull through required to support our current corporate margins.

[Patrick Donnelly:]

Okay. And then just looking at timing, it seems like AMP will be a pretty big conference for you guys. I mean any teasers you can provide or any expectations we should have for ARIES at the conference whether it is guidance or anything else?

[Homi Shamir:]

Firstly, we are hoping to get FDA approval by then. That is really our target now to get FDA approval and as soon as we get the FDA approval call it around AMP, we will provide some – giving some guidance what we expect mainly next year of the installation, how many system and what kind of additional revenue we expect at June 2016. But I think AMP especially when it is happening in Austin here, it's our home [court] [ph], we are looking forward to have a really great event here.

[Patrick Donnelly:]

Thank you

[Operator:]

Thank you. And our next question is from Brian Weinstein with William Blair. Your line is open.

[Brian Weinstein:]

Thanks for taking the questions. First off, you guys have talked a little bit about accelerating your preparations for ARIES. Can you just talk about what specifically you guys are going to need to add to get prepared from a sales and marketing or G&A standpoint and how we should think about the growth in the operating expenses as we go into that launch?

[Homi Shamir:]

Yes, I think we mentioned in our previous call Brian that we are adding close to 10 additional sales people. I believe as of today, probably all of them being recruited or let's say 90% have been recruited. We are going to start training them here in the next couple of weeks and we are making them ready to launch the product as soon as FDA will give us the clearance. So, we are getting ready for that. So the impact of the - on our OpEx, as I keep saying, sales guys roughly [indiscernible] between $250,000 around this - a year. Again those people will be mainly impacted so on average four months or you can do the calculation from there.

[Brian Weinstein:]

Okay. And then we talked a little bit about this on the [group] [ph] tour last week but as we think about the launch and potential trajectory of the launch for ARIES, do you think that the HSV 1/2 product as it gets approved is enough to start the process of getting conversions or do you think you will need a broader menu before you start seeing significant uptake?

[Homi Shamir:]

I believe we need slightly broader menu and that's where we are already engaged heavily into additional clinical trial with GBS and C. diff and as we keep saying we believe that by the middle of next year we will have FDA approved at least five assays. Also to remind you, when we launch the product we launch it with at least 10 assay of LDTs or ASR for LDT so that will be a fairly substantial menu. Obviously, initially the first customers or couple of the first customer will be fitting more on what the assays that I just mentioned, but we are also discussed in previous call, we are shifting resources, more and more resources to expedite the acceleration of assay development. So, behind the five assay we will have approved by the FDA by the middle of next year. And I think those assay are good enough to give us a stronghold with some customers. We will have additional dozen assay coming in the next two years. So, that will help us allow to gain market share and expand the market.

[Brian Weinstein:]

Okay. My last question is on the assay revenues; two-thirds of that is infectious disease. I'm wondering if you guys can help frame in rough terms where those revenues are coming from between RVP, how you're seeing the GPP uptake, are you seeing any increase on that, the historical EraGen project, anything that you can kind of help frame the growth for that part would be helpful. Thank you so much.

[Harriss Currie:]

Sure, Brian. We fortunately saw growth across every product group in our portfolio. GPP, RVP, the PGX area, the PGX assays, women's health assay, if we go down the list we saw growth all across the Board in each of those products. As far as distribution across the - for instance the infectious disease distribution, obviously it depends on the season, right, so in the winter months RVP is the lion's share of that. In the summer months, it moves more towards the women's health carrying the load there. Unfortunately the answer is, it depends. Obviously in the genetic portfolio CF is by far the largest component of that portfolio. So I hope that gives you little color there.

[Operator:]

Thank you. Our next question is from Bill Quirk with Piper Jaffray. Your line is open.

[Bill Quirk:]

Great, thanks. Good afternoon everybody. So I guess going back to the pacing of the ARIES launch. Homi, given your comments around the five assays by the middle of next year, is it fair to assume that we should have kind of fairly modest I guess initial placement expectations and that should accelerate with the additional approvals? In other words kind of accelerate in the back half of 2016?

[Homi Shamir:]

Absolutely Bill. I think that’s a right assumption. We will provide more target as we’re trying to be much more open to transparency between what we’re doing. So we will provide the number and also obviously we - this number will be much more aggressive towards the second part of next year. But nevertheless, we’re pushing to put system - some of them even this year, but also the first half of next year. You have to also to remember it stayed couple of months to the user to start ramping up there also utilization. So yes I think your assumption is correct.

[Bill Quirk:]

Okay, sounds good. And then a second question, Harriss, this concerns one of your prepared comments regarding one of the reasons for the royalties accelerating. You mentioned partially due to auditing and I guess forgive me if you mentioned that in the past I guess I don't recall it. Was there anything one-time to call out in the royalty line or I guess asking the question in another way, kind of how sustainable is this recent uptick that we've seen?

[Harriss Currie:]

So on a regular basis, to give you some background, we perform royalty audits on our royalty paying customers and partners. And so on a regular basis, we discover instances of lack of alignment of their payment submissions with those it would be submitted in the event that they accounted for everything. And so, this was a onetime finding for this customer. However, we do these on a regular basis and we see components of these in every quarter, we see these audit findings. We have been talking about these in most of our 10-Qs. Most of the time it happens in the first quarter of each year where royalty minimum happen within royalty audits happen throughout the course of the year so the big bolus that you see is in the first quarter of every year where the minimums are then throughout the year, you see royalty audit findings. And so what we try to do is give you feel for base royalty increase versus findings not that the findings are going to ever go away completely, because again we continually do these audits.

[Homi Shamir:]

But Bill our partners' business, our goal is to push it to be in a - on a annual basis on a globe between 5% to 7%. And we all believe that if royalty we have seen it royalty is going to as close as to the double-digit number, sometimes you need to make those adjustments, but it’s a very strong business for us and we see, we’re monitoring the charge for the last couple of quarters, we can see more and more utilization by our end user. So it's giving us also reason to believe that when we stabilize the issue of the bids, the onetime inventory bid, these business over the partnership will be going to upside to 7% and it’s extremely profitable business to remind all of you.

[Bill Quirk:]

Very good. And then just last one from me is just on the implied fourth quarter guidance kind of assumes at the midpoint anyway a pretty modest sequential uptick in 4Q. So is it safe to say guys, that you are not expecting to see a severe respiratory season? Are you assuming moderate to below average? Just kind of curious what your thoughts are regarding that. Thanks.

[Harriss Currie:]

In our guidance we factored in a moderate respiratory season. We've also factored into our slower quarter guidance in the third quarter obviously a final fall-off in the seasonality of that respiratory season. So we talked about potential for modestly down quarter to third quarter lot of that seasonality based, and a lot of that is timing of partner orders. If you sort of do the math, you would see that at 117 in the first half, 117 in the back half, 234 which is the midpoint of our guidance range right now. And an increased respiratory season would obviously lift you up a little bit faster than expected growth of GPP, the PGX franchise et cetera of two growing franchises, would obviously help lift this up to the top end of that guidance range.

[Bill Quirk:]

Got it. Thanks guys.

[Operator:]

Thank you. And our next question is from Brandon Couillard with Jefferies. Your line is open.

[Brandon Couillard:]

Good afternoon. Harris, could you within the consumables division, spike out the growth ex the one large customer with the inventory issues and has your view around the headwind from that dynamic on the full-year changed at all?

[Harriss Currie:]

Yes, the size of the headwind is we remain comfortable that we’re going to have that - in the neighborhood of that $2 million headwind that we talked about. We’re in round numbers about 40% of the way through that through the middle of the year. The growth absent, the effect of that one customer is about 3% or 4% of consumables in the first half of the year of 2015 obviously over the prior year when you factor them out. So consumables are growing, royalties are growing faster, because the end user sales on an annualized basis were - at about $498 million at the end of the first half. So $0.5 billion of the sales by our partners on an annualized basis at the end of the first half of the year up, about 10% from the prior year, royalties are up an equivalent amount over that over the prior year, royalties the primary indicator of use of our technology in the marketplace, the sales of our technology in the marketplace by our partners. And so we were comfortable that our bid business or royalty business and our partner business in the aggregate is in great shape.

[Brandon Couillard:]

Super. And then, Homi, you mentioned you made some comments about the effects of the Enzo litigation settlement freeing up some resources. Could you elaborate on what exactly you mean in terms of resources internally and perhaps what the cost savings might be from a legal spend perspective from having that behind you now?

[Homi Shamir:]

When you have litigation, it’s taking resources out of the company. R&D people have to be spending their time, management have to spend their time. So we don't are have to worry about that anymore. And I believe on an annual basis we were up and over $2 million plus on expenses there and that’s before we went to trial. So, if you do the calculation we have done fairly well getting it settled there, and moving forward and concentrating in our main business which is [launcheries] [ph] and continue to build the company here.

[Harriss Currie:]

And as you know it gets significantly more expensive the closer to trial you get and so our run rate of expenses would have increased pretty significantly and for us the settlement was in effect an avoidance of future costs and made all of the sense in the world for us to do that put it behind us.

[Brandon Couillard:]

Super. Thank you.

[Operator:]

Thank you. And our next question is from Zarak Khurshid with Wedbush Securities. Your line is open.

[Zarak Khurshid:]

Good afternoon, guys. Thanks for taking my questions. Harriss, can you quantify what that true up in the royalty line was worth on an absolute basis? And then as a follow-up to that, could you give us any flavor for which partners or applications are the stronger drivers of that royalty line?

[Harriss Currie:]

So it was $3.75 million true up about that was in there. The strongest drivers of the royalty line obviously come from our biggest partner, which is Thermo Fisher, formerly One Lambda makes up a the largest percentage of that total. So as they grow royalties grow, our largest partners royalties have grown pretty significantly, up almost right at the double-digit rate in the current year over the prior year. So they continue to have success in the marketplace. The royalties growth absent that one-time charges as Homi mentioned, was just under 10%

[Zarak Khurshid:]

Got it. Thanks for that. And then what's happening with your large CF customer that has threatened to convert to the NGS-based test?

[Homi Shamir:]

They are still assessing when they would like to convert. For sure they're not going to do it this year, probably something it will happen. I cannot say that it is certain into 2016 or 2017, but it's going to happen - we will know better in the next couple of weeks when we have a better visibility on what they need and how they are looking at 2016. I myself anticipate in some of the meeting with them, we will know better. But it's something that we cannot ignore. We need to remember it's going to happen, hopefully it will not happen in 2016, and we can stretch it to 2017, but I cannot at this stage and I'm sure when we provide the guidance for 2016, that will be our on top of the list, if we know anything before that, we will update you during our next quarterly call.

[Zarak Khurshid:]

Sounds good. Thanks for that, Homi. And then last one on free cash flow, looked very strong in the quarter. Can you give us a sense for how you are thinking about that maybe for the rest of the year and then next year as you make some investments around ARIES commercialization? Thanks.

[Harriss Currie:]

So obviously as we mentioned previously we're looking for opportunities in the marketplace that will allow us to accelerate the rate of ARIES assay development. We had a lot of questions about share repurchases, dividends, such like that, but our goal is to initially exhaust the opportunities for really significantly increasing the growth rate of our Company. Should we find ourselves in the future still generating gobs of cash for a company our size, then certainly we'll have to consider again redistribution or distribution back to the shareholders.

[Zarak Khurshid:]

Understood. Thanks

[Operator:]

[Operator Instructions] Our next question is from Dan Arias with Citi. Your line is open.

[Brian Kipp:]

Hi guys, this is actually Brian Kipp on behalf of Dan. Just drilling in on the instrument side, I think you guys said you exceeded the midpoint of your range. But previously I think you had mentioned that there was a push out in orders. So just in light of that, were you still above the midpoint ex those large orders if they did convert or were those further extended?

[Harriss Currie:]

We were within our range, with our without those numbers. The order that was pushed out was a finite number of systems that was in order for future delivery that they then determine the pace of those systems will allow. So with those, the full order, we are within our range and without them we still would have been within our range.

[Brian Kipp:]

Appreciate it. I guess just the weakness there, is there some mix shift in the sense of how you guys are placing instruments, is that accounting for some of the pressure in the quarter or why was it down significantly relative to the growth here in instruments?

[Harriss Currie:]

Can you ask that another way so you can help me out with weakness within our guidance.

[Brian Kipp:]

Yes, I guess just on a q-o-q basis, the further growth we saw in instrument placements up say 40 instruments q-o-q yet modest acceleration in overall revenue growth. What is kind of the dynamic there, the implied ASP are hard to decelerate?

[Harriss Currie:]

Back in prior year we recall we did more than 250 systems in a quarter. Those systems in a prior year, there were some purchases that were made by ex-U.S. partners in order to maintain regulatory compliance of their jurisdiction. Those obviously didn't repeat and a bolus like that in the current year. We also have shifts in mix from LX systems and MAGPIX systems where we're shipping the same numbers of systems, we're shipping a higher number of the lower price systems and a lower number of the higher price systems correspondingly that drives what is a modest decline in revenue for something that's less than 10% of our total revenue at this point. And also there was a modest amount, very small, the BSD Australian subsidiary that contributed its last bit of revenue in the second quarter of last year.

[Brian Kipp:]

Appreciate it. I guess one follow-up too on the ARIES side, now that you guys have placed RUOs 24 instruments around that range, kind of starting to scale up some of the manufacturing processes, are you seeing any bottlenecks ala optics or any other areas where there are concerns where you might need to invest or build out further?

[Harriss Currie:]

We've done some pretty significant manufacturing build out to allow us to produce that very high rate when those volumes result hopefully in the not too distant future. We believe today that we have addressed the bottlenecks that we have identified and think that we are well prepared to meet the anticipated needs going forward.

[Brian Kipp:]

Appreciate the color.

[Operator:]

I'm not showing any further questions. I will now turn the call back over to President and CEO, Homi Shamir.

[Homi Shamir:]

Thank you, Bridget, and thank you all for attending our earning call today. We look forward to seeing you in person in the very near future. Have a great day.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect.