Q3 2019 Earnings Call

Afternoon, ladies and gentlemen, and welcome to the via both from a third quarter 2019, <unk> financial results Conference call.

As a reminder, this call is being webcast live and recorded.

It is now my pleasure to introduce your host Mr. Mark Klausner of Westwicke. Please go ahead Sir.

Good afternoon, and thank you for joining us for the vapor Therms third quarter 2019 financial results Conference call.

Joining us on todays call or baseball terms, President and Chief Executive Officer, Joe Army.

Vice President and Chief Financial Officer, John Landry.

I would like to remind you that this call is being webcast live been recorded a replay of the event will be available following the call on our website.

To access the webcast. Please visit the events link in the IR section of our web site staple term dot com.

Before we begin I would like to remind everyone that our remarks in responses to your questions. Today may contain forward looking statements covered under the safe Harbor provision of the private Securities Litigation Reform Act of 1995.

These statements are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated including those identified in the risk factor section of our annual report filed on Form 10-K for the year ended December 31 2018.

Which was filed with the Securities and Exchange Commission on March 20 to 2019 and in any subsequent filings with the Securities and Exchange Commission.

Such risk factors may be updated from time to time in our filings with the FCC, which are publicly available on our website. We undertake no obligation to publicly update or revise or forward looking statements as a result of new information future events or otherwise unless required by law.

This call will also include references to certain financial measures that are not calculated in accordance with generally acceptable accounting principles were gap.

We refer to these as non-GAAP financial measures.

Reconciliations of these non-GAAP financial measures to the most comparable measures calculated and presented in accordance with gap or available in the earnings press release on the Investor Relations portion of our website.

With that it's my pleasure to turn the call over to baseball terms, President and Chief Executive Officer, Joe Army.

Good afternoon, and thank you for joining us today.

I will begin by discussing the progress we made in Threeq. You then I will hand, the call over to John Landry, our CFO to provide the financial details of our three Q2 thousand 19 results and our revised guidance.

After which I will update you on our key areas of focus for the balance of 2019 before taking questions.

Generally feeling pretty good about how we're doing in building the company. Despite the shortfall in U.S. capital revenue in the quarter Big picture total revenue grew by 15% led by 24% growth disposables.

Gross margins were nearly 45% and our cash burn improvement program is making progress.

Operationally our expanded field sales force is coming along nicely our installed base is tracking to plan.

Our E D guarantee program is gaining traction.

Disposable turn rates are strong year to date.

Our product development efforts were all progressing according to plan.

I'm not sure last quarter.

That's some of our legacy U.S. sales professionals had not been performing to their capital sales program.

I'm pleased to report that this quarter nearly two thirds of these legacy tenured sales professionals grew their installed base. According to our plan.

In addition, last year's expansion class of sales professionals continue to develop in line with our expectations as they progress towards their one year anniversary.

We like how sales pipelines that building as they take multiple quarters to build and art Akita increasing your installed base.

Despite all these positive signs we came in below our U.S. capital revenue expectation for the quarter. The primary reason for the shortfall was the mix of sold versus placed capital units.

During Threeq you saw a higher percentage of place units compared to sold or lease units than we were expecting and as a result, we saw lower than expected capital revenue in the U.S. by approximately $400000.

However, we were very pleased when we looked at the total number of units put into the field in the U.S. What are those units were sold leased well placed.

We have continued to see our installed base grow in line with our expectations. Since Threeq you have 2018, we've seen a greater than 1400 unit or 14% increase in our active U.S. installed base.

As I've shared with you in the past the growth of our installed base is the metric that I focus on the most as this is a key driver of our high margin recurring disposables revenue.

Our focus on the E. D continues to progress well and Hybean I technology is now being used in nearly 300 of the largest ease around the country.

This quarter, our U.S. sales professionals focused on educating customers about our E D guarantee program.

And in the quarter, we signed over 60 of these agreements as a reminder, under this program if a byproduct intolerant patient is placed on the precision flow system and fails, we refund or replaced the disposable.

We believe it's a unique in the market and it's a powerful tool as we continue to change clinical practice and replaced the 20 year gold standard.

We're tracking the results from this program and we intend aren't publishing this data to add real world experience. In addition to the growing body of compelling clinical data that we previously released.

[noise] recall that our third quarter is the slowest quarter of the year.

Disposable turn rates came in at 1.66, which is roughly our historical through your average.

Importantly, our E. B accounts continue to consume disposables at a higher rate than our 90 be accounts.

As we continue to open more of the large you de accounts, we see the potential for the overall turn rate to edge upwards.

We're continuing to forecast with our historical turn rates for the foreseeable future until we established a new baseline for both sold in place capital units.

Our gross margin improvement plan continues to work as planned our three pronged game plan to improve gross margins is simple and well understood by our entire company.

Selling higher clinical value products.

Reducing direct product costs and decreasing our overhead rates per unit produced.

We continue to deliver in Threeq, you well, we have been working steadily to set ourselves up for 2020 and beyond.

The oxygen assist module project, which we formerly referred to as until two also made good progress in Threeq.

Recall that oxygen is a dangerous life sustaining drug with a narrow therapeutic window.

The oxygen assist module will help the clinician to keep the patient in the targeted oxygen saturation range.

We continue to expect to receive the CE Mark on the oxygen assist module in Fourq you enter developing our European limited market release plans, which we expect will occur late in Fourq, you or early in the first quarter 2020.

In the U.S., we expect to file and I'd. He would F.D.A. for the U.S. clinical trial later this year and have determined the clinical study sites that will participate in this important trial.

Three quarters of the way through the year, we're feeling good about the business in the work we are doing to set our company up for continued success in 2020.

Well there was disappointing to miss on our US capital equipment revenue. We're encouraged that we kept the installed base growth on track, which sets us up to continue to grow margin and recurring disposables revenue.

Gross margins are nearly 45% and our cash burn improvement plan is beginning to yield results.

Operationally the EDI focuses working disposables revenue growth and turns have been strong year to date, we anticipate full market release of new disposable products in 2020.

And the oxygen assist module development efforts are on track.

Now I'll turn it over to John Landry, our CFO to provide a financial review John .

Thank you Joe.

Revenue in the third quarter, 2019 was $10.8 million, representing a 15.1% increase over revenue of 9.4 million in the third quarter 2018.

Total U.S. revenue was 8 million, representing an increase of 6.6% over the third quarter of 2018, primarily due to 16.2% increase and disposable revenue as a result in the larger installed base of precision flow units and higher average selling prices.

This increase in disposable revenue was partially offset by a decrease in revenue generated from the sales the precision flow units on a year over year basis.

Total international revenue was 2.8 million, representing an increase of 49.8% over the third quarter of 2018, primarily due to an increase in disposable revenue as a result, a larger installed base of precision flow units and higher average selling prices and to a lesser extent increases in service and other revenue.

Capital revenue, including revenue from both product sales and lease revenue was 2.5 million in the third quarter of 2019, representing a 7% decrease over the prior year.

The U.S. capital revenue was 1.9 million has compared to 2.1 million in the third quarter of 2018, primarily due to fewer sales the precision flow units and to a lesser extent slightly lower average selling prices.

International Capital revenue was 647000 in the third quarter of 2019, an increase of 77000 over the third quarter of 2018.

Disposable revenue was 7.8 million in the third quarter 2019, representing a 24.3% increase over the third quarter 2018, and was primarily driven by an increase in our worldwide installed base of precision flow units and higher average selling prices.

During the third quarter of 2019, we sold roughly 79000 disposables worldwide.

Disposal revenue was 6 million in the U.S. compared to 5.1 million in the third quarter of 2018, representing 16.2% growth year over year.

Disposable turn rates were consistent in the U.S. on a year over year basis, while average selling prices increase roughly 2%.

International disposable revenues 1.9 million compared to 1.2 million in third quarter of 2018, representing growth of nearly 60%.

Proposal average selling prices and our churn rates in international markets for both higher on a year over year basis.

Worldwide service revenues 464000 in the third quarter of 2019 of this amount 202000 was generated in the U.S. and 262000 was from international markets, which increased due to greater service revenue generated in the UK.

Gross profit in the third quarter of 2019 was 4.8 million an increase of 1.2 million over gross profit of 3.6 million in the third quarter of 2018.

Gross margin was 44.5% in the third quarter of 2019 compared to 38.5% and the third quarter of 2018. The increase in gross margin was driven by decrease and disposable component cost in comparison to the third quarter of 2018 reduced overhead rates per unit, a favorable sales mix of disposables.

And increased average selling prices.

Research and development expense was 3.3 million in the third quarter of 2019, an increase of 1.5 million over the prior year.

The increase in research and development expense was primarily due to new product development costs associated with our oxygen assist module and next Gen Hybean AI platform and to a lesser extent an increase in research and development personnel related expenses.

Sales and marketing expense was 9.2 million in third quarter of 2019, an increase of 1.4 million over the prior year. The increase in sales and marketing expense was primarily due to the fourth quarter 2018, U.S. salesforce expansion and corresponding compensation travel and employee related expenses.

And other sales and marketing initiatives.

General and administrative expense was 4 million in the third quarter of 2019, an increase of 1.2 million over the prior year.

The increase was primarily due to public company related cost, including increased headcount employee related expenses legal advisory and consulting fees.

Net loss in the third quarter of 2019 was 12.8 million or 65 cents per share compared to 9.5 million or $10. A 90 cents per share in the third quarter of 2018.

Adjusted EBITDA for the third quarter of 2019 was negative 10.7 million compared to negative 8 million in third quarter of 2018.

Adjusted EBITDA adjusted for foreign currency gains or losses net interest expense changes in the fair value of warrant liabilities, depreciation and amortization expense and stock based compensation.

The 2.7 million increase in adjusted EBITDA loss in the third quarter of 2019 was primarily due to higher operating expenses, partially offset by higher gross profit.

As of September Thirtyth, 2019, cash and cash equivalents were 83.5 million compared to 46.1 million has at the end of June 2019, and 58.2 million as of the end of December 2018.

We completed a follow on offering in August resulting in net proceeds of 48.3 million.

Including the underwriters option to purchase additional shares which was exercised in fall.

In the third quarter of 2019, our cash burn was 10.6 million an increase of 800000 from the second quarter 2019, due to R&D expenses of 1.1 million related to our oxygen assist module and nexgen Hybean I product, but our cash burn in third quarter 2019 does reflect a decrease of five.

Hundred thousand dollars from the first quarter of 2019.

Please note this cash burn calculation excludes the impact of the Solus acquisition in the first quarter of 2019, each quarters debt activity and the net proceeds from our recently completed follow on offering.

Now turning to guidance.

For the full year 2019, we now expect revenue to be between 47.1 million and 47.6 million, which represents a year over year increase of 11% to 12%.

This full year revenue guidance reflects a decrease from our prior guidance of 49 million and 51 million due to lower than expected us capital equipment revenue.

For the full year 2019, we now expect gross margin to be in the range of 43% to 44% an increase from our prior guidance of 42.5% to 43.5%. We continue to expect annual operating expenses to be in the range of 68 million to $70 million.

For the fourth quarter of 2019, we expect revenue to be between $12 million, and 12, and a half million representing growth of 3% to 7% over the fourth quarter of 2018.

This concludes my remarks, I'll now turn back over you Joe.

Thanks, John before opening the lines for questions I'd like to review, how we intend to focus our efforts over the balance of the year.

First we're expanding our U.S sales channel by 10% from the 52 territories at the end of Threeq, you to 57 territories by year end.

This is going smoothly to date and we'd like to quality of sales professional candidates were seeing.

Secondly, we're focused on preparing for the full launch of our new disposable products. We're wrapping up a limited market release of our new Prosoft line of next generation Hyve unite technology patient interfaces.

These kenya's are comfortable lightweight materials and ensure minimal gentle contact with the skim. We're also in the midst of the limited market release of our integrated aerosol drug delivery Hybean I disposable this product can help clinicians deliver continuous nebulization of drug with our Hybean, our technology, which could be especially help.

Through them during the upcoming RSV season.

I've already spoken a bit about our oxygen assist module for the precision flow, we expect to receive the CE mark by the end of the year and we'll be focused on beginning the limited market release in a handful of European countries, including our newly direct UK market as soon as this clearances received.

During the limited market release, we will test several business models, including sales rentals and placements of the oxygen assist module.

Early indications from our Prelaunch work suggests this technology may help us open net new accounts.

The only caveat to this timeline relates to the transition of the European regulatory model from the previous medical device directive to the new medical device regulation.

This change could potentially lead to the approval process spilling over into one Q of 2020.

As mentioned earlier, we are planning to start a us clinical trial over the next couple of quarters, depending upon the timing of our IB approval.

We also intend to continue with the development of our next generation Hybean our platform.

Recently, we received five 10-K clearance for the first the duration of this product.

While we're pleased to achieve this is significant milestone recall that this clearance is just to step in the development process towards the clearance of our commercial projects, which we expect to occur in 2020.

Turning to our growing and compelling clinical and economic data set. The emulation study was recently published in the journal of clinical respiratory diseases and care supporting the feasibility of using HB Eni technology with of April sort of transfer unit for emulation of in patients.

We're also continuing to develop the clinical proof of Hybean technology as compared to bypass among hyper Catholic patients.

Our final area of focus is the continuous effort to improve our gross margin.

We like what we see for the remainder of the year and we intend to keep running the same three pronged play to drive gross margin improvement that has been working well to date.

We're now shifting our focus to putting the pieces in place that will support 2000, Twentys gross margin improvement plan.

An important part of this plan will be the new disposable products that I discussed above.

We anticipate full market launches early in 2020 for these products, which we believe will offer great clinical value for our customers.

The more you as investors understand what we do and how we make the clinicians and patients feel the clear you will understand the opportunities and challenges in front of us as we attempt to change clinical practice.

To provide you with a little more insight into this I want to share a patient story with you from last quarter from one of our teammates in the northeast.

Last Monday, where we're starting and implementation one of the respiratory therapist came up to the office frantically looking for an alternative mask as the patient was not tolerate bypass.

This was an elderly women in congestive heart failure.

We suggested precision flow and the RFP initially declined saying, they're just going to Intubate here. We are short her of our support she was very nervous we went down to the emergency department with her I spoke with the physician who gave the respiratory therapist to go ahead of the patients Sun was pleading with his mom to cooperate because he knew what.

The two would mean for his elderly MMRM.

She was coughing and gagging with respiratory rate in the high Thirtys within five minutes of being on Hybean I technology. She was the sleep.

And her respiratory rate was in the low twentys. Her son was crying tiers of joint thanking US. This patient was discharged a few hours later to the telemetry unit and weaned off to four leaders nasal cannula by Wednesday afternoon. She avoided the I see you altogether.

In conclusion I'm feeling good with how we're doing despite the shortfall newest capital revenue for the quarter. Our installed base is tracking disposables grew by 24% and they now represent over 70% of our revenue.

Gross margins were nearly 45% and the expanded Salesforce is coming along nicely. Thank you for trusting us with your capital that means a lot to us now I'd like to open it up for questions.

At this time in order to ask your question. Please press Star then the number one on your telephone keypad.

Our first question comes from Robert Hopkins with Bank of America Merrill Lynch. Please go ahead. Your line is open.

Great. Thanks for taking my question. This is Carl touched on for Bob.

Quick question about the capital environment in the United States.

Obviously came in a little bit weaker than we had expected this quarter and it sounds like a ASP was a little bit lower just wanted to make sure that I understand is there anything dramatic going on there that's worth calling out into another several quick follow up after that.

No Kyle before John gets into the details just want to remind you that our primary focus is on the long term growth of that installed base and that is tracking in line with our expectations installed bases the metric that I focused on the most as this is the key driver of our high margin recurring disposable revenues.

Worldwide that installed base grew 18.5% or just over 2400 precision flow units and it now is over 72% of our overall revenue comes from disposables.

Yes, so collagen out a little more color here in terms of the third quarter.

Proximately $450000 of the shortfall between the midpoint of the range and where we came in at was attributable to a shift in the number of units that we placed at customers versus so selling directly to the customers. So you take that number.

And our average selling price that's that's roughly the delta between the midpoint of guidance and where we came in at.

That's helpful. And then I guess in terms of kind of growth rates as we think about next year and looked at historical trends.

What would it take tickets to the mid teens to high teens raise so we've seen historically.

You do you expect growth rates to kind of beyond the slower and for the next few quarters and accelerate from there. So any kind of broad comments or are helpful.

Well I would say broadly speaking the thing that I pay attention to again is that installed base disposables grew 24%.

It's now 72% of our total revenue based Carl and what I'm going to just stay laser focused on is just keep expanding that installed base, whether it be true placements sales leases. Those three elements are really how we drive it as well as through the expansion of that Salesforce, which we expect to have that.

Fully completed by the end of this quarter by the end of December and then lastly.

Accelerating that revenue growth through the use of.

The next set of new products that were coming out with both the prosoft as well as the aerosol specialty disposable we're pretty excited about.

Those are the types of things there, we're looking at continuing to drive our growth.

For taking my question.

Thanks, guys appreciate excel.

Our next question comes from Ana Nussbaum with William Blair. Please go ahead. Your line is open.

Hi, guys.

And on from Margaret.

I just wanted to follow up on the 18.5% growth in the installed base.

The lower than expected total system sale.

I and with the disposable utilization probably pretty predictable on those placements can you speak too.

ROI and implied.

Growth out of those placement and then what you expect for the installed base.

Growth going forward.

As law.

Okay.

Sure Hi, and its John So in terms of the installed base growth was 18.5% and what we find is generally that the installed base growth.

Fairly good indicator of our disposable growth going forward. So they look at the installed base growth year over year last year, roughly 18, 19% and our disposable year over year growth. This year is going to be roughly 21%. So we find that to be.

Pretty pretty good indicator of future events a bit disposable stream.

In terms of the placement and the economics on that capital in terms of the return on invested of that and return to return on investment of that invested capital.

Generally based upon the average selling prices in our cost structure, we can receive cash on cash return on that invested capital and roughly one year.

Okay got it. Thank you and then you talked a little bit about India.

You are centered on the how did that play out in the quarter.

Relative to expectation and.

I guess if in terms of.

Growing that program, how how does it.

Benefited overall.

Well.

This is Joe I'll take that one so that EDI guarantee program, we substantially exceeded our internal expectations around that it really has helped us to start conversations with.

Clinicians.

When we offer a money back guaranteed a hospitals if a bypass intolerant patient goes on our technology and then fails.

We believe that it breaks down an initial barrier for us in that sales cycle and remember we are working to displace a two generational technology that everybody has been trained on in the emergency Department as the go to for every respiratory distress patient.

The ability to put our money, where our mouth is is a pretty powerful message and.

To date, we've sold almost 3700 disposables under that program and we've only had a handful of disposals returned to US. So this is a very interesting differentiator I can tell you that our sales professionals are really like this they understand how to use it and they are getting better and better at it in engaging fully.

With those EDI physicians.

Got it thanks for taking my question.

Thank you thanks Anna.

Our next question comes from Jason Mills with Canaccord Genuity. Please go ahead. Your line is open.

Hi, This is actually Cecilia on for Jason I, just wanted to ask about gross margins on that continued to come in ahead of our expectation partially driven.

By the strong recurring revenue, but I was just wondering if you have any updated thoughts just on your ability to continue to expand margins going forward, if you're still targeting that 200 300 basis point.

Branch and you talked about previously and then just also to impact the oxygen assist module could have on gross margin going forward.

Sure. So hi, Sealy, it's John ill take this one here so in terms of the gross margin improvement. We did have 600 depth of improvement on a year over year basis.

We're happy to report that all three elements of our three prong player working.

Of that improvement roughly 20% to 25% of that year over year improvement was tied to a change in mix as you pointed out to higher recurring disposable stream, but the remaining 70, 580% were tied to the three key elements of our three prong approach which is.

Cost reductions in our disposable taking direct material labor out.

Inductions in our overhead rates per unit as we continue to scale and in the last pieces, our ASP increases so we like what we see.

We haven't set core haven't offered guidance yet for 2020.

But we have communicated the two to 300 depths of improvement.

Hundred 30 to 300 bits of improvement on a year over year basis.

And we like what we see there right now in terms of the oxygen assist module I think it's a little bit premature to to comment on what that could potentially due to our gross margins going forward, but it is an important part of increasing the average selling prices of our technology as we drive more clinically valuable technologies into the hands.

Our customers and we're also looking to with that to have a more streamlined.

Disposable as well as.

Capital unit, which would again go hand in hand, with reducing the overhead the overhead rates per unit as we build more and then the direct material direct labor cost reduction initiatives. So it plays a very important part in that going forward.

And we'll provide more commentary on the 2020 guidance.

In the yearend 2019 results call.

Great. Thank you throw the color and then I just wanted to ask as well on the sales force the turnaround you've seen that you highlighted in Q3.

Just.

If you could provide any more qualitative comments around on what you're seeing but then also on your updated thoughts around peak rep productivity levels going forward with this new profile versus your prior expectations, but the older about pie.

Well I've been very lucky to be thrilled to be in the field with a number of our sales professionals in the last quarter. In fact, I was out with one of our more recent additions to our team last week in Colorado and I can tell you what I'm noticing is that the noise in our field organization is settled down.

Our leaders have done a really good job and helping them understand where we're going to grow this business and working through all of the structural changes that we made to that organization a year ago.

It's important remember that 75% of our field organization has less than one year experience under their belt with us.

The majority of the vast majority of these folks now are our tenured seasoned medical device sales professionals, but the b to b sales professionals that we have with us that have come up to the ranks have done an outstanding job as well. So I will tell you I'm just I'm really really proud of the entire team I really like what I'm seeing their settling write down.

I'd like what im seeing out of our field leaders and our clinical team in particular has done an outstanding job at serving customers. So.

I guess thats about all im going to say on that topic and in terms of what peak productivity is going to look like you know I don't think that I'm prepared to discuss that at the moment I think we might have more thoughts on that in 2000 Twentys. We're going to have these guys go out there and run a little bit and see how they do.

But I'm I'm like in loans Liam.

Our next question comes from Sean Lavin with BP Ji. Please go ahead. Your line is open.

Thanks for taking my question.

For Sean today.

A couple quick questions I don't think we've had the chance to see April Sir.

Purchasing patterns and revenue.

Cadence around us really strong.

I wondered what your thoughts are we're hearing from some that this could be a pretty strong first season. So I wondered what you're hearing in the field on that in terms of how we should think about kind of capital and disposable cadence around that.

Bob if I take the first part around the flu season than Johnny can talk to you a little bit about the overall cadence of the of the.

Break between disposables and capital we've heard the same thing out of Australia, Our Asia Pac leaders been sharing with US that this was a what they are characterized as a moderate to severe flu season in the southern hemisphere.

If characterize the type of flu that they've seen is consistent with what we saw in 2017 in the us.

Sometimes the southern Hemisphere is really good predictor for the us flu season, and sometimes it's not.

One of the things it was characterized by the southern hemisphere flu season. This year was that it began a bit earlier than historically.

I can tell you when looking at the CDC food report, which they publish weekly.

On a one week lag, we're beginning to pick up signs of the flu in the us, but it's still very very early in the season and it would be much too soon to make any kind of prognosis around you know the type of flu that we're going to see because like I said some types of southern hemisphere thing translates in sometimes it doesn't.

That said you know we're coming into our busy season now fourth quarter in first quarter from a census point of view in the acute care facilities in the northern hemisphere are the busiest it's when our turn rates are the most robust also is also when the respiratory department tends to be heard the loudest.

When they are looking for more capital equipment investments.

John anything when I add to that I think that covers it showed in terms of the turn rates Marie.

The third quarter is as Joe said, our seasonally slowest period of time from a turn rate perspective, 167 was our freight for the third quarter as we look to the fourth quarter with more aligned around the two turns per month.

From a disposable utilization perspective, and as you recall, obviously, the first quarter the years to most robust returns perspective at about 2.2 turns we use the lower over the prior year or the historical average to determine our turn rates and we'll continue to do so to eliminate some of that volatility that we see in the variety of flu seasons as they occur.

Our.

Great. Thank you for all that color.

My other question was around Palladium and saw the five 10-K clearance during the quarter I believe for that Gen. One device. There can you talk a little bit more about the road map for that or what you're willing to say publicly about that.

I could tell you why we did it we hadn't had a full blown five 10-K in front of the agency in quite some time and it was a way to.

Mitigate risk with the commercial version of our of our.

Next generation Harvey and I system.

We were very pleased with the process that we went through with FDA. It with a very robust one and now we feel very good about what's going to come next when we submit the five 10-K for that Nexgen commercial version.

As John mentioned on the call earlier, we will be.

Bringing that into a limited market release in 2020, although it will be leaving the year.

And we're pretty excited about that we think that could be a very important tool for hospitals to use.

Throughout their care continuum.

Perfect. Thank you for lunch.

That concludes our question and answer session for today I will now turn the call back over to Joe Army for any closing remarks.

Thanks, very much I want to thank you all for your interest in April So we really appreciate it and we look forward to updating you on our progress again next quarter.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating and you may now disconnect.

No.

[noise].