Q1 2020 Earnings Call
In general.
Good day, ladies and gentlemen, and welcome to doesn't leave we live in Illinois.
Let's see first quarter 2020, <unk> earnings conference call.
At this time, obviously, it's been writing to listen only mode.
Just because people are taking it'll be a question that you sufficient just a question on cashing you'll need to fresh start.
I got my during this conference call is being recorded.
I would now like to introduce the host for today's conference Mr., Matthew time, leaving Nellix Senior Vice President Corporate development you may begin Sir.
Thank you Dimitrius and welcome to our conference call and webcast discussing we even though this financial results for the first quarter 2020, joining me on today's call our Jamie Macdonald, our Chief Executive Officer that used in our Chief Financial Officer, and Melissa Perino, Our Vice President of Investor Relations before we begin.
I would like to remind you that the discussions during this call will include forward looking statements.
Factors that could cause actual results to differ materially are discussed in the company's most recent filings and documents furnished to the FCC, including today's press release that is available on our website <unk>.
We do not undertake to update any forward looking statement.
Also discussions will include certain non-GAAP financial measures reconciliations to the most directly comparable GAAP financial measures can be found in today's press release that is available on our website.
We have also posted a presentation to our website that summarizes the points of today's call.
This presentation is complimentary to the other call materials and should be used as an enhanced communication tool.
You can find the presentation in press release, any Investor Relations section of our website <unk> under news and events <unk> presentations at Investor Dot, leaving no but dotcom.
With that I'll now turn the call over to Damian.
Thank you Matt.
Thank you for joining us and I Hope you and your families are all siphoned well.
Before we discuss that first quarter results, an updated guidance I'd like to make a few comments in line with dependent.
Since the outbreak of kind of at 19.
Priority has been to continue to support patient health care professionals and our employees.
We remain focused on providing watch saving technologies and supporting our customers.
We are still in the early days of assessing the impact of kind of at 19 and the impact that had that ended is expected to have on that business.
I would like to take this mine it to thank all our associates worldwide.
Starting remarkable resiliency through this crisis, particularly those on the frontline and in a manufacturing facilities what maintained at supply chain.
I sat and I will outline during the cold in the first quarter of Twentytwenty carbon 19 started to impact the rest of world region in mid February.
Followed by Europe in early March and the U.S. in mid March.
I'm going to start off by discussing some recent highlights and that sales results by business.
After my comments that will provide you with additional detail on the financials and I realize twentytwenty guidance.
Then I will wrap up with closing comments before moving on to Q1 night.
In late February we entered into a research collaboration with fairly as part of that recovered depression study.
This will allow us to capture Biomarkers of depression, and data on pricing behavior, using technology and analytics provided by prudently.
These data will provide further insights into depressive episodes and they patients response to be in this therapy and its impact on D. TJ.
At the actually see in World Congress of Cardiology meeting in March we present, the two posters.
The posters reviewed the benefits it wouldn't gnomic regulation therapy, youre, not tea and said that support for the rationale so they add some half red Hot side, you pivotal study by reporting a longtime improvement in order not make time that are receptor sensitivity and cardiac electrical stability produced by BNS.
In April we received 50, I emergency use authorization or eating away for several cardiovascular products back my therapy.
You I temporarily expands the application of devices for EQT my therapy to greater than six hours in response to kind of at 19.
Product indications for use of being modified accordingly, so many products within that cardio pulmonary and ice yes portfolios.
We also received CE Mark approval for the Bioflo Ecmo, Kenya about this canyon is designed to reduce the risk of limits scheme, yet a significant and all too common complication for back my therapy.
Lastly earlier this week, we announced the conclusion that a series of debt covenant amendments, which materially modify the status of at current credit agreements.
These amendments include adjustments, the covenant calculations and temporary updates to certain limits on financial ratios.
He is the amended agreement to provide additional assurance and flexibility to better manage the business through the pending.
Now I'll discuss that freak arthritis, epilepsy advanced circuits to support.
And the rest of World region.
On the south results will be side and on a constant currency basis.
U.S. epilepsy, south declined in the mid single digits. This is the first quarter of 29 Jane.
This decrease is attributable attributable to the impact on new patient in plots because it kind of at 19.
Our U.S. business was tracking well until mid March when we saw a steep drop in new patient influence and some impact to reflect sometimes.
In Twentytwenty, we now expect the U.S. epilepsy business, excluding de TD south to decline in the mid teens due to the impact of car that knocking on elective surgery.
We currently expect the second quarter to see the largest impact with the business recovering as we moved through the year.
We are forecasting sales to return to near pre target levels in the fourth quarter.
Advanced circuits, we support south or $11 million in the quarter, an increase of nearly 30% from the first quarter of 29 thing.
The growth was driven by beat the penetration of existing accounts with protect your kids used to ripen trickier to recovery intend them longer spirit to support kits also saw an acceleration in the quarter.
The limited rolled out of lock stock is going well and we are on track to stop the U.S. congressional released at the end up this quarter.
We now expect there I see us business to grow about 30% in Twentytwenty.
Rest of World styles were $64 million in the corner growing 1%. That's just the first quarter at 29 thing.
The region was primarily impacted by kind of at 19, what's an execution issues in Japan and the middle East.
Turning now to be difficult to treat depression, south in the quarter $1.4 million out more than 70% versus the first quarter of 29 team.
Our current estimate is that the enrollment into recovered depression study will be impacted by car that 19 for six months and we now expect de T.D. south of approximately $5 million to $10 million for the.
We currently expect to enroll that 250 patient by the end of the second quarter 2021.
In heart failure, or Aspentech, Rick U.S. pivotal trial has enrolled more than 200 patients.
We have temporarily post enrollment in accordance with sorry prescriptions to type it not saying that we are supporting patients and physicians by using remote technology to remain engaged.
We now expect to reached 300 patients in the second quarter 2021.
I'll now turn the call David a sad for another view of that financial results that.
Thank you Daniel.
I'm going to discuss the first quarter results in greater detail and then provided an update on or 2020 guidance.
Sales for the first quarter were 242 million decline of 1.8% compared to the same quarter prior year.
Cardiovascular sales were $152 million down 0.2% from the first quarter 2019.
Cardio pulmonary sales were $116 million in the quarter.
Declined 2.2% versus the first quarter 2019.
Heart lung machines sales declined.
In the mid single digits, primarily due to difficult year over year comparison globally.
Oxygenator sales grew in the low single digits related to strong performance in the rest of World region, including Southeast Asia Eastern Europe, Brazil.
Turning to heart valves.
Sales for heart valves were $25 million from the quarter, an increase of 1% versus the first quarter 2019.
Heart valves benefited from an easier comparison related to our transition to direct sales that occurred in certain markets in the rest of world region in second half 2019.
Now, let's turn to Neuromodulation.
Sales were $9 million, which in the declined 4.6 per se.
Versus the first quarter 2019.
Until mid March U.S., Neuromodulation have been tracking to mid to high single digit growth rate for the quarter.
Neuromodulation cells in Europe grew in the mid single digits led by the UK and Germany.
The rest of World region declined in the mid teens in part due to softness in the middle East.
Adjusted gross margin as a percent of net sales in the quarter was 68.3% down 100 basis points from the first quarter 2019.
The margin declines primarily driven by mix from lower Neuromodulation cells.
Adjusted R&D expense in the first quarter was $41 million compared to $37 million in the first quarter 29.
R&D as a percentage of net sales was 16.9% versus 14.7% in the first quarter 20 like.
The R&D increase is due to higher costs associated with the continued enrollment of the anthem half route heart failure pivotal trial.
Progress in a recovered or depression study.
Adjusted <unk> expense for the first quarter is $104 million compared to $105 million in first quarter 2019.
SGN as a percentage of net sales was 42.8%.
Up from 41.6%.
For the first quarter 2019.
Adjusted operating income from continuing operations was $21 million compared to $33 million the first quarter of last year.
Adjusted operating income margin from continuing operations was 8.7 per cent compared to 12.9% in the first quarter 29.
Our adjusted effective tax rate in the quarter was 8.2% in improvement from 15.5% in the first quarter 2019.
The lower tax rate is related to previous tax planning initiatives.
Finally, adjusted diluted EPS from continuing operations in the quarter was 33 cents compared to 54 cents for the first quarter 2019.
Moving to cash flow or cash flow from operations, excluding payments for one time integration restructuring costs.
Through the first quarter 2020 was $25 million compared to $24 million in the same quarter the previous year.
Capital spending for the first quarter was 2020 was $9 million, which is $3 million higher than the first quarter 2019.
Our cash balance at March 31st 2020.
It was $126 million up from $61 million at December 31st 29.
Our net debt at quarter end was $400 million up from $272 million at year end 2018, as we get an additional $115 million in three t. legal costs this quarter.
As Damian highlighted previously in light of recent market developments, we've implemented a number of actions designed to strengthen our liquidity position.
And promote financial resiliency.
Among these actions we have secured amendments.
Certain covenants prior to December 31st 20 Twond.
These amendments included adjustments on covenant calculations, and an update for certain ratios on calculations of debt to EBITDA and EBITDA to net interest payable.
In addition, we are in the process of evaluating strategic financing alternatives to fund or short medium term capital needs.
Among these alternatives, we have been analyzing potential offerings equity.
Equity linked or debt securities.
Discussions concerning these potential transactions are ongoing.
No assurance can be given that the transaction will be consummated, whereas to the ultimate terms of any transaction.
Now turning to our updated 2020 gardens.
Given the current killed with 19 challenges.
We are providing revised guidance for the second quarter in the full year.
We believe it is important to provide updated guidance as we are in a period of additional uncertainty.
And we've expanded ourselves and EPS ranges to address this.
For the full year, we're now expecting 2020 sales to decline between seven and 17% on a constant currency basis.
If current exchange rates remain unchanged the company's full year revenue guidance will be negatively impacted by one to two percentage points.
We now expect or global epilepsy business to decline in the range of 10% to 15% due to cope with my team's impact on elective procedures.
The largest impact is expected to incur occur in the second quarter.
With the gradual recovery occurring in the back half the year they returned to growth in the fourth quarter.
Do you can be DPP sales or now expect fall in a range of $5 million to $10 million.
Sales and our cardiovascular portfolio estimated decline in the mid single digits with strong growth coming from these yes, largely offset by the late stage replacement cycle. They children arms and the impact of lower cardiac surgery procedure volumes in heart valves in particular.
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On the expense side, we have executed actions to offset some of the expected sales impact.
Specifically, we've instituted hiring freeze and are participating in government sponsored work programs.
We have reduced spend related to travel marketing advance field presence we've shifted.
Two working with our customers and stakeholders using remote assets.
We've reduced our discretionary spend related to consult.
Consulting.
I didn't see staffing.
And finally.
We balance or manufacturing output to coincide demand.
Now turning back to the rest of the piano.
Adjusted gross margin is projected to be in the range of 66% to 68%.
We expect adjusted R&D could be in the range of 14.5% to 15.5% themselves in adjusted SG name to be in the range of 40% to 41% Upsells driven in large part due to due to our decline in revenue spending reductions and investments in D. TV.
We are projecting adjusted operating margin from continuing operations to be in the 10 and a half 12.5% range.
Our adjusted effective tax rate is expected to be in a range of 10% to 12%.
We are adjusting a joke, we're estimating adjusted diluted earnings per share for continuing operations in the range of $1.40 cents to $1.70 cents.
The share count is expected to be approximately 49 million.
Our adjusted cash flow from operations, excluding integration restructuring three key product remediation litigation payments.
Projected to be in the range of $80 million to $100 million.
The integration or restructuring expenses are expected to be in the range of $10 million to $20 million compared to $44 million in 2019.
Capital spending is projected to range between 20, and $25 million and depreciation and amortization expense is expected to be approximately $28 million.
For the second quarter, we're expecting sales declined in the range of 30% to 45% in the loss per share to be in the range of 25 cents to 35 cents.
So with that I'll turn call back to Damian for some final comments.
Thanks that.
I'd like to finish by acknowledging the selfless dedication of health care professionals around the world.
There are extraordinary efforts continue and we wish health and safety for them and their families.
We look forward to updating you on that continued progress and delivering on that commitments to drive shareholder value and with that Dimitrius. We're open for questions.
Thank you everyone Minders asked a question need to press star one on your telephone flip draw. Your question. Please first apparel keep please standby will be compared to Q and he's out there.
And our first question comes from lags internally with Jefferies. Please.
With Jefferies.
You May proceed.
Hi Raj.
Hello.
I Wonder if maybe we could start with or go to the trajectory of the business here as you move through April I. Appreciate it's been tough for most companies is there any could offer in terms in terms of how things have trended you know here just in the first month of the second quarter.
Yes. Good question I would say that I'd characterize this is modest signs of life you know we've seen.
Our monitoring of the hospital by hospital state by State.
Weekly colt internally.
We've seen modest improvements in some hospitals some areas some states.
The little Green shoots in a few countries in Europe.
They've changed their or their regulations around what they consider essentially an elected.
And similarly, Samsung smart signs of growth in China. So.
Again early days, but we are saying small modest.
Signs of signs of life.
Understood.
I guess, you know I, just trying to reconcile that with the you know the guidance cut right, which is pretty substantial on the topline.
It also I guess the commentary in terms of resumption, particularly in BNS by the fourth quarter back to kind of free covert levels and so I guess the question is really around your confidence in the current outlook right because things aren't very fluid at this point, you're just trying to gauge kind of air bands around what you offered in terms of guidance at this point.
Yes, I would just add I mean, I think to me the way, we think about the guidance and the ranges.
It's highly fluid and there's a level of uncertainty.
So we purposely quit some fairly broad ranges.
For the quarter and that also for for the full year.
But again, we're monitoring it weekly we're studying the market, we're even looking at kind of a state by state country by country view.
And.
You know again, we're going to continue to monitor but you know, we're increasing terms and some of the competencies again around the scene.
Some modest progress since day you described.
Okay, and just one last one on you know kind of be operating expenses right. So again I never big models are slightly different but an ours. It looks like the combination of R&D NSG is coming down by about $100 million, where we were previously.
I'm trying to get at where where that is coming from right and if those cuts you're sort of you know.
How deep that is in a sense and so when things do come back.
How much of this cost reduction you you've embarked on is gonna be sort of difficult to recover from or were.
You know how quickly can you kind of snapped back.
No I think to me.
Described the number of things that we are doing to to protect didn't come in but at the same time, it's really important that we continue to invest in the long term and so we are continuing to support our trials of course enrollments as you know obviously getting to be in AFFO.
Because of just delays and the challenges of just getting clinical trials up in running.
We are.
We're working in taking advantage of head count freezes travel restrictions and obviously any government support to help US protect you know again some of the the expense cuts.
But we are trying to balance short and long term of course.
So tied to that and we rise you know we've we've ring fenced studies that are critical to along to create value creation like to recover an anthem trials, we've ring fenced new new product development around key things like lock stock and Polaris and Iris and other things that are less less critical.
Less urgent we.
We put that on on whole.
Understood I leave it there thank you.
Thank you.
Thanks, Rob.
Your next question comes from Rick Wise with Stifel.
You May proceed.
Hey, Rick.
If he had been frankly lost production line.
Yes.
Help me.
At this point he got yes.
Yes, okay.
Great.
Sorry about that.
Maybe start off with.
Okay.
I mean clearly.
You have some.
Optimistic thoughts about recovery they are.
Expected to deliver at least 30%.
Yes growth for 2020.
Maybe just update us on where you are with your ability to.
Supply the product manufacturing side, and that's cobot accelerate lifeguard demand pull forward demand just.
Some more color and support.
Of that out that particular positive pieces.
Your outlook.
Yes so.
I think that first on the supply and manufacture I will tell you I think the tamed made great progress there and now weekly Friday coal with that team you know I continue to be impressed with how they run into project management of that and App component supply that we talked about at the end of last quarter.
It is moving well and so we still expect to be able to execute the commercial release in the second half as we announced earlier, so I'm really pleased with that progress.
On the demand overall I think we've seen great.
Demand from our existing accounts. So we are in an account penetration plight, yet so it existing accounts that using more protracted low more tandem loan.
You know that's there were spiritthree support product, but interestingly the right ventricle also needs to be supported when you have they these events and this respiratory distress. So that's why I think we're saying this uptick in protest do it. So I think the teams continued to execute well there and we see we see strong performance from from that group.
In the U.S. and in a few countries internationally. So I think that's why we're bullish on the full year results you want to get that Rick. It's Matt also we talked up before one of the keys of life Spark is getting more control. There's also the ease of use this controller, we can expand the footprint today, we're in less than 200 centers in the.
The U.S., there's room to go to 500 or more Ecmo is a very valuable device I spent a respiratory distress as you've heard so that's a key component the back half of the year is expanding not just going deeper into accounts as Damian said, but this will give us the ability to expand into a lot of new accounts, who will find this product very.
Easy to use and bullet that embraced and Ecmo practice.
Turning to thank you Matt.
Turning to.
The DTT trial, you if I heard you correctly correct me if I'm wrong, you had 250 patients enrolled by the end of the second quarter I think you talked about the five to 10 million.
Contribution impact.
As well, but maybe if you could expand on your comment there.
How does.
Talk about restarting the trial.
Things recover.
What should we expect what are you expecting and and Dineen, how does the timeline shift the timeline.
The timeline that you articulated in the past shift now.
Like this pause in enrollment.
Yes.
The kids to get to that last part of that question, we get shifted about six months.
It is what it we're forecasting.
What happens, it's really about patient enrollment and.
Implant sequence, that's what's slowing down what's not slowing down or is this team's work on the.
Infrastructure of setting up the trial, so they've continued to work diligently on site activation.
We've been doing a number of remote site Activations, I think which is fairly normal.
Process. We've also continued to work on patient identification and patient awareness of the study done a number of digital.
Activities to engage with people in that that de de community to push them to be aware of the trial.
Related to that we're also continuing out west on how to engage with the private payers.
And weeks at higher up a specialist for a health economics and reimbursement in that area is a really important piece that this guy has the experience in this space and types of efficacy from pharma and I'm expecting a lot.
Engagement there as we continue that process infrastructure. It still progressing it's really about patient enrollment an implied that the slowing step here and that's why we're saying six month for the target for the previously talked about.
Great and just last from me, obviously on the debt financing side you've made.
Some important critical progress with your covenants and some of the details you've announced.
I mean.
Can you expand on your your your comment.
You know.
What kind of funding do you feel like you need.
When is it needed.
And how.
Maybe you can give us more concrete input about.
What to expect how you're approaching it.
And just you know how you're thinking about.
You know the lower end of the guidance, maybe another way to say it drives the need for financing or if you hit the upper end do you need less I'm not sure how to wouldn't rolling contact sure. Thank you yes.
Because we stated we've amended the covenants of ballpark facilities to give us enough room for let's call. It.
The next 15 months, which is usually the the period that you want to.
Test from an audit perspective that of course going beyond that is ultimately what we're looking at.
So I think that gives us a lot of flexibility we continue to you don't though.
Look at other facilities. So for example, we had ended the quarter with 126 million in cash and we added recently noted facility for Barclays last week, and we're just going to continue to look at.
What else could we do we feel that even with the downsides that we have a number of different libors that we could pull on the expense side to protect income and cash flow.
And with the facilities, we have you know.
Is sufficient to meet our.
Liquidity in our debt obligations.
But I think this has taught us all lessons is to just evaluate different strategic financing alternatives and to have additional capacity and so we are looking at the offerings of potentially equity.
You know debt I'm, just looking at you know what else could we do just afirma and have more additional headroom.
But I don't have major concerns. It's just been obviously we've had to address.
Yeah, what was a really strong balance sheet you know two years ago, we were we or leverage was well below one time.
That debt to EBITDA.
But you know given the three t. liability in the payments that we've made you know or debt levels when a bit higher so of course, we need some additional headroom with covenants.
But we're looking at just additional instruments.
So just to follow up quickly on that you're saying at the do.
You know more thinking long term and this is something that.
But when you talk about the additional financing you very much wants to have nice to have important to have but not so critical.
Not necessarily anxiety booking for the next 612 months I'm not sure.
Exactly what you're saying that thank you yeah no no I think I think it's both right. So to me there is a level of uncertainty Rick in this environment. So we want to cover of short term right and you know at the same time, we've been in the process of looking at restructuring or a curve.
Facilities.
So if you if you look at the details of what we have with.
Repayment schedule about $350 million facility in Q3 in Q O Q1 next year of 70 million in those two time periods.
We also look at other instruments to try to balance that equity depending on the scenario. So it's kind of a short term, creating more headroom, but then also taking longer term steps just to recapitalize.
The company company structure.
Is that clear. Thank you for the Yep. Thank you for the thorough a detail. Thank you.
Sure absolutely.
And our next question comes from Scott Bardell, let's bearing Berenberg you May proceed.
Hey, Scott Hi.
Right I mean.
Yeah, So just a little bit more.
Understanding please oh the guidance I'm looking obviously appreciate you taking to stop at this guidance very much.
But just to understand it fully I think he said.
That you would anticipate cardiovascular to be down about mid single digit for the full year. It was was it was that right that the that's your base case assumption.
Yes mid to high single digit but for the full year yet.
And just to understand the habit, but.
With respect to the cardiopulmonary business, which has been largely cabbage procedures and so forth.
Normalized well not considered the favorable or less likelihood to defer you know have you seen all you seen signals should decline on what is the compensates. We if you think from the additional at Commode provision that you know how does that come from a degree of stability to that business. It wasn't that before <unk>.
I want to understand those moving parts bit more please.
Yes, I think obviously you know what we've talked about here as we expect the biggest declined in Q2.
Elective procedures being down and that's going to impact Oxygenators largely.
And now Eric by business unit has said the tandem life business. The small business, we had in App cardiopulmonary portfolio.
And you know what we've seen a small increase there, but not to offset the oxy NHL and business. So.
The business is growing it's an important part of this but it's also very complex part of the procedures and you don't always go straight from fan delighted to make money.
And so you know we were pleased to see the uptick, but we're not banking on that being a full compensate for effects on the caveat boarding portfolio.
And Scott, it's Matt I would take it I know you like to go into detail on this.
Probably if there is one area to think about it being under pressure in cardiovascular or it's going to be capital equipment in the U.S. in Europe right. So each LMDS Ats, that's where we're forecasting to see if a big hit on that business. So thats not truly procedures, that's more of a capital component.
Okay. That's helpful and again the walk through his significant impacting Q2 still declines in Q3 more normalization in the fourth quarter is a is that how you think about it and any recent noises from hospitals about no reactivating elective procedures or at least starting.
As early as sit now soon.
Have you baked in a relatively conservative negative assumption here, that's what I'm trying to understand.
Your opening statements is how weak model that and.
What we've tried to try to explain is that we are looking at this unit weekly with Afghan National things.
In Europe and international country by country in the U.S. Hospital by hospital site by site again, I think everyone's aware that the state differences in the U.S. at very very compelling. So that's where we've tried to be more granular on the state level differences.
More broadly is how you summarized it.
Okay. Thank you.
Selling and that should the question for Neuromodulation. Please so clearly understand you expecting some sharp decline so just to understand this for the.
Is it your expectation that you see a relatively stable replacement business, which is 50% to fill so these U.S. thousand my understanding.
So the new patients.
Significantly down yeah for the next few quarters, who that is that basically the float.
If that could the same idea about the model biggest impact in Q2.
Small recovery in Q3 getting back to sort of normal sale in Q4, and now I would say on NPL Atlas Yeah, what he was saying that more dramatic impact on on that Npis, a new patient implants, and and a slight decrease in the end of service and again very much impact.
And by differences in what people considered or let them you know the UK and Germany. For example, just the last week that battery replacement or an essential surgery. So you know when monitoring this country by country state by state.
Okay understood and so it just last clarification.
You will revenue framework as outlined in potential for down 17%. So I'm not sure I understand the in the context of he'll biggest business cardiovascular being let say mid single digit it seems to me that or even mid to high single digit that wouldn't make sense given the commentary if 10 15 to neuromodulation decline so.
Are you essentially saying that the most likely scenarios the low end of the range I just want to understand that.
Scott It's Matt So now what we did if you look at the growth rates, we gave by the major businesses, you're going to fall in the middle of that minus 7% to 17%. We just wanted to have a slightly wider range given all the uncertainty right now so we're not encouraging you to go to the you know to their right to the worst part of the range.
Okay understood.
And encouraging that you know you see things.
Returning to more normalized problem in Q4 of course, we know we know crystal ball, but that seems sensible assumption to make now as we think about 2021 to nothing this is more of the relevant number to look out.
And can you at least give us some sense of where you think you can recover the business to the according to fill a midterm plan should we.
Expected earnings number that's after above 29, taking them in is out there you know a good sense actually as to how this business trajectory recovers over the next 12 24 month.
Yes, I would say, it's a bit premature to predict 2021 at this point I do think that again, depending on kind of how but it's a V shaped recovery or U shape. We're w.. We just don't know at this point, Scott, but again we.
A gun to take every action that we can too.
To firm up the business to ensure that we're making both short and long term.
Decisions to get this thing back to where it should be whether it's the previous 2019 years old sort of the previous guidance on 2020, we just don't know at this point.
Okay.
Last question Im pleased to me and again and congratulate you for extending the terms of your covenants.
But I wanted to understand a little bit better the concept called at could feel I could see links that.
Obviously, leaving over shares so broadly trading where they work when you manage to in 2015. So I would argue your shares are not really in a position of strength.
Why would it make sense to consider equity when that is cheap and you have headroom in your covenants.
More importantly has this experience where you know that does go up a little bit ahead of where you would like kit change your thoughts on acquiring lossmaking developmental assets.
All the very high levels have been suddenly investment you Mike What's your thought Fifthly compressing your margins. Thank you.
You know great question, and you're absolutely right, it's how we see it as well with this balance of.
What is kind of the right kind of.
Facilities that could help us as leaving over where we're trading today looking on a relative valuation looking at various tools in the market and how is the market developing for these tools as well and we're trying to balance a little bit of equity a little bit at that.
But but try to find the right kind of thing too to address kind of short and long term need capital needs.
We haven't decided and we're going we're exploring options. We just wanted to highlight that today.
But you're absolutely right at the you know we would also speak about very carefully about doing.
Future M&A, especially dilutive deals.
You know the tandem like deals or you know accretive immediately accelerate growth. Those are the types of acquisitions are we at all from sleep be keen on continuing to do.
Okay. Thanks, so much cost.
Okay.
Ladies and gentlemen, this concludes our security question in today's conference Evan I, just trying to call back over to connect the dots for any further closing remarks.
Okay, well Dimitrios thanks, very much. Thank you for everyone for joining us and we look forward to continued conversation and reporting on that shareholder value creation as we move forward besides everyone.
Ladies and gentlemen, this concludes today's conference call to he participating you may now disconnect everyone have a great day.
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