Q1 2020 Earnings Call
Welcome to the align technology first quarter earnings call.
I'm also arnie listen only mode. A brief question answer session. Most all the oral presentation. If anyone should require operators. This is kind of therapies are zero on your telephone keypad. As reminder, this conference is being recorded it is now my pleasure to introduce your host Shirley Stacy VP of corporate and Investor communicate.
Thank you you may begin.
Thank you good after it good afternoon, everyone. Thank you for joining US joining me today is Joe Hogan, President and CEO and John Ricci CFO.
We issued first quarter 2020 financial results today, the of Globenewswire, which is available on our website and investor data line Tech Dot com.
Today's conference call as being audio webcast and will be archived on our website for approximately one month telephone replay will be available today by approximately 530 PM Eastern time, you Fivethirty PM Eastern time on May 13 to access the telephone replay domestic callers should dial 87766 06853 with copper.
Number one three 701 to two one followed by pound International callers should dial 20161 to seven for one five with the same conference number.
As a reminder of the information that the presenters discuss today will include forward looking statements, including statements about aligns future events in product outlook. These forward looking statements are only predictions and involve risks and uncertainties that are set forth in more detail in our most recent periodic reports filed with the Securities and Exchange Commission available on our website.
And I see Si dot Gov.
Actual results may vary significantly and align expressly assumes no obligation to update any forward looking statement.
Posted historical financial statements, including the corresponding reconciliations, it's clickable and our first quarter 2020 conference and earnings release and conference call slides on our website under quarterly results.
Please refer to these files for more detailed information with that I'll turn the call over to align technologies, President and CEO, Joe Hogan Joe.
Thanks, surely good afternoon, and thanks for joining us hope the junior families are well.
Given the significant disruption to our business caused by the extraordinary measures taken by government public and private institutions and businesses around the world to fight the spread of Cobot 19, most of the performance metrics I would normally discuss or that's meaningful.
Therefore on our call today. In addition to the highlights from our Q1 results I'll discuss the trends that we're seeing through early March prior to the escalation in the cold at 19 cases that result in shuts down shutdowns across Europe, North America and compounded the initial impact from similar shuts down shutdowns in China beginning in June.
Or anywhere else.
Also talk about our view of recovery and strategy to help or dr. customers navigate this challenging environment and ensure our business continuity.
I will provide more detail on our financial performance and comment on a current trends across our business globally, including the momentum we're beginning to see in China.
Following that I'll come back and summarize a few key points and hope to call. The question.
With that let me start with a few comments on our first quarter results through early March at that time, China was progressing in line with our original guidance for Q1, which included approximately 20000 to 25000 fewer cases, and 30 to 35 million less revenues for Invisalign and Itero products in other regions were performing ahead.
Our Q1 outlook.
However, the situation quickly change in mid March as most governments in AMEA and North America close down non essential businesses initiated stay at home orders as a result, the vast majority of invisalign practices shut down and stop seeing patients and our business fell off sharply.
We believe the incremental impact at the Cobot 19 on our Q1 results is approximately 50000 fewer cases.
And approximately 85 million less revenues from because a lot in itero product.
[noise] at the same time, while it may in North American other parts of Asia Pac fell off in mid March we began to see improvements in China as the country started to open up again, well, it's still early in the recovery process in a situation is different and every city in for every practice, we're working closely with our doctors to support their current needs.
And ensure they have a game plan to resume operations in a very different environment for the foreseeable future more on that in a few minutes now let's go through our first quarter results.
For Q1, total revenues were $551 million down, 15.2% sequentially and unchanged year over year, reflecting significantly lower than expected sales of invisalign clear aligners and Itero scanners due to the Kobin 19 pandemic.
Revenues from clear Aligners were 481.6 million Itero scanners and services were 69.4 million.
We are lighter shipments were 359.4 thousand cases, notwithstanding the impact of cobot 90 shipment volumes were up 2.9% year over year, reflecting solid growth from non comprehensive products driven by Invisalign go systems across all regions as well as invisalign moderate.
This was offset by a lower mix of comprehensive products, primarily due to the shortfall in China.
For the quarter, we shipped Invisalign cases to approximately 61000 doctors of which 4100 were first time customers.
We also trained over 4600, new doctors in Q1, including 2600 International doctors.
Overall for the team marketing Q1 hundred 4000 teens and pre teens started treatment with Invisalign clear aligners, representing 29% of total cases ship, reflecting growth from a man in the Americas regions and across comprehensive products.
During the quarter, we reached another major milestones with regard to millions in this line teenage patient Caitlin rather.
Student athlete, we started treatment recently with Dr., Tom Hartsock, U.S. based orthodontist in Kentucky, Dr. Hearts got there's been a terrific practicing orthodontic for about 30 years and credits Invisalign with revitalizing his practice at a time when a lot of doctors think about slowing down.
He says approach is to lead with Invisalign and he's got a new digital mindset now and we're excited he's going to share more about that at our upcoming Invisalign teen form virtual edition. This July.
The team segment represents the largest portion of existing orthodontic case starts each year and as we head into the summer season, the busiest time in Orthos practice, we're working to help doctors capture as much of the teams season as possible under the circumstances.
Let's turn to specifics around their first quarter results, starting with the Americas region.
For the Americas region through early March solid sequential growth was driven primarily by North American GP Dennis than Dsos, along with continued strength from Latin American doctors on reported basis Q1, Invisalign case volume was down 5.5% sequentially.
And up 5.2% year over year, reflecting significantly less than expected Invisalign case shipments in March due to the impact of Kobin 19.
Year over year growth for Q1 reflects growth from both orthodontist in GP, Dennis channels, which were up 5.6% and 4.6% respectively. Latin America volume was up 83% year over year led by strong growth from Brazil.
For our international business.
Through early March with exception of China.
You may and APAC regions were performing well on reported basis Q1, Invisalign case volume was down 22.3% sequentially, reflecting significant decrease in Asia Pac primarily China due to the impact from Cobot 19.
Partially offset by growth in AMEA.
On a year over year basis international shipments were flat, reflecting growth from AMEA offset by a decline in April.
For me, a Q1 volumes were down sequentially and up 11.1% on a year over year basis, driven by growth in Spain, the UK and Germany, along with our expansion markets led by central Eastern Europe, and Benelux, including the teen segment.
For a pack Q1 was down sequentially as expected, reflecting a significant reduction in volume in China due to cope with 19.
On a year over year basis, APAC was down 18.2% compared to the prior year, reflecting the longer duration of cobot 19 measures implemented in China.
As you only region down year over year.
Japan, Taiwan Korea, and India saw continued year over year growth in Q1, and as noted earlier, we began to see signs of improvement in China in early March as the government began to relax some or all of the restrictions and business began the road to recovery.
Our consumer marketing is focused on building the clear aligner category in driving demand for Invisalign treatment through a doctor's office.
Q1, we saw strong digital engagement globally, including 7.1 million unique visitors to our web sites and 274000 leads both metrics growing by more than 40%.
Consumer engagement growth for Invisalign was enabled by the launch of our new consumer campaign and visit is strong media spend in a robust omni channel presence.
Our investment in costs years team, it's nurturing consumer leach.
Unfortunately until doctors' offices open which is key to realizing it converting consumer interest into cases.
Further our modeling indicates the consumer marketing drove incremental growth in Q1, and reinforces our strategy to invest in brand building and maintain high visibility with consumers through the cobot 19 crisis. Other key metric showing increased activity in engagement with the Invisalign brand and are included in our Q1 quarterly slide.
[noise], where our taro scanner and services business Q1 revenues were down sequentially as expected falling as a seasonally strong Q4.
Consistent with trends in the capital equipment market.
Q1 also reflects the impact the cobot 19 across all regions, especially North America, Australia, China, Japan, and other repack countries.
On a year over year basis, Itero scanner revenues were down 13.1% due to slower sales in North America, and APAC region, primarily due to cope with 19, despite increased revenues and a Matt in Latin America, reflecting the addition of Zimmer Biomet distribution agreement the introduction of our Itero five D going direct in Mexico.
Okay, and additional left hand distributor markets.
The total year over year decreasing scanner revenue was slightly offset by increased services revenue from a larger itero installed base.
Cumulatively over 23 million worth the orthodontic scans 5.2 million restorative scans had been performed with Itero scanners.
For Q1 total Invisalign cases submitted with a digital scanner in the Americas increased to 80.5% from 76.1% in Q1 last year.
International scans increased 68.7% up from 59.3% and the same quarter last year.
We're pleased to see that within the Americas, 93.6% of cases submitted by North American Orthodontist were submitted digitally.
I'm also pleased this year that we receive ft. A five 10-K clearance for Itero element five the imaging system.
Terra element five de imaging system seamlessly combines three scanning technologies threed data.
Oil cut color photos and near Reimages Neary is near infrared imaging technology, which allows you to see carries a different aspects from a dentition standpoint [noise].
It's an integrated scan and we're excited to bring the advancement Anoro scanning technology to the United States market to help doctors provide better oral care for their patients.
At this time, we're mindful of the current environment and the impact the cobot 19 pandemic is having across the world are focused on customer education and training regarding this new technology well. So many many dental practices in the U.S., our operating on a limited schedule.
We remain confident that the Itero business will continue to helped drive our overall long term growth and help increase adoption of the digital platform with Invisalign treatment.
To that end during the quarter, we announced the acquisition of Exco Cat a global CAD Cam software leader in <unk> completed the transaction on April 1st John will talk more about the acquisition in a moment, but let me say just that the rising consumer awareness around dentistry extends beyond the benefits a straight teeth in orthodontics.
There are significant opportunities for all kinds of treatments from simple cosmetic fixes the ortho restored.
That could help us accelerate growth of our digital solutions fourth or sort of cases are really drive growth and adoption of Invisalign Itero digital platform.
I'm very excited about the addition of Ekso catch proven restorative experience expertise and functionality to our platform and I want to welcome Mexico founders.
Still to steinbrecher, and Mike girth, and the entire Ekso CAD team to align.
Let me now turn to some of the initiatives, we've taken to support our doctors and their patients.
We recognize enormous hardship coping 19 has caused invisalign practices around the world. We're working every region to support doctors and find ways to minimize disruptions to their businesses and to strengthen the experiences their patients have with invisalign treatment.
We have learned a lot from our Dr. partners and teams in the Asia Pacific region, and we've been navigating the impact of Cobot 19 for months, we're applying their experiences and insights across all regions. Many of our customers are sharing creative ideas and suggestions as we all work to manage the situation together.
One of the first things we did was addressed clinical education integral part of Dr. engagement.
Across all three of our regions. We moved most of our education programs. The online digital platforms continuing to provide hundreds of valuable when invisalign in Itero training and education resources.
Many peer to peer for doctors and their teams in a virtual setting.
We also identified opportunities to cooperate with invisalign practices to manage ongoing cases, and explore new ways for doctors to conduct consultations.
Early on minute. Many doctors began using video calls Texan patient submitted photos to a variety of platforms to help monitor patient progress reduced in office employment ensure continuity of patient care doing treatment. It quickly became clear that doctors needed a better way to connect and monitor patients. So we accelerated the launch of new tools.
That we're still in pilot mode.
Invisalign virtual appointment tool enables doctors to easily set up Pippa compliant video appointments to monitor existing patients and to have an initial conversation with patients interested in learning more about invisalign clear aligner treatment for the Doctor.
This is my virtual care program can also use video appointments and enables doctors to monitor treatment progress and stay connected with patients virtual platform patient use the entered a and b intuitive mind. This line out to stay engaged in the treatment and convey progress photos to their doctor.
Who review these photos on their Invisalign doctors site communicate any need an instruction and ensures treatment is on track.
These tools are available through our Invisalign doctors site ideas in the mine. This line App and work as part of the end to end digital platform for Invisalign treatment.
Well both pools are still in early stages of rollout. Our goal is to probably provide doctors with a way to maintain care until patients are again able to visit the doctor's office.
Feedback to date has been relatively positive we believe that doctors will continue using these tools to improve patient experience and increase office efficiencies well after cobot 19 restrictions have been lifted.
We're also supporting doctors through financial and operating challenges in our providing additional resources, including industry experts to help them navigate this ongoing crisis.
This includes webcast E blast and micro sites on the on IDFC again, the Invisalign doctors site with advice on extending aligner aware and holding patients at specific treatment stages.
Options for redirecting aligner shipments at helping address customer cash flow concerns caused by the pandemic, we're creating programs with partners like lending point that are part of recovery Playbooks to help doctors with speed to cash that is expected to launch in may or may 1st.
Before I turn the call over to John I'd like to spend a few minutes talking about the strength and resiliency of aligned and our business model and our view of the path to recovery. There's no question that we are in uncharted territory and while supporting our doctors and their current situation is still critical right now planning for recoveries just as important.
Overcoming challenges is not new to align our employees.
Our response to covert 19 decisions and investments, we're making now to anticipate customer needs and adapting a dynamic environment are based in part on the lessons learned throughout our history and were for further our competitive advantage and position us to capitalize on the market is returns.
We serve a huge underpenetrated market and our share of more than 300 million people, who want a better smile is less than 3%.
Teams aren't important segment and our shares a small fraction of the market and yet we know the teams remain the heart and soul of orthodontic practices and will drive their recovery.
There is no single blueprint for us to follow in this recovery our underlying business is healthy we have an excellent balance sheet with no debt.
And over the last five years, we've grown a business that has generated 25% compounded revenue growth and consistently delivered 72% gross margins, 22% operating margins and generated cash flow from operations in excess of 22% of revenues each year.
We also have operational resiliency in terms of global manufacturing that has taken us years to develop and is simply unmatched and is a key reasons why we're able to continue operations in the crisis and expect to ramp up quickly in recovery.
The core components being supply chain digital treatment planning treat aligner fabrication a fab [noise].
Supply chain.
During normal business, we carry enough buffer stock and our warehouse to handle two disruption to the supply chain. So if a batch go sideways, we can handle that twice after cope at 19 broken China, we anticipated that we needed to mobilize existing suppliers and that three to six months of additional inventory. So that we could whether the potential storm for many of our supply.
Buyers, we have alternative redundant suppliers in case, a shutdown in one geography impacts the supplier.
Treat investments, we have made over the years and having treat in multiple location allows us some flexibility in business continuity to respond to customer needs.
Before cobot 19, we had evaluated to potential for doing treatment planning from home a remote locations and the applications the hardware needs data security and productivity.
When cobot 19 hit China, we ramped up our ability to do that and started transitioning our cat designers to do treatment planning at home and have been successful in that sense. We're confident we could have maintained 80% of our normal output, but volumes fell off before we could prove that point.
China hit first so we load balanced with our other treat locations. So as this went from east to West we didnt have significant issues in our treatment operations.
This is our model and we'll continue to strengthen it going forward.
Aligner fabrication, we have aligner fabrication operations young, China, and Juarez, Mexico and plans for third facility in Europe, there were looking to accelerate into 2021.
Our facilities have excess capacity built in and while we never have 100% redundancy. We do have the ability to shift production volumes based on that excess capacity.
Worst case scenario if one of these facilities goes down then customers wait a little longer for their liners, but production will continue and we believe we can recover swiftly.
In short when we have an issue in one part of the World. We have designed our operations and enable us to load balance across facilities.
We've had to do this because of our growth in huge growth spurts that made it necessary to remain flexible. Additionally, the steps we've implemented during kobin crisis like work from home for CAD designers gives us even more flexibility and we'll leverage that going forward as we evaluate facilities requirements and potential cost savings beyond.
Our business strength and operational resiliency, we're at the forefront of digital dentistry and this pay pandemic has exposed the weakness of analog approaches and this and strengthens and benefits the digital technology in every aspect of our life.
There's been a lot of concern over the years about digital driving us apart and keeping people from interacting.
People focused on their screens and social media rather than with each other interacting with business is online rather than in person et cetera, I think what we're seeing through this terrible situation is that digital actually unites us it keeps us connected gives us flexibility in options without digital technology. During this crisis, how would kids go to school.
How what any of us be productive working from home how would universities are public health experts modeled occur without data mining in a guy I am proud and thankful of our digital platform is able to keep invisalign patients moving forward and treatment well physical practices are closed.
That it can connect doctors and patients to monitor issues and track treatment that because of digital we can get a replacement aligner for some new reorder some new retainers two kids sheltering in place and together with doctors were going to leverage that power digital for dentistry and orthodontics more than ever doctors are not going back to before.
We all know that digital dentistry is the future and that is a part of why align as weathering. This pandemic and why I believe we are well positioned for success going into recovery with that I'll now turn it over to John.
Thanks, Joe now for our Q1 financial results.
Total revenue for the first quarter was $551 million down 15.2% from the prior quarter end up 0.4% from the corresponding quarter a year ago for clear Aligners Q1 revenues of $481.6 million was down 11.4% sequentially across.
All regions, driven by Asia Pacific year over year clear aligner revenues growth of 2.6%.
Its growth from a man and the Americas offset by APAC.
A line of revenue growth was unfavorably impacted by approximately $6 million or approximately one point year over year from foreign exchange.
Q1, Invisalign asps were up sequentially by approximately $15 to $1255, primarily due to lower net deferrals due to a decrease in primary case shipments across all regions on a year over year basis, Q1, Invisalign Asps increased approximately $10 primarily.
Reflecting price increases in all regions and increased additional aligner revenues, partially offset by promotional discounts and unfavorable foreign exchange.
Total Q1, Invisalign shipments of 359.4 thousand cases.
Were down 13.1% sequentially and up 2.9% year over year.
Our scanner and services revenue for the first quarter was $69.4 million down 34.7% sequentially due to volume decreases in all regions year over year revenues were down 13.1%, primarily due to volume decreases in North America, partially offset by increases in EMEA.
And let Tim.
And increases in service revenue often increased installed base.
Moving on to gross margin first quarter overall gross margin was 71.6% down one point sequentially and down 1.6 points year over year on a non-GAAP basis, excluding stock based compensation expense overall gross margin was 71.8% for the first quarter down one point.
Sequentially and down 1.6 points year over year.
Clearly gross margin for the first quarter was 73% down 1.1 points sequentially and down 1.9 points year over year, primarily due to lower volumes.
And higher cost per case, partially offset by an increase in Invisalign asps.
Scanner gross margin for the first quarter was 61.8% down 3.1 points sequentially and 1.8 points year over year due to increased manufacturing variances lower ASP and partially offset by higher service revenue.
Q1, operating expenses were $324.4 million up sequentially, 1.1% and up 3.2% year over year. The sequential increase in operating expenses reflects higher legal and outside services.
Year over year. The increase reflects our continued investment in sales and R&D activities, including increased compensation from additional headcount and consumer marketing spend partially offset by the 29.8 million dollar charge related to the Invisalign store closure costs recorded in Q1 of 2019.
Our first quarter operating income was $69.9 million down, 53.7% sequentially and down 20.3% year over year, our first quarter operating margin was.
12.7% down 10.6 point sequentially and down 3.3 points year over year.
The sequential decrease in operating income and operating margin are primarily attributed to lower volume revenue and gross margin as a result for the covert 19 impacts.
Operating margin was impacted by approximately 0.8 points year over year from foreign exchange.
On a year over year basis, the decrease in operating margin and operating margin.
Primarily reflects lower gross profit and higher operating expenses related to go to market activities, partially offset by the $29.8 million charge related to the envisage line store closure in Q1 2019.
On non-GAAP basis, which excludes stock based compensation acquisition related costs and impairment and other costs related to Invisalign store closures in the prior year.
Operating margin for the first quarter was 17.1% down 9.3 points sequentially and down 8.1 points year over year.
Interest and other income expense net for the first quarter was an expense of $16.9 million, including a $9.2 million hedge loss related to the anticipated exit head acquisition, excluding the hedge loss interest and other income expense net was 7.4 million dollar.
Our expense on a non-GAAP basis.
With regards to the first quarter tax provision our tax rate was negative 2007 out of 45%, which includes a onetime tax benefit of approximately $1.5 billion associated with the recognition of a deferred tax asset related to the intra entities sale of certain intellectual property rights.
Shifting from our corporate structure reorganization completed during the quarter. This deferred tax benefit will be amortized starting in 2020 and continue into subsequent quarters and years that period over which the tax benefit will be recognized depends on the profitability of our Swiss headquarters and is still under assessment.
And my view with the Swiss tax authorities, excluding the tax benefit related to our corporate structure reorganization and the related tax effects on stock based compensation and other non-GAAP adjusted the first quarter tax rate on a non-GAAP basis was 33.2% compared to 29.
20.9% in prior quarter and 22.8% in the same quarter a year ago.
The non-GAAP tax rate was higher than forecasted due to lower than expected profits in regions outside the U.S.
First quarter diluted earnings per share was $19.21 up $17.68 sequentially and up $18.32 compared to the prior year on a non-GAAP basis diluted earnings per share was 73 cents for the first quarter.
One dollar and three cents sequentially and down 52 cents year over year.
Moving onto the balance sheet as of March 30, Onest 2020, cash cash equivalents and market.
Marketable securities were $790.7 million, a decrease of approximately $77.9 million from the prior quarter, which is primarily due to the annual bonus payout and the purchase of an additional San Jose, California facility combined with slower air collections.
Of our $790.7 million of cash and cash equivalents $119.2 million was held in the U.S.
And $671.5 million was held by air our international entities Q1 accounts receivable balance was $533 million down approximately 3.1% sequentially. Our overall days sales outstanding Dsos was 87 days up 11 days.
Financially in up nine days as compared to Q1 last year, we expect dsos to increase in Q2 as a result of.
We anticipate lower collections.
Cash flow from operations for the first quarter.
Was $9.8 million capital expenditures for the first quarter were $46.1 million, primarily related to our continued investment in increasing the lighter capacity and facilities.
Free cash flow defined as cash flow from operations less capital expenditures amounted to negative $36.3 million.
Under our to our May 2018 repurchase program, we still have $100 million available for repurchase of our common stock.
On April 1st 2020, we completed the acquisition of.
Privately held Ekso pad global whole needs Gmbh, a global leader in the dental CAD Cam software market for purchase price of approximately $430 million and cash the acquisition of exit CAD broadens, our digital platform reach by adding technology that addresses restorative need in an end.
To and digital platform workflow to facilitate ortho restorative and comprehensive dentistry and also brings ekso cats expertise in restorative dentistry and fantastic G guided surgery and small design of the align technology portfolio.
We expected to compliment.
And extend our Invisalign and Itero digital solutions paving the way for new seamless cough disciplinary dentistry in the lab and that chair side.
So Ted also brought into our platform reach in the digital dentistry with close to 200 partners and more than 35000 licenses installed worldwide.
Now, let me turn to our outlook as Joe described earlier.
Too early March our business was performing well and we believe we would exceed our Q1 guidance. However, things quickly changed in the latter part of March as the majority of Invisalign practices in our core market in EMEA and the Americas regions close their offices and stop seeing patients, which caused invisalign case receipts to drop rapidly.
And continue into April.
At this time due to the fluid market condition caused by the cobot 19 pandemic, we're not providing guidance for Q2, and we are withdrawing our prior commentary regarding our full year 2020.
What I can offer is the following directional commentary.
For China, which was the first major country impacted by Cobot 19, and what shutdown.
Almost overnight at the end of January as reflected in our Q1 guidance provided on the January earnings call.
It has shown continued improvement beginning in early March our case receipts orders in China are currently running at 80 plus percent of mid January is level.
But with fair amount of variability week to week and between various provinces and city keep in mind that there is about three to four week lag between case receipts and orders to case shipments.
China provinces are not you a uniform and their recovery, but all continue to improve one dong Shanghai and.
Gang are now at or above pre debt pandemic levels, Beijing, and who buys slower recovery is consistent with later reopening.
And our heavier restrictions early indications of patient flow is also positive, but it's too early to mature determine if it is pent up demand due to the lock down.
We also heard today that China's lifting travel restrictions within China, which should facilitate business.
APAC, excluding China is still very fluid as Japan, Japan shutdown later than the rest of APEC and other countries like Taiwan and Korea are also improving but our trailing Jeff China.
For the Americas, it's unclear how volume will evolve due to staggered locked down.
And subsequent staggered reopening by state we would expect the situation in the us to be similar to what we've seen in China with recovery starting in the states in the middle of the country and working its way out to the coast on a city by city basis.
In Latam it is still fluid as it is shut it shutdown later than the rest of the Americas.
They may have market is beginning to open up and Germany is making good strides we're monitoring each market to see how each is responding to the various government isolation regulations and is still fluid and a lot of variability week to week.
For Itero as a result of covered 19, we did see some deferral of purchase decisions at the end of the quarter and I would expect that to continue.
We finished Q1 with $791 million in cash and cash equivalents. Since then we closed our purchase of exit CAD $431 million on April 1st.
Alliance priorities during the pandemic our to take care of our employees customers and shareholders with these priorities in mine. We are taking actions to ensure the business is well positioned to weather the pandemic in order to maintain our financial health. We are taking the following actions holding our current headcount level steady to support the initiatives Jody.
Because while making sure we're prepared for the market recovery controlling discretionary spending such as travel and meeting related expenses slowing some of our capital expenditures and working with many vendors who have allowed us to increase payment terms, while providing extended payment terms to many of our customers.
As always we our balance sheet future investments to drive growth in a vastly underpenetrated market versus making the appropriate cost reductions and cash actions.
That have less impact to the business with that I'll turn it over to Joe for final comments Joe.
Thanks, John and thanks, again for joining us today before I close I want to take a minute to talk about some of the lines actions to support relief efforts and the communities in which we live and work.
One of the things that makes a line of great place to work is the concern our employees have for the world around us and their commitment to helping others. The passion. This core to our purpose of transforming smiles and changing lives and this time of need how we support our employees and customers and serve our communities is more important than ever.
Early on in the outbreak we donated RMB 1 million to the Chinese Red Cross to support relief efforts and what were then some of the hardest hit areas.
More recently, we committed a million us dollars to the line foundation aligns donor advise fun through fidelity charitable.
And our teams have been working together as a source of supply additional personal protection equipment or P. P E and medical supply donations for frontline healthcare workers in the communities. We serve there's some slides that give you more details on this.
Finally, thanks to the ingenuity intelligence of our manufacturing engineering team, we're able to leverage our threed printing technology and manufacturing expertise to produce face yields and medical swabs recovered 19 testing kits.
Through our network of connections with hospitals across the globe, where donating them to hospitals with the most critical needs as our existing threed printing equipment is highly customized for aligner fabrication and can't be reconfigured, we acquired some new separate threed printers to specifically help with relief efforts I'm extremely proud of what our employees are doing.
Individually to make a difference in one line is doing as a business overall in summary, we're all operating in a tough environment and even as we start to see signs of recovery in some geographies.
We don't know when we'll get back to normal or even near normal operations as always we're committed to the safety and well being of our employees Dr. partners.
Their staff in patients that remains our top priority in the weeks and months ahead.
That and working with our stakeholders and communities to get through this together.
With that said I want to make it clear, but we're not resting on our morals waiting for the business and better days.
Line technology believes and playing off fans and investing for future and that includes first and foremost protecting the jobs of our employees and keeping them ready to pivot for a fast recovery that means no furloughs no redo salaries staying focused on our long term strategy employees remain our most strategic asset.
Closing the Ekso Cat acquisition in early April to help expand our digital platform for the ortho restorative treatment.
We're very excited about this opportunity.
Adding resources to support international expansion.
For example, approximately 100, new sales reps in China.
Improving virtual treatment options, and releasing new products and digital tools to meet our customers' needs like Invisalign virtual appointment and Invisalign virtual care to help doctors and patients connect wild practices are closed and beyond.
Key to expanding our digital platform in a post cobot 19 environment investing in marketing and media to reach a consumers while they're at home during the pandemic and keep our brand top of mind something that other companies have stopped to conserve cash extending our working capital to help our customers manage their cash flow and expenses we.
Our very aware of the near term volume challenges of consumer shuttering in place closed ortho and dental offices and possible delays in new treatment as consumers go back to work and evaluate their priorities.
But we're still focused on investing in a vastly underpenetrated market and believe that align is uniquely positioned for recovery and continued growth coming out of the pandemic covert 19 will continue to have significant implications to the world into our industry. Our digital platform has made it possible for thousands of doctors and patients to continue invisalign treatment.
Throughout this global disruption, thanks to the digital orthodontics, and Invisalign Aligners digital treatment planning and virtual monitoring care I.
I think coming out of this more doctors than ever we have experienced the benefit of digital treatment and digital tools for their practices and many we've seen first hand, the limitations in frustrations of the traditional analog approach the patient treatments like wires and brackets.
With that said.
I want to thank you again for joining the call I look forward to updating you on our progress as the year unfolds now I'll turn the call over to our operator for questions.
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First question comes from the line of Nathan Ritchie with Goldman Sachs. Please proceed with your question.
Good afternoon.
Thanks, So the question and hope you in the align team are all doing well.
Appreciate all the color you on the call I guess, Joe maybe starting with China, You know survey potentially the guide for how the U.S. and EMEA might recover.
Yes. It was there anything that you would call out in terms of either the types of cases or the channels that you.
Yes started to come back first they got in China, and you know as we think about you know if China does serve as a guide for the U.S.
Does that sort of being the you know we're looking at sort of like three to four months for kind of the case receipts to get back to that 80% level that you referred to in your remarks.
Yeah, you only the first of all you know China's China right, China has done very rigid locked down procedures. They were into this first I don't think you can you really take a vector from China and as you know working from the United States or from a western geography in general.
We also see you know as John indicated in his <unk> written script is that this is coming up in China by city, and we see Beijing and.
Uhhuh on area, and all who by province.
Being behind in that sense. So I think as you look the United States to New York in California will come up differently than the middle part of the nation's what we're seeing right now too so.
You talked about some segmentation in the sense of how it's come back in China to remember is primarily a comprehensive product base that we have in China, and it's pretty much day, I mean, where we're selling some moderate there and some different things, but if prime it's primarily coming back as a comprehensive peace. So again I don't think that's a vector that will use when you look at other areas too so.
There's no question isn't the other countries will come back I, just I'm very reluctant to pick up a vector from China and really relate that to the western economies in different countries, because it's all being handled differently around the world.
Okay. Joe appreciate that I guess, just just a quick follow up I mean, when when you think about you know these practices kind of open back up and you made some comments about how you're supporting customers.
Are there any changes that you're thinking about from like a marketing or levers that you kind of use of the path maybe rent gearing goes up.
As you think about helping volumes.
It's a kind of get back to more normalized levels.
And we obviously feel that I'm, particularly orthodontic community there'll be a a much harder leaning toward a digital kind of environment, because you know with a chance of reinfection rates with cobot 19, it concerns about future shutdowns or slowdowns.
As we mentioned in our script you just have a lot of variability and flexibility that you can use and digital format that you can't use and analog format. So.
We will be going to our customers without with programs. It really help them through to figure out how to convert more and more of their volume to a digital environment not that we havent done that before but we'll be very specific about it and as we move into teens season, you know team season second quarter, you'll see us really focused on teens, because we know it worked those would be focused on teens too and I know that's it.
Front demographic segments differently in a sense of our product lines like first in math and.
No one will also be ready with P.P. equipment and other things they will prepare doctors for the concerns that they're going to have of protecting their patients and also their employees to.
The Miss anything John or anything it has good.
<unk>.
Next question please.
Thank you. Our next question comes from the line of Brandon.
Jefferies. Please proceed with your question.
Hi, Thanks, good afternoon its.
George I would sort of just talk about the flexibility you have your cost structure, how much of opex is discretionary or variable sounds like you're focused on kind of holding the line in terms of headcount marketing, but how should we think about just the levers you have to trying to control costs. During this period right now.
Hi, Brad This is John Yeah, Yeah, as we said there are they're levers that we could Paul just as was as we accelerate growth there's levers repo and when we look at our existing Opex as we look to spend tip of our marketing dollars, where we spend at how we how we spend it there's lovers around that spend.
As with the travel restrictions and and less conferences and so on there's a lot of other operating expenditures that does that can be pushed out and and not spend currently so we're focused in on its still investing for the future to be able to.
Work with our doctors as Joe has meant that mentioned a lot of new technologies.
And making sure that we keep the employees an end to end to focus that we have on the on our structure that we have but we'll we'll modulate as as we needed as we need to going forward, if if if needed.
Thanks, and then follow up for Joe.
As you think about sort of the leverage you have to drive demand.
Would you expect to be somewhat more aggressive in terms of Asps are you planning to adjust your advantage program levels or hurdles to give dennis a bit of a break given these have their office disclosed thanks.
Operator, we've already extended from an advantage tier standpoint, with our customers when they went into that so.
I don't know how much of an effect I don't have on the ASP standpoint becomes a base you'd be holding them to where they are but overall, it's not price. It's our strategy here as we come up out of here is how do we support our customers in the digital environment. We're trying to explain how do we how do we really support them from a a p. standpoint, and they had expert standpoint, we talked about alone.
Means different things from a cash flow standpoint, we know many I'm are gonna be challenged in that way and we have been often offering some payables relief.
Deferral going forward so.
There's a there's a broad aspect of needs, we think our customers will have.
Advantages is one part of that but it's what we can bring to these customers holistically to help their practices in health and grow.
Great. Thanks.
Yep.
Thank you. Our next question comes from the line of John.
<unk>. Please proceed with your question.
Great. Thanks, guys John.
Hey, Joe.
Joe you mentioned protecting employees know furloughs your salary cuts I'm just curious about the competition and has anything changed in the marketplace around the competitive landscape. We've heard some chatter about sort of call. It cut back from the orthodontic divisions and some of the other players, but maybe you can elaborate on what you're hearing or seeing out there.
Hi, John you dollar be specific but I mean, most of our competitors the pad layoffs or cutbacks in some way we've just been blessed with a really strong balance sheet going into this will allow us to have the flexibility and do it as we do you know where growth business you know that John well, we're set up for 20 or 30% kind of growth we have to position ourselves for that in that sense.
Making sure that our production capacities ready that our employee base is ready to our sales teams are really critical in that sense too and.
It's wonderful we can see some of the investments like you know Invisalign, you know virtual assistance and things that we're working with with customers right now, but we can launch those products and continued to drive those products going forward you know with a full force engineering team also so.
You know from a competitive standpoint, I mean, we are we're seeing varying degrees of cut backs and moves in that sense, but were not focused on that John really were just focused on what we think we should do what's important in our portfolio and how we can help our doctors out.
That's helpful second is a little bit long, but someone swift I know you kicked off a pilot recent recently I think it's an important sort of initiative long term to better get after the lower acuity market I'm just curious Joe you kicked it off when there was a lot going on so did you get enough of a signal during that time to share some takeaways from.
The Swift initiative, and then could we see lean on that a little bit more in coming months, because it is a little bit more price sensitive for the consumer it has a monthly and in this environment of job uncertainty might really resonate. So curious your thoughts there. Thanks guys.
Yeah, Joe when we launched Swift timing couldn't be worse in that sense, because you know coded hit pretty for after that but we got a pretty strong signal in that that we think we understand you know at least parts of the demand equation.
We're going to look at rolling that out in a broader sense going forward.
You know in United States, and maybe in different parts of the world, but I think when you talked about the price point on ASP and different things and obviously, we broached now with the doctors who were part of this with program, but John you know, there's I want to make sure color I understand a this is our margins on this product line or accretive to order gross margin there and how we're going into it so.
It's really important in how we position that going forward, but again, those 300 million patients out there. We know there's some price sensitivity a and then there's some clinical aspects from a simplicity standpoint that we're going after with that product line and we think it will respond real well in a broader sense as we begin to roll that out.
Okay. Thanks, guys.
Thanks, John.
Thank you. Our next question comes from the line to Steve Do you saw with Wolfe Research. Please proceed with your question.
Hi, Steve Steve.
Either Ah thanks for the time here.
I also wanted to ask it in a way about swift, but with a very different angle as.
As we think about the operating environment prospectively for some amount of time people are going to be concerned about safety and so I wonder to what extent you definitely alluded to this in your prepared remarks 10, you flex silver the technology that you have with Swift and some of the things haven't development to decrease the amount of face to face Conte.
Correct.
And I know you alluded to this but I wonder if you could you know ticket a few steps further give us more context, a little more insight into your plans. How do you think about making invisalign treatment achievable with a minimum of in person interaction for those who might be concerned about that even in an environment, where the P. P is you know more widely used.
Steve That's top of mind you know is is we do things and you know today too. So actually you even before co. Good when we designed Swift Swiss was designed for basically two to three dr. direct contacts and that's it and that was part of making the equation for doctors are profitable equation to then you roll then are you know our remote.
Monitoring capability, we just rolled out which gives dr. As a tool to be able to do that and we'll be able to on handsets will going forward.
You know, there's limited amount of attachments and IP are on things like like Swift too.
And you know, it's it's not that our clinical protocols are going to in some way decrease in the sense of what the clinical capability of our and what we can do.
We're also cognizant in a sense of time in mouth and.
Well, we'll just that we might time, those things differently to help doctors to but theres theres a lot of different things that we're contemplating we talked about.
You know what the conference last year about direct printing attachments and those kinds of things that.
In the future in not too distant future will allow us a lot less contact and a lot of speed from a productivity standpoint, with doctors and patients feel to do those things so.
It's the right line of questioning Steve.
So remote monitoring a digital platform that allows us to anticipate exactly when you'll be seeing a patient and what will need to be done in that sense not duplicating treatments at the office that don't need to be done a and keeping up with patients in the sense remotely and only calling them in when something goes array or a doctor has a concern somewhat so welcome.
We feel our digital platform and things we have in the pipeline, Steve are really well positioned to address that.
Okay. Good good to hear.
Second question I wanted to add actually relates to the practice.
The U.S. so it's been well for some of this month, but for practices certainly many weeks.
Do you think about the most likely you know as you talk to the the orthodontic in dental societies, most likely path forward for practice reopening in the U.S. and I know, it's a complicated question because there will be a lot of regional variation and staging but to what extent.
Techniques that you can't can you give us your sense for how you guys are thinking about that and you're planning specific to the U.S. Thanks.
Yes, Steve I think it's going to be it's certainly not going to be uniform in a sense of how we go about that whether it's in the states are anywhere around the world, they're going to be certain government restrictions I think there's going to be certain when I say restrictions to its going to be equipment. That's available from a p. standpoint.
No what patients are going to be prepared to do.
We see you know some you look at treatment planning alternatives or when patients entering office right now, they're not even coming into the office the times they stay in their car until there is some and in some way.
That makes sure that theres less interaction and proper social distancing within within the office itself. So I can't really tight yet the only thing is the food I think is going to be a lot more caution.
About you know obviously transmission is disease, that's going to include how you stage patients how often you see these patients.
And I think from a dental versus orthodontic standpoint, there are off is obviously going to be different protocols because of different procedures that take place. There. She has a different interesting article in the New York Times yesterday that really did and that's why kind of a graph on a different types of professions the interface.
With the with customers and which ones are or.
Most time from intimacy standpoint include transmit you know a virus and dentistry came up almost on the top of that whole thing. So I mean, that's going to be watch closely I think we have to make sure we work with our customers I'm in doctors and and to help them through this too.
Thanks for all the for the perspective there.
Yeah. Thanks.
Thank you. Our next question comes from the line of Elizabeth Anderson with Evercore ISI. Please proceed with your question.
Hi, guys. Thanks.
Yeah Okay.
A question on that.
You know absence or you guys.
No you said that you Lars.
Unveiling the Apple sort of like a beta testing.
Rapidly.
Rolling that forward and allowing more access and training and thanks to that can you speak anymore. The details.
Like the uptake or how the training going up.
The key use of that.
Yeah.
This was just make clear you're talking about virtual appointment virtual care right.
Yeah Yeah.
For those of you talking about just training of doctors online rather than face to face.
No I, sorry, I went on the personal.
Okay.
And so your question is on the work flow of that is that yes, yes.
Wow, that's like how.
Uptake of that.
There's some sort of training.
Yeah.
Hi.
Right.
Right.
I get it.
Hey look first of all you know we've been we didn't just roll that we just rolled this out of them working on it for over a year.
So we actually Russia, so the market and as we refer to the market we were cautious in a sense of how many doctors. We you had in the program.
And we start here in United States and now we're gradually moving it to broader do more doctors in U.S. and across the world too we had to train the doctors to do this but the great thing it is our and on our ideas platform and its has a great user interface with the team put together so.
And the feedback that I've gotten from the teams and the doctors to that user interface has been pretty simple and how they've been able to put that piece together.
Remember the whole idea there is just that how do you stay.
These kind of locked down periods or future workflows, where patients don't want to come into the office all the time to see a doctor how in the world can you track treatment and how can you communicate and it's gone it's gone really well and.
We will have actually more doctors, who wanted to be can give it to right. Now we just want to make sure. We don't burden them and we just rolled that out piece by piece to make sure that it's a robust enough to handle more and more doctors overtime.
Okay.
Right.
Uh huh.
Yes.
Okay.
Yes, more than 2000, Dr., we have more than 2000 Doctor Strange right now I trained and are beginning to use virtual care and not you know obviously, we have you know tens of thousands of doctors out there that will want to roll this out too and we think we'll have an inter.
Just in it.
Okay.
And we've have over just I'm getting some other data here too we other were 3500.
Appointments right now that have been done through virtual care.
You know there's it as we speak about this too. It's just it just makes sense right I mean in everybody's kind of in today's call that environment. It obviously makes sense to try to eliminate patients try and do you guys have this person to person contact, but I mean going forward to in a digital kind of environment.
Having these kind of tools just makes sense from a productivity standpoint for both doctors and patients to so we'll continue to invest pretty heavily in this to get better and better at it.
This is our initial launch, but you'll see more and more reiterations to to help to enhance this platform.
Thank you. Our next question comes from the line of Jeff Johnson with Baird. Please proceed with your question.
Yeah, Hi, Joe. Thank you guys, Hey, Joe how are you good afternoon.
Just two questions I guess, one you know we've seen some news in the last couple of days or from one year.
DTC competitors on some patents they were able to get to end up some better business Bureau recommendations on some advertising or you know would love your view not so much on what that means for them, but it does that have any implications.
Are you either on the Swift product, where some of that is kind of a monthly fee I don't think any that would trip and stuff in their new patent, but also they have to rein in a little bit of their advertising.
So thats a good thing for you, but we'll just like to get your view.
You know.
Jeff overall.
That's that's not a model that competes with US we go directly to doctors in everything we do work through a doctor base.
And so you know from what we know of the we I haven't looked at the patent or whatever I just read most of the information. It's out there that has to do with Invisalign I'm, we have to do with.
Scanning a patient in a store and transferring a file that that never really never really reaches a doctor in any way except from until the dentistry standpoint, So we don't see it being an issue for us at all.
Sorry, I was on mute. Thank you and then just my follow up question. You know, obviously, we're all going into watching P.P., where I'm going to be watching all patients willingness to go into these offices. What are you hearing from the Doctor side, you know from an order gotta standpoint, the opposite maybe a little clean or less aerosolization. It.
It's even a word of fluids and what have you. So oh, you're orthodontists, especially kind of chomping at the bit to get back I'm sure. They are financially, but do they feel safe do they feel I like this will be an environment. They can bring their staff back into that can bring patients into things like that thanks.
You know from an orthodontist standpoint, Jeff you're right. The segment those two because obviously dentistry is a lot different than orthodontists and whenever the orthodontists, we look to I would say that did not concerned but they're cautious in the sense of what they have to do the precautions that have to make with a patients and also.
With their employees internally.
They are anxious to get back, but I mean, there's a good degreed degree of caution to make sure that they come back in the right way.
And a thoughtful way too again I think this could vary by state also in the sense of health applied and what kind of regulations are put in place, but I know theres, they're really interested to come back and the ones that really went into this was a significant amount of invisalign feel good that they've been able to stay in contact with their patients and be able to send passive aligners or different things that.
Helped in any kind of course correction or holding patients to where they are so.
On the dentistry side, I mean, that's obviously going to be different but when you think about it and it was like one of the London leased invasive procedures that you're going to see in dentistry, and we'll certainly be emphasizing that and trying to work with doctors to help improve.
You talked about I go in the growth of I go and that's a great. When you think about his take on we talk about a digital platform. That's a terrific product for GPS in the sense of being able to leverage that and then send to more difficult cases, or the words of dawn aside and we'll be working with GPS to really help through that transition.
Understood. Thank you.
Hi, Jeff Thank you.
Thank you. Our next question comes from the line of John.
I'm Blair. Please proceed with your question.
Hi, Thanks, very much hi, Joe could you remind us what's the lag time between order receipt from a customer from one to the point, where you can actually ship the Aligners [noise].
So we call CCH NCCN would be an order.
And I'd say John can correct me on this I say its four days the five days.
But but from an order to after shipment could be three to four weeks because it's the back and forth describing kinda initial to the actual shipment it could be three to four weeks, depending on how how much back and forth as you know John up getting that treatment plan just exactly the way that Dr. has a and want it takes a takes a number of iterations and then they actually.
Manufacturer and shipment can do so on the outside it could be four weeks and total okay, great. So from a fabrication standpoint.
You know for a a region like the U.S. that got locked down and maybe mid March that backlog, probably would've would it be reasonable to us and that kind of carried through to the mid April.
Well, there's still going to be back and forth debt that goes I mean, you have patients that have not been able to make it into the office to to look at the final planned for doctors to meet you know other other things that go on and so it's going to vary I'm going to vary by this until the doctor actually.
Proved the treatment plan to then and then it gets manufactured so.
You remember our businesses as a made to order business I mean, as there is no inventory and and as things change in the environment. You know when there's people can't come to the office to debt to seek treatment or to make sure that they're going to prove that that treatment plan think shut down right away and down.
It takes it takes some time to to see that ramp back up.
Great. Thanks, that's helpful. And then any anything you can give us in terms of contribution from Ekso CAD since that'll be in there for the full second quarter.
Yeah, nothing nothing on that John that we're giving on any any forward guidance other than what weve, but we've had in our prepared remarks.
Thanks, John next question please.
Thanks, John <unk>.
Thank you. Our next question comes from a line of Kevin Kelly I know what do you.
Proceed with your question.
Hi, Thank you.
Question, you're talking about a digital and analog world, but if I think about a line a year from now and hopefully we're through this.
Competitively.
Just one other manufacturers, but against wires and brackets I mean is there a is their marketing pitch here that that the orthodontists can go and say hey, you know instead of using wires and brackets or you can even pitch to the orthodontists that there might be a greater demand to use clear aligners versus wires and brackets simply because you're able to keep patients out.
The.
Keep them out of that the orthodontists office of the Dentist's office more frequently that something that you've contemplated that could necessarily be a positive for marketshare cream.
You know Kevin prior to the covert 19, we have a program called adapt where doctors orthodontic come to US and say look you want to go primarily you know 80, 80%, 90% Invisalign, how do we do that right and so how do you do that you're going to crank up your volume and a significant way and to do that you just you I needed to drive.
More productivity.
And so we were pushing that pieces you don't have to see patients is often you might have patients come back every three or four weeks to adjust wires and brackets.
I think they're going to come back the during their episode with a wire that comes out and is an emergency procedure about 20% of an worked those time that those along wires and brackets or emergency cases.
Talk to doctors about how you can you know really control your schedule much better in a digital environment and how you know patients still have to comes out. So often we talk about seven weeks eight weeks I've seen patients now that becomes even more magnified. When you think about profitability of infection and concern about cobot 19, it's not just a productivity play it's a way of being.
Able to treat patients in a way that's safer for your staff and safer for those patients to so we'll certainly be emphasizing that and but it goes it just goes along with a digital platform. It is it's much more productive and ER.
Doctors will need less time per patient and you know I mean, we know now well from the millions of patients we've done.
One quick follow up the Dsos spiked I know you made some comments earlier about offering payment terms and loans and the like does that explain.
The bump up the nine day, you said expect Dsos to continue to move higher or what was the impact of yes, I guess would be improved payment terms to the doctors on your dsos.
Yeah. This is Barry so it varies by doctors and tell them, but as they have I'm working capital concerns were fortunate position to to be able to help and so we've worked with them to kind of manage the their cash flow and terms of paying us and then the DSO impact is obviously impacted by lower revenue.
Well, which which causes that to to increase so, but where we're working closely with our customers and making sure that they can help weather the storm stay close with them and as they start to ramp up we want to be their partners. So with them and cash is important part of that.
Great. Thanks, they say if everybody.
Thanks, Kevin cancer, Operator, we'll take one more question. Please.
Thank you. Our final question comes from the line Richard Newitter Baby Leerink. Please proceed with your question.
Hi, guys. This is Jamie on for Rich. This afternoon. Thanks for taking my question.
I just a housekeeping one you guys had said in the beginning of your prepared remarks incremental impact from Kogan 19 was about <unk>.
Yes, you are cases, and I think 85 million last Robin and I just wanted to make sure that it sounds like the way that we should be thinking about that is incremental to what you had originally contemplated in your one you Biden said I think about 20 to 25000 case intact and that's already differently.
Rob anyone intact.
That's correct. Thank God, Jamie you would think of that is incremental to how we guided.
Got it so it's our way to think about that in total would be about 115 to 120 million of impact.
Revenue from the Corrado virus in the first quarter debt, that's that's correct.
Got it okay.
Just last one for me.
Any sort of update on where you buy stand with launching the politics band or product.
Hi, Hi, Jamie I'll take that you know we're still we have the design.
We're still working that piece, we have to find the effective way to manufacturer. So I don't have a date and I can give you, but I can tell you that it's a it's high on our priority list.
Thank you.
Thank you Jamie.
Thank you we have reached the end of our question and answer session I'd like to turn the call back over to Stacie Shirley for any closing remarks.
Well. Thank you everyone for joining us we look forward just speaking with you at upcoming virtual financial conferences in the future. If you have any questions. Please contact investor Relations and hope you have a great day. Thank you.
Thank you. This concludes today's teleconference. You may disconnect your lines at the time. Thank you for your participation have a wonderful.
<unk>.