Q1 2020 Earnings Call
[music].
This ends.
[music].
Good afternoon, ladies and gentlemen, and welcome to be I see you medical call.
It's time, all participants are in listen only mode.
Later, we will conduct a question answer session and instructions will follow at that time.
If anyone should require assistance during the conference. Please press star.
And this your ROE on your Touchtone telephone.
As a reminder, this conference call is being recorded.
I'd now like to turn the conference over to your house today.
Mr. John Mills I see our please go ahead Sir.
Great. Thank you good afternoon, everyone. Thank you for joining us today to discuss they actually medical financial results for the first quarter 2020.
On the call today, representing I see you medical devices that Jane Chief Executive Officer in Chairman.
And Brian, but now Chief Financial Officer.
Well, let everyone know that we have a presentation accompanying today's prepared remarks to beauty presentation. Please go to our Investor page you click on events calendar and will be under the first quarter 2020 units.
Before we start to prepared remarks, I wanted to touch point any forward looking statements made during the call, including beliefs and expectations about the company's future results. Please be aware they are based on the best available information to management and assumptions that are reasonable such statements are not intended to be a representation of each results and are subject to risk and uncertainties.
Future results may differ materially from management's current expectations.
We refer all of you into the company FCC filings for more detailed information on the risks and uncertainties and have a direct bearing on operational results and financial position.
Please note that during today's call will also discuss non-GAAP financial measures, including results on an adjusted basis. We believe these financial measures can facilitate a more complete analysis and greater transparency nice you medicals ongoing results of operations, particularly when comparing underlying results from period to period.
We've also included a reconciliation of these non-GAAP measures in today's release and provide as much detail as possible on any addendums that are added back.
But that is my pleasure to turn the call over to go back.
Thanks, John Good afternoon, everybody and we hope you and your families are well.
For the last three years, we've been ending every call with the same comment about support from our customers and the ability of our employees to adapt in our own journey.
While it was never intended for the current environment that belief is exactly what was and continues to be required in the current environment.
Like everyone in our industry, we want to start first by thanking our hospital customers for trusting us to serve you. During these times none of us know exactly what the new normal is but we do know we will continue to adapt and off our best support an execution.
Our own experiences of rapidly adjusting production up and down new I T systems, new fulfillment models around the world and deep integration work has actually prepared as well for volatility.
Well try to be a bit brief on this call is we know there's a lot of late in quarter reporting happening in the market.
On today's call we wanted to comment on Q1 results with and without the effects of covered 90.
Described the high level knock on effects of the pandemic to why to medical and how we're adapting.
Articulate how we feel about our positioning in this environment and any strategic implications.
A view on timing and but we will have a better view of the year for our shorter term financial goals and at least assumptions were making now.
Update on some housekeeping items, including quality audits product approvals, the Austin factory Cutover, and lastly, reflecting their criteria by which we are judging ourselves as we described in the last call as back to growing our differentiated product lines.
The first quarter fiscal 2020, again showed sequential revenue improvement and commercial stability in our most valuable product lines, but did benefit from pandemic accelerated purchases in certain lines and geographies.
The company is operationally running well the competitive environment seems to have frozen a bit and we do not have any material production constraints with all plants performing well.
While we did have some cobot ordering benefit we also had to knock on effect of a strengthening us dollar which resulted in a large and mostly non cash impact on the income statement.
We finished the quarter with 316 million and adjusted revenue adjusted EBITDA came in at 63 million after absorbing 8 million in currency impact.
From a management perspective, even after marking down some of the cobot purchases and the associated profit we feel okay about the level of profitability.
After adjusting for currency the primary driver of decreased profitability on a year over year basis is price and volume mix, an Ivy solutions as expected.
Adjusted EPS came in at $1.81 and cash was 440 million as we did draw down on our revolver in mid March given the uncertainty and Brian and I will describe some of the thinking there's as it is a costly insurance plan.
The vast majority of restructuring restructuring and integration charges were due to the Austin factory I T system cutover as previously discussed.
So let's go through the business as quickly and then come back to discuss covered 19 and the knock on effects, starting with the usual with infusion consumables, which start largest business infusion consumables had revenues of 124 million in Q1, 2020, which was a 4% increase year over year adjusted for currency and 2% increase on a reported basis.
We had good consistency in most places and product lines.
On college here, we had a record quarter for growth in international markets. As we are finally able to release more product into that channel, but it was slower in the us as implementation slowed dramatically in March and we had some burn off from our Q4 implementations in traditional IB therapy, we saw a small amount of what we would consider excess purchases in.
The international markets due to the pandemic for the majority of the U.S. market volumes were as predicted and there was not any material customer churn anywhere.
Pursuit vascular is clear guard products delivered results as expected.
Moving to infusion systems, which is primarily or LPP pumps and associated dedicated sets.
This segment did 89 million in adjusted revenue, which was growth of 7% on a constant currency basis.
Some of our largest market positions in the segment are in Spain, and Italy, and we did benefit slightly from increased sales into those markets due to the pandemic in Q1.
We will have benefit from covert 19 demand in this segment again in Q2, primarily in the us market.
Even before the pandemic, we were holding the best amount of rollover and competitive signings. We had in many years. The challenge now is predicting the ability to actually get into hospitals and implement these conversions. We continue to believe we've stabilized the 10 plus year install base decline.
We still know that safety is a critical factor when choosing an infusion pump we believe our plum LTP technology is well positioned as evidenced by the recent clinical guidelines around Ivy pumps, we've gotten back to the core marketing messages around our plan that will be pump as these independent and clinical reviews have validated our differentiation.
As for the non LPP products, which include our PPA and ambulatory pumps since the last call supply a PPA vials is inconsistent and we do not see backward slippage in that line.
We do believe our ambulatory product sales will decline, but given recent LPP wins and our current best estimate of installation timelines. We do believe we can finally of growth. This year in our infusion systems segment net of currency impact.
Finishing the segment discussion with infusion solutions, we had 91 million in adjusted revenue down 1% year over year end up 10 million sequentially like last quarter, we did see and feel some more stable footing gear on the base business.
We did see some excess cobot ordering here in the last two weeks of March in the us.
We estimate that was about five to 6 million core around 50% over ordering for the last two weeks of March.
Our business is a mix of direct and distributor fulfillment.
On the direct business roughly half the overage was to committed customers and half was open market purchases, we do not yet no on the distributed business.
We continue to believe the quality of our customer book has improved with US holding the best list of sustainable relationships versus the day, we bought the business. We are still healthy on safety stock and since the last call our new distribution centers come online in Texas to help improve our longer term supply chain costs.
Okay, that's a bit on the segments I'll come back to some of those points when we discuss our current model.
There has been a number of impacts of the company from Cobot 19, and I will just run down the list.
Commercially we moved very quickly to respond to European tenders for pump hardware and demand for dedicated sets in the US market. We have participated in selected national stockpile sales and have responded to selected state RFP for pumps.
The challenge is to balance sales for continuing care versus stockpiles.
We do believe most of the pumps, we sold in Q1 into Europe were for actual care delivery.
Operationally as we mentioned on the Q4 call. The early signs from China did cause us to accelerate some raw material purchases. So we have been prepared.
From a plant perspective, just as many others have experienced the pandemic has required additional planning on our operational footprint shift hours local transportation and redundancy plans.
We invested in additional peony reasonably early and a focused on employee safety. We also added extra compensation to our team members in our production in service operations, who had to perform their duties in states or countries were shelter in place requirements were in place.
As a reminder, our primary manufacturing locations are in Texas.
Utah, Costa Rica, and end Sonata, Mexico, which is 90 minutes south of Tijuana.
From an expense perspective, our incremental direct costs related to cobot 19, and our savings are probably awash. We've had increased expenses as we just described but we've also had savings with discretionary expenses less TNT and higher overall job vacancy rate.
We were struggling with extremely low unemployment rates in Utah and Austin prior to the outbreak freight costs have increased as capacity has been reduced from the system.
Strategically as we've thought through the implications of Coven 19, and the reality is a healthcare system. It has exposed we believe it aligns with much of our commentary since we became a full line supplier.
We make essential items that require significant clinical training high capital expenditures and in general are items that customers do not want to switch unless they have to.
We are us manufacturer that is deeply vertically integrated and has core redundancy and products that we do not produced domestically between end sonata in Costa Rica.
We think the weakness is illustrated in the healthcare supply chain that either drove manufacturing to be incurred predictable or offshore will all get reassessed in the new normal.
We don't make any assumptions about minimum supply chain holds or think that will be immediately implemented but we do believe the market broadly defined does not want a winner take all set up in these essential items categories and thats before each categories assess on its own innovation clinical outcomes et cetera.
And so we focus on what we can control in these moments for us it's having the best list of supportive healthy customers we can.
It's having the best liquidity weekend for a company our size, we're not that big but are necessary to the system and we need to be prepared for what ever realignments our opportunities arise.
But in the medium term the pandemic does make us concern about the economics in the broader healthcare system.
Our products are tied directly to hospital admissions and like everyone else, we see the rapid deterioration of elective procedures and IAR visits which are tied to admissions.
The knock on effects of led to loss selling time and delays in implementations for products that need onsite training and enhances inertia when people don't have time to deal with change.
For that reason, we're cautious on what the balance of the year will bring excluding upside in our infusion systems segment in Q2.
It was unclear in mid March whether this would also have knock on effects to liquidity.
So we chose to drawdown in our revolver, which is unusual for a company that was in our balance sheet position and in our product categories, but we did not want to be the last task.
We know there is a negative short term impact of this if we keep it drawn.
And that.
When combined with the currency impacts result in the revision to our guidance range.
But we do run the company production plan compensation plan et cetera to forecast that is our latest view.
To describe our current model relative to our initial years initial your assumptions first we have more sales and infusion systems than originally planned.
Plus to some likely savings through discretionary costs three some operational improvements.
All of which are combined and then offset by declines in solutions and consumables directly related to lack of hospital admissions.
Currency impact again of which a big chunk is noncash and some incremental coated related expenses.
Electric drive ballpark, one third of admissions and we're already seeing our customers segmenting those cases into time critical versus time sensitive, which means they're not all coming back in our opinion.
It is too early to say with certainty what this means for the fiscal year.
Our current model has made significant adjustments downward in Q2 in Q3 tied to utilization, which is incorporated which is incorporated into our current view and we'll all know more in 90 days I.
I would say a wide range of outcomes as possible, but we still want to run the company to a baseline model as we're not that big and the new normal does need to incorporate more volatility.
Moving on a housekeeping items.
Again in Q1, we had excellent global fulfillment rates to our customers. The cutover of Austin systems happen is working well and being supported in Q2, we are fully stood up not only away from Pfizer, but now have modern connected systems across all business lines.
From a quality perspective, we've had a number of notified body audits over the last four months in San Clemente, San Diego, Costa Rica, and Salt Lake City. All done remotely. These were regarding the MD SAP and CE Mark annual Certs, all went well with no major findings and there are a few remaining sites on the agenda for me.
There will be a small announcement on a recall of one lot of Ivy solutions produced in mid 2019 by our contract manufacturing partner in Rocky Mount and there is no economic impact.
On product approvals, we did receive five 10-K approvals for our swapped at mail cap to complement our swabcap business and a new to a transfer device to add to our Ivy solutions offerings.
We need to cut both items into production stone.
To synthesize all these comments on the business segments, Cobot 19, and how we're trying to judge ourselves.
On the last call. We said, we have the ability to improve our position in our most differentiated businesses of Ivy consumables and Ivy systems, and we have to prove stability in our less differentiated business of Ivy solutions, we talked about the industry structure attractiveness for two years why we fit in the puzzle in our products are in good position from a technology quality manufacturing.
Perspective.
While it may add volatility in the short term, we do think the weakness is exposed in the healthcare supply chain add to the argument for all participants to be healthy in stable and IP solutions. We feel we have the best right to win and I'd be pumps that we've had since we bought the business.
The competitive positioning of the consumables business has not changed nor the value of the oncology category. As a result of covered 19, but it is really hard to see what the next few quarters will bring.
In the new normal or cobot, 19 world, where supply chain resiliency and diversity matters. We believe are essential items logically benefit and our most differentiated items are still differentiated.
We said in the last call that 2019 was the most difficult year our team has faced.
The company did emerge operationally stronger from that experience and has taught us all how to adapt.
Thank you to all the employees customers suppliers and frontline healthcare workers are company appreciates the role each of US has had to play with that I'll turn it over to Brian.
Thanks, Fivex and good afternoon, everyone to begin a first walk down the piano and then talk a little about cash flow in the balance sheet. So starting with the revenue line. Our first quarter 2020, GAAP revenue was 329 million compared to 331 million last year, which is down one.
Percent or flat on a constant currency basis for your reference the 2019 and 2020 adjusted revenue numbers, which exclude contract manufacturing sales of Pfizer can be found on slide number three of the presentation.
Our adjusted revenue numbers for the quarter were 316 million compared to $311 million last year up 2% or 3% on a constant currency basis.
Confusion consumables were up 2% or 4% on a constant currency basis, Ivy solutions, which we sell primarily in the us.
Was down 1% on both reported and constant currency basis infusion systems was up 4% or 7% on a constant currency basis in critical care down, 4% or 3% on a constant currency basis.
As you can see from slide number for the presentation for the first quarter. However, adjusted gross margin was 40% compared to 44% for the first quarter last year. The Q1 gross margin was in line with our expectations. The largest driver for the year over year decrease is similar to last.
Quarter and reflects the impact from lower sales of higher priced non committed business, an Ivy solutions, along with lost manufacturing overhead absorption from lower production levels compared to a year ago.
As she in a expense was 22% of revenues during the first quarter, which is flat compared to last year. This was slightly less than expected due to combination of spending controls and currency.
R&D expenses were $11 million for the quarter down 2 million year over year.
And we expect R&D to be around 4% of revenue for the full year.
Restructuring integration in strategic transaction expenses were 12 million in the first quarter versus 24 million last year.
The first quarter 2002, 2020 spending related primarily to the system cutover for our Austin manufacturing facility and also included cost to restructure certain foreign commercial operations.
The Austin system Cutover took place during the quarter and was the final stuff in the system integration plan related to the Hospira acquisition.
We now expect total restructuring integration and strategic transaction expenses to be a bit lower for the full year at 30 to 35 million with the majority of the spend coming in the first half of the year.
Adjusted diluted earnings per share for the first quarter of 2020.
Were $1.81 compared to $2.58 for the first quarter last year. Please note that the prior year results were favorably impacted by excess tax benefits related to equity compensation.
We continue to estimate our tax rate for the full year to be in the range of 21% to 23% within non-GAAP rate at the higher end of this range.
Diluted shares outstanding for the first quarter were 21.5 million and for modeling purposes. This same number can be assumed for the full year.
And finally, adjusted EBITDA decreased 19% to 63 million for the first quarter of this year compared to 78 million last year.
During the first quarter the strengthening of the U.S. dollar, which was brought on by market reaction to the Koeppen 19 global pandemic had a negative impact to our PNM now in a couple of different ways.
These impacts are further described in slide number five of the presentation.
We estimate that the combined effect in Q1 was a reduction in adjusted EBITDA of 8 million and a reduction in adjusted EPS of approximately 30 cents.
First as compared to our original 2020 guidance the impact of foreign exchange from the translation of our foreign entity financial statements into us dollars for purposes of financial reporting reduced adjusted revenue by 3 million adjusted EBITDA by 2 million.
One and adjusted EPS by seven cents.
Second in addition to the translation impact we also incurred foreign currency transaction losses of $6 million during the quarter, which are reflected in the other expense and income line to the PML and reduced adjusted EBITDA by 6 million and adjusted EPS by 23 cents.
These transaction losses relate primarily to balance sheet exposures from intercompany receivables and payables among our various legal entities and were caused by a significant weakening of certain currencies, mostly in Latin America, Asia and South Africa.
Although these transaction losses are non economic in nature as a result from intercompany balances.
They do impact our reported results.
Excluding the impact of currency, we believe that the level of profitability in Q1 relative to revenues is appropriate.
Ill.
Now moving onto cash flow and the balance sheet.
For the quarter free cash flow was $14 million working capital reflected continued decreases in both dsos and days of inventory on hand. These improvements were offset by a reduction in accounts payable due primarily to timing of vendor payments.
Note that the onetime payment to Pfizer 22 million, which we originally expected to making the first quarter will be made in the second quarter of this year.
That was excess right that.
Okay.
<unk> can you speak to two q. and the potential impact there I think you mentioned participating in.
Select selected ordering in U.S. stockpiles I'm, just wondering in terms of two q. and the potential net benefit from co would care to quantify that.
I don't know that we'd want to quantify Jason I would say, it's really going to show if anywhere in the pump in the I.B. systems line.
But that needs to be balanced against.
The I.V. consume halls, and solutions businesses, where it has been a very volatile ordering pattern for the last four weeks or five weeks right. Okay, not a good way.
Okay.
In terms of just sticking with the pumps were you able to install any of the pump tied to the share gains in 2019 that you've previously mentioned.
Not a lot.
Okay.
I know this maybe a difficult question, but at what point do you think hospitals get back to deciding on new pump platforms.
[noise], it's difficult to know I mean, certainly.
Right now people don't want to deal with things they don't absolutely positively have to deal with.
For us it's about just we've lost time the last six weeks eight weeks with with what's going on here, obviously to secondary issue and we just need to at least be able to get out there and talk and we don't really see that happening in a real way to hospitals haven't even figured out how to allow people in.
And there's not a common set of rules for that even we don't see that happening color 46 weeks or you can even get out there in a meaningful meaningful way.
Right, Okay, maybe a couple of quick ones for for Brian.
Margin should we assume that one q. here is is the trough for the year.
No I don't think that's necessarily the right assumption just given the potential volatility in volumes over the course of the the rest of the year.
Please remember Jason if we install more pumps, that's a negative to gross margin.
Or if things deteriorate even beyond what.
We anticipate the more at the moment and we'll we'll update everybody in the queue to call just like we always do.
It just comes down on the other two business to what admissions look like.
Right.
But if you're if if if pumps, where if admissions went down and.
Volumes went down which is going to happen interesting debate about how much.
And pumps went up.
You're mix would be negatively impacted.
Right Okay.
Okay margins, we come back in the in that period you'd have as you can do better in the pumps over time okay.
Right.
Okay, and then maybe just last one.
Back to the to the T.F.X. dynamic I'm still a little unclear, meaning even the company that these are the countries that you cited in the Powerpoint like you manufacture more product and you sell into those countries. So I'm still a little puzzled as to why a stronger us dollar wouldn't be a tailwind. So maybe if he could don't mind going through.
Some of the dynamics there that led to the revision.
Yes, it's a fascinating topic.
Yeah, So the majority of the.
Impact due to currency.
On the Eve adult line comes from balance sheet exposures now we have.
Related to inter company receivables and payables.
[noise] specifically.
A number of our foreign entities.
<unk> entered company payables Q.R.U.S. entity in U.S. dollars.
Many of these.
Foreign entities experienced significant.
Impacts.
To their currency and as a result, no liability in U.S. dollars.
Increased as a result in that results in a loss to the other income and expenses line.
Of the piano.
Jason does that.
Yeah. So so <unk> you know, we're going to see it on the other Oh the other income line.
Yeah, that's where it is that's where it is.
Yeah <unk> longer term.
Do your other point.
Historically for I see you.
Strength again to pay so one day.
Was it good Guy we've got a bunch of different places now and we we had <unk> you know we thought it was a portion of it might be as good as it could get and we had saw that.
To.
Historically so.
Okay.
Ah Okay. Thank you.
Okay.
And your next question comes from <unk> <unk> keeping.
You guys think stay in the question.
Mmm.
I just Wanna make sure it's been a long day, so I did and make sure I I I understand you guys aren't.
Necessarily reiterating your guidance x., excluding excluding the.
Effects and interest you're going to update it in in next quarter.
And there's a range of outcomes I'm just it's the range of outcomes, you know where where did that make all the middle where some are actually a positive outcomes and some are negative outcomes, but just trying to understand what that range. It outcomes looks like and make sure I fully understand you know what you're saying.
Sure and it's okay to be blunt here right. Our concern was if we <unk>. The one thing we knew for certain was.
Currency and interest expense right, we can pay off the revolver and not good goal. If we wanted we didn't want any <unk> anybody presumed that if we withdrew that it would be better alright, because it is a very unpredictable and difficult situation out there we have built in some downside to our current view.
The balance of the year that television, but it couldn't get worse, maybe there are some outcomes are going to get better, but we don't this might be the new normal we don't want to Paul and put it out there <unk> each year, we lay down to begin here. We've been just it if we had two in the middle of the year and things we knew right now we're there.
Currency, the interest expense and at least some assumption on one deterioration from Q2 to three could be.
That's all it was.
Huh.
I'm only found only for to ask we're just we're trying to tell me run a model we're not that bad we want to really be transparency. This is what we're.
We're running towards.
With a higher degree rescoring.
Right. That's that's right that's very firms in in in this environment.
You were planning towards the 70 580 million dollar runrate on on I'd be solutions over the course Little Act like six months before this what <unk> what are you thinking now and and and how do you couldn't use the the the manufacturing put per between Austin in in Rocky Mountains that has that change.
<unk>, let's do it in reverse nothing has changed a team is actively and that's where a lot of cap X. is gone to get the line up and running in Austin to allow moves away from rocky Mount that is necessary or a long term model so that.
Doesn't change at all.
And yes, the base business was probably a little bit higher than 80 in Q1, I wouldn't make much of it other than it was a an even kind of go back to do for you.
<unk>, a a reasonable flu season acts are before the pandemic and the winter is usually a having a month just a couple million dollar and then when I wouldn't draw any conclusions from that.
And on your commentary around you. Please the market doesn't doesn't want a winner take all you know what is just trying to think <unk>, where where did where did that where did they not want a a winner take all I mean, we'll are you talking specifically around around the solutions there or is it is it more around you know you pick a <unk>.
What would want to use like multiple pump manufacturers Ah that's awful it as well I I think it applies to all these categories and look at the insanity of what we've all been living through.
And there aren't that many factories that make a lot of these products and use or aren't that many vendors.
And it's not good for the system to be overboard anyone.
Situation, and so whether where the beneficiary or the not you know the <unk> on the negative in it that if we were.
In charge, that's how we would think about the categories and certainly the message we're trying to <unk>, obviously your products to stand on their own merits or technology et cetera.
But we see the <unk> the larger system thinking about that a lot.
Right now and you know whether was fans for P.B. or anything like categories and we've been associated with all those categories in our product previous experiences.
We do thing <unk> do a little bit more reflection on that.
Right.
<unk> same question like almost like backwards.
I guess as you look at as you look at you know the rumors if you and and Smith.
You know you look at the U.K. and how important.
Dr is to be based in a country you know to supply a country do now look you know look at at a at a at a potentially large acquisition like that.
No I don't know if going forward <unk> wouldn't even be feasible in this kind of environment.
I think we haven't thought about anything outside of the last.
90 days since I'm running our own business and make sure aren't taking care of our customers that stuff will sort itself out over time on what's required in a given place or not but I do I I really do believe.
It's good for the system to have some diversity in the supply chain, whether that helps us get them and not on some some done at secondary right.
A lot of you say how to.
All all these categories that you're.
Reading about every night I mean.
They didn't leave local manufacturing.
By accident, they left because they've got overweight you know either misvalued are overweight a certain direction.
That's not good for me.
Thank you very much thanks for everything that you're doing but they don't support.
Across as well.
Okay.
Yeah next question comes from.
Sorry, I don't know from C.J.
<unk>.
Good afternoon. It's a here you guys would help a union <unk> hanging in there I'm relatively healthy.
Mm.
The back maybe a couple of questions on <unk>. My question is the answer but in terms of sort of your assumptions clearly a you know sort of the biggest drivers or or admission to hospital admissions and you said things could get worse, and obviously that would be on the elective surgery side could things get worse on the.
Elective surgery side or is it more that you you know you're worried that this continues to be sort of black almost blacked out for a a longer period of time.
I don't know I don't know first I don't know if it's just elective surgeries, Larry I mean, he our visits are important too.
Visits are going on I mean, we <unk>, we read the public hospitals transcripts, you know the four or five that are available and they've all been very candid about it and they're obviously, all hoping right that electives come back every everybody in the system is the economics and system depend on it.
But yeah.
What guarantee it in the yard business are going to be this I mean, what guarantees that like it ever get back more than you know 75% of what they were for the foreseeable future has a big impact on.
Admissions.
<unk>.
<unk> drawing around numbers much better than that in the third quarter like.
I don't I don't know that we have enough to.
I believe that and we have to run plans and plans and all faceless number that's why.
Oh.
Well, what do you guys sorted from a high level, you incorporating sort of we stay the.
We stay the course on the elected side and mission sort of slowly.
Come down more as you know hopefully colvin subsides, a little bit is that sort of your view.
And down the Middle I would say is that would not be like sort of down the middle <unk> I think we have probably a little bit more cautious and down the middle I mean, I think we think you too can be really.
Challenging and Q3 could also be challenging if there's any.
Hope it's certainly later in it's later in the year.
Right right.
You know you mentioned sort of you know obviously this whole pandemic <unk> a light on to the importance of industry.
How do you think does it impact you guys, specifically over the sort of mid to long term, how you'll operate your business assuming pull good <unk>, even if it's a couple of hopefully a two year two to three or thing and then it's somewhat on the control does you know do you couldn't really high level do you see.
Things you could do better yeah, I don't remember really from a really high level. It doesn't actually change that much where we were doing.
Right. We were just this was our business and it is our business and we had to we have to tweet production up and down we have to.
Stop start on installations up it doesn't actually change a much what we're doing their our product features that we want to deliver on in our.
Development Road maps in each of the segments and it it maybe sharpens thinking around some of those.
And it's sweet grind right. We we know that we're not going to go away in the system would grind away from X. opportunity.
Present itself.
Right, Yeah, Oh, no I'm not sure they make sure we have customers that have on the best footing right that believing what we're doing.
Right, absolutely and on the system side, you mentioned before you came into year with you know probably your greatest opportunity or positioning in the winter time to to continue to begin to take some chair.
Did you know obviously this hold you back a little bit but.
Has that competitive environment or your opportunity really had well that product potentially slipped through your hands are those that kind of just ship to the right I know your competitor. It also has.
Spacing issues regulatory issues I, probably wouldn't be sound like won't be resolved too soon.
You know I think like we tend to last call, we don't really want to comment on it.
It has been <unk>, we've lost time with what's gone on.
And so we don't know whether we'd get time back or not we just have to get out there and execute but we still believe the opportunities as good as it's ever been for us I mean.
You work on the products and figure it out we have to full portfolio.
With all the can symbols going with it so we feel like we're well positioned and you have to execute.
Just last question on the on College, you piece, you mentioned that you've gotten some better traction outside the U.S.
Sounds like you don't expect they really get too much traction in the U.S. until things calmed down Oh, yeah. We've been it's been it's been it's been a little bit of a more complicated story.
We were short product for most of last year, we released it first into the U.S. market we had a.
Big surge of product taken in the U.S. marketing queue for.
And then we released it to the international market the beginning of this year.
As a result of all of that released into the U.S.
Ah we didn't.
Have quite the same store reordering in the U.S., plus and the pandemic it and slow things down from implementation perspective that probably flips. The U.S. starts to look a bit more normal international probably cool off been helping put some product out there for the next 90 days or something.
Find it in full time buried depend on the ability to get it it did very kind of the ability to get into hospitals in service train and switch people over and that it's been challenging else you last seven or eight weeks, we've lost time.
Okay <unk>. Thank you.
Sorry.
Okay. If that then we appreciate very much you know everybody's busy it say a difficult time. It there. We appreciate everything that all participants are doing here. We appreciate people.
Interest in our company and just like we have in previous years, we'll come back on Q. tune into exactly where we think the world is thanks very much folks appreciate it.
Lady from Germany, It's Okay. Today's conference call. Thank you for participating you may now discussion.
[music].
[music].
[music].
[music].