Q2 2020 Heska Corp Earnings Call
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Good day and welcome to the Heska Corporation second quarter 2020 earnings call.
At the end of today's presentation, we will be doing a question and answer session.
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Today's conference is being recorded at this time I like to trim, the converts or would you Jon Eckard. Please go ahead.
Thank you and good morning, everyone welcome to up the Corporation earnings call for the second quarter 2020, I'm, John you Dark head of Investor Relations for Heska.
Prior to discussing hubs good second quarter results I would like to remind you. The during the course of this call. We may make certain forward looking statements regarding future events, a future financial performance for the company you need to caution you that any such forward looking statements are based on current beliefs and expectations in Baltimore.
She's been uncertainties, which may cause actual results in performing be materially different from that expressed or implied that goes forward looking statements.
Factors that could cause or contribute such differences are detailed in writing and this morning earnings release, That's good Corporation annual and quarterly filings with the.
And elsewhere.
Any forward looking statements speak only as his time, they're made and that's good.
Specifically disclaims any obligation or attention.
Forward looking statements trueflex events that occur after the time such statement would be.
With us this morning.
Kevin Wilson has goods Chief Executive officer in computing, and capping Grassman pets goods, Chief Financial Officer, Mr. Wilson, and that's grassman will provide details surrounding the results reported and then we will open the call to question.
It's now my pleasure to turn the call over to Kevin Wilson, that's good CEO and President Kevin.
Thanks, John Good morning, everybody.
Catherine probably the specifics of the second quarter.
I wanted to take a few moments to comment on some of the things that are garden testing.
First and foremost it's critical to know the Delta Black people business prospects no ability to meet our mission on cash.
That's the teams and their families or see healthy and productive.
We remain in a remote work posture or servicing business continuity planes are performed strongly.
You know people Oneml, Alan Partridge right.
Or human capital no decision should help.
The change true veterinarians pet owners can touch.
When you reach the variation in ordering patterns rather minor.
We expected.
As large as a burden to normal.
End user demand for our products is held up nicely broadly.
Turn to normal domestically and internationally.
There are still cheap oddities working their way through <unk>.
Ordering path.
No no large numbers or supply chain in the first quarters is largely in good shape.
Some disruptions, which improved throughout the second quarter.
As we entered the quarter or supply chains and its best position that the are.
It's a big major bumps and rose during the second half.
Commercially.
Also on schedule and doing well.
I've challenged ourselves to be great in this new environment, rather than just focusing on mitigation strategies.
Descriptions results are solid.
While it's more challenging to increase the number of new customer subscriptions costly.
We have taken the chance to go wider deeper and longer the dark on customers in April as we noted on our last call. We achieve near record performance in total contract subscriptions value June you did it again.
Contract subscription value is a measure of the total value customer business committed to Heska and it grew 17% in the second quarter.
But in simple terms have could put up solid reported numbers in the second quarter.
Well storing up unprecedented amounts to future business and retention through the power of our subscriptions relationships on Super pleased with the work with our sales marketing product support internal teams.
The tension and essentially capabilities are effective.
We continue to play often.
On April 1st we closed our acquisition that skill animal care companies and have begun to come together in key markets in Sweden, Germany, Spain, France, Canada.
If you haven't had a chance to review our with leases and presentations around this acquisition might encourage you to do so we love the steel.
Our work with our new International teams. This past quarter has reaffirmed my excitement around our strategies and be competing companies not ability to rapidly grow and persons businesses.
Heska is much stronger today than we were in the wells your days with Dreamworks.
Our Newman and large markets new capabilities cash on hand of nearly $80 million.
No wonderfully resilient end markets, we are positioned to harvest the fruits of our work.
Thousand 18, 19 on each one each morning.
During the second half of our five year strategic cycle.
Strategy to do so a symbol.
It's concise and it's clear, it's not easy, but it's simple concise and clear.
The first pillar of our plan was to double the geography, some customers we serve.
And that this target.
The second pillar of our claims to build for the products in revenue lines, we often.
We expect to accomplish this target.
Our products pipeline launches are well underway to achieving this goal.
I will not Clos now shipping full commercial quantities this quarter.
And we are working to quickly expand alumni plus is very exciting menu.
Element or see working internationally focused local chemistry.
It was making its way important international teams Arsenal and is poised for take off.
Element well is progressing in line with our updated guidance and is expected to make its pretty market public big deals are November investor day.
The full commercial launch.
And next year.
They are on target.
Well on our way doubling the products among your lines we offer.
Which will create a multiplier effect into our new much larger markets and customer base.
And our third pillar is to grow in scale or current distances.
And it's currently challenging environment.
The Archie these on this target.
In summary, we remain optimistic to achieve our goals for the second half of our current strategic plan and for the rest of this year.
There's a great deal of work to be done and the competition and universe for that matter boats, No, Florida ambitions every day.
Competition is large and highly competitive in their defense against our market share ambitions are strong and effective.
On top of the saft numerous challenges, both CNN and seeing what continue including pulled in 19 impacts.
International trade currency and tax uncertainties, geopolitical and less election, pensions shifting competitive threats that society libraries and loved friction.
In spite of this we believe in ourselves.
In the decades long resiliency of animal health, which is again confirmed its wonderful nature.
Past six months.
And then our strategic plan, which is focused compelling and achievable.
With that I'll turn call over to capture the detailed quarters performance and to provide you with additional information on that segment reporting and then we'll open the call for your questions.
Thanks, Kevin Hi, Good morning, everyone as Kevin mentioned, we're pleased to report strong performance for the second quarter of 2020 consolidated revenue grew 62.4% well largely benefited by a recent acquisitions of skill and PBM solid performance. During these uncertain times in our legacy Heska business also.
Contributed to the growth on a year over year basis. Following the industry's trend we experienced a slower start to the quarter, but finished strongly.
I also mentioned in this mornings release, we changed our reporting structure as a result to these acquisitions and the related growth of our diagnostic product line, our company's core strategic focus now report our results geographically in two segments North America and international.
North America segment includes the U.S.
Canada and Mexico, while our international segment consists of all countries outside of North America, and it's comprised primarily Europe as of today.
Changes in the segment structure effect only the manner in which the results of the company's reportable segments were previously recorded and do not restate previously reported consolidated statement in other words or prior year results have been recast to reflect this change our North America segment is directionally comparative to the legacy has good business.
North America segment revenue grew 9.8% contributing to this growth was 2.7% of consumable sells a significant growth in PBD would be expected return itself try hard contract manufactured products from Merck, which experienced reduced customer and customer demand and the comparative period and throughout 2019.
The international segment performed inline with our expectations, even demonstrating the resilience in this environment with both filled with consumable and capital lease.
Capital equipment placements consolidated gross margin declined approximately 500 basis points to 39.1% as anticipated negatively impacting consolidated gross margin is the consolidation of scale a lower margin profile business. We continue to see bridging this margin gap as a meaningful synergy opportunity for how Scott the north.
Market segment, how do you like slightly lower gross margin at 44% about a 130 basis point decline from prior year due mainly to product mix.
Total operating expenses in the second quarter, 2020, or 22.3 million an increase of 9.3 million from the second quarter 2019. The increase is driven primarily by the consolidation of our acquisitions operating activities of 6.2 million onetime acquisition and other related costs of 2.7 million and an increase in stock.
Based compensation of 1.3 million.
He managed and continue to manage operating expenses carefully and today's results are inline with our expectations.
Adjusted EBITDA for the second quarter 2020, what's 4.1 million or an adjusted EBITDA margin of 9.1 per cent compared to 1.8 million warrant adjusted EBITDA margin of 6.4% and the second quarter 2019. The increase in margin is attributable to our recent acquisition.
Yes, and the second quarter was a loss of 72 cents per share adjusting for certain items, which are detailed in our GAAP to non-GAAP reconciliation included with our really EPS was $0 per share a decrease of 10 cents per share, which is largely attributable to the cash interest expense associated with our convertible notes issuance.
Our balance sheet is strong and our liquidity position remained solid with cash if suddenly 9.2 million, which continues to provide us the flexibility to advance our strategic plan.
Turning now to the 2020 guidance previously provided on makes us in consideration of our economic position, which resulted in new segment reported reporting and in light of the ongoing pen doesn't act. We believe it it's prudent to assist analysts conduct and and investors during that time, although I will caution on the difficulty of forecasting in this environment and I don't.
Items is based on information may be habits as of today.
It is not our attention to updike update guidance courtly normally provide quarterly guidance. We're reaffirming our previously provided 2020 full year consolidated revenue guidance of 175 to 185 million in our adjusted EBITDA margin of 4% to 6%, which business momentum at the higher end of the EBITDA margin.
An expectation.
Additionally, consistent with revenue proportions, we experienced in the second quarter of 2020, we anticipate approximately 60% to 65% full year revenue could come from the North America segment.
The point of care Laboratory revenue guide of 105 to 115 million point of care imaging revenue guide of 25 to 35 million and former Ob P. segment revenue now included in North America, a 15 to 16 million are all reaffirmed.
2020, combined outlook point of care consumable, 12% to 17% growth was based on the Standalone business at Heska, including Australia, Spain, and France as of March 31st 2020, but excludes the skill acquisition on April 1st 2020.
On a comparable basis, including covert Nike crusher from our prior lowered astronaut for fewer new installed point of care a lot instruments due to travel in hospital access restrictions have been now expects approximately 12% growth, which has been low end of our range as part of the segment recast the portion of the prior 2020 combined.
Well the point of care a lot of consumable growth derived outside of North America, which is approximately four percentage points now attributed to the international segment.
As a result, the 2020 recast outlook for North America point of care a lot consumable it's for growth of approximately 8%.
To provide a little more insights to assist investors and analysts on the profile of our income statement. During this transformative period for the full year, we expect depreciation and amortization of approximately 11 to 12 million can stock based compensation of approximately six to 8 million. The majority of our onetime charges have been incurred throughout the.
First top 2020, well, we continue to make certain necessary investments largely considered one time as we integrate our acquisitions throughout the rest of this year.
Our full year effective tax rate is expected to be between.
The benefit of between 12% to 15%, which excludes any to chip potential future discrete item or any other valuation changes on the reliability of our deferred tax assets and the remaining happens 2020.
Finally, while we don't provide quarterly guidance, we do expect to continue to experience some seasonality among the quarters because of our acquisition of a European based company a region, which experienced a summer holiday primarily during the month of August we expect the fourth quarter, two continued to be stronger than the third quarter.
In sum, we're pleased with our financial performance in second quarter, but that we would like to open up the coal for the questions operator.
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Yeah.
Oh, right and well take our first question from it David Westenberg from Guggenheim Securities. Please go ahead.
Alright, Thanks for taking the question and that's on the performance in light of the coverage.
So I'm going to start with each of them on term.
[laughter] I'm I'm going to start with market share is as a component of gross I mean traditionally we've looked at kind of skies Ito getting the 8% market growth and getting a little bit of a component above that due to market Sherri do you see.
This year in next year's would be more of a transition year with skill or is that still a major component of of gross and and into next year or two.
Well the I. I think it's still a component of growth I think no word knowledge in the first six months and probably probably longer.
The bias for customers is going to need to stay with the current provider.
So there will be up net in North America this year.
Oh, I'm, just not quite as much as we had hoped at the very beginning the bigger.
Skill I use a number one or two player in a lot of those markets.
Already and Ah and I think this in more biased to show the crown provider exists.
Well doing quite well in Spain for instance, because we have skill N C B M.
Both very strong players and staying there between your customers. So I think were tensions probably easier than.
Then net gains right now for everybody.
I don't answer your question, but I don't think that's a permanent.
Lumpiness of common condition.
No no that is helpful. Because it and then my follow up actually is on the same kind of concept. You know you noted on 17% in contract prescription value.
Is that again driven by by contract extensions due to the same exact.
Concept that you're talking about it in terms of staying with your provider.
Absolutely I'm so it's.
Easier to reach out to your existing installed base you have a relationship you don't have to be on site.
On same store sales teams feel very good relationships and they're able then to go back to those customers and add extra value add extra analyzers leverage that trust.
In exchange for that we increased the number of analyzers the amount that they want to commit jobs and probably more importantly, the win.
Over the term that they want to come up with us.
So the good news and the bad news is that they've done since obviously.
Larger players and smaller players who today's subscriptions model I think it it leaves players without a strong culture of subscription maybe little bit more make it.
And then those who have a stronger culture for subscription like we do.
Hi, Thank you very much and <unk>.
My model was fairly often in terms of the Opex line I'm, specifically GDP, but can you just one for Catherine <unk> either this quarter representative in terms of.
Opex run rate.
Or is there any kind of color. Thanks.
Did you called out as being.
And then what we expect going forward.
Yeah, I think you know clearly we called out that the onetime charges. So you had about 2.7 million of onetime charges in the quarter, which we will continue to have that not talked about level throughout the rest of the year. So there will be some of that still.
We did have some of those costs offset by slightly lower operating costs supposed to be the controlling costs through the second quarter, you should see a slight uptick but I'd say.
Overall directionally the second quarter operating exclusive of those onetime says it's relatively close.
Got it.
Thank you very much I'll jump back in Q.
Thank you.
And we'll take our next question from Stephen My from Piper Sandler. Please go ahead.
Hi, Thanks for taking the questions on the congrats on the quota.
Thank you.
So got a question on the on the gross margin. So yes, we're a little bit off on that as well could you could you will maybe give us a little bit of color were there any particular events in Q2 would which caused the gross margin to decline.
As much as it did I mean for example to get it did you pay more for supplies are reagents or was it primarily due to skill.
Yeah, I can take us when Kevin I think so on a consolidated basis, largely directionally, we expected lower margin and skill.
In the North American segment.
Gross margin that was slightly lower than we expected or not the result of an inventory reserve charge, we took in light of Coleman.
If not for that charge a clear that's not something I can adjust for on a non-GAAP basis, given and inventory reserves are normal recurring but not quite at this level, we would have been on par with our with our prior year.
Comparative margin.
Okay. Thank you good night.
I would point out for investors long term.
One of the synergies citizens, who can capture what skill.
Delaware, but the gross margins are lower than arms, we think we can bridge that gap.
So the consolidated gross margin was very much expected.
I think as we get to work improving their margins a we'll do a good job a bridging that gap.
Okay. Thank you Kevin <unk>, Yeah that look like next part of my question do you know.
What sort of timeframe should we expect for a the skill integration and the margins and synergistic Medicare good.
And so it's hard to say, it's probably two pronged again, you have to be realistic in markets that you're in so this will travel restrictions.
Especially amir <unk> to Europe.
So the first step is to make sure that the business for Kansas Health and its and its growth as a standalone business, which is doing.
No. The second step then would be.
More integration optimization and that May take a little bit longer you know maybe no. We're not we're not all over that in the second third quarter of this year like maybe we would have been.
Pretty travel restrictions.
But I think it's making progress so I would say.
<unk> gross margins will improve.
It'll probably take a couple of quarters before you'll see those things improve so early next year I think you'll start to see some of the pull through.
Wausau inventory that no first in first out so you have inventory at current gross margins Hollywood product rationalization happening. So it's going to take a few quarters.
Okay I appreciate the additional color and I'd like to my next question is could you give us a little bit more color on on the European people analyzer.
Let me briefly mentioned that but.
Just one little bit more color of launching expectations.
Yeah, So I.
We're on schedule for or.
Last.
Our last time table and so we think right around this time next year, we would have full commercial launch.
And we think it'll have kind of company.
Public viewing in our November Investor Day.
And so that's a timeframe, but people will be able to him.
Good for hands on it and watch it work.
In November so.
Sounds like a long time until August [laughter], it's only compounds.
Okay.
Appreciate it thanks for taking the questions.
Thank you.
Well take our next question from Ben Haynor from online School partners. Please go ahead.
Good morning, guys. Thanks for taking the questions.
So first off for me just just kinda wants to understand the change in the guide for point of care lab consumables.
I think you talked about on the Q1 call kind of a 50% to 60% decline in system installs.
Is that something that's changed that goes into the decline in the a black consumable guidance or what's a good way to think about that.
So I wouldn't Catherine start and.
I'll jump in as the peanut gallery as needed.
Yes, [laughter], yeah, so definitely that that decline is part of that and it wasn't built into that 12% to 17% range and and so it did beginning of year, you know, which we clearly words gotta catch.
Actually a higher logic that higher point in that range, whereas when when we came back out in may towards the lower end were just more reconfirming based on the results for the quarter, especially you know April and in May and then you know, having having somewhat of a I'm not going to call it a recovery but.
A stronger June just looking at it and in Holistically. It more reaffirmed the lower end of that that guide you wanted to come out and make sure. We were clear on that's where we're ending up and then just a portion of you know the growth is now sitting in a different segment and previously.
[laughter] beat real quick Catherine before the peanut gallery jumpsuit, how much of the growth in the first half Oh was.
Was reclassified to the international I know you you mentioned.
The 4%, though the guy that ships over there, but <unk> how does that look if we look at you know Q1, how much or are the first half how much would have shifted into international you know that we'll see come before yearend.
Yeah, So I'm going to competitors, we reported in the first quarter.
What was that.
That's what I called out to be exact percentage.
Part of course quarter, but in in North America. The first top it was 6.8% was about 7% growth for the first topic North America compute recast good but that remaining growth because it's a would have them in the international covenant.
Got it.
I tried to [noise].
The sorry, Kevin <unk> did you have any anything to add on the system installed Oh.
Update yeah, I mean, I I would I would add a couple of things just in terms of context HM.
So the first thing is I would point to the 4%.
It's just reclass. If it is that is still intact and I think that's important I think it's also important your knowledge.
The facts you know so on a year over year basis, we're we're wanting roughly 7%.
Moving all the effects of cold in the first six months <unk> supply chain.
Delays in first half and I think I think that's a great performance I think that's that's good business continuity.
And we're doing really good product development really good business development. So I think it's important to say look we started the year 12 to 17, who were trending closer to 16.
The bringing that down to them to the bottom of the range.
Well, we didn't pull the guidance.
No. We didn't just say I'll give some color wanting to talk about it I think it's prudent to.
To say, if you're if your 7% for the first half.
You're going to drop for coins and the reclassification.
Like 8% to prison number.
So I'm encouraged by it looks like the markets not but that's that's why we do you do you guys Jude.
[noise] well I mean that it makes sense and then obviously to the business has been quite resilient Oh, given all that's developed you're just so just curious on the any metrics that you might be able to share in terms of you know kind of account visits are contacts player sales personnel in ours and also are there any.
The differences in the states that have had more restrictions to to the than the ones that have had a pure restrictions.
Now that the restrictions are really more client base.
And sometimes are just busy and sometimes we need if someone for people on airplanes.
We weren't put people in hotels and a in perhaps I'm overly cautious and now I think protecting your people and in demonstrating that you care about them.
It's great for your company, it's great for loyalty is your brand and it flows through to the customers you know and conditions are very.
Human Ironically business in veterinary hospitals are treating your people well.
Goes through to two love to those hospitals and they see it no. Soon so we haven't got pain.
That's a and we're asking people to staying home a rather than take vacation, we're asking them to to be healthy and protect that and I think long term.
That is that it's great for the brand and its great for the company and just on levels just the right thing to do.
So we focus on that in terms of.
No kobin restrictions and can I, just can't get to a clinic in Texas.
No we do a lot of web demos of our marketing team has just been phenomenal we basically backfill.
All of our lack of trade show activity there educational seminars.
And your hundreds and hundreds of veterinarians attendees and ER and like a group for over a thousand.
Active leads from from three or four events just in the last quarters. So weve with adjusted and moved to do things that way as opposed to trade shows and online knocking on doors, and bringing donuts and it seems to be working so I don't think that said as much as just the buyers.
For the next six or 12 months I think is gonna be to stay with your current provider, which is which is great great for us the skill.
That could stabilize as that business and honestly it still is doing well.
And and it's good for us at Heska. So.
Yeah, that's a long rambling answer, but I hope the color helping to that.
Oh, that's that's definitely helpful and job that's all I have heard today guys. Thanks a lot.
Thanks, Dan.
Well take our next question from Sanchez Cooper from Raymond James. Please go ahead.
Actually questions I guess, one just kinda thinking about the guide and you know the low end of the 12% to 17% how much of that if you can sort of help us think about.
Fewer new installs.
Is there much new install activity sort of assumed in the back half that help that consumables or can we think about most of that base already having been putting in you know really one Q and I guess, maybe a hair into Q, how should we think about that.
That's that's a great question.
There's not a lot of them.
This is grants.
Not at number.
I believe.
Yeah we're.
Well go to close it nobody calling in for the call.
Get Mike Koban, but I think it's it's relevant here.
I think we're in a very very long slog.
For another six to 12 months, just and so that's what we've assumed so you can assume big step ups in the second half based on hope.
Even assuming the do it sells and we're going to return to normal. So no. We don't have bottle step in new installs.
And in new installs and if you lose a point or two.
A broker.
A couple of hundred hospitals that you thought would be because in a than maybe 100 instead of 250.
The thing that offers.
So.
No we haven't claims the big step functions and changes and now buying by active we're going to be able to do their current I can start taking market share again, that's not built into our number.
Okay great.
Very helpful and then.
Maybe kind of thinking on that seem a little bit you know in the past you guys have gone.
For for different periods programs with.
You know year six months of sort of for free to extend or new customers was there anything.
On that front to call out even in two key where that we should be thinking about for for the remainder of the year, especially as your.
You bet customers at least you know seem to have in resilient.
Just a month or so period and they are where they were probably going a little bit of means anything to call out there in terms of relative to last year as we move forward.
No I don't I don't think there were any kind of gimmicks, we didn't reach out some customers and offer forbearance.
But that was really kind of April time frame.
Candidly people were just scared.
And most customer said, yeah, I don't need it [laughter]. So so no I don't think it was really driven by that it was more of a focus we decided to focus on our current customers go a bit longer with the product line on their counter and certainly go longer.
In terms of contracting and you know they responded to that so I don't I wouldn't say there would be big swings.
Okay, Great and maybe just one more for me sort of on that last point on water on the counter.
When we think about sort of your investment philosophy, you know, whether its I've lost and adding some of the.
More exciting menu items, there or expansion or some of the sales and marketing as you are more global and thinking about those things has anything changed.
Hi level in terms of how you would prioritize some of those investments through obviously the back half of 2020, but even into 21 with with you. After watch on track and kind of a handful of moving parts is there anything that we should note that you're thinking about a little bit different than you were prior.
No I don't have than Andrew.
Catherine money, but I'm not aware I think.
I think our plan is intact and that's when I say that not because I wanted to be right airplane was right.
It just happens to be true.
Move pretty much executing the plan and not having to modify the plan and that's a little surprising to me that deserves.
Just a lot of lot of macro issues, it's a little surprising that we haven't had to ultra plan. The R&D is still intact.
The menu and development is still intact.
So no I don't pent really changed any priorities and I feel pretty good about exactly the plan, we're on and have been on for for the last several quarters.
Catherine I don't know.
Yeah, I want you know and and actually that's a great question and something that you know just triggered a hot honor. Prior question I think maybe I gave it off the question about the run rate for operating expenses you know Nick we did experience they have us well a little bit of a slow down during this quarter as it relates to the bond.
Associated with R&D, but clearly.
Kevin's reaffirmed the.
Timing, it's still not off but we will have an acceleration of.
A lot development and expect associated expense throughout the remaining half of 2020, a and that's actually a great question because I thinking about operating activity that was really thinking about the marketing and sales in gene a function of the R&D is clearly included in there and we will have an increase and activity and stuff.
And given the second out this year.
Okay.
To put them on timing of executing some of the R&D, even more I assume because you couldn't can move around and get something done no timeline shifted the timeline of of actual completion or anything like that that kind of right way to think about it.
That's correct.
Great. Thanks.
Thanks, Andrew.
Well take Sir our next question from since Jim study from Sidoti and company. Please go ahead.
Hi, good morning, good to hear everybody, they're doing well.
Thanks, Jim how are you.
Well well, they're very quality work that are still very good deals. So I think it's worth it.
A couple I just want to be clear Oh, I get from the field galleries.
Breakout International revenue was 16.7 million that's almost we've got all skilled revenue or is there a portion of.
Ladies who has good business.
[noise] there is a portion of legacy Heska business, such as a you know our Australian existing French a and then previously but more recently completed acquisitions through the.
The TV on looks like in Q1, right. So mhm.
It definitely Bakken.
Can you tell me them, what's the what the acquired revenue was from some of the two acquisitions in 2000 tone.
I don't think we're giving out that specific but it's it's safe to say the majority is it was acquired I you know Australia was organic and they've been doing very well that's part of that effort and then France was primarily.
In a loud.
EMEA imaging product line ticket your sense of.
Oh acquired on the P.S. Yoo Livepersons PSC imaging [noise] National segment.
Okay and then.
One question concept manufactured business did very well in the quarter. It looks like it was up about 2 million more of your that.
Is that a level you think you're going to maintain two up yes.
I think the full year guidance is is intact and you know that business always has.
And the Lumpiness.
Again, almost a couple of your work purchase orders. So we have good visibility into that business. So.
So I think we've reaffirmed that.
Pretty much came out today reaffirmed.
Everything actually shortly that women its original within its original ranges. So I don't think there's really any change.
Huh.
I guess that would be it could take on for Paul we reaffirmed everything yeah.
I think like I think what your you take your you're asking a is the only P. P for 15 to 16 and that the period over period comparisons relatively consistent I think gifts, specifically asking about the PV pushing to try hard I'm going to and I think on our last two calls which we agree.
Affirmed around.
Seven ish million return about products for this year, it's kind of between 5 million.
I don't range.
Okay quite good and then last couple the one time expenses, although still early June a or are they split between June and gross margin.
Yes.
Okay can you repeat the first part of my question I mean.
You said you had about 2 million of onetime expenses in the quarter and I'm just trying to help your model going forward, yes is that putting early February so yes.
Okay, primarily engine angle yep, nothing nothing wouldn't be in gross margin.
Okay, then or.
Just.
The literally but could be up the size and salesforce is as of today.
I I don't know why I'm, having a better the difficulty hearing and just what a lot told can you repeat that coming.
Yeah. Maybe this is better can you tell me the size of the cell source right now.
Oh, that's worse.
Kevin do you have that.
Yeah.
And could change while we probably have added a couple oh ironically than we have expanded our regional management.
And we had to.
People, who are from I think to.
Oh, <unk> Casino management came up but I think the net numbers are about the same except for maybe one or two so we can update you on with exact numbers as needed.
[noise] right and then well that's one for me you do have a pretty.
And sort of a European business now what are you seeing the recovery there quicker the real U.S.
Can you characterize it.
No. So I think the question is are we seeing recovery internationally faster and then once we got the question right right.
Oh, Yeah I would.
No I would say, it's Ah I would say its consistent.
And I would also say, it's it's it's a little lumpy, but you know sub markets I'm supposed to this will look a GDP and expand things off almost 19%.
Oh transpose mid teens right around 14, and I think Germany is around 11.
Italy was around 12 'cause it just bought back of GDP I think those are the right numbers and so every country hasn't been hit the same every country has and.
Bounce back the same I think that's been surprising to me is on it and again, that's held up well consumables and held up well, we really haven't been whipsaw.
Then we haven't been affected obviously, there's been effective.
So I think when cap uncertain options I can use the word recovery.
I think that's part of part of the sentiment here is its been pretty steady hand on the filler most of these markets veterinarians largely you're doing well and then there are pockets, where some are doing actually better.
Now I'd, just say I'm about to investors I think there three types of companies in this current market companies that actually do better.
Onto a cold with World think Netflix I don't think zone.
Companies that do a the thing that business continues to grow continues to be helping other covet and then obviously companies that are structurally gap.
I think we're in the second bucket.
No hard we're going a little faster.
But we're definitely not for book of business is doing well and it's held up well and.
I tell you got a little bit of survivor, still well and so we won't bounced around a lot. So I'm not sure that recoveries necessarily the whiteboard each of these markets.
Again, Tom sorry on rambling answer, but maybe the economy.
Concept is helpful.
Okay, Alright, Turkey, or there is impressive or you will go live in Murray Our bar universe will really have not had to make radical codes to your two top and bottom on it. So that is a those input each of the company and the board.
No. Thanks, Jim.
Thank you.
Oh, right and we have no further questions.
Now I'd like to turn the call back over to Kevin for any additional or closing remarks.
Oh, Thank you operator, and thanks, everybody for joining the call.
When they can quit because I know everybody has got a lot of work to do a I'd just reiterate we got a lot done in the first half of 2020.
We doubled our customer in our geographic it's we manage through supply chain you quoted a in law on track for R&D and additional business development. So this we feel like burned very good place and we're definitely a stronger company in August and then we were in January and so with that I'll.
I'll sign off as opposed to seem everybody on our next call and arm November Investor Day.
Others in person or its video cast we're excited about it and when they had very good day for for so as we look at HM.
Or other things.
We'll then thanks for your interest and I'll be safe be cautious kinda Watson's take effect to the veterinarian.
Oh fleets and do something nice for something else. Okay sounds good. Thanks Bye bye.
And that does conclude today's call. Thank you for your participation you may now disconnect.
Oh.
And.
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