Q2 2020 Perdoceo Education Corp Earnings Call
Occasion Corporation second quarter 2020 earnings conference call.
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I would now like to turn the conference over to Brooks Hamilton with Investor Relations. Please go ahead.
Thank you Andrea good afternoon, everyone. Thank you for joining us on our second quarter 2020 earnings call with me on the call today, Todd Nelson, President and Chief Executive Officer, and Ashish Qia Chief Financial Officer.
This conference call is being webcast live within the Investor Relations section at <unk>.
Dot com.
Webcast replay will also be available on our site you can always contact the Alpha IR group for Investor Relations sport.
Let me remind you that this afternoons earnings release and remarks made today includes forward looking statements as defined in section 20, Onee of Securities Exchange Act of 1934.
These statements are based on assumptions made by an interim information currently available to produce you education and involve risks and uncertainties that cause actual future results performance business prospects and opportunities differ materially from those expressed or implied by these statements.
These risks and uncertainties include but are not limited to those factors identified.
And your support on form 10-K for the year ended December 31st 2019, and subsequent filings with the Securities and Exchange Commission.
Except as expressly required by the securities laws. The company undertakes no obligation to update those factors for or any forward looking statements to reflect future events developments or changed circumstances or for any other either.
In today's remarks refer to non-GAAP financial measures, which are intended to supplement but not substitute for the most directly comparable GAAP measures earrings release that accompany todays call contain financial and other quantitative information to be discussed today as well as the reconciliation of GAAP to non-GAAP measures and it's available within the investor relation.
Page companies' website.
With that I'd like to turn the call over to Todd Nelson Todd.
Thank you book.
Good afternoon, everyone and thank you for joining us on todays call.
Let me start by saying I'm very proud of our faculty and employees for their commitment and dedication educating and serving our students during these uncertain times.
Supported by our scalable and innovative technology infrastructure all of our students are taking classes online and are well served by employees working remotely we continue to improve our technology and processes and are providing that answered tools and resources for our employees.
The health and wellbeing of our students employees in communities remain our top priority and I'm proud of the remote learning and service environment that we have built which I believe will help keep our students and employers say during the ongoing pandemic.
Now, let's discuss the quarter.
We're pleased with her operating results for the quarter, which came in ahead of our expectations. We continue to execute against our objective of sustainable and responsible Gulf.
While remaining focused on providing a quality education to our students.
Some key highlights for the quarter included first year over year growth in revenue and operating income for the quarter supported by among other items students serving operations and technology initiatives to organic enrollment growth at both universities supported by consistent levels of prospective student interest that.
Well served by our student enrollment processes three the positive impact of the quarter from the Triton acquisition.
As a reminder of the acquisition of substantially all the assets have tried University International was completed in early March we refer to this asset acquisition transaction as the Trident acquisition for the remainder of today's discussion.
The second quarter was the first full quarter with the Trident academic programs as part of the are you and we're pleased with a broad range of educational program offerings and resources brought by the Triton acquisition for ongoing investments in technology investing in technological capabilities that equip our staff with relevant resources.
Enabling them to efficiently and effectively serve our students is always a priority for educational platform.
But this has proved to be a particularly important and this remote environment.
Now to some quarter details some additional details about our operating performance for the second quarter.
We reported net income of $28.2 million or 40 cents per diluted share.
While adjusted earnings per diluted share, which excludes certain significant non cash items was 41 cents.
Adjusted operating income was 41.7 million a 27.2% increase from the prior year quarter, which was primarily attributable to revenue growth at both universities.
Additionally, both universities contributed to enrollment growth for the quarter with total student enrollments as of June Thirtyth 2020 up 20.1% supported by new student enrollment growth for the quarter of 45.3%.
At Sea to you total student enrollments as of June 30, 2020 increased 4% as compared to the prior year supported by new student enrollment growth of 4.5% for the quarter. Our previously mentioned investments in technology and students serving functions continue to enable our admissions financial aid and advising staff does.
The border students effectively throughout the enrollment orientation and learning process is.
Faculty and inviting teams are further increasing their student outreach efforts by optimizing scheduling and focusing on the needs of students participating in the beginning general education courses see to use mobile app continues to be widely used and we're making investments in technology that use predictive data analytics, allowing further cut.
The position of our student engagement process that we believe will improve student experiences and ultimately academic outcomes.
A quick note on the corporate partnerships, which had been a meaningful contributor enrollment growth at sea to you. We have a dedicated team working with our partners to best serve these organizations and their students.
Our corporate partners remain committed to offering their adult employees educational opportunities that can progress their career paths seek to you collaborates with our corporate partners to offer academic programs.
Center around the organizations educational priorities, which makes these partnerships mutually beneficial.
We will further invest in this strategic channel, which will continue to be important part of our growth going forward.
Turning to a are you total student enrollments as of June 32020 increased 52.7% as compared to the prior year.
Year to date, new student enrollments increased 36% as compared to the prior year period. These increases reflect the Triton acquisition, which was completed in March of 2020, as well as underlying organic growth in new enrollments.
As a reminder, quarterly enrollments results are impacted by eight use academic calendar and the resulting number of enrollment days in any given period.
The positive impact of the Triton acquisition as well as 50% more enrollment based in the quarter contributed to 118.8% increase and new student enrollments for the quarter versus the prior year quarter.
These results are supported by a holistic approach we have information within a are you students serving operations a student support structure focuses on engagement across the entire student lifecycle from enrolling and orientation to ongoing learning graduation.
Full time faculty have been assigned to graduate teams and are focused on helping incoming students get acclimated to the intellipath orientation and online learning.
Yeah, you Messenger, which was launched last year is increasingly used by our faculty and staff to communicate with students improving their effectiveness of our out rich.
We believe our investments in technology continues to enhance the effectiveness of our student support teams, which we are regularly evaluating new ways to improve student engagement over.
Overall, we're pleased with our progress and efforts to integrate triton's unique academic programs along with the students faculty and staff into areas operations try and unique academic model and its masters and doctoral programs will continue with they are you providing a diversification of educational learning models and programs to better serve students needs.
Try to students and faculty now as a part of the are you will also benefit overtime for me I use technology investments and operational support because of Trident unique academic model. Some statements I make now and in the future regarding I use methods and processes will not be applicable Triton operating within a are you.
To conclude I'm extremely proud of the faculty and staff at both universities, who have undertaken various measures and precautions to continued delivery.
Of our commitment to student support and education.
Our faculty in advising teams continued to work with students who have been directly or indirectly affected by the pathetic providing them with necessary support as they work to complete the program a city.
Overall, we are executing well despite these challenging times and we believe our operating results reflect our commitment educating and serving our students.
With that I'd like to hand, the call over to Ashish for a more detailed review of our second quarter Twentyth results balance sheet and 2020 outlook Ashish.
Thank you Todd.
To review the second quarter 2020 results and then discuss our balance sheet and 2020 outlook before handing the call back to talk for his closing remarks.
All comparisons are versus to compare to prior year period, unless otherwise stated.
Before I begin a quick on the order your ear compatibility.
Earning results for are you now reflect the Trident acquisition commencing on March 2nd 2020.
Total company operating income for the second quarter was $37.4 million as compared to operating income of zero point $2 million in the prior year.
As a reminder, the prior year quarter included 30 million dollar expense related to the FTC settlement.
We believe adjusted operating income, which excludes certain significant and noncash items, it's more reflective of the underlying operating performance.
This measure increased 27.2% to $41.7 million for the quarter.
And was above the high end of our outlook range of 38 million to $40 million.
Net income for the quarter was $28.2 million or 40 cents per diluted share.
While adjusted earnings per diluted share, which we believe is more reflective of the underlying operating performance was up 20.6% to 41 cents per share.
The improvement in adjusted operating income was primarily due to revenue growth at both universities, which reflects underlying enrollment growth that was well supported by a restored and serving operations.
Also benefiting our second quarter results was the Trident acquisition.
As well as covert 19 related savings associated with reduced employee health insurance expenses.
Occupancy related expenses travel and other events.
Partially offsetting these positives were incremental investments in marketing and student serving functions.
Cost associated with compliance and monitoring efforts and legal expenses related to the recently as old via matter.
Now onto more specific details around the second quarter.
Total company revenue increased by $19.6 million more 12.5% $276 million as compared to the prior year quarter.
As it relates to our segments.
Revenue at CTO was up $3.6 million or 3.8% $200.2 million for the quarter.
Reflecting new and total student enrollment growth.
Operating income of $32.1 million.
Up from $12.1 million in the prior year quarter.
Please note that the prior year quarter included $18.6 million of expenses related to the FTC settlement.
From an expense perspective, CTO continues to be diligent in prioritizing expenditures on student support initiatives.
Incremental expenses incurred within marketing and student serving functions were partially offset with cost efficiencies achieved across various administrative processes and reduced expenses associated with pandemic related savings.
Now to we are you.
Revenue increased 26.7% to $70.8 million for the quarter supported by the pricing acquisition and underlying organic enrollment growth.
Operating income for the quarter was $10.5 million as compared to an operating loss of $4.2 million in the prior year quarter.
Recall that the prior quarter included and 11.4 million dollar expense related to the FTC settlement.
Yeah, you're too continues to focus on achieving efficiencies across various administrative processes.
And experienced pandemic related savings, while marketing expenses were higher for the quarter.
Separately was bad debt expense as a percentage of revenue stabilize for the quarter. Please do keep in mind that from a competitor there will be perspective.
Operating expenses exhibited year over year increase across most line items due to the Trident acquisition.
Let me briefly touch on bad debt expense.
As a percentage of revenue bad debt expense for the company was lower sequentially from the first quarter and as compared to the prior year quarter.
We continue to invest resources to help students financially prepare for school. So that they are more likely to complete their program our study.
Why do we still expect fluctuations we are encouraged with the year to date progress in this area.
Moving onto student enrollments.
Total enrollments at sea to you grew by 4%.
Supported by new enrollment growth of 4.5% versus the prior year quarter.
Enrollment growth is reflective of consistent levels of prospective student interest that are being well served by the investments made in our admissions and advising functions.
Looking forward, we expect new student enrollments at sea to you grow in the third quarter and for the full year 2020.
Total student enrollments at AIU increased 52.7% as of June Thirtyth 2021, new student enrollments increased 118.8% for the quarter.
Please note that these results reflect a full quarter of the quite an acquisition.
The positive impact of the quite an acquisition as well as 50% more enrollment days in the quarter contributor to the new enrollment increased versus the prior year quarter.
Recall that the academic calendar at a are you specifically the number of enrollment base in any given quarter has a significant impact on the new student enrollments for that quarter.
Looking for it.
We expect new student enrollments at AIU growing the third quarter and also show growth for the full year 2020.
Please note that on a full your basis.
It was 2020 academic calendar is relatively comparable to 2019 with a consistent number of revenue and enrollment days for each year.
Also and Nolan days for the third and fourth quarters of 2020 will be comparable for each quarter as compared to the respective prior year quarter.
Now a quick update on corporate and other.
This category includes residential operating losses associated with closed campuses.
Operating losses associated with closed campuses, where approximately zero point $4 million in the second quarter as compared to $1.8 million.
With the improvement primarily driven by lower professional fees associated with legacy legal matters.
Excluding operating losses associated with closed campuses.
Corporate costs were relatively in line with the prior quarter.
Now to income taxes.
We recorded a provision for income taxes of $10.3 million for the current quarter.
Which resulted in an effective tax rate of 26.7%.
The tax rate for the quarter includes an increase of approximately 0.3% related to the release of previously recorded tax reserves and the tax effect of stock based compensation.
For 2020, we expect our tax rate to be between 25, and a half and 26.5%.
I was assuming any material benefit related to the release of tax reserves and the tax effect of stock based compensation for the second half of the year.
Also the full your estimated rate assumes a negative impact due to increase in tax reserves and the tax effect of expenses that are not deductible for tax purposes.
Separately, we ended 2019 with approximately a $108.5 million a federal net operating loss carry forwards, which are available to offset future taxable income.
As a result, specifically as it relates to 2020, we do not expect to pay any federal income taxes.
Now, let me spend a few minutes reviewing our balance sheet.
We ended the quarter with $345.8 million of cash cash equivalents restricted cash and short term investments.
Which will be referred to as cash balances for the remainder of today's discussion.
This represents an increase of $51.6 million over year end 2019.
Key drivers of cash for the first half of the your art.
Positive cash flows from University operations were partially offset by cash outflows related to the Trident acquisition.
Payments related to the settlement of the Oregon arbitration matters.
And you want on long term incentive payments.
And share repurchases in the first quarter.
Capital expenditures were approximately $2.4 million in the second quarter as compared to zero point $9 million in the prior year quarter.
For the full year 2020, we foresee capital expenditures to be approximately 1.5% of revenues.
As noted previously we completed the acquisition of substantially all of the assets have tried and University International on March 2nd.
The cash purchase price net of working capital adjustment was $43.8 billion.
The final purchase price payment of $5.7 million paid during July of 2020.
Please note that the $4 million of the total purchase price, what's baked into an escrow and is reflected as restricted cash on our balance sheet.
Overall, the company's executing well against as objective of sustainable and responsible growth with investments in student serving initiatives and technology showing positive results.
Finally to our 2020 outlook.
The outlook incorporates anticipated covered 19 pandemic related costs, such as transitioning students and employees toward a more environment and providing ongoing technology support.
And restructure restructuring costs related to the client acquisition.
For the please note that the outlook assumes no material impact to future operating results from the coal with 19 pandemic again and assumption based on our experiences to date.
So for the full year 2020 outlook is as follows.
We are maintaining our adjusted operating income outlook to be in the range of $151 million $255 million as compared to $234.3 million in 2019.
This is consistent with our overall objective of sustainable and responsible growth.
Adjusted earnings per diluted share is to be in the range of $1.48 to $1.52 per share.
This is dollarsthirty seven in 2019.
Now for the third quarter outlook.
Our third quarter outlook reflects the company's expectation of growth in new student enrollments at CQ Andy.
Further the company expects adjusted operating income to being the range of $35 million $36 million versus $34 million in the prior quarter and adjusted earnings per diluted share to be in the range of 34 cents to 35 cents versus 35 cents in the prior year quarter.
Please refer to our earnings release filed today for important information about the key assumptions and factors underlying this outlook and other expectations discussed on todays call as well as the GAAP to non-GAAP reconciliations.
With that I will turn the call back or to talk for his closing remarks Todd.
Thanks Ashish.
Our teams remain focus on positively impacting student experiences retention and academic outcomes and we're executing well against our objective is sustainable responsible growth with our scalable and innovative technology infrastructure I'm confident in our ability to provide a learning environment for current and prospective nontraditional students, including adult learners, which.
Helps to keep them safe during the current pandemic I'm proud of the entire produce your team for their hard work and dedication to our students.
Thank you again for joining us today, and we'll now open the call for any analyst questions.
We will now begin the question and answer session.
You asked a question you May press Star then one on your telephone keypad.
If you are using a speakerphone please pick up your handset before pressing the keys.
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This time, we will pause momentarily to assemble our roster.
It's.
And our first question comes from Alex Paris with Barrington Research. Please go ahead.
Thank God and Ashish congratulations on the quarter. Thanks for taking my questions. Thanks, Alex Thank you.
First question I, both Todd and Ashish you said.
Hi, good organic enrollment growth across both university supported by consistent demand from prospective students.
What are your thoughts on the counter cyclicality of enrollment in higher education.
There's been a number of different players in this space talking about it being counter cyclical others talk about it being a cyclical and most recently a large player in this space talked about it being very young.
Very pro cyclical.
So.
Have you noticed any uptick in demand as a result of increased unemployment, what's your view generally there.
It's a good question I think it depends Alex on on the program at all so the level of degree basis, you know bachelor's versus masters and doctoral degree, but I would say that again, we've had very consistent demand.
In some areas, we have seen a pick up and.
Again, I think that you know the lift philosophy that during a you know a tough economy. There is more attention given to prospectuses upgrading their education to help them and get a job a better job a promotion raise and and I do think that is very consistent with what we're saying but again.
Across the board I would say as we said it's been very consistent for us at this point with some areas.
Better than maybe has been in the past.
All right and then a.
Similarly, what's been your experience with conversion of this demand has there it has improved and stay the same.
And that has been consistent and again I think that you know this is just again.
What I have seen over the years of being in this industry is what you will see is that a conversion rate as far as those are wanting to attend tends to tends to increase but it maybe a little more difficult for them as far as funding. So that may then have a little bit of eight a. calendar effect. So you know.
I think what you'd look for as a consistent conversion rate during a time like this because again you see some things you know more incentives for people do it that again, so maybe a little bit more headwinds as far as getting their funding.
Got you Alright, and then kind of my final question is the bigger class, it's kind of a bigger scope question.
There was a negative article over the weekend and Barron's I'm sure you saw it.
The interview with an Investor you talked about a couple of.
Shocks like in a couple of stocks at either Boyd or short years was one of them, but you mentioned.
And as opposed to pick.
And.
Your stock and the other one mentioned was down on Monday. Your stock is since recovered, but I was wondering if you could maybe address some of the issues. He brought up because I I think it's important.
First of all like brought up the FCC settlement and then the G.A. issue, obviously boats related.
This is from a long time ago, maybe you can kind of refresh our memories I'm not I do not what it really involved what period of time, where they looking out and why you said it without admitting run Julie.
No. Thanks, Alex and you know again I did read the article I thought you know again it was some of the arguments I again, I felt were very outdated and frankly some of them just not.
You know again I don't think really apply but that's that's my opinion, but regarding the FTC that yes. Those can they were allegations of issues relating to the use of lead aggregators. It wasn't anything we were doing internally, which again. The article led I think it kind of led to imply that but again it was the use of some aggregators and now.
These were it was years ago, and there were well over 100 universities that that the bought those leads and you know as soon as we found that there may have bad may have been some information there that wasn't a accurate that they were using not to our knowledge, we stop using them other universities continue to do that but regardless.
Again, it either I think that in the article it it made a connection that just was not the case, but regardless.
The FCC agreement, it's something we're actually very proud because in that we commit to a very robust process using technology partner to make sure to literally scrub every lead before we acquire it to make sure the accuracy the consistency of the information.
Before we acquired that lead and I would say that I'm not aware of if any universities for profit or nonprofit have as robust a compliance process as we do and that we were willing to a agreed to that in an agreement with them. So again, we view that as very positive versus the negative.
Slanted I think was used there so that's our first as far as the V.A. again, that's stemmed from again some of those things that were mentioned in the FTC agreement at which again where years ago that are nothing nothing new and as soon as we submitted the information they considered it the outcome was what we had expected.
They would they would see the very robust.
Compliance process that we have and therefore, there was no interruption and so again, although you can't prevent those things from a from from them asking are presenting the inquiry once they did review data and information.
With a very positive outcome for us, which we expected because we know we're doing so again.
I felt like it was a.
Consistent with maybe those who tried to short of stock or put out information that.
I think when you when you read between the lines, there's there's a lot more there and it in our case again it was I view as positive information, but again, that's that's my opinion.
Thank you and then just one other question and it also was raised in that article, but I would have question anyway bad debt you called out bad debt in excess of 9% of revenue.
That's higher than I had calculated for draw what is bad debt as a percentage revenue.
Currently.
Why is there a lot higher Ali I'll respond to just about it's your bad debt and general Nineth Ashish wants to add anything to it because of I think there's a disconnect there as far as you know in bad debt in anyway, reflecting on on the quality of students that that is bad debt is more an issue of what is going on in the economy in general as you would expect in administering.
This time of pandemic you in your and your desire to help students graduate it's probably I think it's very much in their favor to be very.
Helpful for them and that May or May impact your bad debt, having said that you know.
We are seeing improvements in certain areas of bad debt, so and again I'll, let her she's gone, but again I think that the guiding principle, there which has missed is what are you doing to help your students graduate, especially in times of maybe funding is little bit more difficult for them and I think you know again it needs to be within reason it needs to be managed but.
It should be something that is your goal should being trying to help your students. So she's you want to handle that.
Sure Alex to your first comment I think you are correct. The article does mentioned, 9%, but that is I don't know where that number came from but to your point bad debt before year to date is 7.3%.
That's 9% and then for the quarter. It is 7%, which is better than the prior year quarter. So we are seeing good progress in that area as Todd mentioned, we have invested a lot of resources to make sure our students are.
Financially prepared for school. The goal is to always do everything the best interest of the students and lastly, also if you just look at the revenue growth that we've had over the past few quarters in years and if you look at the quality of earnings. If you will you will see there was heavily.
Cash flow from revenue to operating income to our EBITDA into cash. So so all those factors combined we believe we're happy with the progress. We are made in that area and though we are cognizant of what goes on there and we'll continue to make sure we make progress there.
Yeah, well. Thank you both and I appreciate the consistency of production through this spend dammit, both in terms of actual and keeping guidance and actually raising guidance last quarter maintaining guidance. This quarter. So I I think a consistency is pretty valuable in this environment.
Okay.
Thank you Alex.
Our next question comes from Dan Moore of CJS Securities. Please go ahead.
Hi, Good evening guys. This is a brennan pops in on for Dan I, just wanted to ask about and you might have mentioned that's fine that's the but could you speak to the organic growth for the business excluding try that.
We didn't break that out but I think you can from the numbers that we presented I think you can see that it was a very a good quarter from a growth perspective for a are you.
So were 50% more enrollment days during the quarter year over year. So again, it's not exactly.
Apples reps, but you can use that as a good benchmark and yet they had 118% new student growth and.
So you know again without you know when you take about the 50% you're still talking about 68% implied growth year over year.
And yes part of that is.
Is trident, but there's still a significant amount that they are you as your she's you want to add to that at all I.
No I think that is that is that is correct. We don't separate out excluding flight and but we do say there is underlying organic enrollment growth at our a value and that in organic enrollment growth also is resulting in the operating income growth. So I think thats fix.
Okay, and then on tried and could you speak.
To any anything you've seen in terms of cost and revenue synergies I knew you had very little bit of time.
Well I think that the you know just again say in general we've been very pleased with the quality of the staff and faculty and programs that are.
Trident abrupt two to the company and in particular their students there.
They have a lot of graduate students, they're very dedicated just even though we felt that that would be good I think it spend even more encouraging what we've seen and especially there at the graduate level and then in their relationship with the military those types of things a bit I think really.
Nice improvements for us and I think they have benefited from our robust technology and infrastructure a compliance programs those types of things that.
We've been able to help them with and so the resulting combine.
Effort of the two of them as I think Thats, why you're saying you know good growth in the quarter and looking forward to you know more that in the future.
I think that last question could you speak to any or I guess your corporate partners as it sounded like you know you heard some good things this quarter, but is there any any pulling back or any.
New entrants and then any incremental opportunities with remote corporate training.
Oh good questions.
They did not then to our knowledge as far as anybody pulling back at this point I again, I think that is always a risk that you would have in it across our industry. We've been fortunate in a lot of our partners are in industries that have not been affected by by what's going on in the overall economy whether its.
You know we've got areas of some of our part of our partners in technology. Some of them are in a in healthcare and those are areas that are doing well and I think thats been for US again, very very positive as far as the remote learning opportunities. There you know.
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A real strength for the company, we have a very robust technology and one of the things that I have noticed as a as I noticed some of my own children and grandchildren, some of the remote or the transition from on ground to remote.
Technologies to deliver the education candidly is somewhat lacking and that's where again you look at what we do and the years and years of experience and millions of dollars.
Voted to the technology and the academic infrastructure to produce.
Quality learning outcomes as good or in some cases better than on the then face to face type education and this is where again I think we really have an opportunity to shine as a a very good alternative.
Certainly and then in an environment like this but I also think going forward.
Think more people are seeing the benefit of this as a not just as a technology. This utilized and in this environment, but going forward because there are some real efficiencies.
And again I think that its a.
It is really a complement to our you know our academic staff our technology staff you know over the years to continue to refine and develop that.
Great. Thank you.
Thank you.
Our next question is from Greg Pendy of Sidoti. Please go ahead.
Hey, guys. Thanks for taking my question I.
Hello, guys just as it was asked earlier, but just this is probably one quarter end with Trident University. So just kind of looking at the operating margin differential.
CTO on a are you how should we be thinking about that maybe over you know not.
Not the next quarter, two but just over the next couple a years and you think big picture. A are you would be at a similar operating margin is at sea to you. If it had stayed the same number of Stephens.
Greg Good very good question and yes. The way we look at it is there certain variables that exist that we'll see today I you that if they're consistent being a your your cost per credit hour a your your quality of your program. The what your programmatic offerings are.
The particular demographic of students you serve and there's a lot of consistency.
Between a are you and CTO and so given that we do believe that there's the opportunity for they are you to have similar margins at a similar number students again, you know that a lot of things can change externally in the environment that will affect that but it's certainly you know from our point of view the potential and I think adding triton's what that is.
That one enhance the breadth and depth of their you programs.
In a very.
Much faster level, then if you would go through and get those individual program approvals and development over several years as you add them one at a time versus adding a partner that already had approved programs and so that actually does I think shorten the timeframe that would allow you to have comparable margins.
It still takes time and you still need to scale that you're referring to but certainly we believe the elements are there.
Excluding obviously external impact that may happen.
But yes.
We feel like Theres that opportunity and I tried really added to that.
Our ability to to accomplish that.
That's helpful. Thanks, a lot.
Thank you Greg.
And I would just again, thank you all for joining us today, and we look forward to speaking with you again next quarter. Thank you.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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