Q3 2020 Oxford Immunotec Global PLC Earnings Call
Earnings call.
A reminder, this conference is being recorded it is now my pleasure to turn the call over to Matt Mclaughlin Chief Financial Officer.
Good morning, and thank you for joining us to review, Oxford Immunotecs financial results for the third quarter of 2020.
Before we begin I'd like to caution listeners that comments made in financial information provided during this conference call include certain statements that are estimates or beliefs forward looking indoor subject to various risks uncertainties any statements made during this call that are not statements of historical or current facts are intended to be forward looking statements pursuant to the safe Harbor provision.
One of the private Securities Litigation Reform Act of 1995.
Want to emphasize that such forward looking statements reflect our current expectations assumptions and currently available data.
And then either predictions nor guarantees of future events or performance.
Actual results could differ materially from those stated or implied by these forward looking statements due to risks and uncertainties associated with our business, including those under the heading entitled risk factors in our annual report on form 10-K for the year ended December 30, Onest 2019.
And in subsequent reports, including our quarterly reports on form 10-Q, including the form 10-Q being filed today and our current reports on form 8-K in.
In addition, today, we will make a number of comments about the impact of COVID-19 on our business. We provide these comments to give investors insights into what we're observing however, given the dynamic nature of the pandemic. There's a high degree of uncertainty around any forward looking statements made.
The company disclaims any obligation to update or revise any forward looking statements, except as required by applicable law.
During the call well also refer to certain financial information on a non-GAAP basis.
We believe that non-GAAP financial measures taken in conjunction with GAAP financial measures provide useful information for both Austin investors to evaluate the company's performance.
These include constant currency comparisons EBITDA and adjusted EBITDA right.
Reconciliations between certain GAAP and non-GAAP results, such as EBITDA and adjusted EBITDA are presented in the tables accompanying our earnings release, which can be found at the Investor Relations section of our web site.
Further as a reminder, in November 18, we completed the sale of our U.S. Laboratory service business to quest diagnostics as such the now divested U.S. Laboratory services business is shown as discontinued operations in our press release and forthcoming form 10-Q.
With that it's my pleasure to turn the call over to Oxford, Immunotecs, Chief Executive Officer, Peter Wrighton Smith.
Good morning onstage.
On today's call I'll provide a brief overview of our operating performance for the third quarter of 20 to 22.
Turning to an update on our business and our strategic priorities.
Well then take over to discuss our financials before I hand, the call back to me to discuss the near term outlook for the business I will then open up the line to your questions.
But for the third quarter of 2020, we posted revenues of $19.4 million above the guidance. We gave in August due to stronger than expected demand.
Asia revenues were $13.3 million setting a new sales record for the region returning to year over year growth.
Your west revenue was $4.4 million, a strong bounce back from the low point last quarter, reflecting the recovery in end user consumption demand for all TB test.
Europe and rest of World revenue was $1.7 billion, reflecting recovering demand across the region.
Let's take a few moments to talk about the impact of the COVID-19 pandemic on the business and what we're seeing in various countries.
Starting first with China, China revenue grew strongly in the quarter compared to last year consumption volumes are now returning some to normality.
Then all pre existing accounts and we're also growing volumes by winning new accounts.
In Japan testing consumption continues to be robust test consumption is now back to or slightly above 2019 levels and we expect to drive test growth from here on out through all sales and marketing activities.
In the U.S. test consumption volumes are recovering and by September were running at about 90% of 2019 levels.
We currently expect TB consumption volumes to get back to close to 2019 levels in Q4, although revenues will lag slightly behind did you to the nonrecurring see fixed line revenues last year.
In Europe from rest of World, that's clearly little diversity based on each country's epidemiologic situation.
Core European markets test consumption was on an upward trend in Q3, and we saw a public health volumes start to return in the region, including the UK NHS tender, which was put on hold now starting to Reengage.
Some other regions for example, Russia still meaningfully impacted by call. It Nonetheless, the general trajectory in all Europe from rest of World region is one of recovery and although we're watching the effects of the second way even Europe closely we still currently expect test consumption to continue to improve sequentially.
Obviously, our current views on the business could change rapidly, especially the sizable second peaks of disease and all the reposition of significant Lockdowns. However in summary, we are currently seeing demand for test recovering across the board with Asia, leading the way.
Notwithstanding the understandable focus on growing the virus right now we believe this pandemic will be temporary and why.
Debates, we believe that the outlook for TB testing, we remain a strong if not stronger than it was before corona virus.
TB screening is an essential part of controlling what is still the world's biggest killer from infectious disease and just because COVID-19 is has arisen as another major killer it doesn't negate the necessity for TB screening to return.
It's understandable that public health resources are focused right now on COVID-19, but thought relative neglect of TB prevention will only make that TV problem more severe I'm a need for remedial action stronger once the COVID-19 pandemic sites.
With them on recovering on the need to test for TV as acute an important as ever we're extremely confident to the demand outlook for all tests, given our confidence in the future. Once we're being mindful of Opex on a conserving capital where appropriate we all continuing to spend in areas that we believe will maximize our growth and success.
We plan to hold an investor day in mid December to give more color on our strategy for growth in the business and how our investments supporting the long term growth as a company brief.
Briefly we're focused on four key initiatives.
Firstly, we are expanding our commercial channel, especially in China, where we've been in a transition to a new business model away from a prior exclusive distribution partner to a model whereby we take more direct control EPS sales promotional in market development activities.
We continue to add resources that given the magnitude of the untapped opportunity.
We've also been strengthening all resources in talks at Southeast Asian countries.
Lastly, we are building up our technical service infrastructure in support of the growing pipeline of equipment installs driven by automation strategy.
Secondly, we continue to invest in programs to reduce the cost of goods to continue our long term trends gross margin expansion.
This also gives us more pricing flexibility, which coupled with the benefits of automation will allow us to improve economics for all customers.
In addition, we see this is underpinning future growth as we seek to penetrate additional more price sensitive markets and segments.
We continue to invest in ways to differentiate and extend our market leading test performance.
One of the consistent strength of all test on a principal reason why customers choose all test has been this differentiated performance.
Performance in sounds a sensitivity reproducibility.
Underlie, but achieved an immunosuppressed populations.
Well as all significant ease of use it fall to do some phlebotomy insulin per shipment.
We're constantly working to communicate on extended performance advantage over the alternatives in the market.
With that in mind off to another successful pit may supplement submission to the FDA also team. We recently obtained U.S. clearance for the T spot TB test to be used in pediatric populations as young as two years old.
Makes sense, the first and only blood test for TB cleared for use in pediatrics in the U.S. we.
We are ramping up marketing and sales efforts behind the launch in this important high volume segment of the U.S. market.
Lastly, we are focused on delivering automation to what customers globally.
I'm pleased to announce today that we submitted all P. I may supplement to getting clearance from the FDA to sell automation in the U.S. market.
Based on typical review timelines, we would expect approval in the second half of 2021.
In parallel we continue to make good progress on platform development and are working towards providing automation in other jurisdictions.
We believe that automation changes the game for us and we will provide more insights into our automation program and how this impacts the market at the upcoming Investor day.
Underpinning. These four key initiatives. We also continues to build its foundations to support the company's growth.
The planned capacity expansions in Oxford facilities as well as the relocation of all to Massachusetts sites into one new site are progressing well.
Taken together these will give us expenses manufacturing capacity additional space to automate more of our manufacturing processes expanded office space for on large lodging headcount and expanded laborde trees supposed to develop and showcase our automation to customers.
We're also executing on all projects to replace antiquated operating financial system with a new ERP system, which will once implemented it give us new analytics and brick multiple efficiencies to common processes.
There continues to be a huge opportunity for growth and the TV space and it's critical that we continue to execute on the strategic priorities of the business.
I'd now like to shift gears and give an update on our work in salt costs too.
One of the great assets of our company, resulting from almost 20 years of work is all expertise and all really powerful technology to measure T cell function at a single cell level.
This is all T spot technology platform.
As we look to grow the company outside of our core latent TB markets. One of the things were looking to do is to find new clinical outlets to deploy this world leading technology source.
So let's call. It two has provided a great opportunity for us to showcase the powerful technology and to establish a new revenue line in a new disease area.
We are proceeding on multiple fronts.
As you May recall, we recently made a research use only test available to measure T cell responses against sales calls to the forest. The call just COVID-19 based on all T spot technology.
This test provides a measure of the strength of the T cell response against a wide range of cells called two antigens we.
We presume produced this test because we feel that T cells have an important role to play in the immune response to salt costs too and we want to be well positioned to move quickly if a clinical use case for measuring T cells emerge.
Exciting evidence on the performance of all tests will shortly be published but we've already learned some key things that support the police to be had when we started this work so.
Mostly the vast majority of people with confirmed cells called to infection produce a measurable T cell response, showing how important T cells are in fighting this infection.
Secondly, we detect confirmed cells called two infections west of all that you test on negative.
Thirdly, we now know the T cell responses against all scope to as measured in all test all strongly associated with protection against subsequent infection.
Although this is true even in siro negative patients.
Based on the evidence we're seeing both from our own test unsupported evidence being published every day and academic literature. We're now confident the T cells have a role to play and I'll fight against COVID-19.
To that end, we have made the decision to advance quickly towards developing and automate table I V. D format of all test optimized from a data we've now obtained using their research use only version of the test.
We plan to submit this T spot covered tests for FDA clearance under the way pathway with CE marking in parallel.
We will communicate more about all timelines plans unanticipated use cases at upcoming Investor day.
Alongside the clinical use cases from an I.B.D. test were convinced the T cell measurement has a crucial role to play in the evaluation and rollout of vaccines against golf at 19.
We're not alone in this UK governments vaccine task force has recognized that measuring T. Cell response is a critical piece of the puzzle and they wants to measure T cell responses in a standardized way to allow clear comparison of the different vaccine candidates.
Specifically wanted and at least <unk> technology to measure immune responses given its sensitivity and advanced she is like all other methods.
We are uniquely placed being the only company in the world offering regulated leasable assays for T cell measurement with approvals around the globe.
We've been selected by the vaccine told.
Oh provider of T cell testing services in support of their work.
I will be providing all research use T spot discovery cells called to test as well as exploiting all t. cell expertise and service infrastructure to provide additional T cell measurement assays.
Work has already begun and we will start to recognize revenues from this work starting in Q4.
We expect this work to last for several quarters.
Even once we hopefully have enough efficacious vaccines available that will be studies required to look at vaccine efficacy and longevity in different populations you.
Using the data we're continually building we're now working on educating other government programs on the rationale for measuring T cells and believe we're well positioned to serve this market given our unique ability to produce ship and run large numbers of at least <unk> base T cell test in a hearty standardized manner.
Oh, it will be apparent in the comments I've just made things are moving very fast for the company and there are many important developments in the business.
Lots of this we feel that taking a deeper dive on the business will be informative to investors.
Currently we intend to hold an investor and Investor day in mid December.
He will give a lot more color on how the landscape is changing in the TV space and how the investments we've been making over the past two years have repositioned the company to capitalize on what is a great long term growth opportunity.
Secondly, well be taking a deep dive into all souls called two plans explaining the role of T cells in the area. The use cases that are emerging on all plans to address those using all t. cell expertise and unique T spot technology.
Last we will be commenting on the growth strategy of the company, including how we intend to leverage that T cell expertise and all global commercial channel to build the business over the longer term, that's what is giving some viewpoints on the future financial trajectory of the business.
I'll now hand over to Matt who will give you some more detailed comments on our financials in the quarter.
Thank you Peter.
Our full GAAP results are shown in our press release issued today show the comparison of our Q3 2020 with Q3 2019.
Total revenues in the third quarter of 19.4 million were down 8% versus the seasonally high revenues of 21.2 million in Q3 2019.
Breaking down our reported revenues on a regional basis Asia revenue was 13.3 million representing 68% of our revenue you.
The U.S. revenue was 4.4 million, representing 23% of revenue in Europe rest of World revenue was 1.7 million representing 9% of our revenue.
Turning to volumes in the third quarter, we sold approximately 250000 TV tests in the U.S. via kit sales and.
And approximately 750000 tests in our O U S region, both via kits sales and tests processed in our UK Odell service business gross.
Gross profit for the quarter was 14.9 million and down 4% from gross profit in the prior year period.
Overall gross margin for the quarter was 76.4% an increase of about 340 basis points from the prior year as volumes recovered and the underlying progress we've been making on Cogs once again become apparent in our gross margin numbers.
Product gross margins top 77% in the quarter with service gross margins still below our usual levels due to lower TB volumes running through our UK Odell lab.
Turning to operating expenses operating expenses decreased 5% from the prior year period to 14.6 million.
Why while we've been very disciplined with discretionary spend throughout the year, we still continue to hire resources to support the future of the business, particularly in sales and marketing and R&D.
Sales and marketing expenses decreased to 6.6 million, primarily driven by cost control measures and a reduction in marketing and travel expenses due to the COVID-19, pandemic, which offset continued head count additions, particularly in Asia.
Research and development expenses increased to 2.6 million due to our continued investment in automation initiatives, including clinical studies to support regulatory approvals. In addition to spend related to our work on the Sars Cup two product.
General and administrative expenses were slightly lower than last year at 5.4 million.
Operating expenses for the third quarter included approximately $1.1 million of share based compensation.
As revenues have recovered so is the bottom line of the company network.
Net loss from continuing operations was just $99000 EBITDA was 507000, just $7000 in adjusted EBITDA, which excludes share based compensation unrealized FX gains or losses and unusual items. If any was 1.7 million for the quarter, both EBITDA and adjusted EBITDA are non-GAAP.
GAAP measures.
Turning to the balance sheet, we finished the third quarter with a very healthy cash position of approximately $160 million a reduction of about $5 million from Q2 close.
As our revenues have rebounded in Q3 were back to a normalized level of accounts receivable, which accounted for the majority of the cash movement in the quarter.
I'll now hand, it back to Peter who will discuss our business outlook.
Thank you Matt.
We currently expect Q4 revenues to fall between 19 and $20 million, we're tuning the overall company to growth over pretty pandemic revenues of $18.1 million in Q4, 2019, which included $600000 of now discontinued see six line revenue.
After a record quarter, we're expecting a pac revenues to be lower sequentially consistent with normal seasonal patterns. However, we do expect a pack to show increasing year over year growth versus Q4 last year.
We're expecting sequential revenue increases in both our U.S. and Europe rest of world regions narrowing the gap to Q4 last year.
That concludes our formal prepared remarks, we'll now open up a lot of questions.
Thank you ladies and gentlemen, if you have a question at this time. Please press Star then one on your telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key to prevent any background noise. We ask that you. Please place your line on mute. Once your question has been stated.
First question comes from the line.
Steve Nam with Pete Peter Stanley. Your line is open. Please go ahead.
Oh, great. Thanks, Peter.
So.
Nice quarter congratulations.
So just a few questions on the Oh, sorry, Tobey too.
She said of more sensitive than existing <unk> EPS could you could you explain that a bit more is that related to the single cell sensitivity of the technology or are there other things going on.
Hi, good morning, Steven and thanks for that comment. So so yeah. What I said was that T cells can detect people who are missed by symbology and that's not really specifically a sensitivity thing I because serological tests, all very analytically sensitive it's an it's a biology thing.
And what I mean by that is you know the there are two parts of fuel adaptive immune response, the T cell site and the antibody side and that kind of independent and so you know you can't have people isn't immune response reacting whether T cell phone predominates, all the antibody sought predominates or web bugs happened to get the <unk>.
And what we're what we're saying here is installs called to either a clearly people where the T cell side is predominating and you can see T cell responses, where you can see an antibody response I hope that answers your question.
Yeah, Oh, yeah.
Thank you so much and.
And then you also said revenues would start in Q4.
Just give us a sense of the contribution in Q4, given your you just gave Q4 guidance.
Yeah, we will start to see some copied revenues in Q4 from the vaccine task force contract, but it's it's not material overall.
Okay got it and then long term on the spot.
Revenue actually last several quarters is it is there an opportunity to use it has longer term.
The opportunity to do.
It was a durability.
The what.
Is there potential way to use that.
Too.
You know screen people that have been previously supposed to open I mean, you know go.
In fact, he regimens.
Yeah, but yes, absolutely I mean, one of the use cases, the test would be to understand who's had prior exposure and still has some kind of level of immunity and you know that need will continue for some considerable period of time, even if it's like or we will hope a vaccine starts to become available, particularly.
Yes, I I guess it might well be the case, the vaccines won't have 100% product protective efficacy and they they might not lost in some deterioration for EPS.
So clearly there is I think going to be a fairly good use case for these tests well through 2021 and potentially even beyond that but I, but I think the other thing that we are very mindful off is that three solid golf too we're getting to introduce all technology and all you know <unk> unique capabilities to a whole different audience.
It's clearly going to benefit our TV business, but also could I could introduce all technology for other purposes to other kinds of clients and so we see this very much as a a play for the longer term as well.
Okay, Great. That's really helpful and then maybe going back to you.
The quarter performance.
Question for Matt.
Backlog in fact coming.
Coming off that severe loss.
Correct order or any sort of.
Right.
This quarter.
No. So from a just from an inventory management standpoint at our customers and distributors, we talked about it in Q2 and some of the performance in Q2 was really people drawing down inventories. So if you think about quest. For example, we knew that this year. They wanted to get from holding a couple of months of inventory to closer.
On a one month, which is how they run their laboratories and they did that in the second quarter. So we didn't see any impact of kind of people stocking up the the shipments that we are very much in line with end user consumption and that's how we track it.
Okay got it okay. That's helpful.
Oh.
And then the Oh I guess my last question are you.
<unk> color on the gross margin improvement year over year.
Oh.
Yeah. So if you look at the year over year gross margin improvements, there's two things I would point to one is from a pricing standpoint pricing was was relatively stable in all areas with the exception of China, which is still getting the benefit on the year over year comp from shifting from our old distributor to our new distributor. So there was a pricing bump.
That went into effect partway through Q3 of last year. So that was part of the gross margin improvement and then the second piece is just the continued cost out efforts that that we drive in the supply chain. So we continuously have a deck of projects that were working to drive down cost and that's that's really the second driver that you are seeing that the gross margin improvement year over year.
Obviously quarter over quarter. Some of that is just volume driven and recall that we had some inventory write offs in the first half of the year related to the drop in volume and those have now ceased.
Okay, great. Thanks, I appreciate it.
Yep.
Thanks, David.
Thank you and our next question comes from the line, that's fine Ji Nam with BP I changed your line is open. Please go ahead.
Hi, Thanks for taking the question HM.
Okay.
Thanks [laughter].
Sorry.
Maybe starting off with select.
Lastly, automation platform just curious how that's trending we're tracking in the regions where it commercially available.
Yes, Thanks, Suji for the question and hope that that coffee [laughter] I've, you're okay. So yet in terms of T cell select a an automation it's been available for that a wall now in Europe, and we've been really very pleased with the customer receptivity to this and how much they believe it impacts.
So that their work flow and that throughput obviously, you called it has somewhat disruptive disrupted sales pipelines and installs just because if the ability to travel, but we remain very encouraged by the customer reception of the automation in the jurisdictions, where we've we've started to talk about it.
Okay, Great and then my follow up is that.
The the T cell response has just a clarification. There are you are you guys see Harry or.
Metrics in terms of measuring that across the board.
For COVID-19 or is it just for certain population in terms of trying to better understand.
Indian profile I guess, if the patient population.
Yeah look I mean, the PCR up molecular or antigen detection methods methodologies to look for the virus itself will remain the mainstay of acute diagnosis for obvious reasons. They work generally extremely well, but there are some situations where they don't work great soon.
Similarly, symbology is that kind of secondary test can be helpful to understanding the immune response, a part of the immune response to cells KOF to I will say fill in some of the blanks that they're all still even with molecular nitrogen tests. What T cells are doing is it is a that complementary to those two tests. They give you additional information that you.
Don't get for most all the test and they can be helpful. In a variety of situations.
And so we'll detailed <unk> and a lot more clarity in the Investor day, but just at this point in time, just few T cells is kinda complementary an adverting I just additional information that could help us better manage patients and better diagnose the disease and protection from subsequent infection.
Great. Thank you that's all from me thanks.
Thanks Angie.
Thank you and our next question comes from the line of Chris Lin with Cowen. Your line is open. Please go ahead.
Hey, Peter Matt. Thanks for taking question, maybe just to start can you talk about how Q4 guidance reflects the impact of resurgence of cases in both Europe and the U.S. He also just provide a bit more specificity on trends you saw exiting October.
Yeah, Okay. So.
Go ahead Peter.
I'll take this one so so in terms of the guidance for Q4, obviously you know we are clearly watching the rising cases in Europe and the <unk>. The lockdowns that are starting to roll across Europe.
And guidance for every company Ms space is going to have to be dynamic based on you know how the pandemic unfolds. However, you know we still stand by our guidance given where what we're seeing right now and snow all Q4 guidance reflects the best information as we have it.
Today in terms of trends specifically coming out of October you know, we don't have October data for a variety of all markets. So it's a little difficult to comment on that specifically.
Not anything else Youd up.
Yeah. The only thing I would add is you know as we left Q3, we did see sequentially. You know July to August August to September obviously heading into October positive trends really across almost every region. So that's something we're we're pretty comfortable with in terms of that trajectory as we were heading into Q4.
Okay.
Maybe moving to China can you just help us dissect the Q3, China growth.
Ah and contact the volume at existing accounts and new account wins, you mentioned you know that those were both factors, but I was hoping you could quantify that more and maybe a bigger quit a bigger picture question you provide a bit more detail hiring new direct business model in China impacting growth.
Yes, I mean it all on the second question first so I mean, the reasons for going direct in China, when many fold, but in short we just feel that having arrived and a team on the ground and the ability to increase. The result is that just gives us the best opportunity to drive growth near to medium to long term in in one.
What is going to become one of the largest markets in the world and so we feel this is an important start of a new chapter without long term growth in mind I'd.
I've been very pleased with how things have gone in the first year or so since he made that transition you know we're learning <unk> Intel from the market is just so much better our ability to influence the market is so much better.
This result was that we are already starting to to win new accounts in terms of breaking down that the growth specifically I'm, just probably not going to get into Doc a level of granularity for competitive reasons spot you know the key points really all that.
Yeah test consumption kind of in existing accounts and a health care seeking behavior, yeah, he's getting back very much to normal in China. That's the kind of first point on the second point is that we all driving genuine volume growth through winning new accounts. It's not just it's not just price increases driving that's driving the revenue increase.
Okay I speaking of your primary competitor. They recently asserted that they expect 2021 revenue to be at least at between 19 level given your guide for year over year growth in Q4, it would be reasonable for us to believe you could actually deliver growth beyond the 2019 level next year.
[laughter] I'm going to try not to be drawn on trends trends. One guidance you know as as is all cost him. We will give that on the next call, but you know I think its itself to seek right that we already expect the company overall to get back to growth in Q4.
Okay.
Last question for me and I. Appreciate you plan to give more details at your Investor day, but you may be give us a preview on your commercialization plans for Keysight discovery, particularly in the U.S. I was just a product you anticipate selling through class. Then you just talked about developing and automated will I be de test you leverage automation solution.
And you have available for T spot TB or is this something you have to start from scratch.
No you said all the automation it will very much follow the automation solutions, we have a fighting for T spot TB it cannot be almost identical a process that so it's all about leveraging what weve already developed home with on the TV side in terms of channel to market I cannot prefer to comment on that in the in mid December but ultimately if this.
Thing takes off then we'll be looking for a whole in every channel to to deliver capacity into the market starting all the slate with all existing customers is the first a port of coal.
Okay, all right great. Thanks for taking my question.
Thanks, Chris.
Thank you and our next question comes from the line of Tyco Peterson with JP Morgan. Your line is open. Please go ahead.
Hi, This is Casey Entre Tyco I first question, how how much did you see a clearance for T spot for use in pediatrics, how much did that.
Increased the Tam a few spot and will that be a material growth driver going forward.
Yeah Casey Great question, Yeah, sorry, I mean, pediatrics is a is a meaningful part of the 7.3 million tests, we estimate it done in the physician offices every year in the U.S. So it's it's well above a million tests a year, we think and so therefore, it does represent a significant market opportunity.
And one that we clearly believe will be another another driver of growth for the company going forwards optics, and the short medium and long term.
Got it.
And then as it relates to the advantages of using T spot versus skin in terms of limiting intra person contact during cold at 19 can you point to any new customer wins in the quarter that would maybe driven by this dynamic and how.
How should we think about this moving forward as a normal volumes are normalized.
Thanks.
Yeah, Great question. So I mean, we don't track that as a as a particular KBR and the company, it's more anecdotal, but yet clearly anecdotally that still.
I see a reason why people off or choosing to run all blood test because the single visit advantage you know ultimately our general view is once you've given some of the change from somebody they'd be doing from 100 years, you know once they've tried it but I'd go back. So I think we have extremely high customer retention rates and I don't see that situation being any different.
Got it thank you.
Thank you.
Thank you and I'm showing no further questions at this time and I would like to turn the conference back over to Peter Wrighton Smith for any further remarks.
Great well. Thank you all for joining us to discuss our third quarter 2002 interim results and we look forward to speaking to you again that our upcoming Investor day in mid December Thanks, Bye for now.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect everyone have a great.
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