Q4 2020 HC2 Holdings Inc Earnings Call

Good afternoon, and welcome to HPT HC, two holdings fourth quarter and year end 'twenty earnings Conference call.

All participants will be in a listen only mode. After the prepared remarks and presentations there will be a question and answer session.

Please note this event is being recorded.

Now I'd like to turn the conference Orange and matrix and <unk>.

Please go ahead.

Good afternoon, Thank you for being with US to review <unk> fourth quarter, and full year 2000, and 'twenty earnings results.

Afternoon, we're joined by Abbvie Glaser Chairman of HC, two Wayne Bar Junior C. E O of HC, two and Mike Sena <unk> Chief Financial Officer.

And as usual, we have posted our earnings release and our slide presentation on our website at H C. Two dotcom.

We'll begin our call with prepared remarks to be followed by a Q&A session. This call is also being simulcast and will be archived on our website.

During this call management may make certain statements and assumptions, which are not historical facts will be forward looking and are being made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.

Any such forward looking statements and involve risks assumptions and uncertainties and are subject to certain assumptions and risk factors that could cause <unk> actual results to differ materially from these forward looking statements.

The risk factors that could cause these differences are more fully discussed and the cautionary statement that is included in our earnings release and the slide presentation and further detailed in our 10-K and other filings with the SEC.

In addition, the forward looking statements included in this conference call are only made as of the date of this call and as stated in our SEC reports HC.

<unk> disclaims any intent or obligation to update or revise these forward looking statements, except as expressly required by law.

Management will also refer to certain non-GAAP financial measure measures such as adjusted EBITDA insurance adjusted operating income and insurance pretax adjusted operating income.

We believe these measures provide useful supplemental data that while not a substitute for GAAP measures allow for greater transparency and a review of our financial and operational performance.

Finally results for the telecommunications and clean energy segments sold and the fourth quarter of 2020 and first quarter of 2021, respectively are excluded from today's discussion and analysis of our performance for the comparable periods.

At this point, it's my pleasure to turn things over to Avi Glaser.

Thank you good afternoon, and thank everyone for joining us today before I became chairman and the old HC two had been involved and a myriad of unrelated businesses, including long distance Marine services and energy and why.

And a year HC two is sharpening its focus and has a tremendous collection of best in class assets that are laser targeted to today's new economy first we had infrastructure represented by D. B.

And the largest steel fabrication and erection and companies in the United States.

And outstanding as it may be even more relevant with a likely increase and infrastructure spending going forward as a result of the change of control and Congress.

And with HC, two life Sciences portfolio and said.

As a proven track record for creating value the pants and investments with the greatest potential for value creation are true technologies and met a beacon.

<unk> is developing and commercializing aesthetic medical and non medical devices and the 22 billion dollar aesthetic dermatology market. Our tours led by the same management team that develops L. T X cool sculpting system, and which successfully took the company public in 2011, and then later sold to Allergan and 2017 for two point.

$4 billion met a beacon has revolutionized and kidney health with the first of its kind novel technology and allows for real time monitoring of kidney function.

And it began has been granted breakthrough device designation by the FDA and the potential market is in excess of $7 billion and the technique.

Allergy employed by met a big and can be used for other areas of medicine, and besides the kidney and <unk>.

Third we have HC two spectrum assets represent about HQ2 broadcast Inc. The largest broadcast station group and the U S and as I'm sure you are aware and today's world the opportunities and a nationwide collection of broadcast as it provides including the potential inherent spectrum value is limited only by one's imagination.

We have chosen to focus our company around the three business areas. We believe there is substantial growth and value creation opportunity right in front of US. These are businesses and exist in our portfolio today, yes, It's a world class talent is top notch and we are committed to supporting their success by fueling the organic and inorganic ambitions and they have.

And when appropriate looking for alternative approaches to unlock value from.

And more detail and its exciting assets I'd like to turn the call over to wind Barr CEO of HC two.

Thank you Avi.

This is an exciting time for HC true over the past year, we've reshaped the company with the goal of sharpening, our strategic focus and restoring our financial strength.

We're doing this with the supportive and newly constituted board of directors and a broad group of stakeholders and through initiatives and transactions across the organization.

As a board and management team, we are committed to transparency and have taken action to align ourselves with our shareholders.

And new HC, two is deeper not wider and stronger and more focused.

We've accomplished a tremendous amount and a short period of time and a challenging environment and couldn't be more appreciative of my more than 2800 colleagues across the company, who show up every day with drive and determination to make HC two better. Thank.

Thank you for your hard work.

Over the course of the past several months, we have reduced the number of primary operating segments from seven to four exiting the marine business last winter and spring telecommunications and the fall and clean energy and this winter in January.

These transactions better positioned us to successfully refinance our outstanding bonds in February. We've also sold selected non core full-power television broadcast stations.

In addition to sharpening our strategic focus these transactions generated net proceeds of approximately $265 million and the aggregate, which we use to reduce holding company and broadcasting that and to strengthen our financial position and.

Additionally, our board of directors continues to evaluate the nonbinding indications of interest that we received for our insurance business in December.

Our infrastructure segment DBM global is one of the largest steel fabrication and erection companies and the country.

Led by Rustin Roach, and a terrific team DBM is a highly efficient and collaborative portfolio of companies, providing better designs efficient construction and superior asset management solutions through a full suite of integrated steel construction and professional services.

<unk> is well positioned to continue to grow and the healthy commercial construction market to realize cross market customer opportunities and especially to benefit from an expected increase and public sector infrastructure spending.

And then our life Sciences segment currently own stakes and for companies that are developing innovative health care technologies and solutions.

Partnering with great teams and the strategy is to then incubate and Shepherd each company's development lifecycle and secure additional rounds of financing when necessary, while maintaining governance and creating value by patiently negotiating exits at attractive multiples.

As mentioned currently the near term pants and investments with the greatest potential for value creation are our two technologies and met a beacon.

Our two is currently and the process of commercializing its F. D. A approved palatial Rx device and the U S.

Preorders with US Detections had been going very well for this device, which represents our choose first market dermatological innovation utilizing cryo aesthetic technology and there's an enthusiastic demand ahead of the commercial launch which is scheduled for this month.

Our second product and the yard to brand portfolio glacial spa is expected to launch commercially and China and the second quarter of this year.

As you May recall, our two and Waddell Medicine company had previously entered into and exclusive distribution rights agreement for <unk> products in China and selected APAC markets.

Commercial launches are expected to result in immediate revenue generation this year with no additional capital commitments by HC two.

Our two technologies also just recently received $10 million and funding from what Dawn, which represents the third and final tranche of what Don was $30 million equity investment in our two and a predetermined post money valuation established that time of our two series B close in June 2019 of 100.

$13 million.

These investment proceeds are being used to fund the launch of glacial Rx and glacial spot as well as further platform development.

Meanwhile, net of Beacon, which is revolutionizing kidney health with the first of its kind technology that allows for real time monitoring of kidney function.

Advancements towards its final U S. Pivotal study, which is expected to begin in the second half of 2021.

And that would be can also received a commitment from one dong for an additional $20 million and non dilutive funding over the next two years to pursue class one status from China, which will allow the device to immediately enter the Chinese hospital system.

Spectrum continues to be and exciting play on the growing trend of TV viewers, who are cutting the cable cord and instead turning to digital antennas for some or all of their content and creating a rapidly growing ecosystem for the over the air television.

Aro, which research calls Otas and the new TV growth story.

According to Nielsen there were 20 million Otas homes, and the U S. As of August 2020, or roughly 19% of all TV households.

Up from 16.002 million 18, and just 11.002 million 10.

The number of Otas homes is growing rapidly with over half of these antenna users buying their first and antenna and the last three years.

At the same time, there's a growing number of digi nets and existence that are looking to O T. A as an alternative platform to reach audiences.

We are uniquely positioned to leverage this trend and capitalize on the network. We have built over the past couple of years.

And the implementation of ATSG III Dato should further expand that capability and use of spectrum, creating additional revenue opportunities for HC two that were already actively exploring.

The acquisitions over the past couple of years and the build out of stations, which is now largely complete has transformed our broadcasting business HC choose now the nation's largest otas network operating 227 stations with the footprint covering 94 markets and the United States and Puerto Rico.

Including 34 of the top 35 D M H.

Our attention and spectrum now turns to the next phase, which is generating growth and commercial carriage through both lease agreements and revenue share arrangements with digital content providers as we look to build upon the already approximately 80 networks that are on our platform currently and to take advantage of the significant operating leverage.

And to the broadcasting model given its fixed cost nature.

All of these businesses infrastructure life Sciences, and spectrum executed well this past year and different ways. During a very uncertain period, each was able to weather the challenges and make progress towards their respective goals as they manage their businesses and capitalize on distinct demand drivers.

HC two also took several additional steps to enhance the companys capital structure, including a rights offering in November 2020, and the refinancing of the holding company senior notes and credit facility in February 2021.

We have successfully reduced aggregate holding company indebtedness by $155 million.

Lowered our cost of capital by approximately 300 basis points extended maturity by almost five years and built in the additional flexibility and liquidity that we would like.

Today, the holding company has less debt and lower cash interest burden and no material near term holding company debt maturities and on top of that lower corporate overhead.

We really haven't ever been and this position at the holding company level and my seven years since joining the company in 2014 as a board member.

We're not done with their work, but I like where we are strategically focused financially stronger and the time horizon to more meaningful value creation and shorter.

With that I'll turn it over to Mike for a review of our financials and capital structure.

I'd like to Echo Wayne's commentary about our financial performance and financial strength, we finished a challenging year with stronger and improving financing performance for our individual businesses and overall company.

As a result of the steps we have taken at the holding company and the resilience of our operating businesses were stronger HC, two with a significantly improved liquidity position and a lower cost of capital.

This will serve us well as we narrow our strategic focus to generate and growth and seeking value creation opportunities and infrastructure spectrum and life Sciences.

First let me review our financial performance and then I will walk you through the key changes to our capital structure to help you bridge the quarter.

And the key transactions that have taken place so far and early 2021.

Consolidated total net revenue for the fourth quarter of 2020 was $251 8 billion and increase of one 7% compared to $247 6 billion and the prior year period.

As higher revenue from infrastructure was partially offset by lower revenue from insurance and spectrum medical eliminations.

Net loss attributable to common and participating preferred stockholders for the fourth quarter 2020 was $7 1 million or <unk> 11 per share compared to a loss of $31 4 billion or 70 cents per share and the prior year period.

And the fourth quarter last year, we recognized $47 million non cash goodwill impairment charge at our insurance segment that did not recur.

Total adjusted EBITDA, which excludes our insurance segment was $10 million and the fourth quarter of 2020 down from 16 million and the prior year period, we saw improvement and spectrum, which recorded its first quarter of positive adjusted EBITDA.

And significant efforts, we have managed to reduce costs and improve operations and 2020.

This is more than offset by decreased contribution from infrastructure and increased losses at life Sciences.

Now onto some color for each of the three focused businesses and.

And infrastructure adjusted EBITDA for the fourth quarter, 'twenty, and 'twenty was $17 4 million down from 28 billion and the prior year period.

Revenue increased 6% due to the favorable timing and commercial projects as compared to last year.

So overall results continue to be impacted by lack of new work being released.

Term keeping downward pressure on point of sale margins.

And improvements are being made through optimization of execution strategies, however, with smaller less complex projects. These improvements are not as meaningful.

Segment continued to experience additional costs of $4 2 million during the quarter related to certain bachelors to comply with COVID-19 protocols and consistent with prior periods, we have excluded them from our adjusted EBITDA.

We expect these costs to continue to trend down over the first half of 'twenty 'twenty, one and as we burn off the remaining pre pandemic backlog.

As of December 31, and 2020 reported backlog was $395 million down from 436 million at the end of the third quarter.

Adjusted backlog, which takes into consideration awarded but not yet signed contracts was 608 million.

Mainly consisting of smaller to medium sized projects, which provides infrastructure with significant visibility.

While adjusted backlog reduced on a quarterly basis, we are seeing signs that the worst of the pandemic impact is behind us.

2021 is poised to be a better year for DBM and global there are healthy number of proposals outstanding and we continue to see more opportunities entering the market, including larger projects.

And we are optimistic that we will actively participate and public sector capital spending may be fuelled by substantial infrastructure, Bill, which would provide incremental tailwind to our performance.

And life Sciences, the increase and adjusted EBITDA losses was primarily driven by the scaling of operations at our two technologies ahead of the commercial launch and the glacial Rx and spa aesthetic dermatology products as well as continued development of its product platform.

With the upcoming commercial launches and glacial Rx and spot, we expect to see that the new generation marching and 2020 one.

Spectrum delivered adjusted EBITDA of $1 1 million and the fourth quarter compared to an adjusted EBITDA loss of 1 million and the prior year quarter.

<unk> reflects significant efforts to improve operations and cost reductions, which led to the first quarter of positive adjusted EBITDA.

Net revenues decreased eight 3% to 11 million as higher revenue from the station group driven by an increase and the number of Otas stations and operation was more than offset by lower revenue from the second network, which experienced a reduction and local market advertising spending due to the COVID-19.

And that more than offset higher political spend.

During the quarter, we sold four full power TV stations and the low power television translator for aggregate gross proceeds of $40 5 million.

All of these non core stations along with the refinancing in August 2020, as resulted in reduced debt and they seem to broadcasting.

Meanwhile, and insurance, we generated pretax adjusted operating income for the fourth quarter of $2014 1 million.

34% compared to 10 5 million and in the prior year period.

The increase was primarily driven by lower claims expense and from reserve releases due to contingent and non corporate share elections and benefit reductions and <unk> 2020.

As of December 31, and 2020 insurance had cash and invested assets of $4 9 billion.

It'll GAAP assets of $5 9 billion and an estimated 337 million of total adjusted capital.

Recurring corporate expenses were $3 3 million for the fourth quarter of 2012 up slightly from the fourth quarter of 2019 due to some favorable items last year.

However, on a full year basis recurring corporate expenses $15 6 million represented a 13% reduction and positioned us for further incremental savings on a run rate basis in 2020 one.

We have significantly reduced our overall overhead, particularly in the areas of occupancy due to the consolidation of our headquarters from three floors to one and and executive compensation expense due to a shift from a NAV based program to one based on performance metrics.

At the end of the fourth quarter <unk>.

Two our consolidated cash cash equivalents and investments of $4 9 billion.

Which includes cash and investments associated with HC tubes insurance segment.

Excluding insurance consolidated cash was $43 8 million of which $27 5 million was at the holding company level compared to $8 9 billion of holding company level cash at September 30.

The year end balance reflects $61 5 million and net proceeds from the November rights offering inclusive of the sales of series B preferred shares and <unk>.

Offset by cash interest and working capital payments among other items.

As of December 31, HC, two had total principal outstanding indebtedness of $577 million or 24% reduction from where it stood at the beginning of 2020.

We have further reduced aggregate indebtedness by 25 million and pro forma for the refinancing of our 11, 5% senior notes in February.

Subsequent to year, and we sold their clean energy segment and refinance the holding company debt and I will now walk you through these transactions.

Sales of beyond six and January generated $70 million and net proceeds to seek to reflecting our 61% economic share on a fully diluted basis of $169 million gross transaction price less outstanding debt customary closing adjustments and transaction fees.

In February we completed a three and 30 million offering of eight 5% senior secured notes due 2026, which was used to retire our existing 11, 5% senior secured notes due 2021 and to repay the $15 million outstanding under our revolver.

And credit agreement.

We also entered into and into exchange agreements with certain holders of $51 8 billion of the outstanding seven 5% convertible senior notes extending the maturity date to August 2026.

And $3 2 million of the old converts remains due in 2020 two.

Separately, we amended our revolving credit facility extending the maturity from September 2020, one to February 2020 for increasing the maximum credit commitment from 15 million to $20 million and lowering the current borrowing rate under the agreement by 100 basis points, we have no current borrowings.

And this lives.

Pro forma for the refinancings and the sales beyond six HC two and its subsidiaries excluding insurance had approximately 65 million and cash on the balance sheet and total principal outstanding indebtedness of 551 million.

In conclusion, the actions taken to monetize certain assets and refinance holding company debt and reduced corporate expenses have significantly increased our liquidity flexibility and optionality as we strive to establish and optimal capital structure.

Our primary focus and in the immediate term is to focus on three business segments to support their growth and unlock value.

With that operator, we'd now like to open up the call for questions.

At this time and will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is and the question queue. You May press star two if you'd like to remove your question from the queue.

For participants using speaker equipment and may be necessary to pick up and your handset before pressing the star keys.

One moment, please while we poll for questions.

Okay.

Our first question is.

It is from Richard <unk> with Jefferies. Please proceed with your question.

Hey, guys I was hoping you can give a little color on the first quarter and and thoughts for 2021 with the backlog of TBM might.

And might we see any kind of catch up effect as we get into 2020, one with the economy reopening.

And either projects that had been delayed and 2020.

Work on and work on projects that was delayed or.

<unk>.

They were delayed as well.

Sure Hi, Rick This is Mike.

No.

We are.

She beginning we're still continuing to see a lot of activity and the market and some of the projects that were delayed as far as on the industrial side in 2021, and 2020 were delayed until we think 2020 one.

We haven't seen necessarily any of those come in but we do expect them to come back in 2021, and as far as the fab and erection side of the business. We're seeing a lot of activity, we're starting to see some bigger projects come in and so restaurants pretty optimistic about the pipeline and what and.

And what 2021 and will look like.

Turning to spectrum.

Can you give us a bit of a.

A bit of a bridge too.

What got you to positive EBITDA this quarter and should we expect it to be positive going forward.

Yes, I mean, we've been hovering right around that breakeven.

C and a few quarters 500000 $1 million and loss. We finally crossed the threshold we've done a lot of things on the cost side of the house.

No.

<unk> become more efficient and save save costs, we are still and we now have the network in place.

And.

We're out there looking to fill the capacity and so what you should start to see is as we continue to fill that capacity getting operating leverage from.

And at the stations have and fixed costs, if you will and when you turn that we've been building stations for the past couple of years. So when you.

Building station you turn on the lights all your costs are on day, one and we have the cash rents your broadband and utilities and you're kind of maintenance on those on those sites.

But you don't necessarily have the revenue filled day, one and so that's what we're working to do and so we will continue to.

Pushed forward with the positive momentum that we've had you can kind of see the trend over the past four or five quarters.

Pushing.

The losses down Unfortunately, and the fourth quarter to push it into positive territory.

And now that you guys are and a very different liquidity dynamic at the holding company.

And not having to pull up cash from the op codes.

And what growth initiatives does that allow you to pursue at the Opco is that you were not able to previously.

Hi, Rick and Twain.

No.

And of the enhanced liquidity that we've managed to put.

Put together through the refinancing and some of the asset sales I think it really allows us to focus on some growth opportunities that we have at each of the operating segments that are sitting there.

We are looking at a variety of different opportunities that could take advantage of some potential increased infrastructure spending that might be coming down.

Down the road.

Obviously as Mike said.

And essentially done building out the station group and I think having the liquidity position that we have at the holding company.

Makes us a good partner for any of these content providers that wants to want to come along and take advantage of.

The largest station group and the country and I think it just allows us.

Did you kind of enter into those discussions from from a stronger position and I think we were able to attract more and more opportunities across all three of the operating segments.

And last one from me.

You know again and in light of the liquidity position.

Is that changing at all how youre thinking about the cadence of asset sales you are pursuing.

And then is there any of the volatility and interest rates or.

The things, we're seeing and the equity markets impacting valuations for your assets at all.

So.

So the first part of your question I think.

The board has shown a real.

Interest and being deliberate opportunistic where it can and I think if you take a look at some of the things that we've done including the sale of AMG and where there was a process that was undertaken I think we took advantage of some tailwind there and we're able to.

Reduce it a very nice result, and that's going to continue and regardless of kind of the economic environment that's out there to.

And to the extent it gets more challenging I think the board and management is up too.

Is is up to the challenge, but I don't see the board kind of deviating from our very thoughtful deliberative approach.

And in that regard.

And.

Alright, that's it from me.

Very good thank you.

Our next question is from brokers Smith with Imperial capital. Please proceed with your question.

Hi, guys. Thanks for taking the question.

So starting at the Holdco throughout 2020, you guys lowered corporate expenses by like 13% I think it was looking into 2020. One are there any additional cost saves that can happen at the holdco level and what are the cadence and scope of those.

So.

And I think it's 2021 is going to be a continuation of being vigilant with respect to overhead we did have.

Some very good opportunities that we took advantage of this past year to reduce the overhead there.

There is probably some additional opportunities that we are that we can take advantage of and like I said, we are cognizant of wanting to reduce reduce the corporate overhead our liquidity position is good and we strive to get to where we are.

But that doesn't come at the cost of vigilance and trying to keep the corporate overhead at a right level.

And we did reduce.

Our occupancy by going from three floors down down to one and we'll continue to look for other ways to continue to drive that.

That expense down.

Yeah.

Cool Thank you cool.

And then switching to insurance.

And I describe the process of a potential sale I guess from a regulatory perspective, and how that could.

Impact timing, if you guys did get to a final deal on that one.

Yes sure so.

You pointed out.

Any sale of the insurance segment would require approval from the regulators principally the Texas Department of insurance, which is our home regulator.

Our understanding is that the approval or review of a form 8-K, which is the application that would be made to it.

The change of control.

And just taking anywhere from 90 to 180 days to be reviewed.

And that's kind of based on what we've just seen and.

And the marketplace.

We have a very good relationship with the TDI I talked with them pretty frequently.

They've given no indication that.

And what we've typically seen in the market is going to be any different in the event that we do get to the point, where somebody's submitting a form eight for continental.

But it.

And we really can't because it's up to them, we really cant predict whether we're going to fall within the earlier part of the latter part of any of those ranges.

Great. Thanks, that's all I had.

Okay. Thank you.

And if anyone has any other questions you May press star one.

Telephone pad next question is from Bill <unk> with Odeon capital. Please proceed with your questions.

Hey, Wayne Mike Congrats on a very nice quarter progress during these are I.

I guess I'll say unusual times the pandemic.

Okay.

As we think about EBITDA going forward for the life Sciences segment, it's clearly been.

Dragging and negative contribution on overall EBITDA do you think with the rollout.

Obviously with such a strong team.

With glacial Rx and Spa do you think that that rollout could lead to a positive contribution at some point, let's say and of the year or early 2022.

Yes, I wouldn't expect.

Wouldn't expect it to even though we do we are launching the product we will we do expect <unk> to generate revenues.

We still are developing additional products within that business. So as it ramps up it will we'll continue to.

Incurred losses, there and we would expect and addition, Youll remember there are a couple of other businesses. There they are still and there pre revenue phase. So those are still.

Generating losses also as they develop their products.

Mhm.

And then I guess directly preglacial Rx and spot.

Is there obviously there is a very large tam but is there is there how do you think about I.

I guess the more and.

A more definable smaller Tam that is there one that you can go right after whether theres, a theres a customer our direct competitors and you're essentially going after that market share or is it more of it.

Because clearly with cool sculpting I was kind of a.

Innovative.

New.

And if theres a bit of and educational period.

That involved do you see that the same year, where it's that type of product.

I think it is.

I think it actually is a little broader from my perspective Bill pools.

Cool sculpting, which <unk> brought to market and and we use that as an analogy for.

For our two because it.

Was developed by the same team that developed or two but they've had a very focused.

And <unk>.

Kind of focused treatment and a focused result.

One of the exciting things about the <unk> technology is that it has not only aesthetic dermatological use but do you think it has a variety of uses that extend just beyond kind of that one used <unk>. So from an addressable market perspective I think.

It's more wide ranging and just kind of more of the single use or single result, that's L. Pic obtained so from that perspective, I think that there is.

You know that there is a more opportunity.

And <unk> CAD.

Right.

Well I think that's all I have thanks, very much keep up keep up the good work and look.

And look forward to seeing results as the world hopefully at some point reopens here. Thanks.

Bill.

And our next question is from Richard Phelan with Citrus. Please proceed with your question.

Hello.

To build on the last speaker's question.

And when the <unk> technology, we're excited to see it rollout and the U S. This month and China. The months. After can you talk about this.

Supply chain do you have control over your supply chain of the our two technology units.

And as <unk> has COVID-19, given you any warning signs or.

What do you see there on the horizon.

Yeah, I think it's I think it's a little too early.

To actually see actual results from from device delivery as you know the launches is fairly new there was a prelaunch period, all of which was very well received.

And I'm pretty confident that David and ensuring our keeping an eye on supply chain and whether the pandemic is having any impact on the delivery of the actual devices.

But.

Anything other than just kind of thought and thinking that generally the pandemic has caused things to be delayed.

I don't have any specific examples.

Apply chain being.

And <unk> being impacted here.

At some point and the team talk about.

The manufacturer of the units.

Where they sit.

And how reliable they seem to be the last thing I want you guys to do with such yourself up six months from now nine months from now, saying Hey.

Every unit people love it they can't wait to have it we've got orders and our backlog growing we just can't produce some are not.

And I would love some color around that.

Yeah.

All right.

I mean, the color that I can provide you and kind of goes back to what I was saying with respect as LTE.

And that is this team has rolled out and commercialized a very similar aesthetic device and so I think well I don't have that information and that kind of detail available to you having that management team in place that's already done this and that.

We talk about a proven track record and whether it's David ensuring or or the management team at our two really holds true in this instance, and it's very it's very synonymous with what they did over it's LTE.

And so.

And I am very confident that a commercial rollout.

That was not going to be embarked upon by this group and particular without kind of dotting, the i's and crossing the Ts.

Perfect. Thank you.

Thank you.

And we have reached the end of the question and answer session and I'll now turn the call over to Avi Glaser for closing remarks.

Thanks, I'd like to thank everyone for being on the call today and the entire HC. Two team is very excited about the company's future and I hope you share our enthusiasm going forward. Thanks, very much bye bye.

This concludes today's conference and you may disconnect your lines at this time thank.

Thank you for your participation.

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Yes.

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