Q1 2021 Stryker Corp Earnings Call
Welcome to the first quarter 2021, Stryker earnings call. My name is Christine and I'll be your operator for today's call. At this time all participants are in a listen only mode. Following the conference. We will conduct the question and answer session. During that time participants will have the opportunity to ask one question and one.
Follow up question.
I would like to ask a question. Please press star and the number one on your Touchtone phone. This conference call is being recorded for replay purposes.
Before I begin and I would like to remind you. The discussions during this conference call will include forward looking statements.
And so that could cause actual results to differ materially are also discussed and the company's most recent filings with the SEC.
Also the discussions will include certain non-GAAP GAAP financial measures reconciliations for the most directly comparable GAAP financial measures can be found in today's press release that is an exhibit to Strykers current report on form 8-K filed today with the S E C.
I'll now turn the call over to Mr. Kevin Bubble, Chairman and Chief Executive Officer, You May proceed Sir.
Welcome to Strykers first quarter earnings call joining.
Joining me today are Glenn mainline Stryker, CFO, and Preston Wells, Vice President of Investor Relations.
For today's call I'll provide opening comments, followed by Preston with an update on the Wright medical integration.
Glenn will then provide additional details regarding our quarterly results.
Before opening the call to Q&A.
Despite the ongoing president of the pandemic.
We posted a strong quarter of organic sales growth of four 7%.
Q1 2019.
This was driven by outstanding International results.
Clearly and Asia Pacific and the benefits of our diversified business model.
Across our franchises NATO neuro check and medical had excellent performances, each posting strong double digit growth versus 2019.
The trend that we expect to continue for the remainder of the year in these businesses.
Mako followed up a very strong Q4 with a banner of Q1 performance.
Including and uptake and international installations.
As expected electric procedures were negatively impacted to start the year, which had the largest impact on our hip and knee businesses.
However, the trends improve the progressively throughout the quarter with the U S hip and knee accelerating in March and into April where we are seeing mid single digit growth.
Compared to April 2019.
We also saw improved growth and small capital within parts of neuro check and instruments during the quarter.
In addition, our order book has picked up across our capital businesses.
Which is a good sign of pending growth as procedure volumes return to more normal levels.
These trends give us confidence in achieving our guidance of 8% to 10% full year organic sales growth compared to 2019.
Which is equivalent to 12% to 14% organic growth versus 2000 and 'twenty.
Despite one less selling day.
While the press release shows our performance versus both 2020 and 2019, we believe that 2019, and there's a better reference point for comparison.
Our momentum has continued regarding cost management and cash flow and while spending will increase to support future growth it will be done and a disciplined manner.
Glenn will elaborate on our raised EPS guidance shortly.
We also published our first annual comprehensive report during the quarter, which captures our environmental social and governance strategy and.
As well as commitments regarding of our carbon footprint the.
First of the equity and inclusion and supply chain transparency.
We are encouraged by the progress we are making and these areas.
Overall I am pleased with the strong start for the year and the momentum that is continuing to build.
And while fun pandemic flashpoints are still occurring.
We are well positioned to deliver growth at the high end of Med Tech.
With leverage the adjusted earnings.
I will now turn the call over the Preston.
Thanks, Kevin and Mike.
Comments today will focus on first quarter performance, and our combined trauma and extremities business and update on the ongoing integration of Wright medical and on our most recent acquisition activity.
During the quarter, our combined trauma and extremities business showed good resiliency growing two 6%, including Wright medical compared to 2019, despite the ongoing impacts of COVID-19 restrictions during the quarter are.
For our trauma business, which is less elective in nature benefited from inclement weather and the U S and Europe and February <unk>.
Performance and upper extremities and foot and ankle was driven by the recovery of elective procedures throughout the quarter, along with lower than expected sales dis synergies through the initial stages of the integration.
As a result of the strong performance of our trauma and extremities business and the first quarter. We now expect the combined business to deliver mid single digit growth for the full year when compared to 2019.
We remain encouraged with the progress and pace that the team has delivered with bringing the businesses together throughout the Wright medical integration.
As we have mentioned previously we utilized the lengthy period from announced the close to build and resource the robust integration plan that we are now executing.
As we move through the quarter, our teams made progress against many key integration milestones for <unk>.
Date. The team has established three distinct business units with specialized commercial R&D and selling organizations.
We believe this dedication and focus will be a core driver of future growth across trauma, upper extremities and foot and ankle.
In addition to establishing dedicated business units the team made considerable progress with our U S sales integration, including the establishment of sales leadership sales channel and territory alignment and identification of cross selling priorities.
Considerable progress has also been made on aligning the long term portfolio and pipeline strategies.
Our focus on the integration will remain a key priority for the remainder of 2021 as we balance the complexity of the integration while minimizing sales disruption.
Over the next few quarters, we will conclude the U S commercial integration, including the initiation of cross selling and we will kick off sales integrations across our international markets over the next several months.
Finally, our dedicated business development teams continue to identify and execute on tuck in acquisitions during the quarter. We completed the acquisition of P. M. J concepts of medical device company that manufactures of patient specific temporary mandibular joint reconstruction prosthesis system.
And our cranial maxillofacial business personalized medicine and plays a critical role and the acquisition of P. M. J concepts supports their business strategy of driving category leadership through innovation and purpose of restoring form function and hope to patients.
These acquisitions continue to demonstrate our focus on our strategy of driving category leadership and market leading growth with that I'll now turn the call over to Glenn.
Yeah.
Thanks Preston.
Today I'll focus my comments on our first quarter financial results and there was.
Okay.
Our detailed financial results have been provided in today's press release.
As a reminder, we are providing our comments and comparisons to 2019.
As it is.
More normal baseline.
Given the variability throughout 2020.
Our organic sales growth was four 7% and the quarter.
As a reminder of this quarter included the same number of selling days as of Q1, 2019, and one less day than 2020.
Compared to 2019 pricing and the quarter was unfavorable one 4%.
For Q1, and 2020 pricing was <unk>, 9% unfavorable for.
Foreign currency had a favorable one 3% impact on sales.
During the quarter. The continued impact of the COVID-19, pandemic and related surgical procedure cancellations, primarily and the U S and Europe negatively impacted our sales.
However towards the end of the quarter, we did see improvements and sales momentum and primarily in the U S and our Asia Pacific businesses.
Also as noted in the fourth quarter demand for certain capital products continued as we saw strong results and our.
Our Mako and emergency care products.
For the quarter U S organic sales increased by 1%, reflecting the continuing slowdown of elective procedures as a result of the pandemic somewhat offset by strong demand for Mako medical products and neurovascular products.
International organic sales showed strong growth of 15% impacted by positive sales momentum and China, Japan, Australia and Canada.
Our adjusted quarterly EPS of $1 93 increased two 7% from 2019, reflecting sales growth, partially offset by higher interest charges, resulting from the right acquisition as well as an overall disciplined ramp up and operating costs.
Our first quarter EPS was positively impacted from foreign currency by <unk>.
Now I will provide some highlights around our segment performance.
Orthopedics had constant currency sales growth of 17, 2% and organic sales decline of <unk>, 7%, including an organic decline of one 7% and the U S.
This reflects the slowdown in elective procedures related to COVID-19.
Other ortho grew 49% and the U S, primarily reflecting strong demand for our makeup of robotic platform, partially offset by declines and bone cement.
As noted previously in March we began to see good sales momentum and our U S. Orthopedic businesses with all segments delivering positive organic growth as compared to 22 March 2019.
Internationally Orthopedics grew one 5% organically, which reflects the COVID-19 related procedural slowdown Gibson knees, especially in Europe offset by strong performances in Australia and Japan.
For the quarter, our trauma and extremities business, which includes right medical delivered two 6% growth on a comparable basis. This includes strong performances and U S shoulder and U S trauma and the U S comparable growth was four 4%.
In the quarter med search at constant currency and organic sales growth of five 3%, which included one 6% growth and the U S and.
Instruments had a U S organic sales decline of 3% primarily impacted by continued procedural slowdown that impacted its power tool business, partially offset by gains and its waste management smoke evacuation products and services business as a reminder, during the first quarter of 2019.
Instruments had a very strong growth of approximately 18%.
Endoscopy had of U S organic sales decline of five 7%, reflecting a slowdown and some of the capital businesses, which was partially offset by gains and our general surgery video and sports medicine and businesses, the latter of which grew over 11% and the quarter.
And the medical Division at U S organic sales growth of 13, 6%, reflecting double digit performance says and its emergency care and sage businesses.
Internationally med surge headed and organic sales growth of 19, 9%, reflecting strong growth across Europe, Canada, Australia, and Japan, and medical Endoscopy and instruments.
Neurotechnology and spine had constant currency and organic growth of 12, 8%.
This growth reflects double digit performances, and our interventional spine, neurosurgical, and E&P businesses, and 27% growth and our neurovascular business.
Our U S neuro tech business posted an organic growth of 12%, reflecting strong product growth and our neuro power drills sort of pet IQ bipolar for steps bio reabsorbed bowls and nasal implants. Additionally, within our U S neurovascular business.
We had significant growth and all product categories, including hemorrhagic flow diversion and ischemic.
Internationally, Neurotechnology and spine had organic growth of 31, 7%. This performance was driven by strong demand and China other emerging markets.
Now I will focus on operating highlights for the first quarter. Our adjusted gross margin of 65, 4% was unfavorable approximately 40 basis points from our first quarter 2019 compared to the first quarter and 2019 gross margin was primarily impacted by price acquisitions and business mix.
Adjusted R&D spending was six 8% of sales, reflecting our continued focus on innovation. Our adjusted SG&A was 35, two percentage of sales, which was unfavorable for the first quarter of 2019 by 70 basis points.
In summary for the quarter, our adjusted operating margin was 23 five percentage of sales, which is 160 basis points decline over the first quarter of 2019.
And this reflects the dilutive impact of the Wright medical acquisition combined with the disciplined ramp up and cost to fuel future growth as well as the two year compounding of certain costs given the comparison to 2019.
We also reiterate our operating margin expansion guidance of 30% to 50 basis points improvement over 2019 operating margin, excluding the impact of Wright medical.
Related to other income and expense as compared to the first quarter and 2019, we saw a decline and investment income earned on deposits and.
And interest expense increases related to increases and our debt outstanding for the funding of the Wright medical acquisition.
Our first quarter had an adjusted effective tax rate of 13% given our mix of income.
Given our current circumstances and the outlook for the full year, we would expect to be at the lower end of our range for the full year guided effective tax rate of 15, 5% to 16, 5%.
Focusing on the balance sheet. We ended the first quarter with $2 3 billion of cash and marketable securities and total debt of $13 1 billion.
During the quarter, we repaid $715 million of maturing debt.
Turning to cash flow our year to date cash from operations was approximately $450 million.
This performance reflects the results of earnings continued good management of working capital and approximately $170 million of one time expenditures related to the Wright medical integration.
Based on our first quarter performance and the current operating environment. We continue to expect 2021 organic net sales growth to be and the range of 8% to 10%.
We believe that the recovery ramp of the elected procedures will continue to be variable based on region and geography and will continue into the second quarter of 2021.
As it relates to the sales expectations for Wright medical we now expect comparable growth for trauma and extremities to be in the mid single digits for the full year when compared to the combined results for 2019.
If foreign currency exchange rates hold near current levels, we expect net sales and the full year will be positively impacted by approximately 1% net.
Net earnings per diluted share will be positively impacted by five to 10 cents and.
And the full year and.
And this is included in our revised guidance range.
Based on our first quarter performance and including consideration of our improved full year Wright medical sales impact.
Disciplined cost management and continued positive recovery outlook. We now expect adjusted net earnings per diluted share to be and the range of 95 to nine <unk>.
And now I will open up the call for Q&A.
Thank you we will now begin the question and answer session.
And if you have of questions. Please press star one on your telephone keypad.
He wished for your move from the queue. Please press the pound or hash key as a reminder, collars will be limited to one question and one follow up question.
Your first question comes from the line of Robbie Marcus from JP Morgan. Please proceed.
Great and congrats on a good quarter and thanks for taking the question.
So maybe first start on the outlook, Kevin you mentioned and the release and in the script that March.
Was much better than the rest of the quarter overall with the most items and ortho growing in the and.
Rowing.
In March.
I was hoping you might give some early color or good way to head of frame second quarter here.
And coming out of the fourth quarter call of the Street had a had a wide range and didn't really update through the quarter as trends develop so I was hoping maybe you could start off with giving some thoughts on where second quarter.
It might shake out given the trends you're seeing here are.
Exiting first quarter. Thanks.
Yeah.
Hi, Ravi first thing I would say is that we're not going to be providing quarterly guidance, but I can give you an indication of what's happening.
We did indicate and my prepared remarks that U S hip and knees is currently growing and the mid single digits and that obviously was the business areas that were most impacted by the pandemic.
So that recovery is pretty notable if you look back in January and February where we were declining.
And at the end by the end of March we started to pull ahead and to positive territory and you can see that that's on the upswing difficult to predict with the flash points around the pandemic, but you can see we feel very good about confirming the full year.
Panic sales growth so whether that occurs in April may June and July.
Parsing it by month is obviously very difficult. The other thing that makes us very confident from the full year outlook as the order book for capital equipment, both large capital and small capital.
Which is the bulk of picking up so overall, we're feeling bullish obviously girl has to accelerate to get the 8% to 10% organic when you start at $4 seven from the first quarter, but the it.
Exact pacing between Q2, Q3 and Q4, so little uncertain.
Yeah.
Great that's really helpful and maybe Glenn and it seems like a lot of the 10 cents of dilution for REIT might of came.
And first quarter and the earlier in the year.
You know one is that true and second any thoughts on just as we straighten our models out here I realize you're not giving guidance, but just how to think about the progression of EPS as we incorporate Wright medical here and some of the comments on expense management, you've made on brown.
And the call appreciate it.
Yes, Ravi if you just if you just think about the activities that are going on related to the integration of of Wright medical.
Naturally we would be working on cost synergies early in the year and incurring a lot of the costs that we need to incur relative to.
Integrating Wright medical and as well as aligning their sales forces and all of the things of pressing mentioned and a lot of that did flow through in Q1 and I think.
That impact was certainly reflected in our EPS I think moving forward as we think about it we are we are optimistic about.
Where we stand relative to sales dis synergies and how that will play out for the remainder of the year and so some of the positivity is certainly reflected in our EPS guidance and.
And we fully expect that the.
The benefit.
Benefit will also contribute to sort of raising the guidance like we did and then as it relates to the cost management and how that will play out and the year.
We are we are encouraging divisions to ramp up some of their spending to make sure that we are properly positioned for growth that.
And that would also include spending and innovation and so we are making sure that we are not doing anything to hold back.
Product development and other innovation spending frankly will be needed to really fueled growth even towards the end of this year or even into next year. So I think we will see growth.
And that spending and then we did we did learn a lot from the.
And the experience that we went through and how we work and so there are some benefits and savings that we fully expect to realize in the full year.
As it relates to primarily SG&A costs, and so it's kind of a balance of those things that really get us to a lot of of the confidence we had in the race.
The raising our guidance.
Your next question comes from the line of Vijay Kumar from Evercore ISI.
You May proceed.
Hey, guys. Thanks for taking my question.
John.
And Glenn back on.
The guidance questions here is the.
The assumption for back half, perhaps we're looking at double digit.
Organic growth was <unk>.
2019 is that of a reasonable assumption just given how we're seeing procedures come back.
And your commentary on the mid singles growth and April it seems like back half could be double digits, because the reasonable assumption.
Yes, I think of.
Jay you could probably do the math as easily as I can.
In terms of what it will take and the back half of the year to really get to the.
The 8% to 10% but.
Yes, we do see accelerating growth and we will see accelerating growth throughout Q2 and in fact underlying some of these assumptions as the Q2 has sort of a return to normalcy by the time, we get to the and.
And then we'll continue to see great growth and Q3 and Q4.
That's helpful.
Kevin one for you on the capital trends and the quarter I think I heard you say strong Catherine trends.
Looking at the.
The other line item within ortho I mean that goes.
And $45, 50% is and that's a big number.
Is that.
Was there any catch up from.
From from last year, or what's driving and any sense on how mako placements are trending is that of an acceleration and the end market. Thank you.
Yeah, well I just saw we had a terrific fourth quarter with Mako and that continued into the first quarter. So it was the absolute.
Banner of first quarter.
For Mako and what we saw really was an acceleration and and the international markets for the U S continued its tremendous positive momentum, but we saw a real pickup as you know we received total knee approval and some new markets.
Towards the end of last year, and we started to see the list of Mako installations happening and the first quarter. So it was really make all around the world that Glenn is booming and the first quarter and and that gives us a lot of optimism because that's in the early indicator of the future implant growth.
Your next question comes from the line of Peter Chickering from Deutsche Bank You May proceed.
Good morning, guys and thanks for taking my questions Neurovascular was very strong this quarter can you give us some more color on what you think of our end markets grew versus market share gains can you give us any color on for key products like the Atlas stance or the surpass flow Divertor and also it's been growing very very well and China.
And just curious what's driving that growth and how sustainable you think that is.
Hey, Peter I expressed and just wanted to follow up with on your Neurovascular question I mean, I would say overall, we're really pleased with the double digit growth and and I think certainly as we've seen in the past that market has been accelerating but I do think that with some of those launches that you mentioned, we are we are seeing share gains in that space.
As well so.
And those launches that we had throughout 2020, we're really starting to capitalize as we've gotten into 2021, and so seeing good growth across a variety of those items, including flow diverting stent and our aspiration products.
As it relates to China, and again same thing as we brought and technologies to those markets and been able to grow there.
Similar to how we've done and in our other markets with neurovascular and so we really are looking forward to a strong year and totals and we think about that neurovascular business.
Okay, and then just like that.
And just add one comment I, just think we havent really incredible leadership team of neurovascular.
This is not just the one quarter wonder I mean, they've been putting up tremendous numbers quarter after quarter and as Preston said the product cycle is really hitting beautifully across all of our categories. So this will be a very strong year.
Excellent and then as a quick follow up question you referenced strength at the end of the quarter for U S and Asia.
Obviously on an easy comps.
Can you give us any color of what you saw and the end markets and Europe and other key markets and March thanks, So much.
Yes, so just in terms of some of those other markets I mean, I think as we know Europe, and there's a little bit behind in terms of some of the recovery. We saw some areas like the U K that might've been a little bit out in front.
But certainly as we saw the continued impact on procedural volume for the fourth quarter we.
And we saw similar impacts in Europe really throughout the quarter, but similar to how we saw the U S and some of those other areas. We did see improvements as we ended the quarter and so again as Glenn mentioned, our expectation as we go into in the second quarter is that we're getting back to more normalized levels of course, there are some other and markets that are out there like in Latin America.
Erika and certainly in India, and that will remain a little bit impacted by by the coronavirus restrictions et cetera.
But as far as Europe and are you asking especially in the Asia Pacific as we talk about there and we do expect those markets to get back to more normal levels.
Yeah.
Your next question comes from the line of Larry <unk> from <unk>.
From Wells Fargo you May proceed.
Good afternoon, and thanks for taking the question just the two big picture questions from me one on Afcs Kevin.
J&J said that about 15% to 20% of hip and knee procedures now being done.
The <unk>.
What are your thoughts on this trend.
For your position positioning of Stryker to tap into this shift and.
I guess everybody is concerned is applications for implant pricing and I had one follow up.
Larry I would say that the 15 to 20 might be a little high but there is no doubt that the the trend is increasing and increasing pretty rapidly.
We are delighted with the ASC offense that we put together really over the last.
Two years.
We have a unique way that we go to the market per assay, our new sales organization that we created.
And we really bring the best of Stryker, because we have everything that they need and the ASC. We of booms, we of lights, we of power tools, we have Neptune waste management, and we have operating tables, we have hips, and knees and sports medicine, and foot and ankle and shoulder and the ACD of procedures for spine. So we really are a one stop shop and mixed like they're easy for the customer.
We're winning deals that are very very large clip right now.
And usually involve at least five of our business units and last multiple years and so we welcome the shifts to the ASC as of now it's largely commercial pay that we're seeing those procedures of the ones moving to the ESC. So there really hasnt been much at all and the way of price pressure.
Not to say that won't happen sometime in the future, but certainly for the next at least.
Few years, we don't see much of the way of price pressure and frankly, it's a tailwind for us just given our portfolio is really ideally suited.
And we've structured a very good offense to be able to sell to the U S.
That's very helpful and then Kevin on the backlog how do you think about it there's two analogs here theres, the biopsy recall and which was a long time ago, but I think you were in the industry, they're in and then.
There was the financial crisis, the took a couple of years to see of catch up there.
And you can do the math in terms of how many patients deferred last year. How do you think about it do you think it'll take it'll come back quickly or.
Do you think it'll be you know.
Protracted over over the years before we see those patients come back thanks for taking the questions.
Hey, Larry Thanks for the question as we think about the backlog I think youre right. We will we will see that recovery happen and certainly if we go back a year now the backlog is really been building over time and while some surgeons have been able over the last several quarters to get back and doing procedures and hasnt been at the rates that we would've expected pre pandemic.
And so as we get back to more normal periods. We expect that we will see extra shifts being put in or even some shifts to the site of care to get procedures done and work through the backlog, but I would say that we're not expecting that we're going to see a significant or outsize the growth in any one particular month or quarter, but Steve you'll see rather a.
Steady flow of elevated levels that will happen over the course of several quarters.
Your next question comes from the line of Bob Hopkins from Bank of America. You May proceed.
Oh, great Thanks, and good afternoon.
It was interesting quarter, I mean, the incredible strength and in medical and neuro and versus 2019, but then obviously hips and knees versus 2019 down high single digits. So I guess I wanted to just focus there for a second.
And Kevin did you say the current trends are up mid single digits currently versus 2019 is that what I heard you say.
Yes, and the month of April Bob that's what we're seeing okay. Okay. That's encouraging and then in the guidance assumed for the year. The total company guide of eight to 10 versus 2019 does it roughly assume the hips and knees are kind of and that in that ballpark as well.
Yeah.
Yes, I would say Bob as we think about that eight to 10 I mean, it's obviously all encompassing of all of our businesses and certainly we have some that are that are growing faster than others and what I.
I would say is if you take where we landed and the first quarter and then what Kevin saying about about April and what we would expect kind of as we go through second quarter and into the rest of the year certainly we are expecting a return to more normalized levels and if we just talk about the question with Larry around the backlog I think we will see some elevated levels compared to kind of historical norms.
And so I think if you take all of those into account in context of that eight to 10 and you can get a sense of where we think hips and knees are going to be.
Your next question comes from the line of Matt Smith.
From Credit Suisse. You May proceed.
Hi, Thanks, so much for taking the questions just one of them on the guidance and a follow up on sort of the pipeline and some of the investments you're making so.
Just just to the.
Talk a little bit about the EPS range a bit more.
And curious if at some of it sounds like part of that is confidence in and returning to growth from the top line and I'm just wondering if thats the case.
Why not.
Take up the the top line guide slightly and then as I mentioned and one follow up.
Yes, Thanks, Matt.
Well first of all we're just through the first quarter and so.
And the.
Theres lots of twists and turns here and the next three quarters.
I would say that the.
The fundamental thing on the guidance a couple of thing is that is it boils down to a lot of of the optimism that we're seeing around many of our current businesses. We're definitely not unhappy at all with our Q1 earnings performance or Q1 top line performance and so I do think that as we ask.
<unk> through the quarter and what we're seeing in April we feel pretty good about our prospects for the remainder of the year, Kevin referenced our order books, which are certainly a good indicator of where future sales could land.
So we just feel like there's very solid momentum across many many of our businesses. We also have strong underpinning of disciplined cost, which is going to help EPS.
And I, just think that all of that combined with the also the progress that we're making on Wright medical just gives us the confidence that we felt like.
We should raise our guidance, which is why we did it.
Got it thanks, that's helpful and then.
Just you mentioned also and the operating margin sort of puts and takes that you had.
And sort of continued disciplined investment and I think you said innovation and growth programs.
Which I think many investors. Appreciate you wondering if you could maybe put a finer point on that in terms of basis points.
And then also maybe more importantly.
Talk a little bit about what the.
The first or second most important for near term project of program.
Is and that stack of innovation that we might see sales later in the year or next year.
Hey, Matt I think if you if you look at it in terms of of investment as we think about the quarter in particular and even as we as we go forward and you can probably just look at the rate of.
The percentage of sales in terms of the investments that we've made and R&D this quarter compared to previous quarters and you'll see that it's it is a bit elevated over our historical norms, which is I think what Glenn was referencing in terms of <unk>.
Additional investments and making sure that we're being disciplined about how we spend against the innovation and R&D platforms as it relates to the future projects I mean, the part of the part of the beauty of our model is that the decentralized nature of it allows each of our business units really to focus and all of those projects that are important.
For them as they as they try for growth as we go forward and so really that innovation and that investments being made across all of our businesses and as we have items that debt that makes sense to talk about and this type of for and we'll certainly do so in terms of the new launches and key product innovations that will be coming to market and the future.
Your next question comes from the line of Joanne Glenn.
And from Citibank you May proceed.
Thank you for taking the question and good afternoon to.
Two questions left for them right upfront.
Of your debt goals or debt pay down the call.
Not sure how you're measuring it whether it is sort of that that's the.
EBITDA metric over a certain period of time on that debt, but you're aiming towards and the.
And then right medical of height.
<unk> box and trading somewhat faster than expected and I'm curious, what you see and sort of Mr. <unk>.
And that integration. Thank you.
Hi, Joanne.
In terms of debt pay down goals and we've been pretty clear with the rating agencies on this as well.
We really look at.
Debt to EBITDA is the ratio that we focus on and really bring it back down to kind of what are our historical levels, two and a half times roughly and.
And if you think about the next couple of years.
It means the paydown of.
2 billion $2 billion plus in terms of what we will do we if you think about what we paid off in the fourth quarter and what we paid off this quarter, we're about 1 billion and towards that goal.
Probably.
And an opportunity to pay down a little more debt. This year that will take advantage of two and so.
That's where we think we'll land once we do that we think will be and the solid territory too.
Sort of accelerate.
And our programs around looking at sort of larger opportunities.
But the organization is very focused on cash flow and reaching those debt pay down and calls.
And maybe I'll take the question on Wright Medical I would say we're off to a very good start. So so so far so very good with the Wright medical integration. It's it's.
Proceeding much more quickly than <unk>, which was our first overlap deal and I would say I'm delighted with the the products the people.
And the pipeline that we've acquired with Wright medical.
And really if I can think back to all of the deals we've done in recent history, maybe nobody ex the only other deal I would say.
And the same ballpark as this one in terms of the speed of integration of the speed of decision making.
We have mixed management teams that are leading a lot of the right medical leadership has come over to <unk>.
Key leadership roles and the momentum is terrific and we have baked in a certain level of dis synergies and.
And even on the cost side, I think we're making progress a little bit more quickly than we had expected. So overall delighted with where we harvest for Wright medical and in the future is very bright.
Thank you.
Your next question comes from the line of Ryan Zimmerman from <unk>.
And proceed.
Great. Thank you for taking the question. So wanted to ask first about the U S spine market and.
And you flatten out of the K two of them acquisition and and so if you can comment on kind of your assessment of your spine franchise and your expectations for getting back to market growth from that business and then my second question is just around.
You called out the stage business and and it seems like it was very strong this quarter and medical and so is there some dynamic of kind of pantry loading and the expectation that procedures could be picking up sooner and.
And just how to think about that cadence.
Within that business going forward. Thank you.
Hey, Brian This question and I'll I'll take I'll take both of those questions Kevin from a spine perspective, I think overall, we're very encouraged by the performance that we've seen and our spine business over the last several quarters.
Certainly, it's been and enhanced by enabling technologies and certainly our recent acquisition of <unk> and a part of that.
And I think the other thing I would just point out to you as we think about spine in relation to some of the other and.
Plant businesses, we certainly didn't see the same level of impact as a result of the COVID-19 restrictions, particularly across the last quarter like we saw and some of the other implant businesses. So it's just something to keep in mind and we think about the performance, but overall like I said, we're encouraged by the performance and where we have high expectations in terms of our spine business getting back to two market.
And continuing to perform that way.
As it relates to the stage I think of hit it I mean really it's.
It's a product that certainly was impacted by the procedure of slowdowns and so as hospitals ramp back up and get ready for that the procedures to pick back up there is an element of stage that will pick back up in terms of stocking to get ready, but at the same time I think you'll also begin to see the flow through that's happening from a day.
And each perspective as well.
More and more procedures are done and that catch up of the recovery process.
Got it thanks for taking the questions, but the.
Kevin and I, just like to add one comment I think our medical business, sometimes it gets a little <unk>.
Under estimated and.
And the reason is you have three different components of it you have the acute care the beds and stretchers and we have of brand new bed procure the that was launched towards the end of last year that will have the floor models. Two of those models will be launched a little later this year that will drive very strong growth for that business and then you have the emergency care, which is the distributors and the.
And with the district.
On the cost and then you have the stage of business and so you have three different businesses that frankly had.
Last year, you had a little bit more contribution from acute care and the emergency care and not so much from stage. This year youre going to have a lot more sage emergency care is going well and acute care should pick up.
As we get into the latter of course of this year. So overall it really is a much more stable high growth business and then it was a decade ago based on the acquisitions of both of US Youll control and some of it.
Thank you for taking the questions.
Your next question comes from the line of Chris Pasquale from Guggenheim You May proceed.
Great. Thanks for taking the questions Glenn one quick one for you and then one on the business and I was just wanted to confirm with the guidance.
How much of the change and EPS guidance was related to a change and expectations for currency versus operational performance and it wasn't clear to me what the components were there.
Yes, Chris we are we basically incurred some positivity of <unk> and Q1, and we think the full year, we will have an impact of five to 10 cents just theres still some variability out there so that's where we got and Tim.
And I guess relative to the original guidance was there was there of delta there or is it the same as you were expecting with the original EPS range.
There's a there's a really it's a wordsmith thing I mean, the original guidance, we thought it would be.
And a dime of for.
<unk> 10, and now we're sort of more thinking that we might see a range of five to 10 cents.
Your next question comes from the line of Anthony Petrone from Jefferies. You May proceed.
Hi, Thanks, maybe just a couple of questions one of them robotics, one of them right and medical on the.
Robotics, just trying to get a sense of sort of the competitive landscape for where we're hearing quite a bit about the J&J <unk> Alex.
Robot launch we are pending and so I'm just wondering if there was any sort of impact and the <unk> numbers perhaps.
Big of selling effort ahead of the competitive launch and then secondly on right when we think about.
Sort of settling at mid single digit growth.
Pre acquisition it was the high single digit grower and just.
Wondering if we could sort of break that out between the synergy and <unk>.
And demick and sort of what is the timing to get back to that high single digit growth rate. Thanks a lot.
Yes, so with regards to your question on robotics and from our perspective really nothing has changed and our focus and what you saw in the first quarter really is just the continuation of the effort that we've had since we launched Mako and and so we're really seeing the uptick as a result of of just selling in our technology and overall, we really remained bullish about <unk>.
And what it brings.
The other other competitive systems like like Dallas, or Rosa haven't slowed us down at all and if anything what they've done and the increase.
And the validation that robotics are here to stay and and really demand for Mako and our technology continues to be Super strong as we saw by the results we posted and and also we believe we of the best solution and so from a head to head comparison and something that we look forward to with the technologies that are on the market today.
Think about Wright medical and and again the high single digit I mean, it's all inclusive in there obviously, we're coming off of a of a pandemic are still still kind of coming out of the end of the pandemic. So theres certainly some impact there.
And this synergies that are associated with the deal itself and and then there's also just the integration happening has been in terms of of the REIT business and our own business through cross selling and things like that so.
It's not something that we've parsed out in terms of the different components of it I think what we can expect to see is that as we work through the integration we will get we'll get out of total trauma and extremities business backup so performing above market growth.
Yes, Thanks, a lot the thing to remember the key thing to remember the middle mid single digit growth that includes our existing trauma business. So that wasn't just for the Wright medical portion of all right. That's the combined trauma and extremities and.
And so right medical will be a faster growing components of the combined trauma and extremities business, but obviously it wasn't in the first quarter just because of the pandemic.
Thank you very much.
Your next question comes from the line of Steven Lichtman from Oppenheimer. You May proceed.
Thank you hi, guys.
First question and I know you haven't been providing mako knee numbers in recent quarters. I was wondering if you could give us your perspective on where the U S market penetration is today any color you can provide and where you think penetration wise from a procedure of placement perspective from a market perspective would be really helpful.
Yes, I mean, obviously, we're not providing specifics on the quarter, but I think if you go back and look at what we said in the fourth quarter that will give you some sense of of where we are and total total installation base. Both both from a use of our global perspective, and you can make some assumptions about what that might mean and U S versus international but if you think about what that.
Total placement is and you think about the fact that there is the potential for 4500 or so hospitals that can carry of Mako that just gives you a sense of where we are penetration wise, but even then I would tell you that many of these hospitals are able to take more than just one so I think the bottom line with all of that is it still early days in terms of penetration. So there's a lot of opera.
So any of the out there in terms of robotics and.
And taking mako and taking more than one mako as we look forward.
Got it great and then and Glenn you mentioned relative to right obviously the.
The integration going better and you upped the top line is part of the operating margin.
And the confidence also some pull forward of the expense synergies that you were expecting or.
Is that still yet to come as well.
Yeah, I think I think that's a fair assessment, we are we're executing very well on the cost synergies that were planned and our modeling and so we are going to see a little bit of that favorability that's flowing through.
And the revised guidance.
Your next question comes from the line of true Ranya from Morgan Stanley You May proceed.
Hi, Thanks for taking the questions.
Kevin and you called out strong China results from the quarter.
Could you just maybe talk a little bit and more detail about what youre seeing now over the next 12 months and what your expectations are moving through 2021, and just sticking with APAC for a second kind.
Kind of what's your enthusiasm for Mako, and China, and Japan is 2021 and inflection year for these countries or should we see more gradual adoption and the nearer term.
Yes, so first of all of China had a terrific first quarter as you know the pandemic has not really affecting the day to day life and China and they had a very obviously in 2019, the even going back to 2019, we had terrific growth, but obviously last year was very badly affected and the first quarter. If you compare for 2020.
So China as a whole were very small and China relative to other companies but.
But we grew incredibly fast and very very high double digit growth in Q1 of the.
The outlook for China for US is still very positive given our lower relative market shares it will be of very good and makeup market. We're just getting started in China I would say, Japan, certainly Australia is farther ahead of where we are in China. So it's early days, but very promising very encouraging the one negative for China of courses.
This trend towards volume based procurement, which you've seen and the with cardiac stents and we know that that's kind of come down the pipe and effect of couple of our businesses hasnt yet but.
Starting two and there'll be noise around that but overall, China for us still remains of.
High priority markets, and and we will be of growth market for us just given our relative position.
But even as it relates to make all of that that will be carved out of the of the tendering related to volume based procurement. So we still have a significant runway for robotics, both in Japan, and China those are going to be both big markets and we're very excited.
About our progress and both of us.
Great. Thank you and just a question for Glenn Glenn You mentioned momentum continues for cash flow, but could you just give us some more color on your efforts to drive cash flow kind of discretionary expenses come back just how the Stryker focused on on cash flow generation day, maybe first 12 12 24 months ago. Thank you.
Yes, I think one of the one of the things that we got the whole organization garnered around over the course of 2020 and with just the importance of cash flow and.
And good management of that cash flow just so we can operate the company and reduced revenue level levels. But then also just so we could reallocate that cash flow the areas.
That provide better returns in terms of M&A and things like that so.
So I do think organizationally, we are well positioned relative to manage cash flow.
Have efforts ongoing in terms of.
Moving a lot more of our collections the standardized shared service centers and we.
We have efforts and inventory management and working very closely with the businesses. So that we can forecast inventory needs better.
We also look at.
Distribution strategies that sort of are more efficient in terms of how much inventory we have to have on hand to serve customers and then lastly, we are also working with our vendors in terms of.
Accounts payable and how do we have more favorable terms in terms of payment terms on the accounts payable and so all of that is just really tightening up our working capital certainly will benefit us this year as we look at.
Improving the results of cash flow.
Your next question comes from the line of Matt Taylor from UBS You May proceed.
Hi, and thank you for taking the question.
And so I wanted to ask about the guidance last quarter.
We're asked about what the swing factor was between the high and the low end and you said it was basically the big one was the how quickly things come back in Q2, if they came back better on the front and he could be near the high end and on the backend.
Near the low and if that makes sense. So.
Is that still how you're thinking about it and based on the trends that youre seeing is that leading you towards the high or the low end of guidance for the year.
Thanks, Matt So as you think about it again, we provided the range because of the variability that exists and and certainly as we think about where we're headed we're happy with what happened and the first quarter.
And as we know what the momentum that we're taking into the second quarter and certainly if we continue to have great momentum obviously it means it means the good thing for us as we think about our overall sales, but we put the guidance range out there for exactly that reason because youre still of lot of variability that's happening across the different marketplaces. So I think that's how I would think about it and certainly as we come in.
And to our second quarter results, we'll have another update that we'll be able to talk about that.
Okay, and then you mentioned a couple of times, you've got a strong order book, which is a good sign I was hoping you could characterize that for us a little bit better in terms of maybe the percentage of your sales and it impacts directly or indirectly because you've talked about it as the indicator for the implants and just kind of the timing of that when does that start to land and how long does the last to help us.
Think about how that impacts of the forecast.
Yes, so I think when we talk about our order book generally its and referenced as we think about our capital business day is because of those those items are being placed in some cases well in advance of do we think about our larger capital items or even the smaller capital items of the orders that are coming there. So it's just the leading indicator as we look at those businesses and so really when we talk.
About capital and we've talked about capital before has been.
About 15% of ourselves and our.
Of all capital and about 9%, 10% being our large capital items as we think about it as a percentage of our total our total business. So I think if you think about those items those are the ones that we're talking about when we reference our order book and generally is impacting the 25 or so per cent.
All of our business and again, it's just the leading indicator as we think about return.
Return of procedures and also just the strength of our customers in terms of their financial positions as well.
Your next question comes from the line of Mike Matson from Needham and company you May proceed.
Hi, I wanted to ask one on M&A.
And after you did the right acquisition, we really haven't seen as many deals and there was the pandemic last year or so its probably not too surprising given everything that was going on but.
And how do you kind of balance the need to digest the right deal integrate the.
The company what Stryker versus.
The the.
Funnel for M&A and just the valuations on some of these companies out there now.
Yes, good question and as we talked about when we did the right deal. Obviously it was the largest deal and our history and so one of the things we talked about is while we go through the integration of right that we would continue to focus on M&A, but the focus that will have on M&A will be more of a tuck in variety. So as we look at at placing either smaller products or more technologies into our existing.
<unk> business days and so we go back to the end of the year, we had the ortho sensor acquisition and then we just talked about today. The TMJ concepts acquisition. So youll continue to see those types of acquisitions and the near term as we continue to go through the integration of REIT and the debt Paydown of.
And that we've talked about as well. So I think that's how I would think about acquisitions for us as we as we think about going forward I think one key point is that we're always looking.
Dedicated business development teams as part of our commercial business units and they're always out there evaluating the landscape and and looking at targets. So that debt whenever the opportunity presents itself that we're able to take advantage of it.
Okay. Thanks, and then just wanted to ask one on spine. So you you had good growth there and the spine business and.
I suspect you probably outperforming the market, but do you have any sense for the degree to which that that market was affected by the procedural flow down in the first quarter early part of the first quarter as opposed to the hip and knee market.
So as we think about spine. The only thing that we can look at is what's happened over the last several quarters and I think what we see with spine, even as we look at our own business is that it's not as impacted and it certainly has impacted us.
Elective components of it but it's generally.
Generally more emergent and as we think about spine versus some of the hip and knee business. For example, and so we haven't seen the same level of slowdown as we think about where that lands of it in regards of the total market I think as we are as we come through the pandemic. It's just something we're going to have to continue to evaluate and once we get into a more normalized setting.
Your next question comes from the line of Richard No winter from from.
And the Leerink you May proceed.
Just just first Kevin you mentioned, the mid single digit trajectory relative to the 19 for hips and knees those are different businesses with different deferral of characteristics throughout COVID-19 and and they also of different comps.
And the 2019 period. So I was just curious should we be thinking of needs and as being substantially higher than that mid single digits, and maybe hips drag that down to an average of mid single digits I'm just trying to get a sense of difference between the two categories, especially given where the backlog is coming.
Yeah. So first of all I don't want to get too carried away with one month of comp right. It's a very positive sign both are in the mid single digit range and I'm not going to sort of say, which is higher than the other one there.
And they're both are doing mid single digit growth versus April of last year, but again, we're talking about 25 days of selling days roughly between.
Two years apart and so it's definitely a change from the trajectory saw and the first three months of the year and a positive change, but I don't want to get too excited about that it's just an indication of data point for you of that tells you things are improving volumes are coming back, but it's not really providing you guidance with which the hips and knees, which one is going to be.
And it's performing better than and the other one they are both coming back and that's a good sign overall.
Okay. Thanks, and then just a follow up you mentioned, some dynamics and spine relative to the recovery January to March can you talk a little bit about some of your other elective in nature for huge areas like sports medicine, and key and just talk a little bit about what the recovery is looking like there and and <unk>.
Aspects for back half thanks.
Yes, sure those were actually recovering very well and sports Medicine, I think we mentioned on the prepared remarks grew double digits and the.
First quarter, it actually grew double digits and the fourth quarter last year. So we're delighted the those procedures are done and surgery centers, where you frankly havent seen the same degree of slowdown as you have and the inpatient hospital E&P was the most negatively impacted when the pandemic started because of the <unk> procedures, we're seeing that have a nice rebound.
And so both of those areas are going to be strong performers and strong contributors to growth and 2021.
Your next question comes from the line of canvas Crum from true Securities You May proceed.
Great Hi, Thank you for taking our questions.
Can you speak a little bit and a little bit more detail about the T. N. J concepts acquisition, you mentioned on the call just the rationale how important or significant that could be just any additional detail there would be helpful.
Sure and so we think about that acquisition and again it fits it fits the overall strategy that we have in terms of binding finding products and technologies that are out there and and really extending them into our sales force is hands to help them really go out and serve the surgeons and the customers and patients that they serve so with TMJ concept is really it's adding that TMJ.
Prosthesis product to the bag, that's and that's allowing us to go in and really service.
Customers and patients that are actually in that debt position of meeting that replacement.
Yeah.
But I would say overall, it's a very small deal. So this is not something that's kind of really hit your radar screen for the overall size of Stryker and some very meaningful to our CMS business very meaningful to the oral and maxillofacial surgeon, but not a big mover of the needle for overall Stryker.
And so you'll see that as we report our results, we'll report that and the acquisition column, you'll be able to see that but it's very small and nothing.
And that's going to that's going to be really meaningful to the overall strength.
Got it Okay helpful. And then just high level and Kevin and I Love to just hear what you're hearing from your hospital customers in recent months.
You mentioned and Youre seeing more of a shift to ASC is are there any other sort of interesting trends and the market you're hearing about that if the price you either either to the positive or negative and recent dialogue with your customers. Thank you.
Nothing I wouldn't say surprise and Caleb what I would say is that the shift to the ASC every hospital and you speak to has program is underway and so that was already happening prior to the pandemic. It is definitely accelerating that's probably the most notable thing I would say the other thing is that they are actually in pretty good financial position. So unlike.
Prior crises that we've gone through where there was the financial meltdown or or other issues. The.
Hospital liquidity is actually very good and.
So there was a pause for a little while on some of the capital sort.
And with the smaller capital, but as procedures are coming back we're seeing the through our order book.
Hospitals are and actually very good financial position and better than frankly, I would've expected.
When the pandemic first hit.
Your next question comes from the line of Jeff Johnson from Baird. You May proceed.
Thank you. Good afternoon, guys just clarifying questions if I could press and you were talking about the spine market in the.
Good to hear that it's a little more emergent and maybe not as pressured as much of the <unk> as the hip and knee market, but I'm, assuming the pass through payments on spine Jack helped a day.
The amount of <unk>, so when I look and Youre down, 2% U S spine versus the down seven 8% U S hip and knee is that about the right way to think about a $6 differential and core spine versus hip and knee market growth at this point or would that differential being less and that if we kind of exclude some of those benefits and I'm, assuming you got on the interventional side.
Yeah, and I think it's again and being that we're right in the middle of the pandemic. There's a lot of regional variability with this I mean, I think any take any number and absolute is probably not the right that but but I think certainly there is that GAAP, there that's driven by that debt less emergent.
Impact if you think about hips and knees versus spine. So I mean, I think if you take some gaps and that and that small single digit range, that's probably about right.
Alright, fair enough and and Kevin I found it interesting your comments on the ASC and the five business units typically be and involved in it and.
And a contract I think historically and correct me if I'm wrong, but historically, you've said, there's not a lot of bundling that goes out of the hospital level of cross business unit and things like that at this point.
Obviously and the ASC is that seems to be happening more does that mean your incremental share gains and ASC should be even greater than what we've seen historically on the hospital side for you guys. It just seems like you're so well positioned there given the diversification of the business model.
Yeah, Yeah, it's a great point that there is very different volume that occurs at the ASC and it does in the hospital and the hospitals have very elaborate procured.
Procurement divisions and departments and they buy by service line and it's very decentralized. The ASC has a very simple sort of.
Customer that you have to interact with the novel as many people they can't receive 22 Stryker sales people.
Don't want to and Thats not the way they want to do business. So we have of different offense for the ASC.
And Fortunately, we have a portfolio for the orthopedic ASC, which include sports that is just perfect for for what Theyre looking for and.
And so yes, we've adapted our offense, we have the portfolio, but it is a very different buying pattern and the hospital isn't as interested and frankly and looking across our different divisions and hasnt historically been as interested but the ASC customers certainly is.
And the good news is we've adapted our offense. If we had continued with are the same way we used to sell.
We wouldn't be having the success that we're having now and really I'm optimistic about this continuing in the future.
Your next question comes from the line of Matthew O'brien from Piper Sandler You May proceed.
Hi, this is carrying on for Matt Thanks for taking the questions and just.
One quick one for US can you talk a little bit about how Mako hip is going and how you expect it to perform for the remainder of the year.
Yes, sure so the the Mako hip application if you remember we launched it last year, but we really couldnt get it out to all of our customers because of the pandemic, we've got roughly 50%, maybe a little bit more than 50% of the accounts have the new software. So it's not as it's not as simple as just.
Sort of doing and upload or for the web of the software we actually have to go to the account puts.
Put the software on and do it and servicing with our customers because there's new information they have to learn so theres actually a training regimen and that goes with it right.
Right now we're excited about the procedure growth and.
And the hip is increasing as more and more accounts.
The software installed and are in serviced by our Stryker team. This will continue through the second quarter, probably through a good part of the third quarter before all of the accounts have the then you hit the software, but the feedback from the surgeon customers terrific.
Takes less time to register so that speeds up the overall procedure time and Theres, some very valuable information such as public tilt with with the surgeons find very beneficial to make sure they're managing like length of discrepancies and so some of the feedback again very positive, but we're still in the throes of this implementation and it does take time because it requires.
At the high touch and servicing and sort of the pandemic, we haven't been able to move as quickly as we would like and all of our accounts and all of our regions.
Thank you.
Your next question comes from the line of Josh Jennings from Cowen Your line is open.
Kevin just two questions on the knee business.
First just you've had unprecedented success with your strategy of pairing robotics with the triathlon implants.
And you see any need for now.
The other.
Three of the big four of introduced robotic platforms to pivot from that strategy and how do you see.
Implants of evolving from here, the implants, and the robotics era and and the second question is just sort of another.
AFC question, but for knees are you overrepresented in the and Skus that sort of assumption just wanted to sanity check that and do you have a higher share and afcs and and the rest of the U S. And you just received approval for patient specific instrumentation for the triathlon and she can you help us understand how that and.
Proof of your competitive positioning, particularly and isc's. Thanks for taking the questions.
Okay, great. There's a few questions and there so I'll try to cover the malls. So first of all the AFC is an area of that we welcome we're having success with Mako frankly, and the ASC more success than I would have imagined honest like two years ago. When we initially signed the deal with the conformance that deal was designed to really have a very simple solution for the.
And the customer that is not using Mako and there will be a of sees the deal with some of the deals. We've won don't involve of Mako, where they won't use manual procedure that's the.
The solution will be terrific because it requires much less sterilization and theres really custom designed for the AFC. So we're excited to get that FDA approval, and we look forward to being able to offer that to our ASC customers.
I think you asked about market share I don't know Preston do you have a feel for whether for over index and I ask because I think it's fairly representative range. Yes, I think it's fairly represented at this point I mean, obviously, it's a growing and growing segment, but it's I think fairly representative right now.
Yeah, and it's still early but we like our chances of being able to do very well and as it relates to the implants I would tell you and the short term no no real need to change anything we're going to continue to have high high adoption of robotics. We have some analysts that continues to grow as we've talked about and the fourth quarter.
Over 40% of our knees are some atlas, but thats still has a long runway to go longer term I do think of different types of implants that are of a center of more.
More of bone sparing that don't use playing out of cuts.
But those will require IV trials, but I thought I think something that debt.
To keep the ACL and and places.
As is the area that we're exploring more of us from a science standpoint, so nothing.
That'd be launched imminently, but I do think that will be the future as new kinds of implants that are of a center that are curved that only of robot will be able to to be able to and to implement into our pension. So that's kind of the longer term future, but in the near term, let's say call. It. The next two or three years I think we're very pleased with the portfolio, we have and a long runway.
And for continued growth.
Okay. Thanks, a lot.
There are no further questions at this time I will now turn the conference over to Mr. Kevin Lobo for any closing remarks.
So thank you all for joining our call. We look forward to sharing our Q2 results with you in July.
Thank you.
Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.
[music].
And then.
[music].