Q2 2021 Evolus Inc Earnings Call
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Greetings and welcome to the Atlas second quarter 2021 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star zero on your.
Telephone keypad as a reminder, this conference is being recorded I would now like to turn the conference over to your host Mr. David Erickson, Vice President Investor Relations. Please go ahead Sir.
Thank you operator, and welcome to everyone joining us on today's call with me today are David <unk>, President and Chief Executive Officer, Lauren Silvernail, Chief Financial Officer, and Executive Vice President corporate development.
Our prepared remarks today will include forward looking statements within the meaning of the United States Securities Laws and management May make forward additional forward looking statements in response to your questions.
Forward looking statements are based on management's current assumptions and expectations of future events and trends, which may affect the company's business strategy operations or financial performance. The detailed discussion on the risks and uncertainties that the company faces is contained in its annual report on form 10-K quarterly reports on form 10-Q.
On current reports on form 8-K.
Actual results may differ materially from those expressed in or implied by the forward looking statements. The company undertakes no obligation to update or review any estimate projection or forward looking statement.
Additionally, our discussion today will include non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of GAAP to non-GAAP results may be found in our earnings release, which was furnished with our form 8-K filed today with the SEC.
And on our Investor Relations website at <unk> Dot com.
Lastly, following the conclusion of today's call a replay will be available on our website at <unk> dot com and with that I'll turn the call over to David.
Good afternoon, and thank you David.
We are very pleased to share with you our results for the second quarter of 2021.
This quarter is notable for several reasons.
Not only is it our first full quarter of results. Following the successful resolution of our legal matters more importantly, it is a quarter that clearly demonstrates both the resilience of Avalere as a company and the strong underlying demand for <unk>.
Thanks to the unwavering support of our customers and dedication of our employees, we reported $26.1 million of net revenue in the second quarter and delivered on our goal of achieving $100 million annualized run rate.
We remain very encouraged by the strong recovery of the U S aesthetics market and the increasing demand for toxin product among existing and new patient.
This quarter, our primary focus was on re engaging our existing account base. Following the settlement and we were pleased to see the majority of customers who purchased in the fourth quarter of 2020 have since reorders.
This validates their commitment to <unk> and what the key driver of our strong second quarter revenue.
In addition, we added over 300, new accounts, bringing our total account base to more than 6000 purchasing customers.
We also observed continued strength behind our <unk> rewards program, which has seen a 66% increase in registrations compared to year end 2020, and now stands at more than 200000 consumers.
In the second quarter, we maintained a prominent presence in both digital advertising and billboards.
These marketing initiatives are designed to elevate the visibility of our brand and our customers while maximizing the efficiency of our investment.
Our co branded advertising is first in class and another example of how we are working with our customers to build the toxin category together.
We are continuing to innovate around the advertising model to broaden our offerings using localized targeted spending across a range of advertising vehicles that focus on the injector.
As an example, we will be piloting streaming TV spots in local markets with key customers during the third quarter.
Overall, our strong second quarter results reinforce our belief that our differentiated approach of partnering with customers through advanced technology to targeting younger demographic will fuel our strong momentum going forward.
While the ongoing pandemic adds an element of uncertainty our confidence remains high that procedural volumes will continue to grow in the back half of 2021, which positions us to achieve record sales in the second half of the year.
As we continue to build our company, we are adding key senior talent and we recently welcomed 2 leaders to the team.
David Erickson, who has extensive health care industry and Investor Relations experience came on board to lead our Investor relations function.
We also added Dan Stewart as head of our international business.
Dan has considerable industry experience, having held sales leadership roles in several medical aesthetics companies and his first task is to spearhead our global expansion into Europe.
We look forward to the many contributions both individuals will make as we execute our growth strategy.
Speaking of Europe, we continue to make progress preparing for our launch there which remains on track for early 2022.
Europe represents a $470 million market opportunity and we believe our digital capabilities offer a unique advantage to build a strong presence and what is the second largest global market for aesthetic neurotoxin.
The launch of the receiver which is a brand name on our product internationally opened 31, new countries and significantly increases our global footprint.
We expect to be the fourth entrant to the European market just as we were in the U S and we look forward to applying key learnings from our U S launch to help drive the rapid uptake of new receiver.
We will provide further updates as we get closer to launch.
Before I turn it over to Lauren as you started June press release, we were proud to announce the publication of a peer reviewed article highlighting the efficacy and safety of <unk> in patients with skin color.
As the article noted clinical data involving non Caucasian patients is quite limited yet. This demographic comprises a significant percentage of the population today and a growing segment seeking neurotoxin treatment.
Articles such as this add to the body of strong clinical data that helps support injector and patient confidence in <unk>.
Now I'll turn the call over to Lauren for some additional financial information.
Thank you David and good afternoon, everyone I'm extremely pleased with how much the team has accomplished in the first half of this year.
We successfully restructured our balance sheet, eliminating $117 million on senior and convertible debt.
We raised $92.4 million from our public stock offering and $25.5 million from <unk>.
Partner settlement.
We also tightened and mindful of managing our operating expenses, which has enabled us to increase that's net.
On programs.
These initiatives have resulted in a more on fishing organization focused on driving revenue growth and <unk>.
Strong cash balance of 131.7 million at June 30.
2021.
We believe this will fund our operations through the next 12 months.
As David mentioned, we have reported strong net revenues from $26.1 million from the second quarter up more than 200 per cent from a year ago. When our sales were impacted by Covid.
Included in that amount was 0.7 million of net.
Service revenue related to international sales as you model out the back half of 2021 key thing.
Line.
First due to the purchasing patterns of our Canadian partner net.
Service revenues are not reported every quarter and at this time, we don't anticipate recording any service revenue for the balance of 2021 and second please keep in mind that while Q4.
<unk> strongest revenue quarter Q3 is the lowest.
Overall, the pricing environment from your own Pops from products is quite stable. In fact, we are seeing from competitors raise prices.
While the majority of our growth this quarter was driven by higher volume net revenue was also aided by a higher average selling price following the sunsetting of 'twenty 'twenty COVID-19 promotional pricing.
Now moving down the P&L on a reported gross margin in the second quarter was 53, 9% on.
Our adjusted gross margin in the second quarter.
Moving the amortization of intangibles was $56.7 per cent and.
With the first quarter of this year.
Based on our year to date performance.
And tightening our full year 2021, adjusted gross margin target to a range of 54 per cent to 57 per cent.
Full year adjusted gross margin includes settlement loyalty and exclude the 1 time payment from our partner starting in September 2022, I'll remind you that the royalty on net sales dropped significantly to a mid single digit rate.
As a result, beginning in the fourth quarter of 2022, we expect our gross margins will exceed 70 per cent.
Selling general and administrative expenses on a GAAP basis from the second quarter of 2021 were $26.4 million up from $17.6 million during the second quarter of 2020, which was an unusually low level due to COVID-19. While we are carefully managing operating expenses overall, we continue to.
Make investments to drive U S revenue growth support our planned market expansion into Europe, and further strengthen our internal capabilities.
For the second quarter of 2021, SG&A expenses on a GAAP basis, including $2.8 million of noncash stock based compensation expense.
Following COVID-19 and the settlement of the ITC and related litigation, we continue to improve our profitability.
Likely on non-GAAP loss from operations improved by 25 per cent to $9.2 million in the second quarter of 2021 compared to 12.4 million from second quarter of last year, driven largely by higher sales this quarter and a $3 million COVID-19 related restructuring charge in the second quarter.
2020.
Non-GAAP loss from operations exclude stock based compensation revaluation of the contingent royalty obligation and depreciation and amortization.
For your models I also want to remind you on some previously disclosed cash obligations coming up later this year.
These include a $15 million settlement payment.
Third quarter, and a 20 million dollar payments on this.
Just on the fourth quarter also on the third quarter of this year, we began paying a quarterly settlement royalties for.
For the second quarter, our weighted average shares outstanding were $51.2 million and for modeling purposes from suggesting approximately $49.6 million shares for the full year 2021, and with that I'll turn the call back over to David.
Thank you Lauren and.
In closing I'd like to make a few comments about the quarter what it means for the rest of the year and the long term prospects prevalent.
On a quarter, we set a new revenue baseline from which we plan to grow and we now have the wind at our back as we look forward to robust growth ahead.
<unk> has emerged very strongly from the events on our path and we are focused on becoming a global leader in the aesthetics industry.
For the company, we intend to execute with excellence around <unk> in the U S and the launch of new CEVA in Europe next year.
We have made significant progress this year in transforming our balance sheet and leaning more heavily into our digital platform to drive efficiency and impactful customer engagement.
As we look beyond 2021, we are committed to expanding our presence beyond neurotoxins and have prioritize business development to transform the long term prospects traveler.
Lastly, I would like to thank the growing ranks of Atlas customers, who have committed a greater portion of their patient base to chabot and recognize the value we bring to their practices. Our commitment to you remains firm to our shareholders. Thank you for your confidence and support as we continue to grow our company.
Did the Atlas team a special thank you.
It's clear to me that we have the best team in the business.
Look at what we've weathered and what you all have delivered.
With that we're ready to take questions.
Yeah.
Thank you.
At this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star 1 on your telephone keypad.
Confirmation tone will indicate your line is in the question queue.
You May press star 2 if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, 1 moment, please while we poll for questions.
Yeah.
Okay.
Your first question comes from line of Annabel <unk> with Stifel. Please proceed with your question.
Hum, everyone and congratulations on a solid quarter.
On a few from me here so.
We saw a huge feat for abbvie and aesthetic stuff on the filler on the neuromodulator side. So that's obviously pointing to demand rebound in market expansion. So maybe you can sort.
It sort of provide some color on how you're participating in this market expansion and rebound.
Are you seeing new patients or primarily switches are you seeing on same store sales from the ekati loyalty around or you're in the right target demographic that you've been been seeking specifically the millennials. So so I guess you know what I want to know what kind of stickiness or you're finding in your product.
Funding a lot of switching between the products and the loyalty programs and so that was long winded I apologize for that but the second question. I have is you know maybe you can just share some of the metrics with regard to specifically on co marketing campaign.
Is it bringing the patient and.
Directly tied to the AD billboards et cetera, and what kind of usage have you had of the consumer loyalty programs I'm, sorry, too long winded questions I apologize.
Annabel. This is David Thank you for the questions I think all 3 questions are interrelated I think what youre getting at are our questions I'll just broadly the market and with what we're seeing there and what role we're playing in shaping that market both around the the ejector the customer as well as the consumer what that might mean going for.
Forward.
Just starting out with the market. We were pleased to see the market leader reported last Friday, and they posted very strong growth as.
As you saw over 100% growth in and of course, we've announced over 200 per cent growth, which is a very healthy to see a mature product that's been in the category for 20 years growing at that clip now we all recognize that from the depressed base line.
Year on year that being said there is strong momentum in the market and we do believe that we're playing a significant role in contributing to that are there.
2 things that I pointed out in the quarter that I think are meaningful to focus on the first is the record revenue that we drove came.
It came off of the same customer base largely that we had in 2020. It did not come from a large portion of it started a very small portion of that came from new accounts. So that shows you that number 1 on accounts are growing faster, but we're also seeing that as a result of our co branding initiatives customer.
Mers are willing to commit a larger portion of their business 2 years ago and that is giving us greater confidence as we make further investments into the back half of the year.
In addition to that our consumer loyalty program continues to perform very well as you know we finished the year last year with just over 100000 consumers in the loyalty program and now we're reporting on the front half of the year, having eclipsed 200000 consumers in the program. So we feel very good about the momentum that we're on it.
The demand for our product amongst the objectors universe is high but the consumer demand is also moving along very strongly that's all happening in a backdrop, where today while we're on in only 6000 accounts there are 30000 customers or greater in this aesthetic universe.
And as we now get to the back half of the year. We believe the windows that are back because we're going to continue to expand on the opportunity within our existing customer set while we also go wider and we think with the market continuing to grow at a fast clip as we focus on that millennial segment, which we believe will be the fastest growing segment is cash.
Laurie.
The combination of those activities give us a lot of tailwind to continue to build on.
Okay, Great and are you seeing repeat.
Usage of that.
Net consumer loyalty program I know you've got 200000 in there but are you seeing repeat usage of that.
The $40 just counts every quarter that they have up to like 160 or something.
Yeah Annabel we are we're seeing a very good return on visits for these patients that were treated in the back half last year, we haven't reported out on those metrics, we want to get more quarters under our belt before we report out on some of those return metrics, but we are seeing what you would expect to see out of our consumer loyalty program, which is patients that are.
And tend to come back more often we just want to have a few more quarters of experience under our belt before we start sharing some of that detail.
Got it and 1 last question, if I may as far as the.
On that that customer side are you well no customer side, but I guess it is a consumer side and the on is are you still are over indexing to the millennial population relative to the market.
Yes, we believe we are we are now tracking our consumer loyalty program is the lead indicator of the.
Demographic mix and what we're seeing is nearly 40% of consumers in our loyalty program, our millennial generation or younger and we think that's a very strong trend clearly over index thing against the broader market.
It has been since block.
Great. Thank you so much thank you.
Your next question comes from the line of Marc Goodman with S. V. B Leerink. Please proceed with your question.
Yeah.
Hey, everyone. Thanks for taking my question. So this is really underlying from work.
Congrats on the from quarter 1 question.
You mentioned that the procedural volume who continue to increase in the second half of the year.
Provide more color on the trend quarter over quarter.
Given the work on me and then it can be sent.
Hi, Rudy.
I would love to give you a lot more color around the quarter on quarter views on.
Unfortunately, given we had a stellar quarter in the first quarter.
And then now we're entering the second it's hard for me to have a great gauge on it we do look at third party reports are clearly I think when you Dollarized, what we've reported now and the other public company. That's reported to date you get a sense for the market itself that it certainly has grown sequentially over the first quarter.
And clearly the second quarter is a market likely all time high so I think all of those things point to very high growth in the second quarter, and we believe that that trend will carry into the back half of the year and some of the reports that we've seen.
I continue to believe that the procedural volume will be strong now of course, we're all watching.
On the pandemic as it evolves, but we feel confident that if there's any customer group or any segment frankly that could weather through it it would be the medical aesthetics group of customers. We think they have the proper protocols in place around their practice.
To continue to treat patients and barring any.
Broader shutdown, we believe this market will continue to be resilient in the back half of the year.
Got it that makes it on a cents.
The Monkey Center.
Mid to high single digits.
Yeah.
It's hard to predict exact share.
<unk> got a sense now for where we are I think you're probably thinking about it the right way.
Yeah.
Got it got it thanks, and congrats on a quarter again.
Yeah.
Your next question comes from the line of Louise Chen with Cantor Fitzgerald. Please proceed with your question.
Hi, Good afternoon. This is kirby in for Louise Congratulations on the quarter and thank you for taking my questions.
First question, how do you think about the Opex for the rest of the year as second quarter Opex, a good run rate for the rest of the year.
Yeah. So what are you seeing additional penetration could come from for toxins to treat aesthetic indications.
And lastly, more on your kind of product portfolio and your plans to add on new products by the end of this year and potentially may be make sure 2022. Thank you so much.
Great.
Thank you for the questions correctly, let me turn it over to Lauren to address the operating expense question you have.
And I will take the upper Inc.
Yeah.
Hi, Harvey nice to catch up with you. Thanks, Thanks for asking on our non-GAAP operating expenses are.
When you look at that we were right at the peak.
Peak out.
Our product costs, including those under GAAP were right around $24 million this quarter and what we plan to do is to continue to invest into the growth of the business on a very measured basis. So we will continue to move it up a little bit throughout the quarters this year, but not raising it dramatically let me turn it back to David.
Great on the second question around penetration.
It's a great question because that really is the predictor of the long term growth prospects for this market. We believe this market is highly underpenetrated. It's a single digit percentage of consumers that are interested in getting a neurotoxin in the U S. Today are actually in the offices.
We believe that our continued focus around that millennial segment that segment in particular is critical to the long term driving this penetration into double digits and the reason we believe that is number 1 on millennials are obviously the largest.
Consumer demographic in the U S. But there are also the fastest growing as it relates to neurotoxin treatments and they're more likely to seek treatment the barriers for them to access and willingness to spend on beauty procedures is much greater than the prior generations that have existed. So we feel very good about the long term prospects are the macro trends.
If you will around the consumer willingness to seek a neurotoxin treatment and that's why we position as both the company on the product where we did it's not an idea for the next 12 months or 24 months is a long term investment strategy and you're seeing that are reflected in our co branded approach where we partner.
Injector directly with this youthful brand and we put that advertising unit within a radius of the practice. So that we can eliminate the steps required for that consumer to seek treatment and we believe that number 1 we are in the early innings of advertising around the consumer, but we believe building a consumer brand that millennials gravitate.
2 is 1 key to our future success, and we're committed to investing to build it.
And then lastly around new products.
I'll start by saying, we really like our singularity and focus we have a single product with a technology platform that powers. It that's focused against this millennial segment.
We're starting to show what the potential is and we've been on the market 2 years and we are just now getting to the point, where our value proposition is very clear and it's continuing to build within the market that being said clearly we have aspirations to build a company beyond a single product, we've usually low as our flagship brand and any.
Asset add in and around your BOE would have to add value to that flagship product and so we're very active on that side and when we have more to share. We'll certainly provide that detail for you. Thank you for the question.
Oh.
Your next question comes from the line of Douglas Tsao with H C. Wainwright. Please proceed with your question.
Hi, good afternoon, thanks for taking the questions just from.
Just curious obviously there was interruption on.
Because of the I T. C issue I think you highlighted you're up to 6000 accounts. Just are you seeing orders from your entire account base and are you fully back or is that can be a driver over time as it just takes time to sort of rebuild those relationships from just kept them ordering.
Obviously, not just you have to I T I D C issue, but as well as COVID-19.
Hi, Doug as you can imagine once we settled the ITC case, we put a magnifying glass on our customer base. There was ordering in 2020 and that was the focus for the entire commercial organization. Both on the back half of the first quarter and the entire second quarter.
And I'm very pleased with the progress the team has made frankly to their credit. This team is resilient their focus and the value proposition. We have is incredibly valuable because despite everything that this company has gone through the majority of employees stayed with the company through these challenges and the majority of customers have since rial.
Ordered and that's the only reason why we delivered a record quarter in terms of revenue we feel very good about this space. It's obviously very sticky customer base given everything we just went through that this customer base dealt with and stuck with us and I can tell you. There's an intimacy with these customers with maybe a new company to this space 2 years in but the.
<unk> chips that we have with these customers are very deep and the same applies to our employee base and we feel that we've built something very significant in the foundation, but I think across the board in this company. We all feel that we have a lot more to do as we go wider and introduce this value proposition to the rest of the market. So.
Overall, Doug I think we feel great about what we've done thus far but to your point, we havent gone wider in the front half of this year has really been focused on getting back to the customers. We had last year. The back half now allows us to shift and expand our focus.
And when you net it and just as a quick follow up I mean is there a type of practice that you are going to be focused on sort of going forward is that sort of key expansion driver.
We have a deployment across the country and our sales reps are focused on.
On the different specialties as well as those that are outside of the specialties to do a set of procedures.
And our stage.
We're an opportunistic company and so we service those customers who are interested in expanding their business, especially around that younger demographic and I can tell you that theyre more whether it's billboards or digital ads that go up around the country. The more of the interest level around those practices rises to partner with us.
And we always believed that this would be a building effect and over time. It would begin to sell volume and I believe we're in the early innings of that process.
Okay, great. Thank you.
Your next question comes from the line of Greg Fraser with Truest Securities. Please proceed with your question.
Hey, guys. Thanks for taking the questions.
For personally for large toxin users who have not yet adopted you, though what have been the reasons that you've heard as to why.
Well look so.
1 of the earlier questions was you know what do you think your market share is just assume for a minute we're a mid to high.
Single digits, I think youre getting after 9 out of 10 customers in the U S are probably not using jumbo versus those that are or at least 9 out of 10 patients aren't getting chabot. So I think there is a list of reasons why they vary by customer.
And are.
These are some of the same issues that we faced in the customers that are now users. There's nothing unique there. It's just a matter of taking our value proposition and spending time with the customers for them to understand it and then there's the natural adoption curve that happens with any product in any category that you'll have your early adopters and then youll.
Continue to build from there we've demonstrated now we're far beyond early adopters.
Likely entering the later stages of the early majority and from there we'll continue to expand our presence, but there's no doubt that as we build a consumer brand.
Consumers are asking for that as we create interest around that millennial segment and in these pockets, where we have a greater presence.
There their peers are using our product in a much larger level I can give you. An example last week last weekend I attended plastic surgery meeting here in California, and 2 of the leaders of that meeting they were the the co presidents. If you will of the meeting they both have billboards in their respective markets they're using.
<unk> Chabot predominantly as there are talks that have choice and when they stand up the podium and they share that information the audience, Melissa and so theres always a spillover effect. So I'd love to give you 1 answer or point to 1 or 2 things. The reality of it is we have a lot of work to do we like our starting point. This revenue is a good place to be today, it's not in place.
We want to be overtime.
We think we have the right recipe and now it's just a question of investing and executing behind it and so we'll look forward to giving you updates as we do that.
Got it that's very helpful.
Given the strength in the U S has the market and the tailwind from pent up demand and do those still being in the early stages of growth could Q3 sales be up quarter over quarter. I know you mentioned seasonality of toxin market that Q3 tends to be the lowest revenue quarter.
Just hoping you could comment further on how you're thinking about the third quarter.
Sure.
Yeah, Greg so.
We really try to look a little further out than any single quarter right. So as we build the business. We do believe that as you know Q3 is our lowest seasonal period of the year for taxes in Q4 happens to be the highest so as you sort of aggregate. Those 2 we felt very confident that when we think about penetration in the market. We're gaining this product in terms of.
Procedural volume relative to other brands will gain share on the back half of the year. The part that makes it challenging is anticipating what next quarters procedural volume will be which is what you're asking.
Generally procedural volume has been down 10, 15 as high as 20% seasonally when you look at the third quarter over the second quarter. So at this point, we arent guiding on that we have provided some color that we feel very confident that the back half of the year will be very strong force and will continue to build on those.
And we're very focused on building that and we remain very encouraged by what we're seeing in terms of the strength of the business.
Got it thank you.
Your final question comes from the mill at <unk> with Mizuho Securities. Please proceed with your question.
Hey, guys. This is wasteful or ivano congrats.
Congrats on the quarter on thanks for taking my question cause from a quick 1 you know previously.
I'm sort of indicated that well I think within 2 years and so you could be the number 2 player on the market and understandably them. There's been a recent and so you know what this we said just wondering what your thinking is now in terms of where you think you could be and a couple of peers.
Thanks sure.
Bob.
Youre right in the sense that.
Certainly the second quarter was a reset and we think about it as.
The baseline by which we built from at the same time I think what it's also proven is that we have an incredibly resilient product and 1 that frankly this management team joined because we believe it has the potential to be a high quality product to command a significant portion of the market over time.
And we're committed to building that that being said, it's been a quarter on a half and since we have settled all outstanding issues and we've been on the market for 2 years. This was our first full quarter on.
On the market without any of the outstanding issues present, so we feel very good about where we stand as we think about long term. We also believe that the potential is intact. Just as we originally thought it would be but as it relates to guiding towards any of those long term prospects I think that's something I'll reserve till we get a few more quarters under our belt.
Okay. Thanks, and you also indicated that a majority of low revenues from this quarter was from Reorders on if you are low customer base on the current.
Customer base.
Just wondering would you be able to share like perhaps on the days of inventory or anything to that effect I'm just trying to get a better sense on how many of those customers get to reorder and will come on quota.
Sure.
Look we don't have a clear indicator of inventory on hand, I don't think I'm not aware of any manufacturer that does unfortunately.
That's something that we have visibility to that being said.
We have a disciplined pricing program, where each of our tiers unlock certain value that value is built on price just like other customers based on volume, but what we do in addition to that it's also built on our co branded advertising dollars. So we actually advertise more.
<unk> around the customer who buys more which we believe is critical to pulling through product more quickly and thats above and beyond our consumer loyalty program, which is very rich in terms of the offering to the consumer which is $40 off per treatment, which we understand to be meaningfully above the market leader as it relates to the savings to that consumer.
Combination of those program is designed to drive consistency and buying patterns over time with these customers. So as we think about.
<unk> patterns. Our goal is to continue to drive higher frequency over time, and it's not designed to create any sort of shelf stocking or bulk type of selling with this product and we think over youll, obviously see that as we execute over multiple quarters, but that's how we designed it.
Okay. Thanks, so much.
Ladies and gentlemen, we have reached the end of the question and answer session and this concludes today's conference you may disconnect. Your lines at this time. Thank you all for your participation.
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