Q2 2021 Avanos Medical Inc Earnings Call
Good day and welcome to the other notes second quarter 2021 earnings conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero.
After todays presentation, there will be an opportunity to ask questions to ask a question Press Star then 1 on they touched on them.
I would draw your question Press Star then 2.
Please note this event is being reported.
I would now like to turn the conference over to Dave Crawford, Vice President of Investor Relations. Please go ahead.
Good morning, everyone and thanks for joining us it's my pleasure to welcome you to the average 2021 second quarter earnings Conference call with me. This morning are Joe Woody CEO on Michael Greiner Senior Vice President and CFO, Joe will begin with an update on our quarter and then discuss our business environment and progress towards our 2021 priorities there.
Michael will review, our second quarter results and update our 2021 planning assumptions, we will finish the call with Q&A a presentation for today's call is available on the investors section of our website <unk> Dot com as a reminder, our comments today take forward looking statements related to the company, our expected performance and economic conditions and our industry.
No assurance can be given as to the future financial results actual results could differ materially from those in forward looking statements for more information about forward looking statements and the risk factors that could influence future results. Please see today's press release and the risk factors described in our filings with the SEC.
Additionally, we will be referring to adjusted result outlook. The press release has information on these adjustments and reconciliations to comparable GAAP financial measures now I'll turn the call over to Joe.
Thanks, Dave Good morning, everyone and thank you for your interest in Avenova.
As we move into the second half of the year I am encouraged by our commercial teams to start to the year and the continued resiliency as they respond to the challenging dynamics brought on by the pandemic.
Across our enterprise, we remain focused on getting patients back to the things that matter as we meet the needs of our customers.
I will begin with a brief review of our results for the quarter before discussing the current environment and our progress against our 2021 priorities.
Sales increased 14% for the quarter to 186 million, while we earned 21 of adjusted diluted earnings per share are.
Our sales results were at the high end of our planning assumption.
Not only benefited from the return of elective procedures, but more importantly executed well against our growth initiatives.
Performance for the quarter fell short of our expectations within our manufacturing and distribution footprint net.
Negatively impacting gross margin for the quarter.
These higher costs are temporary impacts to our business, primarily pen dimmock driven being seen across industries and did not indicate a permanent change to our operating structure.
My management team and I have made this our top priority and I'm confident we will show meaningful progress in the second half of the year, Michael will expand further on the steps we're taking in his remarks.
I'm pleased with our team's execution finding additional efficiencies throughout the business to reduce operating expenses.
They are finding ways to increase productivity and lower our cost structure, which not only is assisting in offsetting some of our in your gross margin headwinds, but also is positioning us to deliver on our commitment of SG&A as a percentage of revenue being less than 40% on a go forward basis.
With that as a background I'll discuss our market environment and update you on progress against our 2021 priorities starting with how we are strengthening on a gross profile.
As I mentioned on our last earnings call, we began the quarter with increasing top line momentum across our pain management franchise as elective procedures began to reaccelerate.
Momentum continued throughout the quarter and we saw the fastest acceleration and cool leafing game ready, where outpatient procedures continue to recover faster than procedures performed within the hospital.
Sales for both of these therapies eclipsed the pre pandemic second quarter of 2019.
While the recovery on on Q has trailed our other pain therapies, we delivered sequential sales improvement throughout the quarter.
Based on the gradual increase in procedures and conversations with our surgeons and hospital administrators. We continue to believe inpatient procedural volume will likely remain below its full potential until the end of the year.
As we move into the second half of the year, we continue to build on our solid foundation to accelerate growth across pain management.
For Cooley, we're planning to launch the next generation of cool leaf cooled radiofrequency probe kits, the new probes will make it easier for physicians to perform poorly procedures, while maintaining our premium look and feel the new probes will also be more efficient for us to manufacture and deliver scalability, thus improving cooley's already high gross.
<unk>.
Combined with the launch of our new generator last year, our new probe kits strengthen our cooled RF leadership position.
With respect to on <unk>, we continue to see positive results from our channel partnership agreements, where we are leveraging orthopedic sales partners to gain access to orthopedic surgeons.
In an effort to differentiate ourselves from other pump manufacturers in the coming months, we'll be launching <unk> blocked pro data collection and patient engagement app that will allow physicians to track their patients' recovery and understand their satisfaction levels and opioid consumption in real time without needing to speak with patients.
On block Pro will also help us engage patients and improve their experience by providing education about the pump and the ability for us to answer their questions. We will be the only pump company to offer both data collection and patient engagement to this extent.
Finally, we continue to leverage our exclusive relationship with lighters to further solidify our customer base.
Shifting to chronic care the positive trend across our digestive health franchise continues we maintained double digit growth across our near mid franchise, while our standard of care strategy from core pack is accelerating sales of our coronary hardware to record levels and respiratory health sales were down as expected given the prior year pandemic tailwind.
Finally, we continue to execute on our international expansion opportunities our market development initiatives focused on the clinical benefits of our therapies continue to pay dividends and we are bolstering the growth of recently acquired products through our global footprint.
Well our growth for the quarter was muted given the pandemic benefit last year, we delivered results at the high end of our expectations.
Our second area of focus is on gross and operating margin expansion as I noted earlier. It is imperative that we begin to recapture gross margin losses to start on the pandemic.
Last year, we took the necessary steps to protect our employees from the pandemic and expand manufacturing of products to treat COVID-19 patients.
We responded well when presented with these challenges, but now need to address the inefficiencies in cost that arose out of our manufacturing sites and.
In addition, this year, we have made in a short term tradeoff to capture market share for our anemia product family at the expense of higher freight costs to ensure that we take full advantage of its growth potential.
These short term cost increases will allow us to maximize the long term investment of our <unk> acquisition, but have obviously created some in your headwinds on gross margin that we did not anticipate coming into the year.
Our continued cost discipline and emphasis on driving efficiencies in spending continues to produce results I'm seeing a cultural shift in how our teams examine investments and make the necessary tradeoffs to achieve the best value for our spending.
Improved efficiency also carried over into improved management of working capital, which helps drive a return to positive free cash flow in the quarter.
We're on target for our third priority to begin generating consistent repeatable free cash flow and continue to expect significant free cash flow acceleration in the second half as we await receipt of tax refunds, we highlighted on prior calls coupled with our improved operating results and working capital discipline.
Our last priority for the year focuses on capital deployment.
Our M&A pipeline remains healthy and we are engaged in active dialogue with a number of potential tuck in targets, which would leverage our existing footprint generate synergies and enhance our top line growth profile M&A.
M&A is a priority for us, but we will remain disciplined on identifying targets that meet both.
Our strategic initiatives as well as exceed our financial hurdles, ensuring we generate a strong return on capital.
Lastly, as a follow up to the Doj investigation, we update you on the last quarter in early July we entered into a deferred prosecution agreement with the United States Department of Justice that resolves the Doj's criminal investigation related to the company's macro cool surgical gowns, which are part of the S and IP business, we divested more than 3.
Years ago.
As part of the agreement, we paid $22.2 million in line with the expectations. We previously communicated.
Wanted to share our customers and our team members that we will continue to maintain robust compliance and quality programs and we will continue to enhance them through new and revised policies procedures and training requirements.
In conclusion, we remain well positioned to advance our strategies across each of these 4 areas of value creation as our focus on execution remains strong.
This along with our market leading portfolio gives me confidence we can successfully deliver on our 2021 priorities.
Now I'll turn the call over to Michael.
Thanks, Joe and as you noted we remain in a challenging environment, especially with regards to supply chain and operations and get the team continues to find ways to overcome these challenges.
Now, let's begin with a review of our second quarter results total sales of $186 million increased 14% compared to last year.
About 13% increase in volume on a 1% benefit from favorable exchange rates unfavorable price offset sales by 1% as we saw price movement return within our normal range after slightly higher than normal price impact last quarter.
Given the 10 million dollar pandemic related tailwind from respiratory health in 2020, chronic care sales declined 4% to $116 million in the quarter adjusting for the 2020 tailwind respiratory health sales would have been down slightly for the quarter as we saw hospitals draw down their inventory of closed suction catheter is on other related products ASP.
Pandemic related hospitalizations significantly declined on.
Although a new wave of pandemic related hospitalizations appears to be upon us through July we have not yet experienced material acceleration of orders from distributors or hospitals, our planning assumption for respiratory health in the second half of 2021 does not include additional benefit from the pandemic on we also expect a normal start to cold and flu season.
Shifting to digestive health, we saw above normal growth as we experienced some pandemic related disruption last year for our legacy Mickey franchise, providing a favorable comparison for the share Neilmed. Once again grew double digits from the continuation of conversions to our inkjet technology.
Moving to pain management, we delivered $70 million of sales, 62% higher compared to the prior year driven by the favorable prior year comparison, resulting from the cancellation of elective procedures during the pandemic.
As Joe highlighted growth has returned faster for our cooling and gain revenue therapies. Both of these therapies saw sales growth ahead of the pre pandemic level for the second quarter of 2019.
With respect to on Q, although recovering for the therapy has trailed cooling and game ready we continue to see the average day rate of sales increase on a monthly basis for the quarter sales through lighters and new customers using them as a pre filler again increased by double digits as our partnership with <unk> continues to benefit customers as a pre sell option.
Finally, despite a difficult prior year comparison international organic sales grew at a low single digit range for the quarter.
<unk> did however benefit roughly $1 million due to the timing of shipments to distributors taking place at the end of June that were originally scheduled for early July move.
Moving down the income statement adjusted gross margin decreased to 51% compared to 56% last year.
As we indicated on our previous earnings call and as Joe noted earlier gross margin was expected to be impacted due to higher transportation costs are perennial net products from China to the U S to meet customer demand on them.
Additionally, we continue to have inefficiencies at our manufacturing plants in part for the safety precautions to protect our employees from the pandemic as well as additional employees, we hired during the pandemic at our plants. These factors have resulted in less productivity higher overhead costs and increased waste in recent quarters, while we saw in <unk>.
<unk> mix given the increase in pain management sales these headwinds had us behind our gross margin expectation for the quarter.
Looking at the second half of the year, we continue to expect adjusted gross margin to significantly improve based on some of the following factors first we expect to continued benefits from our sales mix. Our sequential growth continues with pain management, while we anticipate that demand for our respiratory health products will remain at normalized pre COVID-19 levels.
Capability will be magnified in the fourth quarter as we anticipate the normal seasonal uplift on our pain management franchise.
Second we will see a meaningful decrease in airfreight costs versus the first half of the year, although the anticipated benefit will be less than originally planned in the second half given that higher transportation costs for ocean freight are still relevant for me on that product family.
Additionally to ensure we achieve higher gross margin on the second half in July we have initiated several steps to return our facilities to pre pandemic efficiency levels. We have recently reduced the number of employees on our manufacturing plants by approximately 10% to return on employment at our facilities to pre pandemic levels. We are also taking steps to reduce waste.
And scrap levels and are working with our commercial teams the sales slow moving inventories to reduce the increase on write offs incurred recently.
Finally in order to offset some of the inflationary pressures across our supply chain. We are informing some customers are price increases beginning later this year.
Due to the slow start for the year on our adjusted gross margins are now expected to be slightly below on 2020 margin levels.
To offset this reduced gross margin level, we are reducing operating expenses in order to maintain our commitment for operating margin improvement for the year.
Now turning your attention to some bottom line financial metrics.
Adjusted operating profit totaled $15 million compared to $13 million in the prior year performance was primarily driven by higher sales volume, which was partially offset by the lower adjusted gross margin I'll just reviewed adjust.
Adjusted EBITDA totaled $20 million compared to $19 million last year on adjusted net income totaled $10 million compared to 6 million a year ago. As we earned 21 of adjusted diluted earnings per share.
Turning to the balance sheet and cash flow statement as Joe highlighted we achieved positive free cash flow absent the receipt on any of our cares act refunds, keeping a healthy balance sheet and generating meaningful free cash flow remains a key go forward priority on.
Our balance sheet is solid and continues to provide us with strategic flexibility as we ended the quarter with $100 million of cash on hand, and $165 million of debt outstanding on our revolving credit facility and improvement of $10 million versus the end of the previous quarter due to a small repayment free.
Free cash flow represented on inflow of $10 million enhanced by improved working capital.
Finally, while some unpredictability of the Corona virus remains we are reaffirming net sales on a constant currency basis to increase 2% to 4% compared to the prior year. However.
However, due to increased manufacturing and transportation costs, partially offset by operating expense savings we are reducing the top end of our earnings guidance. We now expect to earn between $1 <unk> on a $1.20 of adjusted diluted earnings per share in closing we are off to a solid start at the halfway point in the year I'm confident in our ability to.
Kudos strategy and you take the necessary steps to drive gross and operating margin improvement and deliver significant free cash flow in the second half of the year operator. Please open the line for questions.
We will now begin the question and answer session to ask a question Press Star then 1 on a touched on phone if youre using a speakerphone. Please pick up your headset before passing on the keys to withdraw your question Press Star then 2.
At this time, we will pause momentarily to assemble our roster.
And the first question comes from Matthew Michelle with Keith. Please go ahead.
Good morning, guys good.
Good morning.
Hey, I just first wanted to start with with Neil Matt I mean, this is an acquisition you made a couple of years ago, it seems to be doing.
Well.
From an annualized sales run rate.
But the gross margin still has been a problem could you kind of walk us through kind of where you started with new bed, where you're at now and kind of how you're thinking about the gross margin progression free.
For that business.
Yeah, Matt I'll say, a couple of things and as always Michael Mike might jump in but this has been a highly successful acquisition for us.
It grows double digit did again.
In this quarter.
The other thing going on on alongside of this is that there is a conversion of called the infant conversion, which is a global standard happening it really needed to be complete by customers moving into next year.
So what youre seeing from us is and we Havent, we manufacture in China.
As during the pandemic increased transportation range, particularly are where we need to get the product over we've made a decision to ship are so that we can get the conversions. They have a timeline on our customers are they're up against and theyre going to definitely benefit us going forward.
As we get the repeat sales associated with that but it's obviously.
On a headwind to our to our gross margin so generally.
Generally when I think of the model I think once we get through the pandemic and some of these 6 temporal items on the gross margin, we're going to be in really good shape with all of the metrics that we put in place on you know a lot like we were pleased with for example, with core track, but Mike I don't know if you want to add anything.
Yeah, No I think we're making choices here to Joe's point to secure these conversions even with these headwinds that are impacting gross margin. When you look at our model.
DCF is still very attractive for this business.
Over the forthcoming few years.
We never modeled Neil Matt even from the beginning to have gross margins in excess of our consolidated gross margin set so neilmed weighted more normalized state Matt will still be below the company level slightly below the company level gross margins, it's significantly below right now because of these freight costs.
Headwinds, but even in a normalized state Neil Matt was never model to be.
Above our company level gross margin if that's helpful.
Yeah, but well.
Just going back to the question was when you bought on I think it was an annualized run rate of about $40 million. Once you finish it didn't fit conversion, how how big of a chunk of businesses isn't too bad for you guys.
I mean, so I see it like a lever similar to international business, but more like a cool leaf where it's a similar size and growing double digit and has some consistency for that on the next couple of years. So we like it quite a bit.
Okay.
And then just shifting over to Cooley.
The new folks that youre going to be rolling out next year does that I mean, it's it's at a higher gross margin because I'm more effectively allow doctors to do this.
S E or physician office.
We have some of that later on this is not I think when we were talking about in the prepared remarks.
Youll see both upgrade opportunities and new business, we think driven out of this introduction.
Okay.
And then just lastly on the gross on the gross margin side I realize there's a lot on there's a lot going on and people are people are across the board and talk about the headwinds in freight and manufacturing inefficiencies.
But when you say significant improvement into into 2 age just give us can you give us like a sense of what that means.
I was wondering if you're not going to be below.
Last year, but what what should we like a little range of what to expect around around improvement.
Yes, I'm going to Tee up a couple of things and then Michael on thing is going to walk you through a little bit of the way we look at age 2 and think about it.
And we did talk about this on our on our previous calls and said that we thought Q2, we'd still see.
Headwinds on gross margin, obviously, we saw a little bit more than.
And then anticipated when you think about the NIM, we were just talking about <unk> really have the tailwind.
It was reflected in the email which is why we're saying look this is temporal and not a fundamental change.
And our business and I think that there are some things because of the fact that we're dealing with China and are there air freight and some of the things we did in Mexico, reminding everybody that we.
<unk> had investments in our plants, who are dealing with obviously the Mexican government.
And employees, but also.
<unk> built out the closed suction line, so that we wouldnt experience of deferred debt.
Defense of DPA.
From the government.
And so when you put that together you sort of have 2 unique situations that said, we've got a completely different line of sight.
For the second half I think Michael wants to kind of take take books through that yes, Matt we were.
Joe alluded to we were about 200 basis points in Q2 below where we thought we'd be kind of a starting point when you think about where we're going in the back half of the year a couple of things.
That was just part of the math, so we won't have the revaluation.
Impacts that we had in the first half on here, that's about 200 basis points price.
This mix, we anticipate will improve by about 150 basis points part of that is some of these price increases that we're passing along with our with our customers.
Some of it is the continued slow but steady improvement in our on Q business that we've been seeing the day rates that we referenced another 200 basis points relates to plant performance some related to the reduction in the workforce by 10% as well as reducing the write off debt incurred in the first half.
For the year and then another 50 basis points on freight.
Primarily to Neil Matt now that we thought would be a little bit higher on what we're seeing is increased.
Free from from water Lane standpoint, but obviously significantly cheaper than the air freight that we have been doing in the first half of the year. So that gives you about 600 plus basis points on very specific items and then we had some other items that we're working through as well so that kind of walks you. Your question was how significant.
Again, we've seen very significant unfortunately, because Q2 was 200 basis points below.
B within or slightly below where we were in 2020, which obviously was not our plan coming into the year.
Okay understood. Thank you from quantifying that.
Thanks, Matt.
The next question comes from Chris Cooley with Stephens. Please go ahead.
Good morning, Chris Hey, Good morning, This is actually I raw files for on for Chris.
Okay. So I guess.
Thanks for taking my questions.
Turning to the top line can you kind of just walk us through the puts and takes of what you guys assume in the lower and upper bound of revenue guidance.
Yes, so I mean, I'll, just maybe see some a couple of things upfront about the quarter and then Michael might want to comment on the war on what we see going forward.
And the guidance piece, but we saw continued sequential progression in our in our paint business more so in game ready.
Cool leaf and we think thats because of obviously the hospital outpatient department on where they are performed we've talked a little bit about that.
On Q, although that was slightly below 19. It did also progressed, but then some of the procedures and the hospitals haven't come back as quickly as they have in the ambulatory surgical setting.
We think that chronic care.
In terms of our plan internally has.
On a trajectory for the mid single digit for the full year that we talk about in that business and then obviously.
We're seeing some of the comparator issues and respiratory on closed suction from Covid last year. So as a specific example, before I hand off to Michael and everyone should be thinking about $12 million.
That was part of respiratory sales in 2020 that won't be a part of 2021 that goes into some of our thinking anyway.
About the guidance for the second half so Michael yes.
Yes, I think the.
Upside to Joe's point would include on Q, continuing to improve and accelerate as electives come back.
While on the respiratory side, we have a normal respiratory.
Season.
To the downside you would see.
On to kind of level off here.
We continue to have let us come back because of the variance while treatment protocols.
No longer necessarily look for closed suction catheter <unk>. So we would continue to get on normalized respiratory well, we wouldn't get that extra benefit so we'd have normal respiratory.
On Q coming back down because electives are coming back down that would put us more on the low side on the upside both of those are actually moving forward.
We get hospitalization and closed suction catheter being part of that treatment protocol, while the electives don't pull back like they did in the previous period last year.
Yes.
Got it that's really helpful and then kind.
Just a bigger picture question, so guidance for 4 years, 2% to 4% X hundred beds from currency.
Well I guess, what's holding back topline from approaching mid single digits growth on the organic basis.
Yes, I think Michael touched on some of it we can we should touch on in just a little bit again, we've got a $12 million comparator in respiratory that wont be with US. That's 1.1 thing and then theres a little bit of uncertainty still although we have not seen.
This regionalized discussion on <unk> is being affected by the Delta.
On the Delta variant.
And how that also may impact any of our international business, which by the way is primarily chronic care. So I mean, there's obviously can be affected by that being less of an impact, but certainly the the respiratory product care pieces there.
And Ross.
It's a fair question and if you do look at 2019 Q2 versus 2021 Q2, we do have organic growth of over 7% and so that does get you in that mid single digits. I think we're just being appropriately cautious in the back half of the year just not knowing exactly how the new variant is going to play out on exactly how hospitals another treatment proto.
Calls, we'll react to that.
Okay Fair enough and then I just kind of a clarifying question.
Just make sure you have the cadence right for the rest of the year. So a lower gross margin and then that will hopefully be offset by greater opex reductions.
Uh-huh.
Right, Okay, that's right got it thank.
Thank you guys.
And just just to clarify on that question Ross, we took down the top end of guidance.
Not necessarily indicating that $1.17.18 is not achievable right. So $1.10, $1.25, we'd like to now.
But what kind of happens in the community is you take the mid point that gives you $1.17, our move from dollars $25.20 was just signaling a $1.25 is not possible that doesn't mean that $1.$17.18 is still not possible. We just we're trying to be intellectually consistent with the lower gross margins the op.
<unk> is going to help offset that but with that gross margin headwind. We just $1.25, just isn't something that seems to be in the cards that does not mean that $1.17.18 can't be achieved.
Got it.
Yeah.
Thanks Ross.
As a reminder, if you have a question price started wanted to join the queue.
Next question comes from Ravi Misra with Baron Baird. Please go ahead.
Hi, Good morning, Robin. Thanks, Hey, good morning, Thanks for taking the question everyone. So yes.
On 1 if I can just start on on Q in the elective rebound.
Are you still kind of under the current parameters is this a business that can kind of on finally returned to growth for the full year and sort of or do we need.
Like you were a little bit more cautious on the elective outlook. There just if you could help me think about how to kind of model. This thing going forward from a you know what.
What's implied from our procedure growth perspective, yes.
Yes that would be the big driver is the electives being the biggest lever is to growth.
We're seeing our initiatives were a couple that we're really focused on is the channel partnerships with larger orthopedic.
At 10.99 groups, we're happy with what we're seeing on the <unk> acquisition on how we're now having on electric pump offering and Thats.
Working well from us from a portfolio.
Respective.
Pain block pro from some of the initial.
The rollout of that we're seeing success on customers very interested that being able to track the outcomes not only our product but against other approaches to pain management.
And we're happy with what Bill Hayden is done under his leadership to kind of point debt.
Business in the right direction and then obviously, we've just come out of it.
Strategic Board meeting, where we've talked about some future products.
And particularly electronic nerve block that we think can be.
A big game changer in that space. So we're happy with where we are we think again the biggest lever on whether or not you.
The growth and how fast it comes as the elective procedures, so to the extent delta doesn't well a lot of things we can do better.
And Robyn.
<unk> has become the big Big word and med device over the last day 60 months. When you look at game ready and Cooley as Joe talked about on the prepared remarks, those are back and above.
Where we were so that that definition on electives has worked well and we've captured all of that is appropriate there, but obviously remember is generally for very specific types of procedures.
Multi day stay often are definitely multi day recovery.
And so those types of elective I'm not come back as quickly.
Okay, Great and then just on the on the gross margin sorry go on to harp on it keep harping on it but.
I'm curious your mix kind of shift this quarter was pretty significantly tilted towards the pain management business and you know you are calling out this.
Neo Mad kind of freight higher freight costs.
Just help us calibrate maybe I don't know if she called out kind of the actual quantification of that freight costs. I mean, if that wasn't there would you have been at that kind of 53 sounds like where you were targeting internally or was there more to it from that because I would assume that the mix shift into pain management would it more than offsets.
Right so.
Freight was a portion of it it basically offset the mixed shift and then to your point, we had an additional amount on plant performance under performance from.
From an efficiency standpoint that was the additional 100 or so basis points that we underperformed by.
So youre right freight was a portion of it.
But we also then have the plant underperformance from <unk>, which we've now done some steps in mid July to rectify for.
Great and then maybe 1 last 1 Joe just on kind of opioid safety in that project there.
What should we be kind of thinking about here for the rest of the year or is this now at 2022 event.
I'm, sorry, I didn't hear the first part of your question Ravi.
On the novel technology the opioid.
Product.
The growth the go.
Yes, so no actually we're actually rolling that product out now will continue throughout the second half and so this will be something that as we end the year going into 'twenty 2 will be will be rolling.
Block protocol.
Okay that is the software that okay got it okay.
Yes. Thank.
Thank you Ravi.
Thank you.
As we have no further questions. This concludes our question and answer session I will now turn.
The conference back over to Joe Woody for any closing remarks.
Thank you as many of you may know.
And they have been talk to Dave Crawford after 9 years from the spin of higher to Avenova, Dave is going to be.
Moving on.
He has been our treasurer and obviously, our head of Investor Relations.
We definitely want to thank him for his service to the company, but I would say that as business guidance on consultation partnership.
I have really been outstanding and so we wish Dave the best and we will definitely stay in touch with Tim and I. Thank all of you for your continued interest nanos, we continue to.
Execute well on an uncertain environment, we remain really committed to creating shareholder value.
I am confident we've got the right for these details.
Combined with our portfolio and we think we're an attractive markets, we're positioned well for sales growth and.
Margin expansion in the free cash flow that we want to generate so look forward to chatting with you as we go forward and thank you all.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yes.
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Yes.
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