Q2 2022 Establishment Labs Holdings Inc Earnings Call
Good afternoon, and welcome to establishment Labs' second quarter 2022 earnings call at.
At this time, all participants will be in a listen only mode. At the end of this call. We will open the line for a question and answer session and instructions will follow at that time.
As a reminder, today's call is being recorded and I will now turn the call over to Raj Dunaway, Chief Financial Officer. Please go ahead Sir.
Thank you operator, and thank you everyone for joining US with me today is one is <unk>, our chief Executive Officer.
Following our prepared remarks, we'll take your questions before we begin I would like to remind you that comments made by management. During this call will include forward looking statements within the meaning of federal Securities laws.
Statements on established Labs' financial outlook, and the company's plans and timing for product development and sales.
These forward looking statements are based on management's current expectations and involve risks and uncertainties are.
A discussion of the principal risk factors and uncertainties that may affect our performance or cause actual results to differ materially from these statements.
Encourage you to review our most recent annual and quarterly reports on Form 10-K, and Form 10-Q, as well as other SEC filings, which are available on our website at established relapsed dot com.
As a reminder, establish a larger Stephen an investigational device exemption from the FDA from a TV implants and is undergoing a clinical trial to support regulatory approval in the United States, we continually seek to expand the geographies in which our products are regulatory approved please check with your local authority for specific product availability.
The content of this conference call contains time sensitive information accurate only as of the date of this live broadcast August eight 2022, except as required by law established labs undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances. After the date of this call.
It is my pleasure to turn the call over to our CEO Juan Jose.
Thank you Raj and good afternoon, everyone. I hope everyone is healthy and continues to remain safe.
Revenue in the second quarter of 2022 totaled $41 2 million.
9% increase over the second quarter of 2021. This is a new quarterly record for our company.
Excluding the negative impact of foreign currency changes our growth in the second quarter would have been approximately 33% our strong market share gains continued to be driven by our singular focus on women's health and wellbeing, our commitment to bring highly differentiated technology based on science and patient centric.
Design is wholly unique in our industry. Most importantly, with this commitment to innovation, we are expanding existing markets in creating new categories that we will sustain our growth for many years to come.
Raj will provide additional detail on our second quarter performance and our outlook in a moment before I turn the call over to him I would like to highlight several recent events in July we released our annual sustainability report, we think about sustainability a little differently at establishment Labs. Our company was founded on the undersea.
Standing that the legacy of our industry cannot be our future. We are defined by our commitment to offering clinically safer and better options to women in their journey of breast health and wellness sustainability at its score is key to our continued growth and success. We recognize how privileged we are to lead the transformation of this industry.
Through our commitment to women's health.
Our focus in the future that is built in positive social and environmental practice. Most importantly, it is about the women put their trust in us by choosing whichever by honoring distrust. We believe our business is in a strong foundation and our strong financial results are sustainable.
Victor Carolyn Glicksman, the principal investigator in our U S. IDE study presented two year data from the primary augmentation cohort of the study in April the results matched exceptional performance, we have seen over the past 11 years would be over 2 million Motiva implants, we have sold around the world.
We continue to receive very positive feedback on the results and the interest it has sparked and clinical community is tangible as we announced last week. We have completed the remaining surgeries in the reconstruction cohorts of the trial our U S. IDE study is now fully enrolled and we are moving diligently through <unk>.
Follow up.
On the aesthetic cohorts as we've previously communicated we are pursuing a modular PMA submission back I'm pleased to announce we have submitted the third module to the agency for review.
This module is related to the manufacturing of our implants, we look forward to submitting the fourth and final module to the FDA in the fourth quarter.
In our static breast reconfirm <unk> the launch of our Motiva flora tissue expander in Europe , and other CE Mark countries is ongoing.
Florida has many advantages over other commercially available tissue expanders, including first of its kind RFID enabled port which allows for MRI imaging without artefacts during the time when expander used up dermis that Jimmy.
<unk> non magnetic floor it potentially opens new options for radiation oncology treatment during this stage of recovery.
Florida also features our patent itself friendly smooth silk surface technology and the early users have noted improved patient comfort and healthier capsule formation with this unique tissue expander.
We're expanding the markets in which Florida is available adoption will take time, but early efforts have been encouraging and that too I believe that we can help support the woman in the breast reconstruction journey surgeons are adopting our technology with many making floor at their expander of choice.
Laura is only the first step in our static breast Recon initiative, where establishment labs will offer tools and techniques that allow women to receive reconstructive surgeries that achieved the aesthetic ideals to which day aspire and work to democratize breast reconstruction worldwide. We look forward to sharing more with you on these efforts in the future.
In our consumer franchise EMEA, our minimally invasive injectable breast enhancement procedure, we continue to wait for regulatory clearance in Europe for the tools that are part of the <unk> system. The.
The migration in Europe from the MTB to the MTR standard has created some gaps in regulation for the industry and this is adding to the regulatory timelines as we wait for clarity we continued to build our direct to consumer capabilities centered in our women's health hub in Barcelona.
We also continued to perform EMEA cases, as well as track the original 100 patient cohort that we completed in April of last year.
We have 100% follow up of this first group of patients and the outcomes continued to support our belief that this approach will transform breast aesthetics and bring a new base of customers.
Training of new surgeons in anticipation of our commercial launch set to expand in the coming months.
Overall, our early experience continues to support what we found in our market research, namely that the new category created by EMEA could grow to more than $5 billion globally with approximately half of the opportunity.
From new patients that had not previously considered breast enhancement.
Our clinical and commercial efforts in China are ongoing and we continue to make progress in the regulatory process based on the updated expectations for the timing of regulatory review given the effects of Covid related restrictions in China, We expect approval form of G. By in this market in the first half of 2023.
I will now turn the call over to Raj to cover our financial results.
Thank you Juan Jose.
Total revenue for the quarter was $41 $2 million reported revenue growth in the second quarter was 28, 7%.
Foreign currency changes reduced our second quarter revenue by approximately $1 $5 million.
Excluding the impact of currency revenue growth in the quarter would've been 33, 3%.
Direct sales were approximately 41% of this total while distributor sales, which can fluctuate based on changes in inventory levels and the timing of Reorders made up the balance.
From a regional perspective sales in Europe comprised approximately 32% of global sales.
Asia Pacific and Middle East was 33% and Latin American made up the balance.
Brazil, which is our single largest market globally accounted for approximately 16, 3% of total quarterly sales.
Our reported gross profit for the second quarter was $27 5 million or 66, 7% of revenue compared to $21 5 million or 67, 1% of revenue for the same period in 2021.
Gross margin was primarily the result of changes in foreign currency.
Overall average selling prices in the second quarter were down slightly from the first quarter of 2022.
SG&A expenses for the second quarter increased approximately $11 2 million to $33 million compared to $21 $8 million in the second quarter of 2021.
Increase in SG&A in the second quarter resulted from continued normalization of business practices. Following the disruption from the global pandemic and our perforation of investment in new growth initiatives like Mia.
Preparations for a launch in the U S.
R&D expenses for the second quarter increased approximately zero point $6 million from the same quarter, a year ago to $4 $9 million.
R&D expenses will fluctuate quarter to quarter based on the timing of clinical trial and other expenses.
Total operating expenses for the second quarter with $37 9 million, an increase of approximately $11 $8 million from the year ago period.
Increase this period was again due to primarily to the normalization of activity and spending relative to year ago as well as the investments in growth initiatives.
Net loss from operations for the second quarter was $10 $4 million compared to a net loss of $4 $6 million in the year ago period.
Our cash position as of June 30th was $91 $3 million this compared to $53 $4 million at the end of the previous year.
The increase in cash in the quarter with a net result of the first $150 million tranche and the new term loan we secured on April 26th.
Net of fees and the repayment of our previous loan the new facility increased our cash balance by approximately $72 million.
As a reminder, the terminal has three additional tranches totaling $75 million of non dilutive capital. We can access on the achievement of revenue regulatory milestones.
Cash used in the quarter included approximately $12 $4 million of investments in our new manufacturing facility that will expand our capacity more than half the world's market.
Under our current forecasts to cash we currently have on hand, as well as the additional capital available to us under our credit facility can allow us to achieve cash flow profitability, while still funding our growth initiatives.
We are maintaining our sales guidance for 2022, and a range of $155 million to $165 million, representing estimated annual growth of 20% to 30% as we can.
On our second quarter results there was considerable momentum in our business and we expect that this will continue even in the current macro environment.
It is important to note that we are maintaining our guidance despite a steeper headwind from foreign currency.
If current rates hold currency will impact reported revenues by approximately three 5%. This is about a point worse than our last update in early may.
As it relates to our supply chain, we have seen so far minimal impact on our results were not immune to the challenges. Many global companies are experiencing and we anticipate that those will remain for the rest of the year.
If you look down the rest of the P&L, we continue to expect to see spending levels increase as we prioritize investment in a significant number of development and commercialization programs we have underway.
The timing of expenses can make our quarterly results less linear but overall given our strong top line growth operating expenses as a percentage of sales should trend down over time, even as we increased strategic investments.
We believe our company remains in a very strong competitive and financial position and with that I will turn the call back over to Juan Jose.
Thank you Raj as.
As we invest in the significant growth ahead, we are mindful of the uncertain global environment. Our business has considerable momentum, but we are cognizant that the macro environment is unsettled because of this we are taking steps to prioritize spending on our growth initiatives and to be more judicious about spending broadly we are in a unique.
Position, given our strong sales growth as well as a number of significant opportunities in front of us, but we are using this current environment to review and prioritize our investments to the areas of highest return.
The last few months have strengthened the foundations of establishment labs.
<unk> solidly in our commitment to women's health and wellbeing and it is well within our reach to become the leading global company in breast aesthetics and reconstruction we.
We will continue to transform our markets and doing so and we will create new categories for growth and more importantly, create new options for women around the world.
I will now turn the call over to the operator for your questions.
Thank you at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Confirmation tone will indicate that your line is in the queue. You May press star two if you would like to remove your question from the queue.
And for participants using speaker equipment, it may be necessary to pick up your handset before pressing any star keys.
One moment, please while we poll for any questions.
Our first question comes from the line of Chris Cooley with Stephens. Please proceed with your question.
Good afternoon, and congratulations on the record quarter I appreciate you taking our questions here today.
Juan Jose and Raj if I might just my first question I'd like to maybe focus on growth.
And clearly the Companys outpacing the global market rate of growth right now.
I would appreciate any color that you could provide as you think about.
The guidance range of $1 55 to 165 here kind of what that implies in the back half how much of that is share gains relative to market growth I'm, just kind of curious what the underlying base assumption is for the broad market.
And then why you are confident in that kind of continuation of well above market growth and then I've got a quick follow up thank you.
Yes. Thank you Chris So again we.
We see establishment labs, performing above expectations and.
We feel very strongly about the way our team is able to work through any type of challenges and if you take for instance, Brazil as an example.
So amazing performance coming out of Brazil, our market share.
Continues to increase we're hovering.
Bringing somewhere around 35%.
Market share in that.
Very competitive price sensitive market, even though our pricing has increased 14% in constant currency in that market. So it shows you the strength of our technology, and how medical education and being able to train surgeons around the world into best Stickney.
<unk> and best usage of our products is helping us move through.
With.
<unk> market share gains.
I think thats happening and even though the situation.
Growth is of course, a question, we think that we will continue gaining market share from our competitors and of course, we have new markets that are coming in that will allow us to of course agree on the expansion with geographic.
In the U S and in China.
I appreciate that additional color and then maybe just one more for me on the operating side and I'll get back in queue.
Raj you provided some incremental color there on the roughly $11 million step up.
I think versus most of us for modeling for SG&A in the quarter.
Specifically more so sales and marketing.
I know in your prepared remarks, you stated that you expect those expenses to continue to accelerate throughout the year, but.
Can you help us kind of think about that a little bit, especially with China looks like it's been delayed a little bit now.
The early next year kind of not only the gating but.
Maybe the kind of the underlying.
The implications there for the burn rate I know thats going to be a topic of discussion here. So does it peak.
We're exiting the year and then you start to see a drawdown or does this carryover.
Into the first half of 2023, just because of the modest push out there on China. Thank you so much.
Yes, thanks for the question Chris.
Generally speaking if you look at all of the opportunities in front of us as a company, we're clearly investing in those.
In those opportunities right, so not only preparing for U S launch, but preparing for me.
You mentioned the push out of China, China is a distributor market for it so our investments there well.
Well.
They will contribute it is less than some of the other things we're working on and so I think when you look at the business, we're getting ready for some significant.
Opportunities that were about to tap into over the next couple of years and so we're spending on those.
Having said that though we do expect our spending as a percentage of sales will trend down over time.
Even this year if you look at where we are in the first half relative to where we ended up for the full year of last year, our operating expenses as a percentage of revenue are still slightly below that and generally.
As we've commented in the past.
The next couple of years in particular this year and next year people should not expect a lot of leverage from us, but as we get into the U S and we start to tap into some of these opportunities that leverage will start to flow in earnest. So.
Again, just appreciate that we're investing in and all the good things to come for us as a company.
Thank you and congratulations.
And our next question comes from the line of Zach <unk> with Jefferies. Please proceed with your question.
Hey, Thanks for taking the question just one from me on Mir.
Can you talk about how the procedure has evolved and what you guys have learned over the last year or so and that procedure.
Okay.
Yes, Thank you Zack.
So if we think about the first knee procedures that took place in Japan in 2019, and the procedures are being performed today.
I can tell you there is just tremendous.
Improvements in the patient experience.
Since the beginning we've had.
Our economics to diamond implant with a superb silicones.
<unk> chemistry, and mechanical properties that allow that implant to be injected with the procedure itself is what has been really a regulation because we are able to do this procedure without dissecting tissue yield way. So we are preserving all the tissue and that's what's allowing patients.
Seems to have very little pain, that's what has allowed us to move decisively away from general anesthesia and Thats whats keeping these patients with the same sensation because we are not touching any of the nerve endings in that breast area. So all of that together really makes for a strong case for us being able to tap into new.
Consumer market and that is mainly women who are not interested in traditional desktop mutation, but are using compensatory behaviors like a padded bra silicon in service or the type of clothing that they may use so we feel very strongly that synergies.
Able to go to market they will make a substantial difference in terms of adding to real new market. So.
It was just in Japan last week and I can tell you the excitement there is tremendous.
We're looking at.
Change the clinics, where we can launch these products as soon as we have the necessary go ahead and.
And I couldnt be happier to see that progress.
Working through all the regulatory requirements in different geographies, and especially in Europe and looking forward to the launch.
Alright. Thanks.
And our next question comes from the line of Josh Jennings with Cowen. Please proceed with your question.
Good afternoon, thanks for taking the questions and congratulations on the record revenue result, and the progress on our submission.
Pathway I wanted to ask Juan Jose just about just any challenges that your business is facing clearly here. The team is executing and navigating through a lot of headwinds but.
What types of challenges as the business facing whether it's reasonable pressures where supply chain employee retention.
Any any categories you can share just in how you how your team is managing through.
Yes, I'll start by saying Josh.
With establishment labs has done over the last few years is to be able to work through the challenges and be able to pivot when necessary find ways and make.
Our numbers.
And I think we've been doing that for the first half of this year, we've seen challenges in supply chain that we've worked through and those challenges and supply chain. I think we don't expect them to come down and I think our team has been really good at working through it but.
Those supply challenges will continue.
On the other fronts, it's been difficult with.
All the difficulties in hiring and turnover rates. So we have engaged into a cultural project internally to make sure that we slowed that down and we're happy to see that the turnover rate of our employees is slowing we are high velocity organization and of course, it's not for everyone but.
Absolutely we feel very strongly about what we are doing to strengthen our team globally, especially when we think about everything that is coming ahead of us.
Our consumer business unit in Barcelona is being built we have a lot of new talent that is coming on board and that is going to help us in the lunch at Neal and of course, you know when it comes to Florida, we're tapping into a new type of.
Our business breast reconstruction requires different skills and again, it's something that we're working through to make sure that we have what it takes.
Furthermore, I think thats.
It's a complicated year on the regulatory side because you have all these different challenges and they are not unique to establishment labs. These are things that different companies are experiencing like you know what happened in China with the Lockdowns is slowing the regulatory process for for many companies, what's going on with the move from the NPD.
The MBR in Europe , as well as slowing down statics in general when it comes to new products. So we're working through those challenges and hopefully we can continue doing this type of performance for the rest of the year.
Thanks for all those all that.
Color.
My follow up is just wanted to ask about.
Building of physician awareness of Motiva in the United States in front of approval.
<unk> meeting was a big event.
For the company in.
Especially after the data was released to your data, but I was hoping to better understand how you feel U S. Plastic surgeon awareness for Motiva has built over the course of this year and then just as we think about the three year data I think the last patient.
And the augmentation.
Set of cohorts.
Should finish to follow up this month, but could we see three year data presented at a plastic surgery meeting.
It is this year.
Any help thinking about three.
Three of these would be unlocked and made public would be would be great to understand as well thanks for taking the questions.
Yes.
There is growing excitement around around motiva use plastic surgery community that we have to balance that.
That excitement with <unk>.
Not promoting Motiva ahead of time ahead of an approval.
So with.
More surgeons traveling overseas.
Are able to speak to their colleagues and of course that always brings up the subject of motiva.
As you mentioned the presentation of the two year data at the aesthetic meeting in San Diego was the <unk>.
Land market event.
Actually when you see.
Data presented at <unk>, 5%, capsular contracture rates, 3% rupture or suspected rupture and that's what we've been about.
Over the last 11 years, we've been able to prove that less than 1% device related complications as possible and we continue to prove with data that.
It is done through science and innovation, we do think that.
Some point, we will be able to show our three year data, but our focus right now is on getting the fourth module.
Finalized and sending it over to the FDA in the fourth quarter. So we're not going to get ahead of ourselves.
About specific date for releasing that three year data, but.
Though as well.
Whenever it comes to being transparent with data we know it's always going to be in our favor. So we're going to look for the right opportunity to do so.
Understood. Thanks again.
Thank you and our next question comes from the line of Maria <unk> with BTG. Please proceed with your question.
Hi, good evening and congrats on the strong quarter.
Wanted to ask you first a little bit about the regulatory timelines.
With EMEA tools.
Yes.
Timing in Europe is that specifically just with the MBR transition or is there anything.
In particular that the agency is looking at around the tools themselves and then secondly, what's happening behind the scenes in China. I know you mentioned a little bit of a delay on the timing there would love to hear just whats happening over there.
Yes, Thank you Marie.
When it comes to the tools, we have submitted absolutely everything that we need to submit.
In the MVD to MDA are transition, there's an annex called <unk> 16 and for debt annex they have to set up this.
New requirements and European Commission has not given those requirements. So that's why this is not only affecting us it's affecting the entire statics industry. So we're waiting for those and we hope that as soon as we get them and those are published for the industry. Then we will be first in line to be able to.
To respond to that.
We have done again everything that we needed to do up to now when it comes to China. It is definitely COVID-19 related.
So far this year, we had been making good progress, but I think over the last couple of months as you have.
Seen on the news visiting a lot of Lockdowns and the ability to have <unk>.
<unk> on the progress has.
Basically.
Diminished so that's why we update it.
<unk> to the first half of next year.
Okay. That's very helpful. Thank you for that and then maybe a question for Raj I apologize if I missed that but I wanted to hear if there is anything we should be considering for the back half of the year in Kansas summer seasonality or the like if we consider Q3 and Q4 revenue cancer. Thanks for taking the questions.
Absolutely.
As you saw last year in our third quarter, we saw a meaningful step down from the revenue reported in the second quarter and we expect that same trend will continue this year.
As our business matures, we're not immune to these these seasonal factors and particularly as more people are traveling and things are getting back to normal post the pandemic.
Personality is definitely.
Pronounced here in the third quarter. So so we would again endorsed the idea that we will see some seasonality here in the third quarter. Then we should see a nice step up in the fourth quarter as we saw again last year.
Thank you.
And our next question comes from the line of Amit <unk> with Goldman Sachs. Please proceed with your question.
Alright. Thanks. This is Phil on for Amit and thank you for taking our questions as well.
On the U S I D.
<unk> you guys have been a little bit reticent to provide specific timelines when the FDA is involved them in.
As you said if your willingness to now provide a timeline for module for submission by year end as an indication of increased confidence or what went into the decision philosophically to give a more definitive timeline at this point.
Yes. Thanks for the question I think it's really a reflection.
The interaction we've had with the FDA. We've now submitted as you heard on the call our third module.
The dialogue remains active.
As you know this month in August we're passing three years on the on the augmentation cohorts. So we have the full year three year data set now and so our expectation again based upon everything we're seeing in our interaction with the FDA and how things are progressing as given us the confidence to again endorsed the idea that by year end, we should have everything in for approval.
Okay. That's helpful comment or a question on the on the FX side I believe you commented a couple of hundred basis points worse for the year than you had anticipated at <unk>. If you roll back to <unk> can you remind us when your original guidance was set in dollar terms.
How much worse is FX from a dollar standpoint than you anticipated at the start of the year. It seems to be kind of in the $3 million to $4 million range.
Might actually be a little bit worse than that it was probably closer to $1 million and now we're looking at something closer to $6 million to $7 million on a year.
The functional currency is the main currencies for us are the euro rate and we do have some northern European exposure and some of the.
Nordic countries the pound all visa we can dramatically this year and so it has got a lot worse and I think again it speaks to that.
<unk> of our business that we have maintained the original reported guidance of 22% to 30% despite absorbing.
A bit of additional headwind next year.
That's helpful. Thanks Raj.
And our next question comes from the line of Anthony Petrone with Mizuho Group. Please proceed with your question.
Thanks, Congrats on the quarter, maybe a follow up on the IV study.
And really going back to the current FDA guidance around silly.
Silicone breast implants, and so the standard is still that the.
The FCA once at least three years of data for a PMA submission, but it's still I guess somewhat unclear that they.
Potentially could want to see a little bit.
More data beyond three years again, so it's a minimum of three years of data.
But again the follow up here on just the confidence of getting the fourth module submitted and the PMA and does suggest that three years is sufficient so just wanted to sort.
Sort of take a temperature check on that that guidance specifically around at least three years of data.
And potentially if theyre looking for more data and then I'll have a couple of follow ups.
Yes, Thank you Anthony and yes, the guidance is pretty clearly that is three years of data.
Of course, what we have done in terms of.
Follow up.
Patients, having debt that amazing number above 90%.
Patient compliance is very helpful. Also when you look at the complication numbers. That's also very helpful. Because it shows the strength of our clinical outcomes with the two year data. So we are hitting our three year data.
At 100% in this month so.
If anything I think.
It has strengthened our ability to produce all the data that the FDA needs to approve multibank cats for the U S market.
That's helpful. And then just two follow ups one is.
It is macro related and then just a quick one on FX. So on a macro side just broadly across the markets you compete in.
And not necessarily establishment labs specifically.
But are you seeing some price competition from your competitors.
Perhaps maybe as spending gets tested a little bit either by the patient or physician practices. So are you noticing any price competition out there amongst competition.
And then just on FX.
Step up.
In total spending this quarter.
Some of it sounds like it was adding head count, but certainly there is a translational impact.
There as well so what was the dollar uptick related to FX overall on the sequential pickup in spending thanks.
Yes.
Fair question, Anthony that honestly I don't think I can give you.
Terribly detailed number right so given the.
The fact that we do have quite a bit of our expenses in U S. Dollars, we have quite a bit expensing in Costa Rica, we have expenses in Europe .
There is a natural offset to a lot of our currency exposure for us.
But in terms of an exact number as it relates to our spending I don't have that in front of me here.
But I think as you mentioned for us when we look at spending we are investing in the business right. You look at the number of opportunities in front of us with EMEA, the United States and the other things we're working on and we're standing up a lot of these operations ahead of when we're going to be realizing revenue from them and so youre seeing a natural sort of.
Lack of leverage this year and into next year as I mentioned earlier, but that should start to pay off as we get beyond those.
Launches in the business really starts to generate revenue in those in those new areas.
Yeah, and I think when it comes to when you were mentioning with price competition.
As I said before for instance, we have made significant share gains in Brazil. This year, although in local currency, we are 14% higher than last year.
<unk> position in the premium category net market.
I was in Asia last week, and both in Japan, and South Korea, we have over 50% market share in breast aesthetics, and we continue to be solidly positioned as the premium brand in both markets. So when it comes to the way the market.
Have performed I think what it shows is that over the last decade establishment labs is has moved a what it used to be a commodity industry into an industry based on safety and aesthetic outcomes and when it comes to that I think we continue to prove that we can continue to.
Gain market share, even though our pricing is on the higher end.
Very helpful. Thank you.
And our next question comes as a follow up from Amit <unk> with Goldman Sachs. Please proceed.
Hi, Thanks for taking the follow up with Trillium.
Just running the math I assume most of the currency headwind was in Europe Kevin.
Ill move against the Euro, but even then it looks like maybe performance was a little bit softer in Europe , and then Conversely, Latam strength, if I got the geographic breakdown correctly. So I was just wondering if you could give a little bit more geographic color, if theres any divergence and what's going on in end markets and what's what's causing it at this point. Thanks.
Yes.
Question correctly Youre right, we did see.
Stronger performance in our distributor markets in the quarter.
This is both Latin America, and some Asia Pacific markets, we did see a little bit of a softer.
Demand side out of Europe , but again I think it was mostly that we just have much better demand out of some of these other markets. Brazil is one of the vehicle that was a very strong market for us.
I Didnt mentioned earlier, but the reality is another currency, which were exposed to from Brazil.
So if I'm hearing your question I think your observation is correct. We saw very strong demand in Latin America, and some of our other distributor markets and Conversely that overwhelmed some of the demand we saw in Europe and other places.
Thank you.
At this time.
<unk>.
The question and answer session and I will now turn the call back over to Juan Jose for any closing remarks.
Thank you for joining us on today's call, we look forward to providing our next quarterly update in November .
Everyone continued good health.
Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and have a great day.
Okay.
Okay.
[music].