Q3 2022 STAAR Surgical Co Earnings Call
Star Dot com.
Before we begin let me quickly remind you that during the course of this conference call. The company will make forward looking statements. We caution you that any statement that is not a statement of historical fact is a forward looking statement. This includes remarks about the company's projections expectations plans beliefs and prospects.
These statements are based on judgment and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward looking statements.
The risks and uncertainties associated with the forward looking statements made in this conference call and webcast are described in the Safe Harbor statement in today's press release as well as staar's public periodic filings with the SEC.
Except as required by law STAAR assumes no obligation to update these forward looking statements to reflect future events or actual outcomes and does not intend to do so.
In addition to supplement the GAAP numbers, we have provided non-GAAP adjusted net income and adjusted earnings per share and sales in constant currency.
We believe that these non-GAAP numbers provide meaningful supplemental information and are helpful in assessing our historical and future performance.
Table reconciling the GAAP information to the non-GAAP information is included in today's press release.
Following our prepared remarks, we will open the line to questions from publishing analysts.
We ask analysts limit themselves to two initial questions then re queue with any follow ups.
We thank everyone in advance for their cooperation with this process.
And with that I would now like to turn the call over to Caren Mason, President and CEO of STAAR.
You, Brian Good afternoon, everyone and thank you for joining us on today's call.
<unk> achieved 30% net sales growth in the third corner, which reflects strong Evo ICL unit growth in APAC and strong accelerated growth in the U S.
<unk> constant currency challenges and in Europe macro economic headwinds.
In the third quarter Global ICL unit growth was up 40% year over year.
We advanced our patient awareness engagement and market building initiatives for Evo in the U S. During and subsequent to the third quarter highlighted by media campaigns with Global Entertainment Celebrity, Joe Jonas and NBA player Max <unk> and.
And introduced our presbyopia lens Evo veeva to surgeons at our experts meeting preceding the annual Congress of the European Society of cataract and refractive surgeons.
In China, we concluded another successful peak busy season that put <unk> on track to exceed at 25% share of refractive surgery market units by year end.
However, due to tighter COVID-19 restrictions in China, resulting in expected delayed demand in the fourth quarter ongoing headwinds in Europe.
Weakness in the yen and euro and lower other product sales.
We now anticipate total net sales will be approximately $285 million for fiscal 2022, which represents $300 million.
Adjusted for constant currency.
Our fiscal 2022 outlook.
<unk> ICL sales of approximately $272 million.
Representing 28% year over year growth and other product sales of approximately $13 million.
As you know today it is vital that star focus on the significant growth opportunities, we have with our premium Evo products at the same time, our low margin other products business, which represents approximately 5% of sales and consists of cataract IOL.
<unk> <unk>.
<unk> injectors and injector parts.
Increasing supply chain challenges.
As a result of third party materials and supply chain challenges that only affect our other products business, we will no longer be able to support other products as we have historically.
We will continue to support customers of other products through the end of 2023.
As we looked at fiscal 2023, despite the aforementioned challenges we expect to achieve approximately 30% ICL sales growth year over year to approximately $355 million in total company net sales, which contemplates <unk>.
Ltd sales from other products.
We see tremendous growth potential for Evo family of lenses globally, and look forward to continuing our focus efforts and resources on especially large growth opportunity in the U S and Asia in 2023.
Turning back to the third quarter of 2022.
For the third quarter Global ICL unit growth was up 40% year over year.
By geography, we achieved strong ICL unit growth in China up 52%, the United States up 63%, Japan up 40%.
South Korea up, 49% and APAC distributor markets up 47%, all as compared to the prior year quarter.
In the U S. We are pleased with our progress in advancing the adoption of Evo lenses through patient awareness and surgeon engagement.
After our August partnership announcement with singer song writer and actor Joe Jonas We launched Evo brand advertising featuring Joe in the U S. On September 26.
The campaign included targeted geographic and multichannel advertising to our core 21% to 35 year old targeted population on Youtube Instagram Snapchat tick tock display advertising and search engine marketing.
Last month, we announced our partnership with NBA player Max Strewth, a sharp shooter for the Miami heat.
Max is another example of a person with him IOP of prescription of less than minus five diopters, who had evo lenses implanted and is now thrilled with his new 2010 vision, which is better than 2020.
Max joined other Evo brand ambassadors in the U S, including a top model.
TV share.
Style expert and blogger of fitness and wellness coach and others, who are helping to inform potential patients.
The benefits of Evo based on their own Evo experiences each of our ambassadors speaks to potential evo patients with a unique voice that we believe will continue to build momentum and contribute to Evo is broad success in the U S.
Youtube is the second most popular search engine for our target audience in August we launched our Evo ICL educational series on Youtube, which is now expanded to eight videos as we added individual videos about Joe in Max's decision to choose Evo.
The Evo ICL channel on Youtube is now approaching 6 million video views.
<unk> forward, we will continue to partner with new micro macro and celebrity Evo brand ambassadors in the U S. Since we have experienced through our earlier partnerships that we can successfully expand our engagement with potential patients.
We are also engaging with U S. Refractive surgeons our goal is to accelerate education of our lens. So that surgeons may increasingly transition the mix of vision correction options or entire practices to lens based solution with our evo family of lenses.
As of today, we have trained and certified over 550 U S. Surgeons on Evo since FDA approval approximately seven months ago.
We remain on track to meet or exceed our goal of training and certifying 600 U S surgeons on Evo in 2022.
Please take note that quote the number of surgeons trained unquote is just one of the metrics, we establish manage and measure for surgeon and patient engagement. Our U S. Commercial organization and Star management is working diligently to assist patients in there.
Journey for visual freedom from glasses, and contact lenses and to assist surgeons in their confidence and desire to offer the evo lens based solution to appropriate patients seeking visual freedom.
We're focused on transforming the refractive industry for qualified patients to when Evo lens based industry.
We are pleased to report accelerating unit growth in the U S up 63% year over year in the third quarter and up from 36% in Q2.
Anticipate unit growth in the U S will further accelerate in the fourth quarter to approximately 100% year over year.
Innovation and strengthening the moat around our business remains a strategic imperative for STAAR.
This includes potential expansion and enhancements of our Evo lenses to new indications and execution of other R&D clinical and regulatory pathways to get our existing and next generation products to market and two certified surgeons.
As we look to fiscal 2023, our outlook is for a strong trajectory of growth for Evo ICL.
Continued market share gains.
Prudent investment growing earnings and many happy new Evo ICL patients and surgeons Patrick.
Thank you Karen and good afternoon, everyone.
Total net sales for Q3 2022 were $76 million.
Up 30% as compared to $58 4 million of net sales in Q3 2021.
30% year over year increase in Q3 2022 net sales is attributable to a 32% increase in ICL sales, which represented 95% of total company net sales in the quarter.
On a sequential basis Q3, 2022 sales were down 6% from Q2, 2022, which is similar to the year ago step down in sales from Q2 to Q3.
Q3, 2022 reported net sales included an approximate $4 million negative currency impact as compared to the prior year quarter due to changes in constant currency, primarily the Japanese yen and the euro.
Constant currency net sales for Q3, 2022 would've been approximately $80 million.
37% year over year.
For the nine months ended September 32022 reported net sales include the $9 million negative impact from changes in constant currency as outlined in the constant currency table in today's earnings release.
We currently anticipate approximately $65 million in net sales for Q4, 2022, which contemplates tighter COVID-19 restrictions in certain cities in China, resulting in unexpected delay demand in the fourth quarter of approximately $5 million.
Ongoing headwinds in Europe of approximately $2 million weakness in the yen and euro since our August 10th Q2 earnings call of approximately $1 5 million and lower other product sales of approximately $1 $5 million.
Turning back to Q3 gross profit was $60 5 million or <unk> 79, 5% of net sales as compared to gross profit of $45 3 million.
Or 77, 6% of net sales for Q3 2021 60.
At $63 9 million or 78, 8% of net sales for Q2 2022.
The 190 basis point year over year increase in gross margin is due mainly to geographic and product mix, partially offset by increased period costs associated with manufacturing projects.
The sequential increase in gross margin was 70 basis points from Q2 2022. This is primarily due to geographic and product mix and decreased inventory reserves, partially offset by increased period costs associated with manufacturing projects.
For Q4 2022, we now expect gross margin will be approximately 80% of net sales.
Moving down the income statement total operating expense for Q3, 2022 was $46 8 million as compared to $37 5 million in Q3 2021.
And $46 9 million for Q2 2022.
Taking a closer look at the components of operating expenses G&A expense for Q3, 2022 was $14 million compared to $11 million for Q3 2021.
$14 million for Q2 2022 a.
The year over year increase in G&A is due to increased compensation related expenses facility costs and outside services.
We continue to expect G&A expense will be approximately $15 million for Q4 2022.
Selling and marketing expense was $23 1 million for Q3 2022.
Care to $82 million for Q3, 2021, and $24 2 million for Q2 2022.
The increase in selling and marketing expense for the prior year is due to increased trade shows the sales meeting.
Advertising and promotional activities travel expenses and compensation related expenses.
The sequential decrease in selling and marketing expense.
Q2, 2022 is due to decreased marketing promotion and advertising expense, partially offset by increased trade shows sales meetings compensation and travel expenses.
We now expect selling and marketing expense as a percent of sales will be approximately 35% to 40% for Q4 2022.
Research and development expense was $9 6 million in Q3, 2022 compared to $8 3 million for Q3 2021.
And $8 6 million for Q2 2022.
The year over year increase in R&D is due to increased compensation related expenses.
Sequential increase in R&D from Q2, 2022 is partially due to increased post approval study clinical trial expenses.
Now expect R&D expense will be approximately $10 million for Q4 2022.
Operating income in Q3, 2022 was $13 7 million or 18% of net sales as compared to $7 8 million or 13, 4% of net sales for Q3 2021.
We continue to expect operating margin for fiscal year 2022 will be approximately 15%.
Our team continues to be proud of our ability to drive very high levels of sales growth, while expanding profitability.
For Q3, 2022, net income was $10 3 million or 21 cents per diluted share compared to net income of $6 million or 12 cents per diluted share for Q3 2021.
On a non-GAAP basis adjusted net income for Q3, 2022 was $18 1 million or <unk> 37 per diluted share compared to adjusted net income of $10 3 million or.
Or 21 cents per diluted share for Q3 2021.
A table reconciling the GAAP information to the non-GAAP information is included in today's financial release.
We now expect our fourth quarter effective tax rate will be approximately 20% subject to no change in our valuation allowance.
Turning now to our balance sheet, we implemented an investment policy for a portion of the growing cash on our balance sheet.
The primary objective of our investment policy is capital preservation, while maximizing return on investments through AAA to a minus investments discussed further in todays 10-Q.
The investment policy resulted in start shifting a portion of our cash to high quality U S treasuries and commercial paper with shorter maturities.
This did result in additional gains and interest income in Q3 2022.
Our cash cash equivalents and investments available for sale totaled $224.
$7 million as of September 32022, as compared to $202 5 million at the end of Q2 2022.
In Q3, 2022, we generated $24 $1 million of cash from operations and invested $6 $3 million in property and equipment.
We remain on track to invest approximately $20 million for the full year fiscal 2022 on Capex, primarily to support manufacturing capacity expansion.
We also continue to anticipate generating positive cash from operations in Q4, 2022, and ending the year with a higher cash cash equivalents and investment balance in fiscal 2021 with regard to foreign exchange rate headwinds when compared to our initial fiscal 2022 full year revenue guidance in January of this year.
Now estimate an approximate $15 million negative impact on full year fiscal 2022 net sales.
Normalizing for these FX headwinds results in constant currency net sales of approximately $300 million.
For fiscal 2023, as we complete our initial planning and budgeting. We currently believe we can achieve ICL net sales growth of approximately 30% year over year.
Which contemplates the continuing challenging macroeconomic environment in Europe , a lessening impact of Covid no significant changes to foreign exchange rates and little to no sales from our other product business, which is more than offset by a strong trajectory of growth in the Asia and U S market.
Finally star will be participating in several investor conferences and events in the coming weeks.
<unk> the Stephens annual investment conference in Nashville, Tennessee on November 17th.
<unk> virtual ophthalmology day on November 29.
And the Stifel Investor Bus tour in Newport Coast, California on December 13th.
We look forward to meeting with many of you at these events.
This now concludes our prepared remarks, operator, we're now ready to take questions.
Absolutely we will now begin the Q&A session, if you'd like to ask a question again. It is star one on your telephone keypad in star two to remove that question.
As a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking your question.
Our first question today comes from the line of Anthony Petrone with Missouri Mizuho Group Anthony Your line is now open.
Thanks, and I hope everyone's doing well.
I'll keep my two questions to the <unk> implied outlook as well as some of the.
Statistics that was thrown out there for 2023 so.
So when we look at the implied ICL guide for <unk> It looks like.
$63 million to $64 million as implied in there were several headwinds.
Called out currency delay.
Delays in China shipments, maybe to just provide a little bit more color on how those headwinds are broken out.
And then in terms of the implied U S outlook, you had called out a 100% growth in units, but we're missing sort of how we should translate that into dollars and then I'll have one quick follow up on 23.
Okay.
Yeah.
Hello. This is Patrick Anthony when I kick off I think Karen beyond having some connection issues at the moment.
So the answer to your question.
Thank you Karen if you could get on there. Please jump in to answer your question I tried to highlight in my prepared comments. So you are right.
What we talked about and what you described is generally in the right direction, we guided to $65 million and very little contribution from the.
The other products, which is our legacy business and then I did highlight in my prepared comments.
We saw about $5 million of what we think is delayed revenue related to the tighter COVID-19 lockdowns in China, a couple million dollars related to European macroeconomic factors.
Million and a half on the FX side since our August 10th earnings call in Q2, and then another million dollars half related to the <unk>. So we try to bridge that gap and provide as much transparency as we could.
And then just the follow up would be as we bridge it to 'twenty three at $355 million.
Predominantly mostly ICL.
Certainly calls for healthy growth year over year.
Just wondering if you can provide a little bit more color geographically.
What is contemplated in there for China growth for instance.
Assuming we still have some lingering headwinds from COVID-19 into 'twenty three and then when we think about the rest of the geographies of course U S is in the launch phase and then we also have headwinds in Europe. So just how should we be thinking about the geographic makeup in 2023.
Hi, Anthony this is Karen I'm happy to be with you today I had a little bit of a connection issue.
So with regard to looking into it thank.
Thank you looking into 2023.
We believe that growth in China will shell on a unit basis exceed that 30% range.
We believe as Patrick stated this is delayed demand largely due to the fact that the recent election.
Has for a number of individuals.
Provided some concern about.
How COVID-19 would be handled it seems to be a I a perception.
That COVID-19 might in fact.
The lockdowns might in fact be a little more challenging.
So I think.
What we're hearing is that our big customers are hospitals or clinics are.
<unk> very very much.
Looking forward to 2023, there is a belief that it's on social media hasn't been validated yet.
That in fact, the Covid Lockdown principal will be.
Changed.
And more favorable in terms of freedom of movement within China. So I think bottom line. We can look them in 2023 for a resumption of great demand.
With regard to the U S. We're talking about very strong growth.
We're talking way above this year's growth in terms of percentages.
We expect that within 18 months.
That the U S market will also be able to.
Performs similar to China in terms of market share wins.
With regard to Europe , we think that's a little foggy or in terms of when we expect Europe to really get out and they predicted recession, which seems to have a little bit of a challenge.
But again I wanted to stipulate that we are in a growth mode. In every market. We are stagnant nowhere. It's just win as demand is going to be at its greatest.
In light of the macroeconomic trends some of the political challenges et cetera, but overall, we see nothing that blue Sky had.
Thank you very much I'll get in queue. Thank you.
Thank you Anthony.
Our next question today comes from the line of Margaret Kaczor with William Blair.
Your line is now open.
Hey, good afternoon, everyone and thanks for taking my question.
I wanted to follow up just to start on the China comments you know it.
It could be wrong, but it seems like that's just the first time at least I've seen you guys kind of mentioned the Covid lockdowns in the in the three years.
Maybe as the presidential election, but maybe any other commentary you can provide on what it could indicate for 2023 is it pulling back.
And not only delaying but what's the base that we should look at I guess for that for that 30% growth.
Thank you Margaret for joining us today the basis for that 30% growth is built on what we know already.
Contractually with strategic agreements as well as focus of the team on all the critical critical accounts in the major markets.
The fact that we are preparing with the appropriate amount of what are our toric lenses, which continue to grow in demand even above our historic growth.
We already are aware, where the hospitals and clinics are planning for 2023, as we plan along with them. The reason why the fourth quarter has a question Mark.
Because right after the election over the last week to week and a half there has been behaviors by consumers and employees such as you saw may have read about Fox Con, which is making people a little hesitant about how the government may react to that freedom around COVID-19.
And what can happen if you happen to be in the wrong place at the wrong time with an outbreak.
I end up not being able to make at home. These kinds of concerns are different than what.
What we experienced in the other COVID-19 challenges throughout the last two and a half years. So we've decided rightly to be prudent just shift the right amount of inventory to prepare for a strong 2023.
Okay, great I appreciate that color.
And then let's let's maybe shift to the U S. The 550 surgeons are trained at this point, obviously, a very good number.
It seems like maybe you're pointing towards more of an inflection in the back half of the year and so I think maybe you can tell me, whether I'm right or wrong on that and then.
Any color on the profile of the $5 50.
The practices that they're in and whether or not there are plenty of them converting maybe a large portion of patients to evo.
Just adding it is an option for those that aren't eligible for lasik or smile.
So in the United States, we believe that the enthusiasm for this expansion of the U S market, which we believe will happen with Evo lens based technology is just beginning so we are training the most interested.
Surgeons first obviously the ones who have committed from the very beginning just signed a strategic agreement with star and want to get started as soon as possible.
Just a personal note the other day my husband and I went to a standing surgeon in San Diego, Dr. Sandy Feldman.
And it was fun because when we got to the door and there was a major Joe Jonas poster.
Florida ceiling with people gathered around it and I do not exaggerate.
A lot of enthusiasm by her entire team and this was just on my personal visit.
You can imagine that this is being replicated around the United States and so in terms of moving the business model in the right direction that takes a little while because youre going from a laser based practice to lens based practice and as a result of that when we talk about training surgeons and how quickly there.
Going to move their business over to lens based Evo you know it varies but we've found everywhere else, including our largest markets around the world that within 12 to 18 months you start to see some really strong movement by some of the largest providers.
Around those major markets. So our expectation is in 2023, well have really really strong growth, we still want to be 10% of the market by the end of next year going into 2024 and 20%.
By 2025. So these are big numbers, but we believe we're going to meet them and we think that you know the rollout as it has been over the last several weeks, especially continues to be very strong.
Thanks, guys.
Thank you.
Our next question is from the line of Bill <unk> with Canaccord, Phil Your line is open.
Hi, Karen Patrick It's John on for Bill Tonight, Thanks for asking a question.
Actually I wanted to follow up on Margaret's question could you talk about this early users have you been able to convert any exclusive ways are only clinician and do you see practices today, especially those ways are only users do they have the infrastructure and facilities today to support doing the procedure or they need to build those out Phil. Thanks.
Thank you John .
So it really depends on their practice.
In terms of whether or not they have a strong cataract practice that theyre doing premium cataract lenses, assuming they've never done evo lenses, even in the previous Disney N type of lens.
So, let's say that you are not doing a lot of intra ocular procedures, it's probably going to take you a little longer to move your practice model and your clinical confidence than it will be for those surgeons, who are very comfortable in the eye either having used our evo.
Lenses known as busy in before.
<unk>, they're very good at refractive lens exchange premium cataract lenses et cetera.
So it you know.
It varies but there are a number of surgeons, who are moving aggressively to go from maybe not all lasik base to all in space that quickly, but certainly from a mix of procedures to weigh more evo so that I would say we'd identified probably the <unk>.
<unk> pick up and the greatest users we currently have.
That's really helpful. Thank you.
I should be thinking about Q4, and where you've spoken about China and the softness there and setting up for 2003.
Are there any updates the backlog that was existing.
How can you use this period.
Able to catch up by the year end.
Yes, so first of all I, just and I appreciate.
<unk>.
We're reporting 40% growth quite often that it appears that Q4 is soft it's not shocked we're still looking at China, 22% to 25% growth of units.
It's just not going to be 30 to 35 in the fourth quarter, while were delayed as people are trying to figure out how this COVID-19 challenge plays out in terms of you know what we expect going forward. It is that these strong growth numbers will continue.
Okay. Thank you and then just sneak one last one into the other product discontinuation.
I noticed that product line was important to some kols surgeons do.
Do you expect any impact to <unk> because of that phase out. Thanks again for taking all of our questions.
No we do not the users.
Our I O L and injectors and injector parts.
They are at this point very happy with Starz lens that we are going to make sure as we have as we moved out of the Iowa business in other markets that there is a long lead time and that we're very supportive to provide inventory until they find alternative sources for.
Iowa lenses and injector parts, we're really talking about two markets.
And really.
Our hope is that the ICL business will be even stronger in conversation in those markets, where Io business has really been not a focus for us for a long time a bit of a downward cycle. So we're only going to be talking positives going forward and we see our ICL business.
Picking up just fine in those markets as well.
Thanks, Ken.
Thank you.
Question is from the line of sack liner with Jefferies.
Your line is open.
Hey, everyone. Thanks for taking the question.
To touch on the U S market.
It looks like.
We'll hit the two those released it looks like U S was flat sequentially.
This quarter can you just give some color on performance in the quarter in the U S and how we should be thinking about it in the fourth quarter.
So Patrick why don't you take that one I do not believe it was flat sequentially.
You are correct. So let me go pools, maybe see what youre seeing that but I know, we were up actually on revenue closer to 75% year over year.
I need to go look at the sequential again to double check that but as Karen said in her prepared comments, we expect unit growth to be going from 66% year over year in Q3 to a 100% in Q4.
And then as you said, even as we go through 2020 Three's continue to see even larger market share gains as we move through 2023.
I apologize I missed most of the looking at the wrong thing.
And then I guess just looking at.
The.
China performance.
We look at.
Procedure volumes through the quarter and how should we think about it through 2023.
Okay.
So as I said, we expect that procedure volumes in China in the fourth quarter will be.
From a growth trajectory, 22% to 25% and then 2022 to 2023, 30% plus.
So you know that we consider that strong healthy growth.
Okay. Thanks for taking the question.
Thank you.
Our next question comes from the line of Ryan Zimmerman with <unk>.
Brian Your line is open.
Good evening and thanks for taking the questions just a follow up on the last question a point of clarification I think your revenue in the second quarter was $3 87 to based on the Q and you guys did 3873 in the U S.
Maybe some of Thats injector sales.
I appreciate that the units are up.
But I guess.
Question goes to just the <unk>.
Fact that U S growth sequentially on the Eve of launch Karen If you could just speak to that end.
I think implied with the 100% of unit growth I'm coming out to about $5 3 million for the U S in fourth quarter and just.
Wanted to check my math on that and see if thats, what youre kind of expecting for the U S in fourth quarter.
Yeah. So if you check our math I turn it over to the <unk> Sky and finance and that's Patrick.
Okay.
Yes, so there's a little bit of noise in there on the domestic side related to.
Perhaps some Canadian and North America, So you can't quite get apples to apples on that one.
In terms of your math of looking at Q4, I would say directionally.
You're headed in the right direction.
As Karen has said we expect to get.
Greater market share gains as the product is in the market longer.
As a reminder, the fourth quarter that we're currently in and this is only the third quarter of commercialization and so as we've been very consistently saying, we expect to see bigger gains as we move through 2023, and certainly as we exit 2023 in terms of contribution from the U S.
Okay.
I appreciate that color and clarification.
On the on the shares number to the $3 55.
I would appreciate your thoughts either Patrick or Karen around just the impact of units versus price and how much price do you expect to pick up maybe next year.
The U S becomes a larger proportion of sales relative to the unit expectations that your.
Got into on an underlying basis.
Patrick.
Sure. So on that one what I would say is that.
We have a very healthy asps in the U S.
In terms of our Asps we.
We don't see a lot of pressure on asps at all because of the nature of our strategic alliances globally, we know exactly what we're going to get in terms of pricing and that set for the forthcoming year, where we do see a mixing ASP is going to really come from either product mix, which where we see more toric, our spirit towards being a higher ASP.
And then of course, the geography mix, which is what your question was on the direct side for the U S. Still the U S is a relatively small piece of the revenue contribution. So it's really not going to move the needle that much.
<unk> fact, if you look at our revenue in the U S. As we said we were 66% on units and actually higher on revenue growth year over year because of the higher asps. So.
That answers your question Ryan.
As we said, it's still a relatively small piece of.
The contribution but as we move through 2023, then I think those questions will be a lot more viable in terms of modeling.
So just a clarification on the $3 55 in the <unk>.
<unk>, 30% growth essentially eclipsed 30% unit growth or there is some price impact in there as the other sales diminish.
Yes, we would expect a slightly higher unit growth, but I think to your point as the U S is starting to come on board with a higher ASP that differential is perhaps not as great as it's been in the past when we were more concentrated with lower.
Asia market pricing such as China.
Okay I appreciate the color. Thanks, Thanks for taking my questions of course.
Thank you Ryan.
We are showing no more questions in queue. So I'd like to now turn the call back over to Karen for closing remarks.
Yeah.