Q1 2025 Owens & Minor Inc Earnings Call
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Operator: Ladies and gentlemen, this is the operator. Today's conference is scheduled to begin momentarily. Until that time, your lines will remain on music hold. Thank you for your patience.
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Speaker Change: Good day and thank you for standing by. Welcome to the Owens & Minor 1st quarter 2020-25 earnings conference call. All lines have been placed on mute to prevent any background noise.
Speaker Change: After the speaker's remarks, there will be a question and answer session.
Speaker Change: If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad.
Speaker Change: And if you would like to enjoy your questions, press the star one again. Thank you, and please be advised that today's conference is being recorded.
Speaker Change: I would not like to hand the conference over to your first speaker today, Jackie Marcus, Investor Relations.
Speaker Change: Thank you, operator. Hello, everyone, and welcome to the Owens & Minor First Quarter 2025 earnings call. Our comments on the call will be focused on the financial results with the first quarter 2025 as well as our outlook for 2025, all of which are included in today's press release.
Speaker Change: The press release, along with the supplemental slides, are posted on the investor relations section of our website.
Speaker Change: Please note that during this call, we will make forward-looking statements that reflect the current views of Owens & Minor about our business, financial performance and future events.
Speaker Change: Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them.
Speaker Change: However, there can be no assurance that our expectations, beliefs, and projections will result or be achieved
Speaker Change: Please refer to our SEC filings for a full description of these risks and uncertainties, including the risk factors section of our annual report on Form 10K and our quarterly reports on Form 10Q.
Speaker Change: Any forward-looking statements that we make on this call or in our earnings press release are as of today, and we undertake no obligation to update these statements as a result of new information or future events, except to the extent required by applicable law.
Speaker Change: In our discussion today, we will refer to non-GAAP financial measures and believe they might help investors to better understand our performance or business trends.
Speaker Change: Information about these measures and reconciliation to the most comparable GAAP financial measures are included in our press release.
Speaker Change: Today, I am joined by Ed Pesicka, Owens & Minor's President and Chief Executive Officer, and John Leon, the company's Chief Financial Officer [inaudible]
I will now turn the call over to Ed.
Ed Pesicka: Thank you, Jackie. Good morning, everyone, and thank you for joining us on the call today. We hit the ground running in 2025, and we continue to progress forward on our broader long-term strategy.
Starting with our patient direct segment.
Ed Pesicka: We've had a tremendous start to the year. Our top line grew in the mid single digits in the first quarter and are operating income grew by 31% or $14 million, resulting in a 173 basis point expansion.
This exceptional performance was supported by many items.
Let me share a few of them with you.
Ed Pesicka: Over the last year, we made an investment in the sleep journey. The objective of the sleep journey was to streamline the new start process and improve adherence for resupply, making it easier for customers to reorder needed products.
Ed Pesicka: The result of this investment can be seen in the first quarter results which showed a meaningful increase in our sleep starts and high single-digit revenue growth in our sleep supplies for the first quarter.
Ed Pesicka: In addition, over the last year we've invested in additional commercial resources.
Ed Pesicka: This has enabled us to streamline territories while expanding the sales rep's bag, resulting in double-digit growth in three categories.
wound supplies, ostomy, and urology.
Additionally, we continue to identify therapy categories for expansion.
Ed Pesicka: For example, within home respiratory space, we launched an organic expansion into chest wall oscillation therapy.
Ed Pesicka: Finally, during 2024, we began to invest in our already strong revenue cycle management process with the goal of enhancing our collection rates.
These efforts began with a focus in our Byroom Division.
Ed Pesicka: I am pleased to report that these efforts resulted in a record collection rate in Q1. We are now moving the learnings to our Aferia Division and anticipate this program will be completed by the end of the year.
Ed Pesicka: With respect to our planned acquisition of ROTEC, we are awaiting a final decision from the regulators and still expect to close in the first half of 2025.
Ed Pesicka: We have our financing in place and we are ready to move forward.
Moving on to our products and healthcare services site.
Ed Pesicka: As a reminder, in February , we disclosed that we entered into discussions regarding the potential sale of our products and healthcare services segment. We remain actively engaged with a number of parties in the sale process for the segments.
Ed Pesicka: And I look forward to providing more information when it is prudent to do so.
Ed Pesicka: In the meantime, we continue to run this segment with the same level of commitment and attention to detail around serving our customers and delivering high quality products.
Ed Pesicka: I also recognize that the sale process creates a bit of a distraction in the day-to-day execution.
Ed Pesicka: Despite the effort needed to move the sale process forward, there were some great accomplishments in the quarter.
Ed Pesicka: Within our Medical Distribution Division, we saw continued growth in same-store sales and an increase in proprietary product penetration.
Ed Pesicka: In addition, we have begun our distribution network automation efforts to drive long-term efficiencies.
Ed Pesicka: We successfully opened a new state-of-the-art distribution center in Morgantown, West Virginia to serve the state of West Virginia and surrounding areas anchored by a long-term agreement with WVU.
Ed Pesicka: We also recently opened another distribution center in Sioux Falls, South Dakota, to serve the Upper Midwest.
Finally, let me address Taris.
Ed Pesicka: I will start by saying that Owens & Minor we are dedicated to delivering high quality medical products to support patient care.
Ed Pesicka: To date, we have worked extremely hard to mitigate the impact of tariffs to our customers. Through cost reductions, investment and inventory, utilization of our U.S. manufacturing footprints, our multi-country sourcing approach, as well as offering untair of product substitutions.
Ed Pesicka: However, in a business that operates at less than 1% profit margin, we can no longer absorb these costs.
Ed Pesicka: The cost-absorbed to date include the 2024 tariffs on Chinese spatial protection and gloves, ranging from 25% to 50%.
Ed Pesicka: The terror has been implemented in March and April of this year, ranging from 145% for imports from China to 25% for non-USMCA imports from Mexico and Canada, and 10% or more for imports from most other countries.
Ed Pesicka: We anticipate the annual exposure of current tariffs on our products to be in the range of 100 million to 150 million.
Ed Pesicka: Accordingly, we are currently beginning to implement price increases in our PNHS segment that will be effective in early June . We have elected to impact only products affected by tariffs and not blend or use a weighted average method to spread tariffs across product categories.
Ed Pesicka: That said, we are using our diverse manufacturing footprints and our strategic sourcing options to offer our customer alternative products with lesser impact from tariffs.
Ed Pesicka: Our primary goal is to ensure our customers receive the high quality and critical supplies and services that the providers and patients rely on every day.
Ed Pesicka: I'm excited about what's ahead for our company and have now turn the call over to John to discuss our financial performance in the first quarter. John ?
Thanks Ed, and good morning everyone!
John Leon: As they walk through details of the quarter and discuss the outlet for the business, please note that my remarks on today's call will cover only non-GAAP financial measures.
John Leon: All gap-to-not GAAP financial reconciliations can be found in the press release filed earlier this morning.
Now let's check our first quarter results.
John Leon: The business delivered on almost all of our expectations in the patient-direct segment performed exceedingly well.
John Leon: Our revenue for the quarter was $2.6 billion, up just under 1% as reported, but of 2.3% to patch the prior year on a same day's basis, noting that there was one less selling day in Q1 2025 versus 2024.
John Leon: Patient direct revenue of 674 million grew by 6% compared to the first quarter of 2024.
On a same day's basis, the year over year growth was 7.3% [inaudible]
Speaker Change: I am pleased to say that almost every therapy category showed good growth and sleep supplies and diabetes once again led the way.
Speaker Change: Small categories like ostomy wound and urology also performed very well [inaudible]
Speaker Change: We were encouraged by the continued improvement in oxygen therapy growth which began in the fourth quarter and still a comfortable saying that we have seen the bottom for that category and expect growth throughout 2025.
Speaker Change: The reported revenue for the products and healthcare service to segment showed a decline of 0.8% on a same sales-day basis grew 0.7% compared to the first quarter last year.
Segment Revenue, Total 1.96 Billions of the Quarter
Speaker Change: The Medical Distribution Division, again, showed good saves for sales, the lower year-over-year glove prices and lower international sales, offset the med distribution saves for sales growth.
Speaker Change: We were encouraged to again see an increase in the amount of our proprietary platyx sales running through our distribution channel.
A key strategic initiative of the House.
Speaker Change: Gross' profit in the first quarter was 526 million, or 20% of net revenue.
Speaker Change: Although Grosslight is expanded by 40 basis points in patient direct, a rise in commodity input costs, particularly nitrile, and an abnormally large and adverse change in foreign currency rates within TNHS, draws the consolidated gross margin rate down by about 50 basis points.
Speaker Change: Our distribution, selling, and administrative expenses for the quarter were 462 million or 17.6% of revenue compared to 478 million and last year's first quarter, which was 18.3% of revenue.
Speaker Change: Lower benefits cost and focused expense reduction and efficiency efforts draws the improvement in DSNA
Speaker Change: These low expenses were partially offset by cost-related to the build-out of our two new
Speaker Change: But just an operating income was 61 million in the first quarter in improvement of about 7% versus Q1 2024. This included 31% segment operating income growth at patient direct.
Speaker Change: The products and healthcare services segment realized a larger impact from foreign currency in the first quarter than we usually see, and this negatively impacted consolidated for just the operating income by $3 million in the house.
Speaker Change: James's expense in the first quarter was just under 34 million, that 1.7 million compared to the prior year's first quarter.
Speaker Change: This change was driven by lower average barrelings throughout the course of the quarter, far self set by less interest income than we had in the first quarter of 24.
Speaker Change: Our adjusted effective tax rate was 31.9%, as compared to 29.2% in the first quarter last year.
Speaker Change: The increase is primarily due to the impact of a lower share price on equity compensation.
Speaker Change: Adjusted income for the quarter was 18 million for 23 cents per share to pay the 15 million or 19 cents per share last year representing about 20 percent growth.
Speaker Change: Adjusted EBIDoglu 5% to 122 million versus 116 million reported during the first quarter of 2024 for the first quarter of 2024.
Speaker Change: As expected in discussed last quarter, we have what we believe will be the weakest Casual
Speaker Change: The consumption of working capital was driven by a number of factors, none larger than increase and probably health care services inventory ahead of the opening of the previously mentioned new distribution centers, as well as in anticipation of tariffs.
Speaker Change: Additionally, the first quarter always walks the payment of incentive compensation to a gnome of our teammates.
Speaker Change: And this should do the timing of payroll to enter the first quarter of crude salaries declined by $22 million as prepared to your end.
Speaker Change: Also, cash expenses related to both the planned road check acquisition and the potential sale of the
Speaker Change: Cash outlays from most of these items are expected to reduce over the course of the year.
Speaker Change: This fact, along with the seasonal profit growth and seasonal improvement in the already best in class collection rates of patient direct, should lead to marked improvement in cash low, which will be used for debt reduction as we continue to focus on returning to the targeted leverage debt range of 2-3 times EBITDA.
Ed Pesicka: As you heard from Ed, we're actively making price and changes to pass along the impact of tariffs in addition to re-working sourcing strategies, and we also are prepared to leverage a US manufacturer footprint.
Ed Pesicka: The vast preponderance of the potential tariff exposure resides in approximately healthcare services, and the larger profile of that business obviously makes any kind of absorption impossible.
Ed Pesicka: While we believe we will be role-positioned to protect the business rate tariff impact, the possibility exists of at least a adverse timing impact on working capital as tariffs to pay the head of AR collections.
Ed Pesicka: Importantly, as noted in this morning's press release, we have reaffirmed guidance for the year and continue to expect improving results in each subsequent quarter and we still see at least 70% of earnings and cashflow generated in the second half of the year.
Ed Pesicka: Overall, it's pleasing to have the business start to be largely as expected and we remain bullish on the outlook for earnings and cash flow for the remainder of 2025.
Ed Pesicka: I'll now turn the call over to the operator for questions. Operator?
Speaker Change: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue.
Speaker Change: And if you would like to withdraw your question, simply press the star one again. If you are called upon to ask your question and listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.
Again, these press star one to join the queue.
Speaker Change: Your first question comes from the line of John Stansel of JP Morgan. Your line is now open.
John Stansel: Great. Thanks for having me question. Just want to dig in on the tariff side of this. Can you talk about the discussions you're having with your customers?
Speaker Change: and how they are not, you know, planning around this essentially changing behavior or approaching their sourcing. Thank you.
Yes, sure, John , you know, I'm seeing me sorry [inaudible]
So, let me again re-scope the Terrafim, you know, exposure [inaudible]
Speaker Change: We think it's in the $100 to $150 million range. As of right now, it's on that lower end of the range but obviously has product mixed changes. That could change so that's why we have the range on it.
Speaker Change: And the bulk of arts is really coming from China and Thailand, obviously where we make our gloves and in some of the sourcing of more of the commodity type products and a very very small impact for really related to USMCA type products coming from Mexico.
Speaker Change: Regarding our customers, look, we've got various contractual opportunities or contractual capability to be able to adjust prices going forward. We recognize from a customer standpoint, it's a difficult conversation.
Speaker Change: We've done, I think, really a good job over the last several months absorbing a significant portion of it.
Speaker Change: Again, as a reminder, there were terraces that went on facial protection as well as gloves that were effective at the end of last year as well as in January 1.
Plus The Additionals
Speaker Change: Some of the things we've done to help mitigate that for our customers is we increased our inventory significantly in the first quarter of the year to make sure we had product on hand.
Speaker Change: But then again, at 1% selling margin in this business, we can't afford to take on 145% tariff and we have to work together with our customers to work through that [inaudible]
Speaker Change: We are working with our customers to identify alternatives, products that can be substituted out at a lower cost.
Speaker Change: But those are the conversations we're having and we'll have going forward. I think the other thing we're trying to do is because this is such an administrative burden for customers and they're getting it from various suppliers, not just us.
Speaker Change: is to try to do it infrequently so you don't have so much administrative work associated with it.
Speaker Change: So that's where we are in the process and it's a pretty fluid environment too but we're going to have the ability to react as things change within the policies and the tariffs and that's the way we're approaching it.
Speaker Change: Great, and then just quickly on FX, obviously a headwind sounds like in the first quarter, the dollar has moved around a fair amount, you know, in March, April . I just reaffirmed FX that I think as of the end of last year, just how should we think about the impact, kind of progressing through the remainder of the year, first year expectations.
[inaudible]
Speaker Change: Hey, John , it's John Leon. Yeah, I think we saw a lot of volatility in the dollar, particularly in the month of March, particularly in the Asian currencies where we do a lot of our manufacturing and sourcing.
Speaker Change: That has since subsided quite a bit, the dollar still moves quite a bit [inaudible]
Speaker Change: But relative to what we saw in March, things are much, much calmer now. And if we stay where we are today, I think the guys will be fine. We don't expect too much. We're volatility like we saw in March and we might or it's just in the P&H segment only when we see that.
Speaker Change: Well, what we know today, I think we're full cause with the guidance for the rest of the year around FX.
Thank you.
Speaker Change: To your next question comes from the line of Michael Cherny of leaving partners, please go ahead.
Ehm.
Speaker Change: Good morning, this is Ahmed Long from Mike Cherny. Thank you for the color that you gave on Terrace. I just wanted to clarify, is the 100 to 150 million the direct impact of Terrace, or is it just the exposure, the potential exposure? And just to be clear, what exactly is in medicine the guidance? [inaudible]
Speaker Change: And just if there's any more color you could give there, and how do you think about price increases? Will you be able to preserve spread or is the goal just to preserve GP dollars? Thank you.
Speaker Change: Yeah, so the tariff exposure in the essence, if you look at it at a skew level, you try to take it to that level of detail, gone through it by country of origin, knowing what the tariff is, knowing what our product cost would go up, you know, that's what it is in totality. And then from there, the expectation is that we're going to cover those dollars that come through.
Speaker Change: So that's what we're expecting on an aggregate basis. So hopefully that helps when we talk about the $150 million exposure. That is what is getting passed through so that way it can cover our costing crisis.
Speaker Change: Your next question comes from the line of Daniel Grosslight of CD. Please go ahead.
Speaker Change: Hey, this is Luis Alfredano Grosslight. It's a quick follow-up. What is the sport between the hundred and hundred and fifty-tail exposure between the Pennage DNA chest segment and the PD segment? Thank you.
Speaker Change: Yeah, it's virtually all PNHS segment. I mean, we've gone through in detail analysis for patient direct segments and within the patient direct segments, the vast majority of the products are either made in the US or qualify under the Nairobi Protocol.
Speaker Change: So there is very little exposure within our patient direct segment today associated with it.
Speaker Change: You know, the one area is, and it's a small category for us, you would think, would be something like a bent metal area where you do have some of that stuff made overseas, but again, the $150 million, it's virtually all in our PNHS sector.
Appreciate it. Thank you
Yeah, I'll be your next question.
Speaker Change: I'm sorry, I'll just have one more comment on tariffs and again, recognizing that in a lot of conversations we have to have with customers.
Speaker Change: But in the industry today, we're not the only ones trying to pass this on and needing to pass it on so really across the industry.
Speaker Change: You know, it's, it's most manufacturers and or distributors and our suppliers that are needing to do this because it's, you know, the margin rates we have within the space.
Speaker Change: Alright, your next question comes from the line of Kevin Caliendo of UBS. Please go ahead.
Good morning guys, thanks for taking my questions.
Speaker Change: First one, I just want to understand a little bit on the guidance. The Rotech financing is in place, but it doesn't look like the interest expense has changed so is that, like how are you accounting for that in the guidance? [inaudible]
Speaker Change: Are you just not going to, is the financing set up such that it won't really start to pay until the deal closes and so you'll update the guidance then I just want to understand how how that dynamic works.
Speaker Change: Yeah, Kevin, it's John . So, the, none of the debt comes onto the balance sheet until we actually close the deal. The yellow, that, that term bellow will begin to accrue interest before the end of May.
Speaker Change: Keeping in line that we are expected to have an FTC in early June .
Speaker Change: That makes sense to you? Yeah, that's helpful. I know that that came in more, maybe, at a higher rate than you had expected. Are any of your assumptions around, you know, the Rotech accretion changed?
Speaker Change: In any way, shape or form, or how should we think about that? It's not in people's models. There are most people's models yet but I'm just wondering how you're thinking about it or are you going to just plan to update us when the deal closes?
Speaker Change: Yeah, well, you'll recall that we had it neutral the first full year, then a creative in the second year. I think it was like 10, 15 cents or an exact number, but we'll certainly update upon closing, but you are correct. The debt came in roughly 50 basis points and we had anticipated at the time of the deal.
Okay.
Speaker Change: And just one last one on free cash loads, or if I'm hogging the phone here a little bit, but
You on our last
Speaker Change: And the last quarter you gave kind of a cash-low bridge, right? Ebidol with a cap-axe of around 260 million and the interest expense guidance just remains the same. But one thing I guess that's different now is obviously the working capital looks a lot different than maybe you had anticipated.
Speaker Change: The last commentary you made to us publicly was that there would be like a hundred to a hundred fifty million dollars of...
Speaker Change: of Caselo available, depending on working cap. Do you still anticipate, given what you do with the inventory that the free cash flow this year would be meaningful or 100 million or more? Is that still in play?
Speaker Change: around the Strategic Initiatives, both the Planned Rotech Acquisition and the potential self-P&HS, although higher than we thought, particularly on the Rotech side, but other than that, it's as we expect it, so there's no change in the outlet for cashlor for the year, we still expect to go to generate good free cashlor impuser to pay down debt.
Fantastic. Thank you so much.
Thank you.
Speaker Change: Your next question comes from the line of Eric Coldwell of Beard.
Eric Caldwell: Please go ahead. Thanks. Good morning. I have a few. I'm curious if you could share with us the...
Eric Caldwell: Incremental tariffs that you actually realized in Q1 from those that were all in effect and those that went into effect
Eric Caldwell: January 1st, what was the impact on the quarter itself? Obviously, some of the pricing decisions hadn't gone into effect at that point on your side.
Eric Caldwell: Yeah, really based on the inventory we had in place, Eric, it really did not have an impact on Q1.
Okay, good.
Eric Caldwell: And then the second quarter here, the quarter that we're in, I'm curious...
Eric Caldwell: Just from an easy standpoint with the models, you know, you were just asked about the the Rotech dad and when the financing comes in and
Eric Caldwell: It sounds like maybe there could be a slight mismatch on timing on the term coming in in May but...
There's also the tariff
Increases, and you're talking about pricing...
Eric Caldwell: that starts to go into effect, I believe, in early June , so...
Eric Caldwell: Is there a bit of a gap here for a couple of months before your pricing efforts take effect and, you know, if so, what is the potential impact of tariffs here in the second quarter? Or would you be on still a bit of a delay because of the timing of when inventory flows?
Speaker Change: Yeah, I think at a high level Eric, the way we think about it, the way we've thought about it and the way we've done it from a timing standpoint, you know by having the new pricing in an early June based on what's an inventory and what our normal flow through should be and based on the inventory we add in the first quarter. That's when we need to start to do it as the higher price stuff starts to flow through our system. Now, let's get started.
Speaker Change: So that timing lines up pretty, pretty good on when the products go flow through our system and when those price increases.
Go, you know, go and do a fact. Got it. And then...
Speaker Change: What happens in a scenario? I completely understand what you're saying and most others are saying in terms of having to pass the pricing on to, you know, a larger, entire extent.
Speaker Change: Some of your competitors may not pass all of the pricing on, they may use that as a bit of a competitive advantage or a...
Speaker Change: Take advantage of a tough situation for clients and use that to gain share Some manufacturers have said they're not going to raise prices or not going to raise them fully
Speaker Change: And then some manufacturers have also said they're going to spread tariffs across all products and so not go
Speaker Change: SKU by SKU, Country by Country, so there could be some mismatch in the pricing on specific products. If you're, for example, taking 145% on a certain China product, but a competitor might be taking a lesser amount on that particular product. So,
Speaker Change: We also have a hospital and maybe more health systems that have said they're just not going to take price increases. I mean, Vanderbilt's been pretty clear on this. So what happens if a customer says no, do you?
Speaker Change: Do you just lose the sale or do you bend a bit? I'm just curious what happens in these situations where maybe the pushback is
is great.
Speaker Change: Let me take, there's a lot in that questionnaire, so let me just take first is the approach on tariffs.
If others are blending or using a weighted average tariff approach,
Speaker Change: It's completely not aligned with what the terrorists were implemented or designed to do. So I'll give an illustrative example here. If you've got a Chinese product selling for a dollar and a U.S. product selling for $1.30
Speaker Change: And the company decides to do, instead of doing the 145% tariff on that dollar product, decides to just spread it at 25% across everything. That means that dollar product goes up to a dollar 25 and it's still below the US May product price.
Speaker Change: and you're still encouraging people to buy the lower-cost Chinese product.
Speaker Change: That is not the intent of the tariffs. In tariffs, the tariffs, you know, they're increasing costs for Chinese-made products that ultimately will help lean towards buying products that are made in the US or in tariff-friendly or US-friendly countries.
Speaker Change: So that's why we've taken the approach to actually implement the tariffs based on the way they have been laid out. Not you not turn around and blend it and raise prices on every product regardless of where it's made.
So we've taken a pretty direct approach on that
Speaker Change: Duck and a Wall, you know, there's requirements that don't enable it, that will stop us from selling products at a loss.
Speaker Change: You know, and we just can't do that due to various requirements that are out there.
Speaker Change: And I think with our customers, we're going to work with them. We're going to work with them aggressively to find them other products potentially that are lower cost than what the tariff implemented product is and focus on that. That's what we have to do because, again, what we can't do is sell products.
Speaker Change: and that have significant loss on them because we're absorbing the tariff cost. So that's the intent of what we're going to do within this.
Speaker Change: And then the, thank you for that. The last one for me.
John Leon: Rotech, John mentioned the depth was about 50 bits higher than originally forecast that.
John Leon: That process, since you first announced the deal has been going on for nearly a year now.
as you've reported...
John Leon: Financing Presentations. As you reported over time, Rotex financials actually did deteriorate a bit. Revenue and margin profile came in. I'm curious now that a year has passed.
John Leon: Is the acquisition target performing at the levels you built into your original base case of neutral and your 1 and 15 sensor creative in your 2?
John Leon: The answer to the question is yes, Rotec continues to perform as we expected. In 2024, came in very much right on top of our deal model. The declines that people saw were largely anticipated and largely resulted from a lot of...
John Leon: Covid era benefits that the industry got to realize that fell off. It's been in the early 2020-24, like 75-25 PhD going away.
John Leon: We saw the same thing in our current patient direct business so we fully anticipate that those changes in 24 and overall the rotate performed exactly as we expected in the deal model and doing so through the first quarter of 25
Okay, thanks very much.
Thank you.
John Leon: And that concludes our Q&A session. I will now turn the conference back over to Ed for closing remarks.
Ed Pesicka: So thank you everyone and really I appreciate to take the time to join us this morning. I'm excited about where we're going as a company and we really have right future ahead of us as we continue to operate and execute on our long term strategy. With that, I look forward to sharing progress with you later this summer. Thank you.
Speaker Change: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Speaker Change: Michael Cherny, Edward Pesicka, Mark Beck, John Stansel, Alexander Bruni, John Stansel, Alexander Bruni, John Stansel, Alexander Bruni, [inaudible]