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spk01: Good afternoon, and welcome to the fourth quarter and full year 2021 earnings conference call for Conformist, Inc. My name is Justin, and I will be your conference operator today. All lines have been placed on mute to prevent any background noise. After management's remarks, there will be a question and answer session. I would like to remind you that this call will include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements made during this call that are not statements of historical facts should be considered forward-looking. These statements involve material risk and uncertainty that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. including these discussed in the risk factors section of conformance public filings with the U.S. Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements. Conformance disclaims any obligation except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call will include time-sensitive information and is accurate only as of the live broadcast today, March 2nd, 2022. I will now turn the call over to Mark Agusti, President and Chief Executive Officer of Conformist.
spk05: Thank you, Operator, and welcome everyone to our fourth quarter and full year 2021 earnings call. With me today is our CFO, Bob Howe. We appreciate you joining us for an update on Conformist. Since our business update on January 6th, we've continued to execute on our core growth initiatives. While early, we are receiving positive feedback on our Platinum Services program. We continue to make strides with our identity imprint and limited market release, and we continue to grow our HIP business. From a strategy perspective, conformance has never been positioned better. With our product lineup and new service offerings, we now have expanded revenue opportunities and a clear path to grow our margins materially over the next few years. With that being said, 2021 proved to be another challenging year for the medical community we serve. The ups and downs caused by COVID variants were further impacted by hospital staffing challenges and supply chain pressures. Through it all, conformance stayed focused all year and achieved a number of key wins in 2021. We had a new company record for total revenue, generating 99.9 million for the year. This was driven by our exceptional performance in protection and monetizing our IP. While we celebrate this achievement, we are not satisfied. For those who have been following our progress over the past few years, you know that product revenue is how we measure our business. Our product revenue in 2021 was roughly what it was in 2020. This was equally rewarding and frustrating. Rewarding in the sense we commenced a limited market release of both our identity imprint knee system and our PSI partnership with Stryker. Frustrating in that we had to do this in the face of COVID-related headwinds causing instability with elective procedures and staffing shortages at hospitals. Omnicom crises have declined substantially over the past few weeks, which is a welcome trend. Although we have not yet seen a substantial change in the headwinds we are facing, we do believe clinic visits will improve throughout the year with the corresponding increase in elective procedures. Right now, we do not anticipate nor can we predict any additional variants that would have meaningful impact on our business, and we still believe that as elective procedures return to a more normal level, we will see improved recovery. Although we continue to face headwinds, we are confident in our strategy. I'd like to share some highlights from those aspects which had the most activity in the past quarter. The most significant activity was devoted to the final preparation and the actual January 6th launch of our Platinum Services Program. This was a tremendous accomplishment by our entire organization. This program will allow facilities to offer a fully personalized knee system as a deluxe upgrade to their patients. At its core, we believe this program increases access and choice to a broader patient population. Medicare and commercial payers permit patients to pay out of pocket for non-covered deluxe services. Just as patients can pay extra for a private hospital bed or for a premium interocular lens product, Platinum Services brings a first-of-its-kind premium pricing structure to orthopedics where medical facilities can charge patients an out-of-pocket fee for their upgrade, which creates a new and incremental revenue stream for the facility. While early, the program introduction has gone well. We are onboarding our current hospital and ASC facilities, and we are attracting interest from new customers across the country. The feedback remains consistent with our market research and confirms that patients are looking for a greater say in their care and are willing to pay an out-of-pocket premium to fully personalize their implant. We also had solid progress advancing our imprint knee. Our identity imprint knee system combines the benefits of our personalized solutions with the convenience and flexibility of the off-the-shelf system. We believe imprint represents a significant advancement over standard off-the-shelf knee systems since imprint includes several of the features of our personalized knee system. We see this filling the void between the crowded off-the-shelf category and the fully personalized category where we are the only player. We recently achieved an important milestone as we successfully completed our 100th imprint procedure. Interestingly, 45% of surgeon users are competitive, meaning those surgeons are new to Conformis. We acknowledge the need to expand our surgeon users, and we believe the product benefits of imprint along with the economic and efficiency benefits of our surgery in the box model, provide a significant market share opportunity. Throughout the limited market release, the clinical feedback has been strong. During the fourth quarter and early part of the first quarter, surgeons completed a questionnaire and rated 100% of the imprint crisis as either four or five star experience based on a number of criteria, including AP and ML, femoral and tibial bone coverage. In fact, many resurgent users have rated the femoral fit significantly better than the competitive system they use, which is excellent news and confirms our excitement about the superior quality of the product design. We remain on track for a 2Q transition to a full market release. Lastly, our hip business had 8% revenue growth in the quarter and 19% growth for the year, which is particularly pleasing since we still have a limited product portfolio and, like knee replacements, hip procedures are very susceptible to deferral as an elective procedure. In addition, COVID has resulted in less new product trialing, which is an important requisite for growth since we are still relatively new in the hip space. We continue to focus on the training and education of the growing group of surgeons who use our hip implants. Like our knees, our hip offers and leverages unique delivery model to provide customers an efficient and economic benefit solution. In addition, we made progress on our Actera primary hip stem. This will be our second stem, and we remain on track for a mid-2022 launch. Acterra will be a shorter style model conducive to the popular direct anterior approach. We believe having a broader hip portfolio is important for us to attract new surgeons to conform us. Now I'd like to shift gears and highlight two recent achievements reinforcing the compelling clinical success of our personalized knee implants. First, the Orthopedic Data Evaluation Panel in the United Kingdom, an independent bodily commonly referred to as ODEP, awarded the conformance eye total CR knee replacement system a 7A rating, which reflects seven years of performance data as reported in the UK's National Joint Registry, or the NJR. The NJR is one of the most respected registries in orthopedics, so this clinical performance, as reported, is a fantastic independent validation of the quality of the conformance personalized knee design. The other clinical win, and perhaps even more significant, was the recent publication in JBJS Reviews, the review journal from the publishers of the Journal of Bone and Joint Surgery. This study looked at patients that had a fully personalized conformance implant in one knee and an off-the-shelf implant in the other knee. The authors reported that 72% of patients prefer their conformance knee, only 6% of patients prefer their off-the-shelf knee, and 22% were neutral on preference. As the authors noted, patients of this study with bilateral knee joint replacement showed an overall preference for customized total knee replacement. We believe both these studies will be of particular interest to patients concerning upgrade through our platinum services program. As you know, the overall environment has been everything but predictable. We continue to believe hospitals and ASCs will return to normalized elective procedures both in the U.S. and internationally at some point in 2022. However, our plan will assume we operate in a similar environment that we've seen in the past six to eight quarters until we see a sustained improvement in our scan activity and procedure bookings. Let me now turn the call over to Bob for a more detailed financial review of the quarter.
spk02: Thank you, Mark, and good afternoon, everyone. I'll start with a walkthrough of our financial highlights and then close with a few thoughts on our outlook. We reported total revenue of $15.4 million in the fourth quarter, which is down 8%, from the fourth quarter of 2020 on both a reported and constant currency basis. For the year, as Mark mentioned, we had an all-time record with $99.9 million. Product revenue was $15.3 million for the fourth quarter, which was also down 8% from the fourth quarter of 2020 on both a reported and constant currency basis. For the year, our product revenue was $58.3 million, which is roughly flat to 2020. Within product revenue, sales of our conformance hip system were approximately $700,000, up 8% compared to last year's fourth quarter. For the year, our hip business grew 19% in 2021 to $3 million. We expect our hip growth rates to accelerate in the second half of the year as we expand our product portfolio and trial and disurgence resumes in earnest since it was slowed considerably during COVID. Our royalty revenue for the fourth quarter was $146,000, and a record $41.5 million for the year, which included several non-recurring but significant dollar value items relating to protecting and monetizing our IP. Our recurring licensing revenue is expected to be approximately $125,000 per quarter. Our product gross margin was 38.0% in the fourth quarter and was adversely affected by primarily two items. The first was an increase in our canceled case inventory reserves. We have seen an increase in the agent of cases that have been postponed but not yet rescheduled, as well as a lower than estimated conversion rate of these cases into revenue. The canceled case inventory reserve is associated with fully manufactured implant kits for surgeries that were postponed, and at this point, a future surgery date has yet to be scheduled. These unscheduled surgeries can still occur, and we continue to work with the healthcare facilities to get these back on the calendar. The second item is that over the past few quarters, we've experienced an increased impact from a tough labor market combined with COVID-related absenteeism. This has negatively affected our manufacturing capacity and efficiency and resulted in higher scrap, shipment delays, and a temporary increase in our delivery lead times. While there are many advantages to our just-in-time manufacturing model, it can work against us when a manufacturing facility is not operating at the right capacity and efficiency levels. To address these challenges, we've invested in recruiting new team members, focused on retaining our talented operators, and increased our focus on training to get new hires up to speed faster. For the full year, our product gross margin was 41.4%. Like many other companies, we continue to face margin headwinds from higher material, labor, and other manufacturing costs. In addition, we have felt the impact of higher cancel-case inventory expense, lower sales volume, and a reduction in selling price. Until the medical facility environment normalizes and we're operating closer to our target capacity and efficiency levels, we expect our gross margin rates to remain in the high 30s to low 40s. However, as the environment improves, we should be able to ramp our gross margins back to the mid 40s. Longer term, we expect our gross margin to increase meaningfully, driven by growth of our imprint products, which is targeted to have gross margins in the low 70s at scale, and our platinum services, which is targeted in the low 60s at scale. Total operating expenses for the fourth quarter were $19.3 million, which reflects the investment we are making in sales and marketing and R&D. It also reflects the planned higher G&A related to investment in professional fees to protect our IP. G&A was also impacted by higher freight expense as we relied more heavily on expedited shipping methods as a result of our manufacturing capacity challenges. In 2021, we finished the year with $68.7 million of total operating expenses, This includes the planned investments we made in the second half of the year and was in line with our previous guidance. We continue to closely manage our expense structure and have focused the majority of our investments towards supporting our growth plan. For 2022, we expect operating expenses to be between $75 and $81 million, which reflects continuation of our planned investment to drive our growth, as well as associated variable expense increases as a result of this growth. I'll walk through how 2022 compares to 2021 and highlight a few key areas driving the year-over-year increases. From a high level, like almost all companies, we're facing a tough labor market. Turnover is higher than normal and finding qualified talent is taking much longer and is more expensive. We have addressed this by adjusting compensation for our workforce to align with current market trends. This impacts all operating expense categories to an extent. For sales and marketing, we had $24.9 million in 2021. We anticipate sales and marketing expenses to be between $29 and $32 million in fiscal year 2022. At the high end of this range, about half of the increase is related to variable costs associated with the revenue growth and half is related to the continuation of planned investments that we started in the second half of 2021 to support imprint and other product introductions and the launch of Platinum Services Program. For R&D, we had $14.8 million in 2021, For 2022, we expect R&D to be between 16 and 17 million. This increase is to continue to drive our priority products in our development pipeline, add AI technology to enhance our CAD process, and support our regulatory efforts to transition to European Union medical device regulations. Finally, for G&A, we had 29.0 million in 2021. For 2022, we expect G&A to be between 30 and 32 million. The increase is primarily driven by higher compensation expense, increased rate costs, and additional investment support IT initiatives. Moving to our bottom line performance, we generated a net loss of $16.0 million in the quarter, or $0.09 per share. This included foreign currency exchange loss of $865,000 compared to foreign currency exchange income of $1.7 million in the same period last year. Interest expense was $1.7 million compared to $0.6 million in the same period last year. This increase was due to $1.1 million of expense related to the extinguishment of debt recognized as a result of our debt refinancing. Our balance sheet remained strong as we had cash and cash equivalents of $100.6 million at the end of the fourth quarter. This included the $15.5 million of license and loyalty payments I mentioned last quarter that we received in October. One balance sheet item to note is inventory. We expect to continue to build our inventory of imprint needs as well as our tariff hit over the coming quarters to support our product launch cadence. As noted earlier, we refinanced our credit facility in November. This new $21 million facility extends the term until 2026, has a three-year interest-only period, a reduced interest rate, and includes more favorable covenants. Lastly, I would like to provide some thoughts on our outlook. Based on our performance through February and our forecast for March, we expect Q1 product revenue to be between $13.5 million to $14.5 million. This compares to the first quarter of 2021, which was $13.7 million. Our Q1 guidance reflects the forecasted impact from continued disruption of electric procedures caused by Omicron variant, staffing shortages in the medical facilities, and our own manufacturing capacity challenges. With that, Mark and I are happy to take your questions.
spk01: And thank you. As a reminder, to ask a question, you'll need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by. We compiled a Q&A roster. And our first question comes from Kyle Rose from Canaccord. Your line is now open.
spk03: Great. Thank you for taking the questions. Just wondered if we could kind of walk through your expectations, maybe beyond the Q1, just with respect to all the moving pieces you have on the revenue line this year. When we think about Striker and that relationship rolling out, as well as the combination of the full launch from the Platinum services, as well as Imprint, can you kind of help us understand the puts and takes of what you're thinking for the full year number?
spk05: Hey, Kyle, it's Mark. And I'll let Bob have a chance to comment. But I think what, you know, we're looking at is, you know, sequential quarter-to-quarter improvement of the top line. And, you know, that'll be through continued launch of our imprint and our platinum services program. I think in the back half, it's benefited a little more from the launch of the HIP stem. So HIP will sort of continue, you know, contribute to that growth a little more in the back half. And Stryker is in there, again, as I said before, we're not really going to comment too meaningfully on that out of respect for the relationship, but, you know, it's showing, you know, just lower than maybe, you know, I personally would like, but continued growth. So lower actual sales, but continued sales each month. I mean, like us with our, you know, launches and stuff, you know, the industry, which, you know, Stryker is a part of, is impacted by the Omicron and the stuff in January and the economy being closed. So for instance, I know personally we couldn't have a sales meeting. I think other companies got affected by that. The ability to train sales force, launch new products have been impacted. So a lot of those plans for 22 that companies like to launch in Q1 have sort of been pushed out later in the year. So I think we'll consider to see some continued growth from that. But thematically, what we're looking for is, you know, sequential core-to-core growth improvement throughout 2022. Right.
spk02: Yeah, the only thing I would add, I think, is obviously there's an assumption. We had signaled, you know, a range of 60 to 70 on our January 6th call. You know, the 60 represents if the market doesn't really improve. That's kind of the found case scenario, 70, obviously. assumes it improves. So obviously sequential improvement would be benefited by an improvement in the overall elective procedure market. Yeah, absolutely. Okay.
spk03: Yeah, and then just one more on my end. Could you just talk about maybe break down the gross margin headwinds that you saw in the Q4? I mean, how much of that is royalty reserved versus how much of that is coming from just the input costs and capacity constraints? Just really trying to understand those two pieces with respect to how gross margins are going to shake out for the full year.
spk05: Yeah, yeah. And again, I'll let Bob, you know, capture more detail. But there's no doubt, as you know, he said in the prepared remarks, there was some one-off true-up stuff. I mean, cancel cases, as you might imagine, in this environment are higher than we typically run. So we decided to go ahead and, you know, make for that provision in Q4. And we're going to keep looking at that, you know, obviously throughout 22. There's no doubt that, you know, labor input, as Bob parted, has gotten higher. And, you know, with turnover, it's a challenge on that. So, you know, that's impacted us. Some small things from raw materials. I don't think it's been crazy, but we're seeing, you know, we're seeing some of that continue to come through. And that's a challenge for all medical med tech companies. And so we're bearing some of that as well. I can tell you first quarter, in 22 right we're not you know i don't think i let bob talk about it but there's no doubt that january was a tough month so we're seeing some sequential improvement through february we're hoping that march holds up january was a tough month and it was a tough month all around you know not only on the revenue line but as you might imagine that then impacted um efficiencies because you know we had a ton of absenteeism um late december and all through january due to, you know, our manufacturing workforce is up here in the New England area primarily. And we got really, really hit hard with Omicron. So the good news is people got through it healthy. They were able to come back. You know, I'm pleased to say on that. But when you see the kind of absenteeism we experienced, it's hard to run an efficient plant. So that was a challenge for us. But we should see some sequential improvement in gross margin as well, not only through top line improvement, but also through efficiency improvement.
spk02: But with that, I'll... Yeah, I mean, just specifically on the question on Q4, you know, and bridging it, I mean, I would say the cancel case, you know, adjustment was probably about a third of the head. I mean, without that, we probably would have been in the low 40s, which is roughly where we were thinking. Outside of that, you know, you probably have a third that's due to efficiencies. A little tricky to get an exact number on that, as you can imagine. And then, you know, there's probably another 20, 30% that's, you know, inputs, whether it's labor or whether it's raw materials. That's probably directionally, Kyle, in the vicinity. And there's a little bit of price, but that's not the biggest driver.
spk05: Thank you. Thanks, Kyle.
spk01: Thank you. And our next question comes from Stephen Lichman from Oppenheimer. Your line is now open.
spk04: Thank you. Hi, guys. I wanted to start off with Imprint, a great data point on the competitive surgeon conversion, that 45%. I was wondering also what you're seeing in terms of the location of these procedures. Are most of them now ASC? and what is your thought in terms of where the mix of ASC versus hospital will be for imprints as you look out over the next couple of years?
spk05: Okay. Steve, you know, I will tell you I don't want to put a number on it because I don't want to be wrong, and we are looking at that, and we're looking at potentially providing more color on that for you guys as we go through the year. I mean, it's a little early, but I will say it's primarily ASC. It's a lot of ASC. I'm not going to say there's not any in the hospital because there's some, but without giving you an exact number, it's a lot of ASC. And it's a great question I want to get to, but that's one of the reasons why we're in a challenging time and there's a lot of things buffeting us, but we're really excited about our strategy because we're having a lot of productive conversations with imprint for ASC utilization, which is, you know, what we targeted. So we're really pleased about how that, you know, is sinking in.
spk04: Great. On Platinum services, based on what you're seeing so far, do you anticipate the whole custom program to be converted to Platinum by September? I think that's when you had targeted before.
spk05: Yeah, that's still our plan. I'm not sure you'd be the whole custom program, but I think what you mean, which is right is the only way to access a fully personalized me will be through the platinum services program starting in September. Now, to be clear that between now and then it's really only our existing users that we're transitioning starting, you know, as we speak, you know, new, new customers, which we're getting with imprint, new customers, only can get to um to the fully custom product through platinum services but yes by september that'll be the only way to get a fully custom implant from conformance great uh last question and yeah that's what is what i had meant thanks mark and then on the new uh primary
spk04: HIP stem in mid-2022? Should I assume that that's going to be a limited launch in the back half and that the full benefits of the portfolio on HIP we should really be targeting for 2023, or will that be more of a full launch in the back half?
spk05: Yeah, that's pretty much our cadence. Knock on wood, hopefully the limited release will go well and we'll only be in limited release for a couple quarters, and then we will get close to a full-year benefit, that would be the plan in 23. So, yeah, that's the way to think about it. But, you know, as you know, our numbers are smaller with our HIP franchises. So even in limited release, again, you don't know until you're there, but it should be able to incrementally drive growth for us because we've got a small base we're working off of even in limited release. Okay?
spk01: Got it. Thanks, Mark. Thank you. And our next question comes from Josh Jennings from Cowan. Your line is now open.
spk06: Josh Jennings Hi. Good afternoon. Thanks for taking the questions. I was hoping to just make sure I was clear on the full year guidance and just that you are formally reiterating that $60 million to $70 million today. Sorry, I just didn't see the press release or the formal remarks, but I think you answered in one of the questions if that is still in play.
spk05: Yeah, I mean, I think the way I would say it is the answer is yes, and if we saw a need to say something different, we would tell you. It's our expectations for the full year haven't changed.
spk06: Great. I just want to make sure we were clear on that. And then second, just thinking about the hikes in labor costs, is that pertinent to the sales force and And if so, is this an opportunity where you can spend a little bit more to pluck off some talent? Or on the other hand, are you seeing any pressure for reps leaving for greener pastures, if you will? And is there just an overall kind of sales rep hopscotch going on in 1Q across the industry?
spk05: Well, that's a really interesting question, Josh. I haven't sort of got it that way. So when we refer to this and what we're experiencing is, is really our employee workforce, our W2 workforce. As you know, most, not all, but most of our sales reps are commissioned agents. And we're not seeing losses there through that or anything around that. As a matter of fact, I will tell you, and it's one of the statistics we'll look at, but we, you know, led by our commercial team, we are making changes in our agent structure, you know, in our leadership team. They're doing a great job. We're seeing a lot of interest from new agents coming to Conformis because the imprint and platform services story is attracting them. So I think we're gonna plan to be adding significantly to our sales force and I'll probably talk through some of those metrics as we have something to report in Q1 at our Q1 earnings call. But that's our goal, I can say publicly. It's always been our goal but it's been hard It's been hard during COVID for the, you know, to, to do that 2020 was basically a last year and 2020 was a little challenging and we hadn't really gotten into the launch of imprint, but now that it's out there, people are seeing that it's real. We're delivering on it. They're seeing the story. They understand the ASC strategy and that's getting traction. That's the best word I can say is it's getting traction and, and good agents in orthopedics, if nothing else, they're good at sniffing out an opportunity to make money. and that gets through, you know, a good story to sell and a good product to represent, and that's what we have with imprint and platinum services.
spk06: Great. And just one last follow-up. Just in terms of your expectations for recovering the U.S. versus Europe, any difference there in terms of the pacing and the cadence or what you're seeing so far in Q1? Thanks a lot.
spk05: Yeah, I'll let Bob talk about that. I think he's a little closer. But in general, Europe is still a challenge for us as a company because, number one, we're even more limited in our critical mass and support. The challenge we have is still, if you think about our – so we don't have any plans to launch HIP at this point internationally. Our need portfolio is challenged. as always, through reimbursement challenges and pricing and other stuff. And the NBR regulation has continued to be a big headwind that we have to get through and represent a risk. And where we want to go is we'd like to get to imprint as the main product over there. We don't see, except for limited opportunities in certain markets, we don't see the same opportunity that we have in the U.S. with platinum services. So, you know, while we're, you know, while we're Thinking about adding distribution in Japan and Australia is gone and some other areas, there's just still risk for us as we think about that. And the recovery, frankly, I don't believe is going to be as pronounced as much because our biggest revenue source is still Germany, and Germany still is just a reimbursement drag from us because all we have is the fully personalized revenue, and that's what they're banging on. So it's a challenge for us. Having said that, it's become almost to the point, Josh, where it's still meaningful, but it's barely more than 10% of our revenue at this point where it was high, right? Well, actually, we're right about there. So give or take a few points. So it continues to be challenging for us, but we continue to push at some of the new countries that we want to launch.
spk02: Yeah. I mean, Mark hit all the points. I mean, we don't have the growth drivers overseas that we do in the U.S., but we do have some arrangements like Australia, for instance, which we are hopeful and we want to see it. And we're seeing it. Right. We're starting to see it, but I would say for next year, take a little more conservative. Hopefully, procedures will benefit like they have in the U.S. with a recovery in like the procedure market, but clearly they don't have the growth drivers that we have.
spk05: And I think, I mean, we don't report out, I don't believe, country by country, but the issue is even though we get certain growths in some of the smaller companies and that's helpful, Germany has been such a big portion of the international revenue line, the OUS revenue line, that as Germany struggles, it's just, you know, as you know, Josh, because you follow the company, I mean, I've been very transparent about it. It's a continued challenge for us and, you know, struggling through COVID even hurt more.
spk06: Understood. Thanks, gentlemen.
spk05: Thank you, Josh. Appreciate it. Operator, any more questions?
spk01: I am showing no further questions. I would now like to turn the call back over to Mark Augusty for closing remarks.
spk05: Thank you, Operator. And once again, thank you, everyone, for participating today. We have a solid strategy, and we're focused on executing it. We continue to believe our move to Platinum Services Program and the imprint system focused on the ASCs is the right thing to do. And it really reinforces our unique and differentiated portfolio. And most importantly, it's allowing us to implement a disruptive pricing model to arthroplasty. That's like a key insight that I focus on and we're excited about. So on behalf of our leadership team, I want to thank our entire employee base for doing their part to help our surgeons do business easier and help our patients continue to gain pain-free lives. I mean, it has been tough at the close of the year and in January, but all of our employees are making a difference, making a difference with our surgeon patients and patients. We're going to be participating in several healthcare investor conferences over the coming months, so we look forward to seeing our community there and talking more about the company. Thank you for your interest, and have a great evening.
spk01: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
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