MiMedx Group, Inc

We do thank you for your patience. Please continue to hold. Our conference will be getting started momentarily. Please continue to hold. Thank you. Thank you. Good afternoon and thank you for standing by. Welcome to the MiMedx Second Quarter 2023 Operating and Financial Results Conference Call. At this time all participants are in listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to Mr. Matt Notarianni, Head of Investor Relations for MiMedx. Matt, please go ahead.

Thank you, Operator, and good afternoon, everyone. Welcome to the MiMedx Second Quarter 2023 Operating and Financial Results Conference Call. With me on today's call are Chief Executive Officer Joe Capper and Chief Financial Officer Doug Rice. As part of today's webcast, we are simultaneously displaying slides that you can follow. You can access the slides from their investor relations website at mymedics.com. Joe will kick us off with some opening remarks, and Doug will provide a summary of our operating highlights and financial results for the quarter. And then Joe will conclude with some additional updates, including a discussion of our financial goals. We will then be available for your questions. Before we begin, I would like to remind you that our comments today will include forward-looking statements, including statements regarding future sales growth, future margins and expenses, expected market sizes for our products, and potential timelines for FDA submissions and reviews. These expectations are subject to risks and uncertainties, and actual results may differ materially from those anticipated due to many factors. Actual results, market sizes, timing, and FDA review will depend on a number of factors, including competition, access to customers, the reimbursement environment, unforeseen circumstances and delays, and other factors. Additional factors that could impact outcomes and our results include those described in the risk factors section of our annual report on Form 10-K and our quarterly reports on Form 10-Q. Also, our comments today include non-GAAP financial measures, and we provide a reconciliation to GAAP measures in our press release, which is available on our website at www.mymedics.com. With that, I'm now pleased to turn the call over to Joe Capper. Joe?

Thanks, Matt, and good afternoon, everyone. Thank you all for joining us on today's call. It is my pleasure to report on another outstanding quarter of solid financial performance and operational excellence. In short, our momentum is strong and we expect it to continue. As you will hear today, Q2 exceeded even our lofty expectations for the business. I am particularly proud of the team's tremendous progress on delivering adjusted EBITDA approaching levels this company has not seen for several years due to the numerous enhancements we have set in motion. Our recent decision to increase focus on our wound and surgical businesses was driven by the substantial opportunity in those markets and our highly competitive offerings in the space. Our distinct advantages stem from our gold standard technology and industry-leading sales and operations infrastructure. That powerful combination gives us a strong foundation from which to build, enabling us to outpace market growth for what we believe will be years to come. We anticipate that the company is at the front end of a multi-year growth phase with the means to capitalize on the numerous opportunities before us. The focused go-to-market strategy and disciplined execution that drove our strong first half performance is certainly repeatable. Before we provide you with more detail on how we envision our long-term growth plan unfolding, Let me first touch on some of the more noteworthy accomplishments from the second quarter. Due to year-over-year net sales grew by approximately 21.5% to $81.3 million, the highest quarterly net sales performance we have delivered in nearly four years. Gross profit margin improved to 83.3%, another nice step up sequentially. Adjusted EBITDA was $14.1 million. up from an adjusted EBITDA loss of almost $1 million a year ago, representing a $15 million improvement. We ended the quarter with $68.7 million in cash, up $7.5 million from the end of Q1. We announced the suspension of our knee osteoarthritis development project, an important strategic pivot which hones our focus in the wound and surgical markets. And we were pleased to welcome Doug Rice to the team as our new Chief Financial Officer. Doug is a highly accomplished and seasoned healthcare executive whose considerable experience makes him ideally suited for our next stage of growth. In fact, we are already seeing the value of his contributions in the brief time he's been on board. This second consecutive quarter of exceptional performance was driven by an incredibly high level of execution across the entire company. Moreover, any business that is going to win in the market has to have a solid financial foundation, great products, attractive opportunities, and a team that can execute. I am confident we have that at MiMedx. While our Q2 financial performance exceeded our expectations from top to bottom, Our adjusted EBITDA margin, again, rates additional attention. As anticipated, the business is starting to generate fairly dramatic margin improvement with scale. The Q2 adjusted EBITDA of $14.1 million represents a 17% return on net sales. However, if we pro forma out the Q2 spend on the knee OA trial, things start to look significantly better as our adjusted EBITDA margin would have been in excess of 20%. As you can see, we are starting to unlock the leverage in the business, which, as I mentioned last quarter, will increase free cash flow generation, improve our balance sheet, lead to growth funding optionality, and accelerate value creation. As is my practice, I will provide a quick update on the company's progress on the three key elements of our strategic focus. As a reminder, these are the areas in which we are concentrating our time and resources in order to drive growth and ensure long-term success. Our top priority is to build on our leadership position in the wound and surgical markets by enhancing our product portfolio and expanding geographically. To that end, The second quarter represented another period of commercial excellence, during which we once again experienced growth in all sites of service. The two products we launched in September of last year continued to gain wide market acceptance in various surgical settings, helping to grow our Q2 sales in the hospitals by 17%. As we work to refine our approach in surgical markets, we are making significant investments in clinical research, and our medical affairs efforts. We believe our success in the surgical sector will be greatly enhanced with a growing body of real world evidence supporting a wide range of surgical applications. In the private office sector, we recorded another strong quarterly performance, growing at 25% year over year. The positive trend we saw here in Q1 continued into the second quarter, which is likely being driven in part by the OIG's guidance for companies to register their products on the CMS price list and adhere to the ASP reimbursement methodology. We anticipate this transition could continue to provide us with revenue growth support into the second half of the year. We also hope to be in position to launch another new product later this year, likely in Q4, into the private office setting. As you may have seen, The CMS proposed position fee schedule for calendar year 2024 was published a few weeks ago. The proposal indicates that CMS has decided not to make any major modifications to how skin substitutes are currently reimbursed, but continue to drive enforcement of current policy per the OIG's guidance. If this position holds through the comment period, we would not expect to see any potentially disrupted policy changes at least throughout 2024, which would be a net positive for us in the near term. We will continue to provide input and work with various stakeholders as CMS strives to develop a reimbursement model that ensures patient access to these critical products and safeguards against abuse leading to overpayment. Finally, we were encouraged by the strides we were making in Japan. as we work through the early market development phase. During the quarter, we continue to see an increased level of interest in and utilization of this first of its kind product in the Japanese market. As such, we expect adoption to ramp in the coming months and quarters. Our next priority is to develop opportunities in adjacent markets to create additional growth drivers for the company. With our strategic focus now firmly concentrated on the wound and surgical business, One of the more obvious opportunities is to expand our skin substitute offering beyond amniotic tissue. According to market data, amniotic allografts account for less than 43% of the skin substitute market, with xenografts and synthetics making up the balance. An expansion of our skin substitute offering beyond amniotic tissue immediately more than doubles our total addressable market while leveraging our entire commercial infrastructure. As such, we have concerted efforts, both internally and externally, toward the expansion of our product portfolio. Additionally, we continue to look for ways to leverage our technology and commercial strength to develop opportunities adjacent to the skin substitute market. Our final objective is to build a corporate discipline around expense management, rationalization, and continuous process improvement. As the Q2 results indicate, this approach continues to take hold within the organization. Our efforts to enhance efficiencies and production yields and operations resulted in another sequential improvement in gross margin, and we continue to get leverage from our overall operating expenses. As a reminder, we've highlighted two efficiency goals, which we have been striving to achieve by year end. One is to get a wounded surgical contribution margin above 30% of sales, and the second is to get corporate G&A below 20% of sales. For Q2, we more than achieved both of these targets, well ahead of schedule. I anticipate that we will continue to execute on our plan, resulting in further margin improvement and an enhanced ability to scale over time. The team certainly turned in another great performance in Q2. Executing against this three-point strategy and building on the momentum established as we enter the year. Our plan is to continue to identify and execute against the most relevant road drivers for our business. If we stick to this formula, I have no doubt we will build on this franchise, have the opportunity to create tremendous value, and move MiMedx into the ranks of healthcare's most admired companies. I'd also like to mention that shortly after the end of the quarter, the 11th Circuit Court of Appeals ruled in our favor by affirming the dismissal of the putative securities class action lawsuit brought against the company and others in 2019. The case was on appeal with the United States District Court of the Northern District of Georgia. We were obviously glad to receive this positive news, as it should put to rest one of the largest remaining potential claims against the company stemming from past challenges. Now let me turn the call over to Doug for more detail on our financial results on what is his inaugural call as the Chief Financial Officer for MiMedx.

Doug? Thank you, Joe. Good afternoon, everyone, and thanks for joining us today. I'm very pleased to be a part of the MiMedx team at this exciting time in the company's history. I've spent much of my career in MedTech, and I've seen numerous growth stories unfold. I believe MiMedx has the essential key characteristics for growth and value creation. I look forward to meeting and working with those of you in the investment community with whom I have not met before in my prior roles. Moving on now to our second quarter, as many of the financial measures covered in today's call are on a non-GAAP basis, please refer to today's earnings release for further information regarding our non-GAAP reconciliations and disclosures. First, as Joe mentioned, our second quarter 2023 net sales were over $81 million, up 21.5% year over year. Joe outlined many of the growth drivers in his remarks, but I would reiterate that the strong performance was balanced across our sites of service and also continued to benefit from contributions of our newer products, which are still in their first year of launch. Moving to gross profit and gross margins, our second quarter gross profit was $67.7 million compared to $55.1 million last year, and our gross margin was 83.3% compared to 82.3% last year, up 100 basis points. Our gross margin improvement was driven in part by favorable product mix as well as the ongoing accomplishments that our quality, operations, and regulatory team has made this year to help improve our production yields and efficiencies. We continue to work on driving our gross margin percentage back into the mid-80s over the long term. GAAP selling general and administrative expenses, or SG&A, was $51.9 million compared to $55.8 million in the prior year period. The decrease in SG&A spend was driven primarily by the cost savings activities the company actioned late last year, as well as other expense management items partially offset by higher commissions due to higher sales volumes. Our GAAP R&D expenses were $8.5 million compared to $5.5 million in the prior year period. The increase over the prior year period was driven primarily by increased NEOA clinical trial program spending, as well as the dissolution of this segment and the costs associated with that decision. Investigation, restatement, and related expenses were $1 million compared to $3.2 million in the prior year period and a step down sequentially, which was expected based upon the conclusion of some of the company's outstanding legal matters. As part of the decision to focus the business on wound and surgical, which we announced in late June, we also recognized a restructuring expense totaling $3.3 million in the second quarter, which reflects certain write-offs and other wind-down expenses. GAAP net income was $1.2 million, compared to a net loss of $10.9 million in the prior year period. Adjusted EBITDA was $14.1 million, or 17.4% of net sales, compared to an adjusted EBITDA loss of $1 million for 1% of net sales in the prior year period. On a segment basis, net sales in wound and surgical totaled $80.5 million compared to $66.1 million last year, which reflects growth of 21.7%. The wound and surgical segment contribution of $27.6 million represented 34.3% of wound and surgical net sales compared to a segment contribution of $14.2 million, or 21.5% of wound and surgical net sales during the second quarter last year. You will recall one of our goals over the last several quarters has been for wound and surgical to achieve contribution margin in excess of 30%, and we are pleased to report this achievement this quarter. Turning to regenerative medicine, operating expenses totaled $10.1 million compared to $3.1 million last year. This increase was driven primarily by costs associated with our strategic realignment, as well as expenses that have been incurred prior to that announcement through the NEOA clinical trial program. Finally, our SD&A expenses in corporate and other total $13.4 million, representing 16.5% of our total net sales, compared to $17.1 million last year, or 25.6% of total net sales in the prior year period. As you will recall, getting these corporate and other SG&A expenses below 20% of net sales has been a focus of the company, so we're pleased to be reporting this achievement as well this quarter. At the end of Q2, the company had $68 million of cash and cash equivalents, reflecting a sequential step-up of approximately $7 million. As was noted on the first quarter conference call, our first quarter is a heavy cash use quarter, and we expect to build our cash balance throughout the course of 2023. which we expect will afford us with numerous opportunities for growth financing should investment opportunities present themselves to us. I will now turn the call back to Joe. Joe?

Thanks, Doug. As you just heard, our strong second quarter 2023 results give us much for which to be proud. To recap, we recorded quarterly revenue of $81.3 million, up 21.5% year over year, gross profit margin of 83.3%, adjusted EBITDA of $14.1 million, increased our cash balance, continued the rollout of our new products in the US, made additional progress developing our business in Japan, and continued to realize margin improvement by driving expense rationalization throughout the organization. By any measure, the first half of 2023 was a tremendous success. Let me provide some commentary on how we now see the full year taking shape. As you may recall, at the end of Q1, we reiterated full-year 2023 guidance for revenue percentage growth to be in the low double digits. When we spoke to you about six weeks ago, we raised this guidance to the mid-teens given the growth we were experiencing at the time. Now, with another excellent quarter in the books, we are again raising our full-year guidance for revenue to the mid to high teens. So why not just high teens or even 20% like we saw for the first half? Well, I'm certainly not ruling it out. Here's some context. First, during the second half of 2022, we launched two new products, and the business performed much better than it had during the first half of 2022, providing for stronger comps for this year's second semester. Also, both Doug and I are new to the business. Having successfully run companies in the past, we know the benefits gained by living through a full business cycle. Naturally, with time, we will develop a solid field for the ebbs, flows, seasonality, et cetera, of this particular category. We do anticipate second half sales cadence to be heavily weighted to the fourth quarter, consistent with healthcare market behavior. In any case, This is certainly shaping up to be an excellent year of performance and progress. With the elimination of the expenses that were associated with the NeoA development project, we now expect our adjusted EBITDA margin in the second half of the year to be above 20%, demonstrating excellent leverage at the business scales. And, if all goes as expected, we will have a cash balance by the close of 2023 of at least $90 million, barring any unusual events, a marked improvement in our cash forecast over just the last few periods. Those who have been following the company since I joined in January have seen the steps we've taken to reposition the company with an increased focus on wound and surgical and to improve our financial profile. The first half results indicate these steps are having their desired effect. I have no doubt it will continue to execute our plan turn in an excellent second half, and set the business up for sustained growth for the foreseeable future. In closing, I would like to thank the entire MiMedx team for the excellent Q2 results and for their continued dedication to our company and the many healthcare providers and patients we serve. There is definitely an excitement around the company that our best days are ahead. With that, I would like to open the call to questions. Operator, we are ready for our first question. Please proceed.

Thank you. If you'd like to be placed into question queue, please press star one at this time. If you'd like to remove yourself from the queue, please press star two. One moment, please, while we poll for questions. Our first question is coming from Anthony Patron from the Zuho Group. Your line is now live.

Well, thank you and congratulations here to the team. And congratulations, Doug, to the new role here with MiMedx. It'd be good to work with you again. Thank you. I appreciate it. Absolutely. Maybe, Joe and Doug, we could start off with top line and kind of toggle through the two segments and the two end channels. And I guess what we're looking for is just where is the underlying growth profile for the surgical end markets in which you compete today? And where is the underlying growth profile for wound care in And when we think of the delta here with mimetics growing over 20% in 2Q, what amount of the spread versus market is from share gains? And is there any price levers in there that we should be observant of? And I'll have a couple of follow-ups.

Yeah, the easy one is the last question you asked. There's certainly no ASP creep or price advantage in there. This is all volume. Some of the things that are affecting both sites of service that you highlighted is procedure volumes, we believe, are continuing to rise or continue to be higher than they were last year. There's probably some tailwind in the market that we, like other people, are experiencing. We do believe we're benefiting from superior execution within the organization, specifically in our sales and our operations division. There's been much improvement in both of those areas over the last few years. New leadership has established different levels of behavior that we believe we're benefiting from. If you break down the two segments in the surgical setting, as you know, we launched two new products September last year, so we won't annualize them for a few more months. We're seeing some pretty good acceptance of both of those products, and in different applications As you know, surgical and surgical recovery isn't a well-defined market. There's several different applications. So there's always different areas to find more useful product. And I think our sales organization, again, is becoming more effective in that sales channel. In the private office setting, you know, we probably get some talons from what's happening with the kind of shift or trends in that space away from lacking more to ASP. driven by some of the pressure that OIG has put in the category. So we are probably a beneficiary of some of that. Your question about how do we parse this between market growth and market share gain, difficult to do in quarter. Most of the market data we get is a little bit dated, but clear indication that both are happening. We're probably seeing some good kind of high single digit growth in the market. as well as our ability to take share. And again, that goes back to just the execution across the organization. Hope that answers your question.

No, it's helpful. And maybe the follow-ups here, and I'll hop in queue. First, Joe, you mentioned on the wound care side some benefit from sort of CMS recommending that providers adhere or stay closely in line with the OIG recommendations. Do you have a sense of how many wound care products have dropped out of the market based on these recommendations to date? And maybe looking into the second half, how many may drop out? And then lastly, just on adjusted EBITDA, clearly trending well ahead of expectations, was a touch over 20% blended for the quarter. The guidance in the second half is for 20%. So maybe just any areas of reinvestment in the business. Is there a signal there that you're perhaps adding maybe a little bit more to the sales force, either on the wound care or surgical sides? Again, congratulations on a good quarter.

Thank you. So your second part of your question was really about reinvest, and are we hedging a little bit from reading your question on the adjusted EBITDA margin growth Probably, because we would like to invest in different parts of the business, and we think there's a lot of opportunity to do so. Look, I think it's going to be very difficult for us not to be north of 20%, the way this business is growing and the kind of leverage we're starting to get from it. I think productivity is way up. We're seeing leverage in the sales expense, and I expect to continue to see that improve. As far as companies that are dropping off or dropping out of the market, hard to say. The only thing we can point to is there is certainly a lot more companies with products listed on the CMS price list this year than there was last year. That number has increased significantly. That's likely driving some of the behavior that we're seeing in the market, but difficult to say, hey, who's going to survive and who's not going to survive. that we'll see over the long term what happens. But I don't think the story's over here. It's been punted down the road a bit, but I think CMS will still do something to address some of these anomalies.

Thanks again. Thanks, Anthony.

Thank you. Next question is coming from Carl Burns from Northland Capital Markets. The line is now live.

Thanks. Thanks for the question. Congratulations on the results. I was just wondering if What we see here, we see a significant drop in the investigation-related expenses. Do you expect that the third and fourth quarter will be a similar lower level? And then with the same with R&D on a normalized basis, where would you expect R&D expenses to be in the second half of the year?

Good question, Carl. This is Doug. With regards to a drop in the investigation costs, we would expect those to taper with some of the favorable resolutions that we've seen in the last few weeks. Yes, you're spot on there. Of course, we'll adjust for those, and those wouldn't be included in our adjusted EBIDOC guidance, but from a cash perspective, we definitely expect those to taper over time. Your next question was, remind me.

R&D normalization.

R&D normalization. Without an EOA, we came in at 10%. R&D in the quarter on a gap basis, that has a couple million dollars of sort of wind down costs related to the regen decision. And so, as NEOA drops out, that's probably another four to five million dollars to spend, or at least that's what we had in the, that was our quarterly cadence for the first half of the year. I would expect R&D to certainly drop into kind of the low to mid single digits.

The only thing I would add to that, Carl, is what's going to be left is what we're doing in wound and surgical. We still have a fairly robust product pipeline that we're funding development of. The majority of that is more like product line extensions for amniotic tissue product, which doesn't cost us a lot in terms of R&D to develop. We can keep that expense in check. I do, however, reserve the right to increase that spend over time as we see opportunities. It will likely increase in total dollar amount as the organization grows. It will likely not increase a whole lot as a percent of sales, if at all.

Got it, thanks.

Thank you. Next question today is coming from RK from H.C. Wainwright. Your line is now live.

Thank you. Good afternoon and congratulations on a very good quarter. A couple of quick questions here. In terms of the in-office sales growth that you have seen in the current quarter and also continuing to expect in the second half, how do you see this progressing into 24 and beyond? Is that growth going to Peter down or by adding additional products for in-office sales, just like you mentioned on the call, is that how you plan to keep that growth to continue in 2024 and beyond?

Yeah, okay, Joe. It's obviously early to be talking about 2024 and beyond. I would answer it by saying that we believe we have fundamentals within the organization that are strengthening. that would tell me that we have the ability to continue to grow the business somewhere in the double digits for the foreseeable future. I can't give you a number. Some of that depends on what happens within the market. Some of it depends on our ability to continue to extend our product portfolio. We have a lot of plans to do so. I do think that the foundation of the business, the pipes of the company are such that We are in pretty good shape to continue to grow this business for quite some time. There are no major limitations to scale that I can identify.

Very good. And then on Japan, I know you stated that you're seeing a growth in interest and adoption. So how... Do you think there will be some meaningful contribution from Japan in the second half, or we'll just get a glimpse of how the product could be doing in 24, and probably the meaningful contribution is actually coming in 24 and beyond?

Yeah, I think you have that right. In terms of a percentage of sales, Japan in the second half will likely still be not a meaningful contributor. I do think, however, we're making a lot of good progress. We have to keep in mind that this is a first of its kind product in the Japanese market, which means it requires a lot of market development. We have to train key opinion leaders. We have to train our partner. We have to work with those folks to get procurement requirements in place. We have to work with those folks that get reimbursement set in place. We've made a tremendous amount of progress in those areas. We've hosted numerous KOL advisory meetings. Most major KOLs in Japan have used the product, and they're seeing its ability to heal some of the more complex wounds. The uptick is there. It's just going to take a while before they start to use it on more patients. They see more progress with those complex wounds. and reimbursement starts to flow through at reasonable levels. All that is just the early stage of market development. So we remain optimistic. I can't tell you when we're going to hit that magic tipping point where this thing's just going to start to grow at a much higher rate. We did have growth in the quarter. We felt good about that on a percentage basis. It looks wonderful because the basis is still relatively small. But we'll keep you posted. We're still pretty excited about it.

Very good. And then the last question from me, you kind of teased us with the possibility of acquisition of a skin substitute to grow that market because you certainly want to grow that business beyond what you offered to amniotic tissues. If you decide to acquire something Is that included in the calculus of $90 million and more in terms of cash by the end of the year, or that does not include any acquisitions?

This is Doug. All of our forward-looking is simply based on organic and the momentum that we already know we have. Inorganic, we wouldn't be able to predict at this point from an investment perspective. But I will say that we're excited now with our free cash flow, with our positive EBITDA and momentum in building cash that it affords us the opportunity to capitalize opportunities that could be more significant. But it at least opens up a lot of doors for us.

Thank you. Thank you both, Joe and Doug. Thank you. Thanks, RK.

Thank you. As a reminder, that's star one to be placed into question Q. Our next question is coming from John Vandermosten from Zaxx SCR. Your line is now live.

Great. Thank you, and good evening, Joe, Doug, and Matt, and welcome aboard, Doug. Good to have you here as the CFO chair. I wanted to start out with a question on just investment in the business. You know, when you look at investing in the sales force versus investing in product enhancements, where does the I guess the next incremental investment dollar go further?

I think we're doing an adequate amount in both. Honestly, I do think we're getting more leverage out of our sales spend, clearly, as they get more productive over time. You're seeing sales per FTE improve, and I expect that to continue in the second half of the year and into 2024. But it's not like we're choosing one over the other. We've dramatically improved the financial profile of the company over the last six months, and I think that will continue through the second half of the year. Doug alluded to balance sheet improvement and giving us some flexibility in how we could potentially finance things. Likewise, we plan to continue to reinvest in the business, and we're not choosing one over the other.

Okay, got it. I wanted to build on RK's question on Japan. Can Japan be a conduit or a stepping-off point, I guess, to other parts of Asia? Is that something that you're looking into? I know it's early days, but if you build up a good beachhead, so to speak, there, can that be kind of a hub-and-spoke type of thing in other nearby countries?

Theoretically, but it's still early, as you indicated. The Japanese healthcare market is pretty sophisticated, one of the most sophisticated in Asia, so They do tend to lead opinion in that region. Whether or not we can leverage that remains to be seen. So our primary focus is to get that market up and running.

Great. And another question on the financial side. The Series B preferreds, I think those are coming near the end of their life, especially where the shares are trading right now. What should we expect to see there? Should we expect them to be reflected in the basic share count anytime soon?

We can see, yeah, great question on the preferred B. We're now officially in a window where the trading sort of trigger of $7.70 per share needs to continue for a certain number of days 20 trading days, and the conversion can then begin. There's no predicting what our share price will or won't do, but if those shares do convert, there'll be a process to register them, and the disclosures in our queue will sort of tell you what the equivalents look like at the end of June, roughly 31 million shares. on conversion, and so from a total sort of diluted share count, I would look at it as 31 million additional common shares at that point whenever it does occur.

Okay.

Great.

Thank you.

Thank you.

Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to management for any further or closing comments.

Thank you, and thanks, everybody, for your contingent interest in the company. We'll close out the call now and talk to you in about another 90 days. Thanks, everyone.

Thank you. That does conclude today's teleconference and webcast, and we disconnect your line at this time, and have a wonderful day. We thank you for your participation today.