Enovis Corporation

Good day and welcome to the ANOVA's first quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Derek Letko, Vice President of Investor Relations. Please go ahead, sir.

Thanks, Letko. Good morning, everyone. Thank you for joining us today for our first quarter 2023 results conference call. I'm Derek Letko, Vice President of Investor Relations. Joining me on the call today are Matt Trutola, Chairman and Chief Executive Officer, and Ben Barry, Chief Financial Officer. Our earnings release was issued earlier this morning and is available in the investors section of our website, enovus.com. We'll be using a slide presentation in today's call, which can also be found on our website. Both the audio and the slide presentation of this call will be archived on the website later today. During this call, we'll make some forward-looking statements about our beliefs and estimates regarding future events and results. Those forward-looking statements are subject to risks and uncertainties, including those set forth in the Safe Harbor language in today's earnings release and our filings with the SEC. Actual results may differ materially from any forward-looking statements that we may make today. The forward-looking statements speak only as of today, and we do not assume any obligation or intend to update them, except as required by law. With respect to any non-GAAP financial measures referenced in the call today, the accompanying reconciliation information related to those measures can be found in our earnings press release in the appendix of today's slide presentation. With that, let me turn the call over to Matt, who will begin on slide three. Matt.

Thanks, Derek. Hello, everyone, and thanks for joining us today. We had a strong first quarter, but before I discuss the results, I want to recognize the efforts of our fantastic global team of dedicated associates who work hard every day to execute our strategies and help our patients live more active and fulfilling lives. It was a great quarter. Let's go to slide three and talk about some of the highlights. We grew organically by over 9% with 19% growth in recon and 4% growth in P&R. Clearly, there were some tailwinds out there on the recon side, but the step-back view is continued strong outperformance in a strong recon market and the expected market recovery in P&R. We expanded our EBITDA, adjusted EBITDA margins by 120 basis points, reflecting the mixed impact of strong recon growth productivity from EGX, price progress, and moderation in some areas of inflation. We signed a key strategic acquisition in foot and ankle in the quarter and another one in April. And we're seeing strong growth momentum and healthy scaling of the full set of acquisitions we completed in the last few years. Overall, a really great start toward our 2023 objectives. In recon on slide four, we had high double-digit growth in the U.S., led by over 20% organic growth in knees and hips. Extremities grew 14% led by shoulder. Outside the U.S., we grew over 20% organically, also led by knee and hip, and we're pleased to see our brand and presence flourishing in a strong European market and a recovery-building momentum in Australia. I'm excited about the initial traction we're seeing as we begin to cross-sell our market-leading Empower and Altivate products internationally. And we have a strong pipeline of innovation in the U.S. as we continue the rollout of the Empower Revision Neat and the Altivate Augmented Glenoid. The markets were strong in Q1, and we took full advantage, once again growing well above the other recon leaders. Turning to slide five, I want to take a moment to discuss what we're doing to further strengthen our position in the fast-growing foot and ankle market. We've built a strong foundation with differentiated product offerings in the hindfoot and midfoot segments, and we're adding some key new technologies for the rapidly growing bunion and forefoot space. We announced the acquisition of Novastep, which gives us a comprehensive set of products for bunion surgery. the largest and fastest growing part of the foot and ankle market at almost a billion dollars per year of market. Whenever possible, surgeons want to address these issues with a minimally invasive solution, and now we have the leading percutaneous MIS solution for these procedures. And in Q2, we will launch Evolve34, a product focused on the large, fast-growing lapidus segment of the bunion market. This will be a terrific complement to the Novastep MIS offering, and coupled with our great plating and staple lines, gives us a robust offering for the entire bunion segment, regardless of severity or indication. Novastep also brings channel and approved products outside the U.S., accelerating our global progress in foot and ankle. We also announced the acquisition of SEAL's leading external fixation product line, which complements our existing offerings and strengthens our channel position. Overall, I'm very pleased with the progress we're making to build a leading foot and ankle platform. In P&R on page six, our 4% organic growth reflects a rebound in volume as markets recovered. You can see on the right that over the past five quarters, we've had average growth in the 3% to 4% range in line with our expectations. We've applied EGX principles and tools to improve and strengthen our supply chain, and we're seeing the results with more resiliency and better service levels, even as we begin to bring back down inventory levels in some areas. And stay tuned, we have a nice pipeline of additional bracing launches coming later in 2023 that will help us to support P&R growth. Now I'll let Ben take you through the P&L details and our positive guidance update. Ben?

Thanks, Matt, and thanks, everyone, for joining our call today. I'll start my prepared remarks on slide seven. We had a very solid start to 2023, delivering strong growth and margin improvement. For the quarter, we grew 8% or 9% organically. Foreign currency had 150 basis point negative impact on sales. We delivered another quarter of double-digit recon growth and achieved mid-single-digit growth in our P&R business. Gross margins increased 170 basis points versus prior year, reflecting our faster growing and higher margin recon segments. as well as taking some ground on price versus cost. We saw strong performance in our operations, realizing the benefits from our business mix, our proven business system, and strong leverage from growth. In the quarter, our operating expenses were up 40 basis points as a percentage of sales. This is largely driven by investments in research and development. primarily in our recon segment, as we continue to integrate and scale recent acquisitions and fuel a healthy innovation pipeline. Our Q1 EBITDA grew 18% versus prior year, resulting in a margin expansion of 120 basis points and reflecting our strong, profitable growth in the quarter. Our effective tax rate for the quarter was 21%, and interest expense came in at $5.7 million. Overall, we posted strong adjusted earnings per share of 44 cents or 19% growth versus prior year. We are pleased with our results in the quarter and our clear progress executing against our strategic goals. Moving to slide eight, considering our Q1 momentum, we are raising our organic sales growth outlook for the year to 6% to 7%. Recon markets got off to a strong start, and our P&R business grew in line with expected levels. We expect a slightly more difficult prior year comparison in the coming quarters, but we are confident that our Q1 results will lift the overall growth performance for the year. Q2 has roughly one point of growth headwind due to less selling days, and we expect the Q2 growth to be within the updated guidance range. We are raising the full year adjusted EBITDA and EPS ranges to reflect our Q1 performance. Our new outlook for adjusted EBITDA is 259 to 267 million with adjusted EPS of $2.18 to $2.32. While we are still experiencing some headwinds from inflation and currency on our operations, We expect our Q1 performance to read through for the full year. We are excited about our recently announced acquisitions complementing our existing foot and ankle platform. Those acquisitions will initially bring approximately 25 to 30 million of annualized sales, strong gross margins, and a double-digit growth profile. We expect these deals to have a slightly negative impact on earnings for the full year, but they should turn accretive to earnings beginning in 2024 as they scale. To summarize on slide nine, we had a strong Q1 leading us to raise our full-year guide. We demonstrated strong above-market growth and are confident in our strategy of building a sustainable, high single-digit growth company. We took another step forward in expanding our margins and have a clear path to continue this momentum. We continue to execute our M&A strategy as evidenced by the two deals that we highlighted on this call. They are an example of our rich funnel across our business of prospective deals and a strong balance sheet with ample capacity to execute. And now we will move to Q&A. Rocco, please open the call for questions.

Thank you. If you would like to ask a question, please press star then one. If your question has already been addressed and you would like to withdraw your question, please press star then two. Today's first question comes from Dick Chopra with Wells Fargo.

Please go ahead. Hey, good morning and thanks for taking the questions. Two questions for me. I'm going to ask them both up front. I guess first on P&R, I would love to hear kind of what you're seeing in the market with regards to volumes. and how you now think about that business growing for the rest of 2023 and my second question is just on guidance you know you raise guidance after a nice beat um but just kind of help us frame out how you um of the guidance kind of what what gets you there the top end versus the low end thanks for taking the questions

Okay. Yeah, thanks. Thanks a lot, Vic. So, yeah, as we've been saying through the quarter, we expected P&R volumes to recover in the first quarter after a little bit of pressure there in the back half of last year that showed up in Q4. And we saw that recovery back into kind of a normal range for P&R. You know, especially if you actually look at our P&R business back to 19, it's in kind of a normal place in terms of the growth from 19 in Q1. And we expect, you know, P&R to stay in a similar growth range as we go through the balance of the year. The comps get actually a little bit tougher in the next quarter or two and then, you know, easier in Q4. And we expect to be in that, you know, similar kind of growth range as what we've shown as where the business has been performing.

Yeah, Vic, and I'll take the guidance question. You know, I think, you know, we have a good start to the year. We're excited about the start. We're still being a little bit cautious as we think about the balance of the year in terms of what may or may not happen with regards to just the market in general. So we're trying to keep the approach of being a little bit more cautious just to anticipate that there could be some bumps in the road as we think about the balance of the year. But hopefully we'll continue to see this momentum in Q1 continue to play through and then have a little bit of upside.

Thank you. And ladies and gentlemen, our next question comes from DJ Kumar with Evercore ISI.

Please go ahead.

Hi, this is Sophia for VJ, a two-part question. First is, a lot of your peers have cited greater-than-expected procedure recovery and staffing and supply improvements. Can you give any update on what you're seeing, and can you provide any color on how much backwater contributed to organic growth this quarter?

Yeah, so we saw a good, strong Q1 as well, and really what you saw in Q1 in the U.S. is you know, kind of normal, healthy levels, you know, so no staffing pressure, plenty of demand, no COVID pressure. So I think you saw normal, healthy levels in the U.S., maybe even a little better than normal. and then, you know, a soft comp because of the pressure on last year. And so, you know, we and everybody in the industry, you know, had very strong growth in Q1, and we continue to have much stronger growth than the rest of the leaders in Q1. Outside the U.S., you know, in addition to, you know, the little bit easier comp, there are some countries where They're on overdrive, and they're actually working off significant backlogs of surgery, countries like Germany, working off significant backlogs of surgeries and running higher than normal levels. And we saw that as well with well over 20% growth outside the U.S. And so as we move through the year, we expect to see normal seasonality play out in the U.S., which will lead to lower but still very healthy growth as the comps become more normal in the coming quarters. Outside the U.S., things could remain hot for another quarter or so, but then I think we need to be a little bit more cautious about what happens in the back half of the year once you get through that period of some of the countries going on overdrive. But overall, it's a good, strong start in the elective surgery area and in recon, and we expect the balance of the year to play out in a strong way. Again, not with some of the extra tailwinds of Q1, but still in a very healthy place in terms of this year's performance performance.

Great. Thank you. And then just one quick follow-up. So gross margin performance in the quarter, you know, it was up 100 bits quarter over quarter. Can you kind of talk about what the inflation impact was and what pricing was in the quarter? And just kind of overall, you know, what drove that performance? And should we think about 2Q being in line with 1Q or kind of above that level?

Yeah, I'll take the question. Thanks for the question here. Yeah, happy with our gross margin expansion in the quarter. A lot of that driven by our business mix, like I mentioned in my remarks, you know, strong recon performance, which brings, you know, above average margins compared to our overall company. We have taken some ground on the price-cost equation. I would say that we're getting about 1% to 2% price on the P&R side of the business. We've seen some inflation moderate in certain areas with regards to inbound freight. some plastics. We still see some inflation around outbound freight surcharges, wage inflation, and some metal challenges in certain parts of our supply chain. But overall, I feel confident that we continue to take good ground, make productivity in our operations to overcome some of the challenges that we're seeing and claw back some of that inflation that came after us over the last couple of years. So I would expect gross margins to be kind of in line a little bit, maybe lower than what we saw in Q1 as we think about the coming quarters. But overall, you know, good strong start here in the year. Great. Thank you very much.

Thank you. And our next question today comes from Kyle Rose at Canaccord Genuity. Please go ahead.

Great. Good morning, everybody. So just two questions for me. Two questions for me, really. is how should we think about the impact of the revision platform on the U.S. as they move through the year? Is that more you're bringing on new customers that were maybe waiting for you to have a revision set before they adopted primary, or are you capturing incremental share in existing new customers?

Yeah, Kyle, thanks for the question. Yeah, it should be a combination of both, you know, just like some of the other key products we've brought out, you know, that complement our lines in the past years. It gives us an opportunity to sell into existing customers, you know, surgeons that we've converted already and now serve that part of their offering, you know, which, you know, revision is, you know, kind of 15 to 20% of the overall market. So we get a chance to sell some more into existing customers. And then we also have some surgeons that, you know, wouldn't convert until we had an Empower revision, and now we do. So it'll be a combination of both. You know, that product's really just ramping as we make our way through this year, and, you know, we already have extremely strong heat growth right now, and that'll just, you know, continue to put fuel on that as we work our way through this year and into next year.

And then just from a high level, how should we think about U.S. versus O.U.S. recon growth moving forward? I mean, O.U.S. obviously is a smaller base, but you've got some cross-selling opportunities with integrating the Mathis portfolio and the historic DJO portfolio. But then on the U.S. side, you still have products like Empower coming or Power Revision coming. So, I mean, is it fair to say that they should be growing about equal moving forward for the foreseeable future until... until maybe Empower annualizes, or should the OUS market grow sustainably higher than the U.S. market?

Yeah, I think on a longer-term basis, you know, we expect to, you know, probably grow a little bit higher in the U.S. than OUS, you know, based on a combination of the You know, the kind of strong double-digit growth that we've done, you know, for a decade now in the U.S. and continuing to fuel that with innovation and fuel that commercial engine we've got there with innovation. And then, you know, foot and ankle growing well into the double digits as well as it continues to grow and scale. We think that combination... over the kind of medium term, you know, should have the U.S. business further into the double digits. And, you know, we've always talked about the outside the U.S. business being, you know, at least high single digits and pushing double digits, and that combination getting us our double-digit growth over time. Now, in the short term, I think the outside the U.S. business has, you know, the potential for more tailwind, certainly in the coming quarters, you know, in line with some of my earlier comments. comments and even, you know, as we move from this year into next year and we ramp up some of that synergy sales, I think there is the possibility for the, you know, for the outside the U.S. business to grow as fast or faster than the U.S.

Okay. And then last question, and I'll hop back in, is just your M&A expectations moving forward. I mean, you know, Ben talked about the strength of the balance sheet there. Obviously, it's been a little bit more of a tuck-in strategy. historically, just wanted to see how we should think about, you know, tuck-ins versus, you know, transformational adjacent type of deals longer term. Thank you.

Yeah. So, well, first, Kyle, we're super excited about the two deals we're talking about here on the call. They really solidify. I think we've said all along that we've got a strong foot and ankle platform and we could continue to build out the rest of it organically, you know, or can bring some other strategic technologies in. And and I think the deals we talked about here, you know, particularly Novastep, really round out a, you know, full, very powerful offering to go after all aspects of foot and ankle, which is powerful with the surgeons and also powerful with the channel, and so we feel very good about that, and, you know, certainly there are, you know, other possibilities to think about within that space, but we've done a lot there, and I think we'll be kind of you know, more focused on organic execution, you know, in that space. You know, we do see other strategic adjacencies, you know, to look at, you know, within, you know, recon and a little bit on the P&R side. And so, you know, we've got a healthy funnel of things that we could do, all with a focus on accelerating our growth, bringing strong gross margins. So either, you know, technologies that accelerate our growth, things that open up attractive adjacent indications or geographies. And, you know, we've got a healthy funnel, expect to continue to execute using the great balance sheet that we've got and, you know, certainly, you know, focused on, you know, small and medium-sized kind of deals versus big transformational things.

Thank you. And our next question today comes from Jeff Johnson at Baird. Please go ahead.

Thank you. Good morning, guys. Matt, I wanted to follow up on one comment you made about the European market just kind of, you know, being maybe even a little faster to recover here and really burning through some of that backlog. You know, in the U.S., I think none of us probably know, but we've been kind of operating under the assumption that maybe it would take a couple years to get through the U.S. backlog just as ORs operate at pretty high capacity utilization already and you can't get all those patients back right away. Are there different dynamics outside the U.S.? I think you cited the German market specifically, but are there different dynamics, different capacity utilizations where maybe that backlog catch-up could be even faster in Europe? And how are you thinking about the backlog catch-up in the U.S.? Thanks.

Yeah, thanks for the question. And yeah, I think I'd largely agree with what you said, but I'll kind of walk through it. You know, certainly in the U.S., you know, if you look at If you look at the growth versus 2019 in the first quarter, you know, our best view would be that the, you know, the kind of averages 10% or so growth versus 2019, right? And that's a four-year period. So, you know, that's almost two years of growth or a little more than two years of growth maybe for the industry in a four-year period. And now our growth was 30% to 40% through that period, but the industry grew probably about 10%. And so, you know, I think that would say that in the U.S. there's a couple years of growth that were lost. in the industry and the demand's still out there in terms of patients needing the surgeries. But we're not, you know, we're not seeing that come through as, you know, extra surgery in any given point in time. You know, I think, you know, there was, you know, people were doing surgery at very healthy levels with good staffing and all that through the first quarter. But I think nobody's, you know, nobody's saying that they're running way over normal levels to work down backlog versus just that they're running kind of flat out And then, of course, there was an easy comp there in the U.S. Outside the U.S., it is a little different situation. There are some countries where they have such a significant waiting list that they have found ways to run on overdrive, you know, for some period of time here. And that's created, you know, I think some pretty oversized growth outside the U.S. in certain markets. And, you know, Now, at the same time, the outside the U.S. picture versus 19 is less than the, you know, the U.S. picture. And so there's more ground to make up outside the U.S. and there are some countries that seem to be, you know, running on overdrive to make some up. You know, I think that that means that we need to be a little careful about what we think about how the year plays out outside the U.S. and, you know, whether they'll stay at those very elevated levels or start to start to step down, you know, to more normal levels. But I think even with, you know, some overdrive outside the U.S. for a portion of this year, I think there'll still be a pretty healthy, you know, more kind of, you know, kind of demand remaining to work off of demand that was missed over the last few years that has the potential to be a tailwind in the coming years.

That's helpful. Thank you. And then maybe my one follow-up question, just on your U.S. extremities business, that 14% growth, you know, how much above that was shoulder and kind of what, and even if that's just in qualitative terms, and what's your outlook for shoulder here? I mean, obviously, you guys are clicking on all cylinders there. You're a market leader in shoulder. It's going very well. You know, Striker, I think, also doing very well with their shoulder. We've seen the new modular system come out of Zimmer. They're getting maybe a little more competitive. So just how do you think about both market dynamics and kind of your competitive position within that market here as others, you know, are kind of doing their thing and trying to get stronger as well?

Yeah, sure. Well, yeah, I'll say that it was above, as we said, and it was enough above that we're comfortable that we continue to take nice share in shoulder positions. And so, you know, we feel comfortable that we continue to have, you know, good market leadership there in terms of our phenomenal ultimate and a lot of the different things we brought out. Our short-sim anatomic has been doing tremendously well. Our new augmenting glenoid is ramping. And so, you know, we're still leading in shoulder. You know, we've talked about, you know, growing more one and a half, two times market in shoulder versus, you know, three to five in knee and hip. And that's consistent with the fact that we're a leader in shoulder. And as a leader with significant share, if you innovate and drive aggressively commercially, you can grow more than the market, but not three to five times the market. Whereas as a 2% share player in knee and hip, with the amount of innovation we do in the phenomenal and power product we've got, and now some of the enabling tech we're bringing there. We continue to grow at multiple times market. Now, certainly outside the U.S., as we can ramp up the all debate, we've got the potential to grow, you know, more at multiples of market levels, but that's going to take a little bit of time here.

Thank you.

Thank you. And our next question today comes from Young Lee with Jefferies. Please go ahead.

All right, great. Thanks for taking our questions. Congrats to a good start to the year. Maybe on the foot and ankle business, did foot and ankle grow double digits as well? Was wondering if we can get some latest updates on progress with the star ankle and can you talk about the growth outlook for the year for foot and ankle?

Yeah, sure. So, you know, the Foot and ankle business was just under double digits in the quarter, and that's with our star continuing to decline a little bit as we're kind of working through some of the final stages of modernization on that product. Very strong growth in the other products, and we exited the quarter comfortably into the double digits in foot and ankle. And so we're very comfortable that our foot and ankle business will grow double digits in the year. uh and you know we'll be well into the double digits uh here in in q2 uh and uh we're you know thrilled with the additions that we've made that'll kind of you know build on top of that uh the and from a star standpoint we're just ramping up the cutting guy which is a you know kind of a critical uh you know piece of how we get that that uh business back uh on on a positive growth uh footing uh we're continuing to to work through the the polymer swap out with the fda and expect uh you know, that later this year we should have that resolved as well. Even with the new cutting guide, we're getting plenty of interest, and so we'd expect to be able to, you know, turn back to growth here in the coming quarters in foot and ankle, and with the very strong growth of everything else, we're comfortable that we'll grow foot and ankle, you know, well into the double digits here in Q2.

Okay, excellent. And then on NovaStep, can you maybe talk a little bit about the growth bridge for the business as well as the growth outlook and plans to expand it globally as well as into the U.S.?

Yeah, so the NovaStep business is pretty balanced between the phenomenal position in MIS Bunyan in the U.S. and an outside the U.S. position that is, you know, multiple product lines that have the approvals outside the U.S., and it has been growing well into the double digits. And so we expect to be able to bring that product in and have it continue to grow well into the double digits, but also to have it really grow you know, strengthen our position here in the U.S. in terms of our ability to, you know, continue to make our channel and our presence with the doctors more and more powerful. And we also, you know, have an opportunity to accelerate the path that we move into some key areas outside the U.S. based on the presence, channel presence, and the approvals that Novistep has. So it's the larger portion of of that 25 to 30 million of annualized revenue that Ben talked about, and it's been growing, you know, kind of comfortably into the double digits range, and it has very high gross margins.

All right. Thank you very much.

Thank you. And our next question today comes from Matt Michon with KeyBank. Please go ahead.

Hey, guys. This is Brad Fishpin. Thanks for squeezing us in today. Just wanted to follow up a little bit on the M&A strategy. It looks like a lot of the focus over the last few years has actually been in that foot and ankle market. And just wondering, given it seems like you now have a pretty comprehensive portfolio in that area, if maybe like some other areas come to the forefront when you're looking at possible deal activity going forward. I'm just curious how you're thinking about priorities in that respect. Thank you.

Yeah, for sure. I mean, yeah, you're right that the largest amount of capital deployment, by far the largest amount of capital deployment we've done has been into recon with foot and ankle and the math at global expansion, you know, being the key things there and then some key technology acquisitions as well. We also, you know, invested in a terrific laser technology on the PNR side that is growing very, very nicely, you know, as well. You know, looking forward, we certainly have other possibilities in terms of investments we could make in technologies or getting the key indications within the recon space or opening up key geographies further in the recon space. Also some, you know, adjacent segments that we can look at within orthopedics that could be helpful. could be attractive, you know, as well. And, you know, and also, you know, sort of other opportunities in terms of high growth modalities in that kind of rehab area that is an attractive area as well.

All right. Thanks very much. And then just one follow-up from me. You talked about a few drivers of that really strong international performance this quarter. understanding some of it was backlog related, but it also seems like it also seems like you're calling out some, you know, traction from cross-selling opportunities and expanding, you know, the DGO brand presence in Europe following the Mathis deal. So just curious how like those initiatives are contributing to the performance and then how you think that can benefit the growth outlook going forward. Thanks again.

Yeah, so, you know, we grew, you know, double digits in that business last year, you know, without an extra market tailwind. So, you know, I think certainly 20% plus is not a sustainable growth rate, but we do feel comfortable that even without the extra market tailwind, we'd probably be in the in the double-digit range, you know, for the, you know, for the Mathis business outside the U.S. You know, I think that, you know, right now there's a small contribution from the synergies themselves, but I think there's also just a lot of positive momentum in the market. There's some investments that Mathis, you know, had made over the past few years, even going into COVID that are bearing fruit in terms of feet on the street. And there's also, I think, just a lot of confidence in, in, our business in the marketplace and a lot of confidence in our channel as, you know, as they, you know, have, you know, the strength of Mathis historically and then they have these new offerings coming in, you know, from, you know, from the U.S. business. So, you know, great to see that. You know, I will say that most of the Synergy benefit is yet to come. You know, that at this point it's, you know, And Doc's initially using the products and a lot of, you know, Doc's getting ready to use the products. And we're, you know, being, you know, careful about how fast we flow products into the market, you know, given all the growth going on everywhere in the world. And so a little bit of benefit from Synergy right now. in the actual revenues, an additional benefit, I think, in terms of just what it's doing for our brand and the confidence of our channel and the extent that surgeons are excited to switch over to us. And so as the market tailwinds subside, I think we have the opportunity to have the contribution from the Synergy continue to ramp, and that's how we'll grow that business really nicely, not just this year, but in the years to come.

All right. Thank you very much.

And, ladies and gentlemen, this concludes our question and answer session. I'd like to turn the conference back over to the management team for any closing remarks.

Thank you, everyone, for joining us today. If you have any further follow-ups, please contact Investor Relations. Have a great day.

Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.