Paragon 28, Inc.

Good afternoon and welcome to Paragon 28th First Quarter 2024 earnings conference call. Currently participants are in a listen-only mode. We will be facilitating a question and answer session at the end of today's call. As a reminder, this call is being recorded for a replay purposes. I would now like to hand the conference over to your host today, Mr. Matthew Brinkman, SVP of Strategy Investor Relations. Mr. Brinkman, please go ahead.

Good afternoon and thank you for joining Paragon 28th First Quarter 2024 Financial Results and Earnings call. Presenting on today's call are Albert DeCosta, Chairman and Chief Executive Officer, and Chrissy Wright, Interim Chief Financial Officer. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements made as to the company's or management's intentions, hopes, beliefs, expectations, or predictions of future events, results, or performance. These forward-looking statements are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from these forward-looking statements. All forward-looking statements are based upon current available information, and Paragon 28 assumes no obligation except as required by law to update these statements. Additional information concerning certain risks and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings and in the press release that was issued earlier today. During this presentation, we will refer to the non-GAAP financial measure of adjusted EBITDA and constant currency net revenue growth. A reconciliation to the most comparable GAAP financial measure, net income, and reported net revenue growth is contained in our press release issued earlier today. And with that, I will turn the call over to Albert.

Thanks, Matt. Good afternoon, and thank you for joining us for our first quarter 2024 earnings call. I am pleased to have our interim CFO, Chrissy Wright, join us for today's call. Chrissy has been an incredible partner on our board since 2021, serving as our audit committee chair and as a member of our nominating and governance committee. I am now going to kick things off with a review of our first quarter performance, followed by recent highlights. After that, I'll pass it over to Chrissy to provide further details on our first quarter financial results and guidance. Global revenue for the first quarter of 2024 was a record $61.1 million, representing .4% reported in constant currency growth, in line with the top end of our preliminary revenue results reported on April 4th. Overall, we are pleased with our growth through the first quarter of 2024 compared to our strong growth comp in the first quarter of 2023, despite one less billing day this year. We also saw a modest step up from the fourth quarter of 2023, which is typically the seasonally highest revenue contribution of any quarter each year. Importantly, we continue to see balanced top line performance across all five foot and ankle subsegments. Looking at the U.S. business performance, net revenue for the first quarter of 2024 was $51.1 million, representing .5% reported growth. During the quarter, we increased our U.S. producing sales rep roster by 6% to 261 reps compared to the first quarter of 23, and saw an 8% increase in productivity across our rep base. Over the same period, we grew our surgeon customer base by 12% to a record 2,275 surgeons. Medical education remains a core part of our commercial strategy, and our two mobile labs have been important drivers of surgeon adoption to start the year. We are excited to see solid growth in these leading commercial indicators and expect to see continued momentum in these areas throughout the year in line with our typical seasonal trends. First quarter international net revenue was $10 million, representing .2% and .5% reported in concept currency growth, respectively. International growth was driven primarily by the United Kingdom and Australia. Overall, I am thrilled with our international momentum. Our foundation is set for sustainable growth as we drive further investments to clear and launch additional products and new markets outside of the United States. Turning next to our product portfolio, 2024 is off to an incredible start with six full product launches and one limited market release in the first quarter of 2024. We remain focused on innovating across all segments, but it's important to note that all products launched so far in 24 are in high growth foot and ankle segments like bunion, soft tissue, and minimally invasive surgery. Ultimately, these most recent launches will help advance Paragon 28's portfolio in the fastest growing subsegments in our market and position the company well for sustainable long-term growth. Most recently, we launched the Grappler Reinforced Repair System, adding to our suite of novel syndesmosis repair solutions and broadening our rapidly growing soft tissue portfolio. As a reminder, early in the first quarter, we launched three other soft tissue solutions with the Grappler Knotless Anchor, Bridge Line Tape, and Mr. Tenon Harvester, all of which will typically be used in conjunction with other products and are highly complementary to our existing plating and screw systems. Another solution is our FJ2000 Power Console and Burr System, designed specifically for the extremities and MIS surgery. Lastly, we launched the Precision MIS Bunion System and have our new Lapidus Clamp, the Bunionmatic, which is on limited market release with full release expected later this year. We continue to see strong momentum from our 2022 and 2023 product launches, which have continued to be significant drivers of growth through the first quarter of this year, especially in areas of external fixation and hindfoot fusion where we launched our Monkey Rings, Monkey Bars, and Phantom Hindfoot Nail in 2022. Our product launches in 2024 are still relatively fresh and have not yet contributed materially to the revenue in the first quarter, but they've been generating a ton of buzz with our rep base and within the surgeon community. These launches give us confidence in our guidance for 2024 and P28's ability to drive further growth later this year and beyond. As we look further into 2024, we expect to continue investing in our commercial and educational opportunities to enable P28 to realize the full potential of our new product launches as well as legacy products both in the U.S. and internationally. In closing, when we founded Paragon 28 in 2011, we set out with the mission to continuously improve the outcomes and experiences of patients suffering from foot and ankle conditions. That remained our mission through our IPO in 2021 and continues to be our top priority today. Everything we do and every decision we make is to advance P28 along that mission, and I attribute our success to the team's dedication to that unified goal. This is a long-term journey, and while I am incredibly proud of what we've achieved in the past several years, I could not be more excited about the company's future. With that, I will now turn it over to Chrissy.

Thank you, Albert. Turning to the rest of the P&L beginning with gross margin. Gross profit margin for the quarter was 80% compared to .9% in the first quarter of 2023. The decrease in gross profit margin is primarily the result of higher prices from suppliers as well as product and geographic mix shifts. First quarter research and development expenses were $7.6 million, or .4% of net revenue, compared to $7 million, or .5% of net revenue in the prior year period. We continue to invest in new product development to improve patient lives through our product pipeline, which remains robust with over 25 active projects in development, including several tied to Smart 28. Selling general and administrative expenses in the quarter were $54.2 million, a $10.4 million, or .7% increase from $43.8 million in the first quarter of 2023. As a percentage of net revenue, SG&A was .8% compared to .2% in the prior year period. The increase in SG&A was primarily driven by increased headcount, annual merit increases, investments in the commercial team, increased variable sales representatives commission expenses related to net revenue growth, an increase in professional services fees, and an increase in depreciation expense. Adjusted EBITDA for the first quarter of 2024 was a $5.5 million loss compared to a $1.4 million loss in the prior year period. The decrease in adjusted EBITDA is primarily attributable to an increase in operating expenses. While we remain laser focused on driving operating leverage across the P&L in the months and quarters ahead, the impact of investments made in Q1 has slightly pushed out our expectation for EBITDA breakeven in 2024. Importantly, we are prioritizing initiatives directly associated with our growth strategies and top line performance. Operating cash flow for the first quarter of 2024 was negative $11 million compared to negative $5 million in the prior year period after adjusting for the $9 million legal settlement payment made in Q1 2023. The increase in cash use is attributed to higher operating costs and net changes in working capital items. We ended the first quarter of 2024 with $108 million of total liquidity, consisting of $58 million of cash on the balance sheet and $50 million available through our credit facility. Now turning to our 2024 revenue guidance. For the full year 2024, we are reaffirming our previous net revenue guidance of $249 million to $259 million, representing reported growth of .1% to 19.7%. Through the rest of 2024, on a quarterly basis, we anticipate impacts of seasonality to be consistent with 2023. Our net revenue guidance assumes foreign currency translation rates remain consistent with current translation rates. That is the end of our prepared remarks.

We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking a question. Our first question comes from a line of Matthew O'Brien with Piper Sandler. Your line is now open.

Great. Thanks for taking my questions. Maybe just for starters here, Albert or Chrissy, just the revenue that you generated in Q1 was good. Actually, it's an acceleration on its year stack basis. But as I look at the rest of the year here, you're getting easing tops, but you're kind of keeping the growth outlook static. And so I'm just wondering, what is it? Is there something specifically domestically or internationally that you're hesitant about? Or, you know, is competition getting more challenging? And then the split between the two, should we expect more international to drive most of the growth or more of the growth? You know, this year and next, and then I do a follow up.

Yeah. Hey, Matt. It's Albert. Thanks for the question. Maybe for starters, I'll say we have, we've got a lot of confidence in the numbers that we set out in February. We expect net revenue to be $249 million to $259 million. That's around .1% on the low end to .7% on the high end. The assumptions haven't changed going into that number. And we are definitely thrilled on the performance for Q1. It's always really nice to see an uptick in Q1 versus Q4. A lot of our KPIs hit and we have a lot of confidence in the range that we set out in February. The one thing that I'll say is we're going to keep analyzing that and report back as there are changes to be made. On the international question, one thing that I'll tell you, I couldn't be more thrilled about the performance of the business overall, but the international business in particular, you know, we set out as our mission to improve outcomes for foot and ankle patients and to really put a mark on this market. And you can't do that as a domestic only company. You really have to be global. And our international reception has been phenomenal. We've made a lot of investments in the international business. And so you're seeing a lot of those paying off. It's on a smaller scale, obviously, than the U.S. So the growth rate is higher there and we expect that to continue. But the ability to participate with global KOLs and really help craft the message about where this market's going and how it's going to get there is it's thrilling for us.

Got it. Appreciate that. And then the follow up is in the EBIT.com commentary, the push out, is that just for pushing it up to 25? And then the investments that you're making, are those investments to help you grow faster or do you have to spend more to kind of grow at these rates? Thank you.

Yeah, thanks again for the question. Definitely those investments were to help us grow. Right. We took some opportunities to invest in the commercial team and we had some R&D investments that we took in Q1. One thing that we've always been really passionate and committed to is we want to make sure that we're spending every dollar to improve this business and to help us get to where we're going. The one thing we want to do is look at efficiencies and really look across the P&L to find operating leverage as we grow this thing so that we continue to build the best business we can. So, yes, we took some opportunities to invest in additional opportunities to grow. We think those investments are really going to support us moving forward. And on the other side of it is we're always looking for leverage. We're always looking for efficiencies to drive better management of the capital, the precious capital that we've got.

Okay, and I'm sorry to push a little bit, Albert. Is it investment to grow faster or investment just to keep growing at still elevated levels?

Investments to grow faster.

Got it. Thank you.

Of course, thank you. Thank you for your question. The next question is from the line of George Sellers with Stephen Zink. Your line is now open.

Good afternoon. Thanks for taking the question. Maybe to shift back to the guidance, I'm just curious, what does that assume from attribution from some of the new devices you launched in the first quarter and towards the end of last year? And also, what does that assume in terms of the underlying market and the competitive dynamics that some others in the market have commented on recently?

Yeah. Hey, George. Thanks for the question. Maybe to start, and you know this is a tickle point for me, but the products we've launched, honestly, really since the beginning, but more importantly, this class of launches and the ones you're referencing late last year and early this year, generating so much excitement. They're in really high value, high growth segments of the market, and the reception we're getting is phenomenal. Now, modeling that in, I will tell you, products we launched in Q1, we don't expect to be as material early. We would expect maybe in the latter half of the year and into next year to see some meaningful contribution from those products. But the reception that we've gotten so far has exceeded our expectations, and we're thrilled. We just keep, you know, our goal in this market is learning so much every day, and we take that information and we go back and we see how we can improve these outcomes and refine systems and improve the offering out there. And the reception that the products have received tells us that we're definitely hitting the mark there. This market is young. There's a lot of room for improved outcomes, and we feel like we're the company on the front of that mission to do that. And so I just put that there. I'll tell you those new products are already generating some momentum for us earlier than expected, and we do have a lot of excitement, too, about what's coming in the second half of the year. We've got a lot of good products, and one that I'd mentioned on several calls is the SPART 28 launch is still on plan. And so we're just, we think there's going to be a really good year for that.

Okay, that's great to hear. One thing I want to say,

I'm sorry, George, one thing I was going to say, I don't mean to minimize the excitement around the Salesforce expansion that we also are pretty excited about this year. We've got some great new sales folks that we expect to start contributing later in the year. And so I didn't mean to emphasize everything on product, but we think there's a lot of KPIs that are going to contribute nicely this year.

Okay, that's helpful to hear. And then maybe digging into that sales commentary and some of the adjust-debate commentary a little bit. The SG&A line really re-accelerated on a -over-year growth basis this quarter. I'm just curious how we should think about the cadence for growth through the remainder of the year. And maybe to follow up on a prior question, how far out did this quarter sort of push that adjust-debate break-even timeline?

Yeah, again, thanks for the question. We don't typically comment on the exact timeline for EBITDA. I can say it was a slight push, so not terribly significant. The one thing I will say is the SG&A increase, we absolutely expect to start leveraging those investments. And so that increase, we took advantage of some opportunities to invest in the business there, and we did. But we fully expect to start leveraging that and to see a much different profile for SG&A moving forward.

Okay, thanks for the time.

Yes,

thank you, George.

Thank you for your question. Our next question comes from a line of Craig Bijoux with Think of America. Your line is now open.

Good afternoon. Thanks for taking the question. Albert, maybe following up on some of the Salesforce investment that you're making, we'd kind of love to hear what you're seeing in the market and kind of what's driving, or I guess, the opportunity that you see and the rationale for making the investments. Was there talent available? Did you see, was it a competitive dynamic that maybe you could take advantage of? We'd just love maybe a little bit more color on the opportunity and the push or why you thought it was time to invest like you have, so maybe what you see over the next couple years.

Absolutely. Great to hear from you, Craig, and thanks for the question. I will say every time we launch new technology, it generates a real nice buzz in the market, and that brings some opportunities forward. I don't want that to sound like we're pretty flippant about who we bring on. We're a very clinically oriented organization, our products and systems, the way we service that, we take deep pride in being a real resource to our surgeon customers and ultimately impacting that patient on the table. So when we're presented with those opportunities, what we're really evaluating is the clinical approach to the Salesforce and making sure we get not only the geography covered, but get the right partners in place. So all these things kind of feed together. One thing that Paragon's always been blessed with is we have just a phenomenal culture around developing better solutions. We're not bag fillers. And when we launch these systems to the market, it means so much to salespeople, it means so much to surgeons, it generates a buzz around medical education. Those opportunities all connect. And we are one part product development and an equal part Salesforce, right? We really have a sales culture here with most of us came from selling not only medical devices, but selling foot and ankle products. We have a deep passion for the procedures themselves above and beyond the implants. And so that connection just is a really good recipe for us. And so when those opportunities present and it's the right fit, we have to take advantage of those. We have to be committed to investing in the things that matter. And we can look at efficiencies and the things that don't drive top line and don't improve our organization. That was a long answer for that, Craig. I apologize, but it's a real sweet spot for Paragon 28. We happen to be a spot that a lot of people aspire to go to.

No, I think that was great, Albert. Thank you for that. And maybe just following up with a couple quick ones on the P&L side. With your comments, with the script, you talked about just, I guess, a higher variable sales commission. So I wanted to get just a little bit more color on that. Is that something that's being driven by, you know, maybe competitive hires or competitive hiring in the market? And then secondly, and sorry if I missed this, but the cadence for your EBITDA during the year? I mean, should we think of Q1 and the investments that you made? Should the cadence improve sequentially throughout the year?

Absolutely on the last part. There was an increase due to the variable commission piece of it, just the increased sales driving that. There were some investments in bringing on new sales folks that also were reflected in that number. We had some R&D spend. We had some additional headcount. And we had some external professional services fees that also impacted the SG&A. Did I answer the EBITDA part of it? We 100% expect the year sequentially to improve over quarter one.

Okay, thanks for taking the questions. Yeah, of course. Thank you.

Thank you for your question. Our next question comes from Mike Mattson with New Yemen Co. Your line is now open.

Yeah, thanks. Not to keep focusing on the SG&A topic, but I guess what I'm wondering is, you're mentioning that you expect to leverage it, but does that just mean that it'll kind of stay flat and your sales will increase? Or were there, because of these rep hires, were there any kind of one timers in there, like upfront payments or something like that that caused the dollar amount to actually be higher this quarter than it will be in future quarters?

Yeah, thanks for the question, Mike. Maybe I'll pass that one to Chris Eaves.

Yeah, absolutely. Hi, Mike. Nice to meet you. In terms of our total OPEC spend as a percent of revenue, we do expect that to reduce over sequential quarters from what we see in Q1, both as a result of an increase in revenue and as a result of leveraging our operating expense investments we've made in Q1 and prior quarters over the remaining quarters for 2024.

Okay, so my interpretation of what you're saying is that don't expect the dollar amount of OPEC to go down, but it should at least be stable, stable-ish, I guess, and the revenue grows and so then you get leverage. Is that kind of what you're saying? I mean, the run rate of OPEC stays in kind of the low 60s. Is that a reasonable assumption or?

That's a reasonable assumption. We get leverage as the growth on that operating expenses is slower growth rate than the growth rate on revenue.

Okay, got it. And then, you know, you did launch a number of products kind of aimed at the bunion market. I think you're saying that, you know, those products, along with some of the other products you introduced to the fire part of last year and early part of this year, haven't really gone up. I don't know if you've actually contributed yet, but I just wanted to see if, you know, if you're seeing any kind of share gains or anything like that in the bunion category as a result of Bunionmatic and some of these other products.

Yeah, absolutely. I'll tell you, our four foot franchise continues to grow nicely and those products in particular, we believe we are definitely taking some share with some of the newer entrants like the MIS bunion portfolio has just been received really, really well. I think we, we really hit a sweet spot with patients interests, right? What patients are looking for. And so that product is doing really well. It's exceeding our expectations. The combination of that with the FJ 2000, the power console that really delivers the perfect torque and speed for the bird to do those MIS procedures. That tandem has just been really well received. It is early in the cycle. We launched that really in Q1. And so, you know, the normal ramp up of a product, we would expect more meaningful contribution at the end of the year. But I wouldn't underestimate to the power of the excitement around those products, bringing surgeons to medical education right now and reminding them of other products that they might not have either been aware of, or they wasn't top of mind. And so the power of new products and the energy it generates has always been really good for us.

Okay, got it. Thank you. You got it. Thanks.

Thank you for your question. Our next question comes from the line of Brendan Baskes with William Blair. Your line is now open.

Hi, good afternoon, guys. This is actually Justin Lin on for Brandon. Thinking kind of beyond your short term, either that commentary here, longer term, what are some of the levers you can pull to maybe make the business more profitable? You know, is it as simple as kind of increasing volume and naturally growing into that fixed cost infrastructure or is it more nuanced?

Hey, Justin, I'll pass that one to Christy as well.

Justin, nice to meet you. I think you're on the right track as it relates to leveraging our operating investments that we've made historically in GNA. As the company became public, we had to make significant investments to upgrade our systems and processes. And over time, we'll be able to leverage those investments to a greater degree. Selling and marketing obviously has some opportunity for leverage as well, but as we grow, we'll look for those opportunities to be as efficient in the fixed cost structure there. And as Albert has mentioned multiple times, our focus on investing appropriately in innovation and technology will continue to be a focus for us. And I would expect us to have consistent investment as a percentage of revenue on R&D for the foreseeable future.

Got it. That's helpful. And I guess, can you maybe talk about your hiring plans for 2024 in the US? You know, some of the accelerated investments that you've talked about, does that include maybe hiring more reps than you were originally thinking? You know, I think the street models have you adding a little bit more than I think 20 reps this year. Curious to hear your thinking behind that input.

Yeah, one thing we don't normally communicate is the number of reps that we're anticipating bringing on. If you remember, the reported information that we give is the producing rep count. And there can be some seasonal fluctuation in that number, but that's really where we see the impact. Sometimes when you bring new folks on, there's a period of, you know, no productivity as they're getting situated, they're learning the products, they're getting familiar with the hospital systems. And so we really look at when people start becoming producing reps. And that number, if you remember, is a person who sells a product in each month of a quarter. And that's the number that you see that we measure and we communicate out that we think is really meaningful as a direction about where we're going.

And

there's still a lot of room for us to increase that number. I wouldn't say doubling where we are today. It's short of that likely, but we still have a lot of opportunity to keep expanding our sales force in the US and honestly geographically and internationally as well.

Understood. Thank you. Yep.

Thank you for your question. Our next question comes from a line of Dave Turgali with CitizensJMP. Your line is now open.

Hey, good evening. Albert, maybe just to push a little bit on the Bunyan commentary. I know you don't typically speak a lot about the subsectors specifically, but I'm just curious if you think the market is still one of the highest growth of the five, let's say, subsectors. And I was wondering if you might be able to comment. Was that a double-digit griller for you in the quarter?

Yeah, hey, Dave, and thanks for the question. Maybe the best way to answer this, I think, kind of going back, if one of the things we're really becoming sensitized to more than ever is the pathway to Bunyan is pretty unique. There's a lot of different pathways that lead to a Bunyan, right? So some people are born with them. Some people develop them later in life from wearing the wrong shoes. Some people are a flatfoot derivative of a Bunyan. You've got what's called a -doc-dis category of Bunyan people who are born with club feet. And so those pathways each have very different considerations and honestly very different deformity patterns. Right. And so Paragon's approach to Bunyan solutions has always been it's not one size fits all, but it's really tailoring solutions to the needs of each of those unique pathways. I think there's probably no one better than Paragon 28 in that particular sense. And I think that concept is working and has worked for us really well. In the absence of reporting the exact growth for us, I could say all of our subsegments continue to see really strong growth. And all of our investments in R&D still are blended across all of the subsegments of foot and ankle. That's one of our proudest moments, right? The Bunyan market happens to be a really complicated and a very big market that is growing nicely. The ankle market is also a really nice growing market, you know, flatfoot and PCFD. So none of my babies I don't call any of my children, you know, favorites. And it just so happens that we've launched a really nice cluster around the Bunyan and forefoot segment over the last few months. And we happen to see and feel a lot of great energy around that.

Thank you for that. And then I have two quick follow ups I think for Christy. Any other days changes that we should be aware of 2, 3, and 4Q and the interest expense of 2.6 million, is that kind of what we should expect as we move throughout the year? Thank you.

Do you mind repeating the first part of your question? I think I missed one of the words while you're thinking of perhaps what it is. I'll answer the second part of your question first. Yes, I would model interest expense consistent with Q1 in terms of our outstanding debt for the remainder of the year.

Yeah, the first one was just the number of days. I think you said there was one fewer in one queue. I'm curious if there's any other deltas in 2, 3, or 4Q that we should be aware of in terms of selling days.

Yes, thank you so much. I was curious of whether it was day sales outstanding or days of inventory, but billing days as it relates to Q2, there are two billing day difference between 2024 and 2023. And for the remainder of the year, it is pretty consistent year over year.

2Q has two more or two less

days. Two more. We had a headwind in Q1 of about 200 basis points, and we expect a tailwind for the remainder of the year. Thank

you for that. Of course.

Thank you for your question. Our next question comes from a line of Caitlin with Canaccord. Your line is now open.

Hi, thanks for taking my questions. Just a quick one to start off. You noted that

the Lapidus Clamp is currently in limited release. When do you expect the launch of the product?

Yeah, hey, Caitlin. And thanks for the question. I just want to point out that I'm actually wearing a shirt that says Bunyomatic. So I'm supporting the product. That product has been, I feel like I'm saying this about everything, but that product has been really well received. I think we really addressed some limitations that existed out there and the reproducibility of that system is phenomenal. So one, generating a lot of excitement. Two, we're expecting a more fulsome launch coming up here in the next few months. I'd likely target mid-year to see that. And we have high aspirations about what that's going to do.

Awesome. And then, you know, US revs were just a little light even considering the selling day and the comp impact in the Q1. Any really dynamics to call out there?

I don't know that I could call out any unusual situations in the quarter. It was really, really nice for us to see that sequential step up. Again, that's a little bit uncommon for Q1 versus Q4. There is some fluctuation typically around, you know, Q1 can see some fluctuations around the fracture fixation market in particular. But given the headwinds of the fewer selling days and the sequential growth, I think we're pretty thrilled about the performance there. Great. Thanks so much. And one thing to point out, yeah, I think we mentioned that in the prepared remarks, but Q1 of 23 was our toughest comp. I mean, we grew what was a 27% constant currency in 23 Q1. So to see the growth that we achieved in Q1 this year was really, really powerful piece for us.

Great. Thank you.

Yeah, thank you.

Thank you for your question. There are no additional questions waiting at this time. I would now like to pass the conference back to the management team for any further remarks.

Yeah, thank you all again for your time today. If you have any further questions, please reach out. Otherwise, we look forward to seeing many of you at future investor conferences and industry conferences. This concludes our call. Have a great day. Thank you.

That concludes today's call. Thank you for your participation and you may now disconnect your line.