Medifast Inc

NYSE:MED

Earnings Call Transcript 2024-Q1

[Operator]

Greetings. Welcome to the Medifast First Quarter 2024 Earnings Conference Call. [Operator Instructions]. I will now turn the conference over to your host, Steven Zenker, Vice President of Investor Relations. You may begin.

[Steven Zenker, executive]

Good afternoon, and welcome to Medifast First Quarter 2024 Earnings Conference Call. On the call with me today are Dan Chard, Chairman and Chief Executive Officer; and Jim Maloney, Chief Financial Officer. By now, everyone should have access to the earnings release for the quarter ended March 31, 2024, that went out this afternoon at approximately 4:05 p.m. Eastern time. If you have not received the release, it is available on the Investor Relations portion of Medifast website at www.medifastinc.com. This call is being webcast, and a replay will also be available on the company's website. Before we begin, we would like to remind everyone that today's prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions. The words believe, expect, anticipate, and other similar expressions generally identify forward-looking statements. These statements do not guarantee future performance, and therefore, undue reliance should not be placed on them. Actual results could differ materially from these projected in any forward-looking statements. All of the forward-looking statements contained herein speak only as of the date of this call. Medifast assumes no obligation to update any forward-looking statements that may be made in today's release or call. And with that, I would like to turn the call over to Medifast's Chairman and Chief Executive Officer, Dan Chard.

[Daniel Chard, executive]

Thank you, Steve, and thank you all for joining us today. With me today is Jim Maloney, Medifast's CFO. I'll give you an update on the progress we're making in our continued business transformation, and Jim will then provide an update on our quarterly financial results. Medical innovation is empowering more people than ever before to achieve their weight loss goals, and that presents a remarkable opportunity for Medifast as an organization. The expanding use of GLP-1 medications for weight loss, as well as expected further innovations in the medically-supported weight loss space is creating new markets in both the care and support segments of the weight-loss industry. It is anticipated that these 2 areas will become an integral part of the health and wellness journeys of many individuals. As more and more people begin to use medication and make the necessary lifestyle modifications to help achieve greater long-term health and wellness outcomes. For Medifast, the focus of our business transformation is to build a set of differentiated capabilities that will allow us to be a leader in this dynamic and changing health and wellness space. Consistent with our historical focus, we will also continue to support other related health outcomes that are tied to adopting healthy lifestyle habits. With our recent moves to expand our product offerings and target supporting individuals in the medically supported weight loss market, we believe we have significantly expanded our total addressable market by broadening the scope of our consumer offer. Independent research that we commissioned shows that approximately 50% of our prospective customers would consider using GLP-1 medications to aid in their weight loss. As such, it is clear that this high-growth area offers considerable opportunity and fits well with our expertise with over 40 years of history of helping people improve their overall health and wellness. Lifestyle modifications remains as relevant and important as ever, and is an important element to long-term success in the weight loss for those on medications. In fact, the medications themselves are required to be prescribed by licensed clinicians and include instructions for the user to make lifestyle modifications. And we believe our offering and network of OPTAVIA coaches make us uniquely qualified to provide the support. In the clinical study of the new generation of GLP-1 medications, people that were on a placebo instead of medications and who followed lifestyle modification guidance lost 3% to 5% of their initial body weight. Weight loss for those who use GLP-1 medications and followed lifestyle modification guidance was 15% to 21% of their initial body weight, inclusive of both the effects of the medication as well as the benefits from lifestyle modification. Sales of GLP-1 medications alone are projected by many to reach up to $100 billion or more by the year 2030. This opens up a huge opportunity to provide support products and services to this rapidly growing consumer base. Our recent BCG study commissioned by Medifast, determined that the GLP-1 support market, which includes products and services purchased by those on GLP-1 medications, excluding those medication costs is roughly $13 billion today, and could grow to $50 billion or more by the year 2030. Individuals on GLP-1 medications are currently spending at an average of around $200 a month on nutritional shakes, bars, vitamins and other related items to aid in their efforts to improve their overall health and wellness in conjunction with the medications according to the same BCG study. Support from nutrition products for those on weight loss and medications, however, it's just part of the lifestyle modification equation. A holistic program that includes personalized support to help people learn new lifestyle habits and stay accountable on their transformation journey is another important element to helping individuals succeed in their health and wellness journeys. One of the primary goals of such a program is muscle maintenance to avoid the 20% to 50% weight loss from lean muscle mass that many GLP-1 medication users suffer as part of their experience. The fact is that since we launched OPTAVIA just under 8 years ago, we've gleaned some important insights. We know that people do better in their health and weight loss when they have a coach, and they also do better when they're able to plug into a community of like-minded people. It's also abundantly clear that people do better when they learn healthy habits and can leverage them into the creation of a healthier lifestyle. A clinical study sponsored by Medifast showed that those on the optimal wait 5 and 1 plan with support of an OPTAVIA coach successfully lost 10x more weight and 17x more fat than those who try to lose weight on their own. While the health and wellness environment may now have changed due to the weight loss medications, these insights have helped to drive our strategic focus as we continue to transform our business. Coaches and now clinicians are integral to success. So, we will offer a holistic solution that puts support from them at the heart of people's health and weight loss journey. We will integrate customers into a welcoming and engaging community that is on the same journey as each of these individuals. By plugging into what we already do best and adjusting to meet the nature of today's medical innovation, we can offer integrated solutions that align with customer demand and behaviors. In collaboration with LifeMD, a leading telehealth provider, we are now able to deliver a unique holistic offer for consumers who want to use GLP-1 medications that helps them achieve their personal health and weight loss goals. With OPTAVIA Coaches and LifeMD clinicians working together, we provide consumers with the nutrition, education and support necessary to help make living a healthy lifestyle second nature. An integrated solution is more efficient, targets a much broader market opportunity and should increase the lifetime value of our customers. That will be important in helping to offset an expected decline in our average monthly revenue per new customer that signs up for a medically-supported weight loss solution, which will be offered at a lower monthly cost than our historical program. While we recognize that GLP-1 usage is accelerating rapidly and should continue to do so for many years, we remain completely customer-focused as an organization rather than the single solution oriented. In other words, we listen closely to the unique circumstances of each individual and then work to find the weight loss and health transformation approach that is right for each of them. Sometimes that could mean using a medication. Other times, that might mean learning to adopt healthy habits, and sometimes, in my mean utilizing support products to help make the wellness turn easier. Regardless of each unique pathway, the presence of a coach and the community creates a platform that helps drive positive end outcomes and that has helped to positively impact the lives of more than 3 million people to date. Turning to our first quarter results. They came in largely as expected, with continued headwinds impacting customer acquisition, primarily from the macro factors, including the growing popularity of GLP-1 medications. We ran a promotion from March, which extended into early April. And this did provide a small lift, but we believe that right now, a much more effective way to grow our business is to focus our resources on building out new channels for customer acquisition through both a LifeMD collaboration and company-led marketing. Jim will go more into the quarterly details shortly. Regarding our collaboration with LifeMD, we are pleased with our execution to date, and we continue to make progress on rolling out our integrated offer. Next month, we intend to take a key interim step in that rollout as we begin offering a GLP-1 support nutrition package in conjunction with LifeMD at a price point of as low as $282 per month, plus the cost of any medication for a 6-month commitment. The package will include a lifestyle program with a dedicated OPTAVIA coach, balanced nutrition options with our GLP-1 nutrition support kid and through LifeMD access to a medical provider and blood work and prescription and insurance support. Over the upcoming months, we will continue to refine the model and evaluate and test the effectiveness and adoption rates of the offer. We expect to add further improvements to the care and support process as we move through the second half of the year, including enhancing the website and the apps utilized by our customers and coaches. We are working diligently on developing the technology to allow for an enhanced customer experience and expects to roll out incremental improvements throughout the rest of the year. These are expected to create a more cohesive way for customers to sign up and remit payments for the holistic offer, as well as additional functionality to make the user experience easier and more integrated with LifeMD's capabilities. We are also working to develop new products specifically for those on GLP-1 medications, which are currently expected to be ready late in the year. As we have previously disclosed, we will be making a significant investment in marketing at the company level. Medifast is committed to driving growth and enhancing brand visibility through a $30 million investment in company-led marketing efforts throughout 2024. This high-profile national campaign led by Dentsu Creative, a renowned global marketing and advertising firm and IC prospect, a leader in performance digital marketing aims to drive customer conversion, elevate brand awareness and foster engagement with new and existing customers. With an omnichannel approach, the digital first campaign is expected to introduce new branding and elevate the website and digital experience. These investments will ramp up later in the second quarter and even more so in the second half of the year, helping form the foundation of the company's strategy to return to growth and in broadening and deepening our acquisition channels to focus on 3 key pillars: our marketing initiatives, the expansion of our coaching network, and our strategic collaboration with LifeMD to collectively drive forward our mission to empower individuals on their journey to optimal health and well-being. Importantly, our company-led marketing efforts and our collaboration with LifeMD gives us 2 new channels for acquiring customers. In addition to the traditional channel where our coaches source customers via their own word of mouth campaigns in their local communities and in social media. I've talked about our coaches and how they are at the center of everything we do. This is a clear differentiator for Medifast versus others in our industry. The vast majority of our coaches started as OPTAVIA customers, and therefore, understand the mindset and needs of someone looking to better their overall health. Efforts have been underway for a while regarding the coaches learning about the GLP-1 market and the specific needs and challenges faced by those utilizing the medications. With a more complete offer to take to their prospective customers, including access to weight loss medications through a LifeMD clinician, in addition to our line of nutrition products and support from a coach and a community that is on a similar journey, the value that the coaches can bring to their customers has never been more compelling. There can be little doubt that the weight loss market has seen seismic changes over the past 18 months, as medically-supported weight loss adoption has accelerated more rapidly than perhaps anyone could have expected. But with that uptick in consumer focus comes significant opportunity. With a comprehensive, holistic approach that brings together customers, coaches and clinicians, Medifast is uniquely positioned to provide the nutritional and healthy lifestyle support that GLP-1 users need to achieve their lifelong transformation that they are seeking. We believe that Medifast has the financial strength and strategic flexibility to invest in our ongoing operational and marketing effectiveness, and the scientific and medical heritage that provides us with the credibility to play in this rapidly developing space. Most importantly, we have an experienced team that has shown a consistent ability to pivot and take advantage of the opportunities as they emerge, and the strategy in place working alongside world-class partners to help deliver on the exciting possibilities ahead. We look forward to sharing more on our progress on future calls. Now, I'll turn it over to Jim to review the quarter.

[James Maloney, executive]

Thank you, Dan. Good afternoon, everyone. 2024 first quarter results were in line with our guidance as we continue to execute our business transformation initiatives that we believe are integral to our success. Revenue for the first quarter of $175 million was at the upper end of our guidance range of $155 million to $175 million, a 49.9% decrease versus the year earlier period, primarily driven by continued pressure on customer acquisition amid the growth in popularity of weight loss medications, which has led to a decline in the number of active earning OPTAVIA coaches and lower productivity per active earning OPTAVIA Coach. We ended the first quarter with approximately 37,800 active earning OPTAVIA coaches, a decrease of 35.6% from the first quarter of 2023. Average revenue per active earning OPTAVIA Coach for the first quarter was $4,623, a year-over-year decline of 22.2%, reflecting the continued headwinds to customer acquisition. Gross profit decreased 48.3% to $127.3 million for the first quarter of 2024, driven by lower revenue. Gross profit margin improved 220 basis points to 72.8% positively impacted by efficiencies in inventory management and cost savings from the fuel for the future initiatives, partially offset by increased shipping costs. SG&A expense was down 38.1% to $119.4 million for the first quarter of 2024, primarily due to fewer active earning coaches and decreased coach compensation on lower volumes, partially offset by the start of company-led advertising expenses, which continues to be in the early stages, as well as market research and investment costs related to medically supported weight loss. SG&A as a percentage of revenue increased 1,300 basis points to 68.3%, primarily as a result of the loss of leverage of fixed costs due to lower sales volumes, as well as factors I just mentioned. On a non-GAAP adjusted basis, which excludes onetime costs to initiate and operationalize the LifeMD collaboration, SG&A decreased 38.8% to $118 million and moved 1,220 basis points higher as a percent of revenue to 67.5%. Income from operations was $7.9 million in the first quarter of 2024, down 85.2% versus the year earlier period, driven by lower gross profit, partially offset by lower SG&A. As a percentage of revenue, income from operations was 4.5% in the first quarter, a 1,080 basis point decline versus the year earlier level. On a non-GAAP adjusted basis, which excludes the onetime expenses described previously, income from operations decreased 82.7% to $9.3 million. As a percentage of revenue, non-GAAP adjusted income from operations was 5.3%, a decrease of 1,000 basis points from the year ago period. The effective tax rate was 28.2%, was higher than the 25.1% recorded in the prior year's first quarter due to an increase in the tax shortfall for stock compensation and the rate impact of research and development tax credits, partially offset by the decrease in the limitation for executive compensation and various other miscellaneous items. On a non-GAAP adjusted basis, the effective tax rate in the first quarter was 28.7%. Net income in the first quarter of 2024 was $8.3 million or $0.76 per diluted share compared to $40 million or $3.67 per diluted share in the year-earlier period. On a non-GAAP adjusted basis, net income in the first quarter of 2024, which excludes the mark-to-market adjustment of our LifeMD stock holdings, as well as the one-time cost to initiate the LifeMD collaboration was $7.2 million or $0.66 per diluted share. Turning to our balance sheet. We ended the quarter with $156.4 million in cash, cash equivalents and investments and no interest-bearing debt. This is up from $150 million as of December 31, 2023. Now, I'll turn to our guidance. We are expecting second quarter revenue to range from $150 million to $170 million, reflecting continued near-term challenges to customer acquisition as a result of the growth of GLP-1 medications in the marketplace. We expect our EPS for the quarter to range from $0.05 to $0.40. The EPS range excludes the costs related to the initiation of LifeMD collaboration and any gains and losses from changes in the market price of our LifeMD common stock. While the operating environment remains challenging, we continue to believe that meaningful spending on driving customer acquisition from 2 additional sources, company-led marketing and customer flow from LifeMD, and the ability to offer access to clinicians will lead to an improvement in customer acquisition trends beginning late in the year. To foster that improvement, we expect to spend around $30 million this year on advertising and other marketing initiatives to increase the visibility and customer engagement around our OPTAVIA brand and its offerings. An elevated level of spending is expected to continue into 2025 as we believe it will be effective in bringing in new customers that will help us grow in the future. These investments in customer acquisition initiatives, as well as the negative impact of lower volumes on operating leverage are expected to continue to pressure profitability over the remainder of 2024. In summary, we are steadfast in continuing our transformation journey, focusing on our integrated offering in the medically supported weight loss space, while also making strategic investments to grow the business in the future. Our strong balance sheet and continued expense reduction efforts helped mitigate the short-term weakness in our results, and we expect the actions we are undertaking to drive improvement as we move into 2025 and beyond. With that, let me turn the call back to the operator for questions.

[Operator]

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions]. Our first question comes from the line of James Salera with Stephens Inc.

[James Salera, analyst]

I wanted to start with the 2Q revenue guide. If I just take the midpoint, it looks like it's down around 46%, which isn't much different than 1Q. But I would think between the easing comp in 2Q and then the ramp-up of the company-led marketing that there would be a more significant improvement there. Is there something I'm overlooking? Or any color you could offer on that would be helpful.

[Daniel Chard, executive]

Sure, Jim. This is Dan. I'm going to let Jim answer that question, but I just wanted to make a couple of points that will kind of help inform how we're thinking about that guidance. As you know, we've made some significant progress that started at the end of last year with the collaboration agreement. And importantly, as we're looking at how we look forward at the new market. We're specifically focused on the support market, which for the first time, we're measuring and we're doing this through a study that was commissioned by us with BCG, that has the support market, GLP-1 support market at $13 billion this year, growing to $50 billion. Again, importantly, we've now launched a new product bundle, which is now bundled with what is offered by LifeMD. And that bundle is going to be selling for now $282. It includes both the clinician prescription, blood work and insurance support, as well as our traditional support of the coach community, nutrition support, which is the nutrition dense fueling, our OPTAVIA app and the habits of health. So that number, $282 is roughly, well, it compares to $400 of what we used to offer our introductory bundle for our five in one plan. So, you can see there's a pretty significant change in that. We also are going to be launching a new set of products by the end of the year, and also, we'll be announcing in Q3 and Q4, some additional integration that will create a seamless payment and ordering system for the 2 platforms. And so, we expect -- what we expect in the back half of the year is to start to see the impacts of these initiatives. So Q3, Q4, first with improved coach productivity, so driven by client acquisition, and revenue per coach. And then going beyond that to improved client retention as we're able to keep particularly GLP-1 clients for a longer period of time. And with that, I'll turn it to Jim to answer the question about guidance.

[James Maloney, executive]

Yes. So, when you consider our guidance for Q2, Jim, we're assuming the current headwinds on customer acquisition continue in the near-term. The rollout of the advertising will not happen until the very -- the latter part of Q2. So, our guidance does not show that impact. And the amount of spend that will happen is really tilted towards Q3. There will be a little bit higher level of advertising versus Q1 and Q2. But really, the spend is going to occur more rapidly in Q3. So, that's what you're seeing there. Regarding -- we're making headway with LifeMD. We are seeing -- and we're happy with the level of support that we've been able to do with LifeMD. So, the number of customers that are going and using the LifeMD solutions is increasing, but we do believe it's going to take continued time. And we're hopeful that we're going to see that into Q3 and beyond, as we have the integrated solution fully up and running in Q3. So hopefully, that helps us.

[James Salera, analyst]

Yes. I appreciate the color, guys. Jim, if I can maybe ask you a follow-up just on the cadence of the marketing. If I read the slide deck right, you guys spent about $2.5 million in 1Q, which means you have $27.5 million for the rest of the year. Can you just give us a sense for how steep the ramp is in the back half? Like whether dollars or percentage, how much of that 3Q to 4Q?

[James Maloney, executive]

Yes. So, it is very steep. We're expecting that the level will be a little bit higher in Q2, and that's why you're not seeing -- the benefit of that happen in Q2 versus our guidance. So, it's slightly higher, but it's not to any degree that would be meaningful. So, we're still in the learning phase of this, and I tried to indicate that in my part of the script that we're in the early stages of this. We are going to launch new messaging in Q2, but it's going to be at the very end of Q2. And the ramp of it is going to happen into Q3. So the majority -- to answer your question specifically, the majority of the $30 million of spend will happen in Q3.

[Operator]

Our next question comes from the line of Linda Bolton-Weiser with D.A. Davidson.

[Linda Bolton-Weiser, analyst]

Can you please talk about -- so, in terms of the pricing for the new integrated program, my understanding is LifeMD charge is very low for the drug itself. So, the $282 per month is sort of all inclusive, right? I mean, it's the coaching, the Rx script, to the blood work and really most of the drug cost. Am I understanding that correctly? And also, can you explain how is the revenue going to be booked? Are you going to record a portion of that $282 in revenue, or is it split? Or how is that revenue split going to work?

[Daniel Chard, executive]

Yes. Let me answer the first part of your question, and then I'll let Jim answer the revenue question. So, the $282 is inclusive of both of the services from our OPTAVIA program as well as LifeMD. It does not include the cost of medication. And you pointed out, Linda, that there's some different, very price competitive options through LifeMD that are both branded and compounded, but the $282 does not include the cost of the medication. And the split between the 2 is roughly $217 for the product and coaching bundle, and roughly $65 for a 6-month commitment to LifeMD.

[James Maloney, executive]

Yes. So, Linda, we're not going to be recording the $65 that Dan is referring to for LifeMD's portion of this. So, they're going to -- they would record the $65, and we would record the $217. The $65 LifeMD requires a 6-month commitment. So that's the commitment that you have to make for LifeMD. The $217, there is no commitment for that number, from a customer.

[Linda Bolton-Weiser, analyst]

Sure. And then the $217 million includes some full products, some fuelings, or clarify what they --?

[Daniel Chard, executive]

It includes our active way protein supplement and fuelings. So, both of them at a kind of program designated amount for a full month. And in addition to that, it includes the time from a coach, personalized coach. Access to the community access to the OPTAVIA app that includes the recipes as well as weight trackers, which is integrated with a Wi-Fi scale, and it also includes the access to the Habits of Health transformation system.

[Linda Bolton-Weiser, analyst]

Okay. Can I also ask, how much -- in terms of the LifeMD use of the compounded product, has there been any change in availability of that compounded product? Because we know that at some point, it may kind of go away. Is there any update on that? And what do you anticipate as a strategy if there is constraint of a compounded availability? Like if the drug becomes $1,000 a month for the customer, how does the customer afford to pay another $300 a month? What's the strategic thoughts on that?

[Daniel Chard, executive]

Yes. We're working very closely with the LifeMD team who's very keyed into this key part of the questions. The strategy to date has been to offer a branded solution for those who are insured, or who can afford to pay the out-of-pocket. There are cases either that they may not be insured, or in some cases, because of the shortages, the branded solutions are not available, whereas the compound solutions have been readily available. In the case of how long that this current structure will last, I think, will be determined largely by the FDA. As you know, compounders are operating under an exception, which is that they're allowed to offer a compounded solution when we're in a period of scarcity. And we continue to be in this period of scarcity that's projected to last, I believe, several years as the pharmaceutical companies build more capacity. I think there are some other elements that will impact us as well, which could include how quickly insurance companies and Medicare cover the drugs beyond the current exceptions. So, what I would say is we feel confident and comfortable that the approach, which is offer both branded and the compounded solution where appropriate, is appropriate -- is relevant for the short-term and even the next several years.

[Linda Bolton-Weiser, analyst]

Okay. And then one of the issues, I guess, that is going to happen here is that you have a large number of coaches, even though they've declined, just a moderate amount of new people running the drug, LifeMD only has a small number of clinicians. So, I think it's somewhere around 550 clinicians that they have. How are that number of clinicians going to be able to handle such a large potential number of new customers for the script? Like are they planning to ramp up the number of clinicians? Or can you give a little color on that?

[Daniel Chard, executive]

Yes. specifically uses physicians in their services that are licensed in all 50 states. So, that helps with part of it. They can support patients across the country. They also have a very specific and focused hiring strategy, which has allowed them to keep up with their demand. And we work in close collaboration with -- we're working in close collaboration with them to ensure that they understand how our demand could increase. And at this point, we believe they have the capacity in the short-term as well as the capability in the long-term to scale that number of clinicians to support the growing demand.

[Linda Bolton-Weiser, analyst]

Okay. And then is there any -- just on the timing difference thing that the $9.1 million, can you just kind of explain what that is? And does that shift $9.1 million of revenue from first to second quarter? Or can you just explain more about that?

[James Maloney, executive]

That's referring to -- that's actually -- I believe what you're referring to, Linda, is last year, we did a change in revenue recognition. So, there's no impact to 2024. That was actually 2023, and it was in the earnings release, we just were referring back to 2023. The reason for the change of the revenue recognition was due to the change that was made with the terms and conditions that we have with our customers, and that all occurred in Q1 of last year. So, there's -- once we get past Q1, there's no impact for the remainder of 2023 or going into 2024 at all.

[Linda Bolton-Weiser, analyst]

Okay. Got you. And do you have an anticipation of how much capital spending will be in 2024?

[James Maloney, executive]

Yes. I mean, we're looking at spending at the same levels were a little bit more than 2023. So, we didn't really give guidance all the way for 2024. But I would say it's going to be at least the same level as 2023, if not a little bit more than that just because of the investments that we're making regarding the seamless offer and the technology spend that's going to be hitting capital spend in those areas.

[Linda Bolton-Weiser, analyst]

Okay. And then finally, I just wanted to ask about gross margin. I guess that was the area of the report that was most below my modeling, but I kind of think I didn't fully recognize the seasonality, like usually gross margin is kind of lower in the first quarter anyway. But do you kind of foresee like stability in gross margin percent? Or like for some reason, I had modeled for the full year kind of flattish, but is there any color you can give to help us on the gross margin outlook?

[James Maloney, executive]

Yes. I mean when you look at the gross margin, we were 220 basis points higher than 2023. And most of that impact versus the prior year was due to the fuel for the future initiatives that we referred to, which helped gross margins. So, I would expect that gross margins would be steady for the next quarter. The reason is because we're really -- when you look at commodity inflation, we're basically seeing it to be flat for at least the next quarter. So, I would expect it to be very similar.

[Linda Bolton-Weiser, analyst]

So you mean flat with -- compared with first quarter, flat sequentially?

[James Maloney, executive]

Correct. Flat sequentially, correct.

[Linda Bolton-Weiser, analyst]

Okay. That's very helpful. That's all I have.

[Operator]

Thank you. And since we have no more questions, I will now turn the call back over to CEO, Dan Chard, for closing remarks.

[Daniel Chard, executive]

I want to thank you all for joining us today, and we look forward to speaking with you at upcoming conferences and on our second quarter earnings call in early August. Thank you.

[Operator]

And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.