CellaVision AB

STO:CEVI

Earnings Call Transcript 2023-Q1

[Operator]

Welcome to CellaVision Q1 Report 2023. For the first part of the conference call, the participants will be in listen-only mode. During the question-and-answer session, participants are able to ask questions by dialing Star 5 on their telephone keypad. Now I will hand the conference over to CEO, Simon Ostergaard. Please go ahead.

[Simon Østergaard, executive]

Thank you very much, and thank you, everyone out there for taking the time to listen in to our Q1 report. I have CFO, Magnus Blixt, with me, and we'll be happy to answer any questions that may arise after the presentation of the report. So the quarter in brief, we landed a revenue of SEK 139 million, which translated into an EBITDA margin of 25%, SEK 35 million. This was not news to the audience. This is what was communicated a few weeks back in a special announcement. We found it appropriate to announce our results a little bit in advance for this quarter since we've had 3 quarters in a row that were relatively soft. The revenue decline was consequently translated into also the EBITDA margin of 25%, which is lower than our financial ambition. The primarily highlight or you can actually call it low light, but the reason here is the inventory reductions that we've been faced with from our distribution partners -- and here we claim it's due to an uncertain economic climate taking full effect. I think we've gained a lot of insights into the inventory levels with our partners. And we are confident now that the program that was launched pretty much last quarter has come to an end in the sense that the inventory levels are now down in EMEA and Americas at decent levels and a little bit more ambiguity around the situation in APAC, especially Japan when it comes to inventory level. Nevertheless, I think it's also important, given the fact that in entries really the key prime reason for the low top line. So it's important to put a perspective on our top line and our compares . We've learned that the inventory levels have actually increased over the course of the last 1, 1.5 year coming out of the pandemic era in these jurisdictions. The prime driver for that has been the material supply situation that we were faced with about a year ago and a little bit longer, where we have electronic component shortage across multiple industries, but also facing our business, obviously. That has led to a little bit more increase on the security stock levels over the course of the first half, so our compare. So maybe our revenue numbers a year ago were a little bit, I shouldn't say inflated, but were impacted by the stock level buildup, which actually took place for a little bit longer as well. The interest rates went up and that paid that gave rise to increased attention on the cost of capital and by then also working capital, which is why we've -- for the last half year, we've been seeing that in our order intake from our partners. The growth has been restrained for this reason. And also, we see a relatively weak quarter in APAC. We see the COVID implications in China is probably the main driver for the unclear outlook in that region.On the positive side, if we look at our strategic direction, we are really gaining Sierra in EMEA with regards to converting to RAL branded regions. And our journey of registering and labeling our classic stains, the product labeling and all the evaluations that leads to commercializations across APAC is taking place throughout the various countries as we communicated in the previous report. And then a bit of news here. We've talked a lot about our new strategic pillars. And for this report, we find it appropriate to announce that the resources that we invested in our strategic pillar around specialty analysis is paying off. We're proud to have developed a bone marrow module. So we have a first version that will be demonstrated and has been demonstrated recently for clinicians and lab personnel. So this is something that we will demonstrate at the ISLH and the AACC trade shows in May and July. And we will also start our clinical validations this year. So we are aiming for getting CMark next year. It's a really tangible outcome, and this is really where we see an opportunity for the company to drive our DC-1 adoption of the small instrument, but also for the large labs where the bone marrow analysis is primarily conducted. So that's exciting. So we do have exciting news. We've obviously had some headwind on the actual results. Going to the next slide and working our way through the P&L. Organic growth. So the SEK 139 million translates into minus 21% because we had FX -- positive FX impact of 7%. We had a gross margin -- we landed a gross margin of 70%. So it came up from Q4 where we were at 67%. So you're starting -- we're starting to see the price increases taking effect here in Q1. We also had a favorable product mix but primarily the price increases is really paying off here. On the operational side, we -- on the operating expenses, 52%, so EUR 72 million I think where we -- our admin costs are flat. And on the sales and marketing is where we've increased from SEK 28 million up to $32 million. The majority here is actually its currency effect because most of these costs, they sit in outside of Sweden. So it's euro on U.S. So it's a bit of inflation. And then there is a proportion where we've increased taking onboarded a bit more cost for conferences, also the ISLH comes up in May has been booked most of the cost in Q1. And then we also have expanded with a person in Singapore to drive our APAC operations. Coming back assets EBITDA, SEK 35 million. And if we look at the R&D spend, SEK 34 million, we capitalized SEK 40 million. So we have traction on our development programs. That's what is deducted. So in the P&L, you will see SEK 20 million booked as R&D costs up against the compare of SEK 18 million. So a slight increase which is in line with our strategy. Looking at the cash flow, then we have cash flows from our operations of SEK 31 million, and that translates into an operating cash flow of SEK 19 million. So we have also had an inventory buildup ourselves due to the low sales. We're not in a situation where we can just stop manufacturing overnight. However, we are working throughout the rest of the year to drive down our inventory level as sales picks up and also by adjusting our setup with our manufacturing partner. On the investment side, so the cash flow from investments is minus SEK 23 million. So here, you see also an increase. We had, as mentioned, SEK 14 million for -- that is being capitalized for development programs. But we also had SEK 9 million out of investments, which is primarily related to our manufacturing expansion in France, Martillac. So we are building our factory and the program is running according to plan and will be done over the summer. That translated into a total cash flow of minus SEK 15 million. So that should be seen in the light of also a strong balance sheet. We have -- we are now down to long-term debt just over SEK 50 million, so SEK 53 million, and we have our cash at hand is SEK 93 million. Let's take a look at the regional highlights here. So here, you see the growth rate up against the compare. So obviously, a tough compare in -- or sorry, a very low performance out of Americas with minus 29%. And I would say that pretty much the gap from SEK 59 million to the SEK 82 million is equivalent to what we estimate is inventory. So we have been very hard hit by inventory reductions, especially in Americas. The underlying funnel is something that we work with our partners around and it looks healthy. There's a healthy outlook for orders from hospitals that are placed and that leads to our comment that we believe there is a positive outlook for orders in 2023. And then I think also the stock level here should be seen -- I think I mentioned that, but especially for the U.S., we know that there has been some level of stock build up over the years as a result of the situation we've been on, as I alluded to. Looking at EMEA, it's more flat. We've both had a bit of currency tailwind, but we actually -- we've seen traction also in our hematology regions. This is where we have the majority of our oriented business. But we're really seeing the RAL branded products, as mentioned. So we landed the quarter at SEK 65 million, just above the comparative quarter from last year. And then we're getting good feedback, both in the trade shows, but also when we listed customers. The inventory reduction was also present in EMEA, but to a lower extent than what we have seen in Americas. For APAC, our sales were down to SEK 16 million. We did have some sales, obviously, a little bit of regions. But otherwise, some install or some instruments were shipped towards China. I think it's still a challenging outlook. It's difficult to operate. It has been very difficult to operate in the area. And especially in China, it has -- the situation has been prevented from customer visits. We hope that they're clearing out and the normalization, even though they are still struggling with infections, but we hope that throughout 2023, we will see some level of normalization. For the next quarter, we will have a tough compare coming up. We had a large shipment for China in Q2 2022. That is really what hit us in Q3. This was specifically the large shipment that was not installed due to the lockdown, just to remind the audience that in Q3, we only did $8 million out of APAC. We had nothing going to China. So this means the upcoming quarter will be a tough compare for us. If we got the numbers for product group, early, as you can see, the inventory management, of course, hits the instrument where we have minus 23% growth. But we are still confident around the outlook for the business, except for our uncertainty around the pent-up demand for APAC.Last year, we launched the DIFF-Line as we were ready with it. So we've gotten direct end user feedback, and there is certainly an explicit demand for standardizing the workflow within the small to midsized laboratories. I think what we are also learning now is that our partners are really ready to launch. It's been trained and follows through the -- our partners, sales forces. So there will be a rollout there, and we think -- and believe that will fuel standardization of the workflows across these labs. Think this is really good, seeing both -- we had the annual volume growth of 45% DC-1. But getting the DIFF-Line together and then pairing that with all our labs where we have a significant installed base and then grew that together with our remote review that is what builds the ecosystem that we talk about when we talk about strategy. We do believe that we have such a good traction also for the target audience for IHMs. So in the U.S., where you have these integrated health networks. And we think this will be a game changer. So despite the low numbers for the quarter, we are very convinced that we are doing the right things, and we have the right solutions to act in plaster, our blue solutions across lab sizes and then also tailoring that with more content like bone marrow will be successful. For the regions, we actually saw increased growth here at 23% on the hematology region. So very healthy double digit as we've communicated previously. We're seeing that continuing in our large region. And then we're actually pleased in APAC to -- both with the conversations we have, but knowing that our products are being evaluated in labs. So we certainly expect that will translate into the commercialization full-blown commercialization effort across the various countries that were communicated and then, of course, invoices. So we are confident that we are rolling out. So that will be an appetite to convert to RAL brand stains, and that will primarily happen as the stainers are exchanged. The software was down as well. That is a function of the low instrument sales, so minus 17%. Then, of course, we still have significant sales of others, and that's also because the spare parts and the consumables are a function of our installed base. So there is a recurring revenue element that keeps on bringing-- keeps on coming in.So the key takeaways here is certainly that the quarter has been -- the headline is that we really believe and have cost in the data that we have seen that the inventory reductions is what has taken our top line down. Yes, we have fostered -- this has sort of fostered a lot of attention also on the high interest rates and the low working capital with the whole economic climate. So we expect orders to improve throughout the year. We were -- the level of transparency is most limited across APAC. But we believe that over the year, as I said, we will see China clear out. And hopefully, we'll see Japan as well. But it is a bit ambiguous to us for the time being. We are very confident around our strategy for the different regions and what we do together with our partners to roll out our superior stains -- and then we are pleased to see the translation of our price increases, improving our gross margin since we've had some tough price increases and inflation on the material costs. So good to see our compensation is starting to kick in. And then we have obviously also in light of the situation, as we always consider how we spend our money, but we have increased focus on our cost control, both with regards to higher the use of consultants and our variable expense in general. We slipped the minutes to invest in R&D. We think we have a solid plan. We are solidifying it together with our partners, and we want to protect our leadership position within hematology because we believe that the differentiation is the response to the entire situation and to actually obtain the continued leadership within this niche business. So with that, I think it's -- we might as well take some questions and have the conversation going. So I welcome any questions you may have.

[Operator]

If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question please dial star 5 again on your telephone keypad. The next question comes from Josefine Persson from Nordea.

[Josefine Persson, analyst]

So first of all, -- now that we have entered Q2, do you already feel that the sales momentum is improving already as a result of the inventory normalization? Or do you think that this is more tilted to the end of the quarter or beginning of Q3?

[Simon Østergaard, executive]

A fair question. And I would say, overall, we are building confidence and seeing orders are coming in. So I think we have a little bit better outlook than what has been the situation historically. So it looks promising.

[Josefine Persson, analyst]

But do you still think it's more tilted to the end of -- or to H2.

[Simon Østergaard, executive]

Sorry, H2, I thought you said at the end of Q2, sorry. So I think we will probably come back to our normal situation. Even though we don't have outlook for H2 then typically for our business, we have a pretty decent first half and then we have a low Q3, and then we end up with a pretty strong Q4. So I think that is probably the normal pattern. We will be more in line with our partners after this journey we've been on discussing and seeing the inventory levels and so forth. So I think we will come back to the sort of the normal rhythm. That's our expectations. And then, of course, the loss that we've been faced with here in Q1 is relatively hard to recover. Unless safety stock levels are increased again, but we see no specific reason why that should happen.

[Josefine Persson, analyst]

Okay. That's helpful. And we saw some gross margin improvement in the quarter. And do you think that the price increases have already showed full effect? Or do you think-- do you expect it to improve even more in the coming quarters?

[Simon Østergaard, executive]

Yes. And I wouldn't say quarters. I think there is certainly effect in Q1. There might be a little bit more in the pipe for Q2 because orders that were placed for Q1 before the 1st of January were oil prices. And then we had -- so I think you will see full effect in Q2 and not going further from there. But then I think it's also a function of our product mix, both across type of offering but also across customer grid.

[Josefine Persson, analyst]

And on the region sales, happy to see that you are showing improvements there. What do you think is the reason behind reagents growing compared to instruments and software?

[Simon Østergaard, executive]

Yes. I think... I think there is an acceptance of the RALl stains. For certain markets like France, it's been very mature. We have an extremely high market share, but our partners are positioning the reagents also outside France. And I think that's what you're seeing effect of. And then I think there is an acceptance also of -- we are supported by the fact that the IVDR kicked in, in May 2022. And our products are IVDR compliant, which means that there's an extra pool for our regions and maybe substitution of other suppliers who didn't make the cut and may have retracted from the market.

[Operator]

The next question comes from Ulrik Trattner from Carnegie.

[Ulrik Trattner, analyst]

A few questions on my end. Great to see that you have moved forward with your specialty analysis instrument and bone marrow being the first test. And I hope you could help specify when in 2024, you're expecting this to be on the market and approved, as well as if you could clarify what classification under MDR or IVDR it will be? And again, is this to be considered a new device? Or do you have any references in terms of a regulatory perspective?

[Simon Østergaard, executive]

Yes. So we expect it to be -- see I did not buy -- I think when we say 2024, I think it's probably good to aim for mid-2022 -- sorry, 2024. That's the best outlook. What is ahead of us is to do the actual clinical validation. Of course, when we go out with this news, we're very confident around the product. It has been viewed and been demonstrated for clinicians. So we've gotten a very, very positive feedback. But we can't claim it's a product until we have validated it clinically on blood samples out there and shown that the performance is actually classifying cells within bone marrow samples to the same extent as what is done conventionally for many. So that is what we are starting here in this year, and it takes about a year. So I think that's the best -- and it's in CID, as I said, Urlik, and that's for-- of course, it's for Europe. And then our journey continues to register and file 510(k) for the U.S.

[Ulrik Trattner, analyst]

That's great. And do you feel comfortable giving sort of the more stringent regulatory framework now with IVDR in Europe that you're sort of how old documentations ready and feel comfortable with proceeding with that process in order to actually have a product approved by midyear next year?

[Simon Østergaard, executive]

Yes. We actually feel confident. There is always a risk when you have to demonstrate up against conventional methods. But we are very confident, given the -- you can say, given the ability of our product to identify multiple classes of cells within bone marrow. And then we will present that and have done that towards clinicians. So we're very confident around it. But of course, there is a risk, but we are going out with the news because we think, of course, everyone, including the investment community, they deserve to know it. It demonstrates our confidence in it. And the other thing is, I think this is very, very important because this is a software application that will run on our existing DC-1 device. So it's a software application that we register, but the DC-1 is unchanged, which means that we are opening up for the opportunity to sell the DC-1 into the large lab segment, additional instrument revenue, and also from a customer perspective, we make sure that the high-volume workflows that runs on purified blood samples in the last labs is not disturbed. You can actually run your bone marrow samples on the DC-1 sitting adjacent to wherever you want to have it in the lab. So it's a very flexible method and it opens up a really, really great. It serves the clinical need, but it also opened up for an addressable market that is already converted to digital [indiscernible].

[Ulrik Trattner, analyst]

Great. And as you mentioned, it has added software built upon the sort of DC-1 platform itself? What are we talking about price-wise. And I'm guessing you could convert already DC-1 customers to include bone marrow and for those customers, what would this imply in terms of pricing?

[Simon Østergaard, executive]

Yes. I think the pricing, that's too early to comment on that. And I think the existing customers, you're absolutely right. They can acquire a license to the software, and they can get going. However, the majority of the DC-1s they sit in the small, mid-sized laboratories today. and we will continue the journey of converting those. However -- and some of them may certainly be -- have right use if they are doing bone marrow samples, but we do expect that the majority of the bone marrow samples will be conducted in the large labs. So we see it as a total, let's say, virgin land for the DC-1 in the last laboratories. And again, it fits with our ecosystem thinking and our strategic vision because no matter where the bone marrow will be conducted, our remote review is compatible with our remote review -- so the results will be in our database and the remote review users wherever the pathologist may sit, they can view the results and they can have it together with all other data that are acquired throughout our systems. So we think it's a natural prolongation of our strategic content to our ecosystem.

[Ulrik Trattner, analyst]

Okay. Great. And just a clarification, if I heard you or understood you correct. Did you say that the safe sort of inventory boost was 1.5 year or 1 year? I think you said 1 to 1.5 year of perhaps the boosted revenue for systems or...

[Simon Østergaard, executive]

Yes. I think I said 1 to 1.5 years. Of course, I want to put a bit of unclarity as to -- since I don't have the actual inventory books of our systems historically. I have seen some data, which is not just our inventory data. But there, I really get the impression and in our conversations with our partners, it is confirmed that the inventory buildup in general has, in general, has increased over -- sort of coming out of the pandemic period really to mitigate the serious supply prices that were taking place for 9 to 12 months. even more. So that really fuels the, let's say, and the low interest rate. It really fuel the notion of -- we got to be able to deliver the -- and install the blood line. So we saw those for a longer period. So I'd say especially the compares we are looking into here in Q1, probably also Q4 2021. But Q1, Q2 last year, they have been a little bit inflated by that situation material supply wise.

[Ulrik Trattner, analyst]

But a follow-up on that. And obviously, you talked about release of this safety inventory and a bit uncertain situation in China. But -- how much should we read into that scope yield midyear last year released a similar system being sold, I believe, primarily to the U.S. market and Mindray pushing their system forward into China and these 2 being specific weak markets on your end when it comes to interment sales. So how much should we read into that?

[Simon Østergaard, executive]

I think for the first one, we see a number of digital imaging companies popping up. It is our impression that there's a way to go, but we expect competition to come. We've built a market and the company you mentioned is obviously tapping into it being very active from a marketing perspective. I will let the customers decide whether that's what they want. I just know that we have seen -- we have not discovered significant loss in the market. And so our strategy of really pushing for content, what you see with our bone marrow launch here is also a counteract to be the single provider who can actually need all the clinical needs despite lab sizes, et cetera. So we will keep on driving our strategy, and that should counterfi any imaging company popping up in this arena. I think with regards to China and obviously Mindray, that's certainly Mindray has been for years a significant competitor within the cell counting market. They have a significant market share, in particular, in China or very much in China, competing head-to-head with another large player, and then there are some percentage points, which are local players. Our game plan there is to continue what we've done being -- competing head-to-head with our DI-60 system that is launched together with Sysmex. So here, we are certainly in a tight competition. This is where I see the most competition across any market that is in China. I believe we have an advantage also in now that we are coming out with reagents, RAL-branded reagents. So we can offer a full suite of the total solution, and we will continue along those lines also to build this superior offering and compete on those terms with anyone who will pop up.

[Ulrik Trattner, analyst]

Okay. Great. Just a follow-up on that. Beckman Coulter, one of your distributors looking at their hematology analyzer offering. It looks like they're promoting Scopios solution, have them adding scope to their list of systems that they're distributing change or worsen your relationship with Beckman Coulter -- or is that essentially unchanged?

[Simon Østergaard, executive]

I think we certainly still have a relationship and distribution relationships. We can -- the best KPI is obviously our sales numbers. So we certainly -- that still exists. I think this is an opportunity also to differentiate from the very strong Sysmex television alliance. However, the customer speaks and would like to acquire television instruments, that's what we see. So we respect our relationship being nonexclusive. That's where we are. And again, our prime objective here is really to provide the superior healthcare solution for the lab and by then the patients.

[Ulrik Trattner, analyst]

And if you can help me just to understand how big of U.S. sales, your U.S. sales is derived from Beckman Coulter today?

[Simon Østergaard, executive]

I think that would probably be me overstepping the line in terms of confidentiality. So I respond for that... Yes. Fair enough. I understand the question, of course. But I don't want to get in trouble with my partners.

[Ulrik Trattner, analyst]

Yes. Understood. And last question on my end and if you can just help us give us a reminder on the seasonal effects, the general seasonal pattern of your sales and orders throughout the year, that would be very helpful.

[Simon Østergaard, executive]

Sure. Yes, I think typically, we see -- well, as mentioned, we had momentum both in last year, both in actually Q4 '21, Q1, Q2, maybe a little bit of inflation, especially for Americas. We kind of believe we will come back to that. So I expect a healthy outlook for Q2. Again, with the caveat that APAC is a bit of a white card for us, and it probably will be a wild card for a couple of months or quarters. So that's the only sort of disclaimer I would put in. We don't have as much visibility for the time being into Q3 and Q4 in terms of orders. Q3 typically, what happens here is that we will have both Europe and in certain places, it's very much holiday season in July and for some of the countries, it's August and also the U.S. So if you take the sum of Q3, there are less weeks where there is opportunities to actually install blood lines and by then the -- that follows back to the ordering of our systems. So we typically have in comparison, a weak Q3, so to speak. But that's a general trend. And then it builds up to a relatively strong Q4. So that's the dynamic. And we hope and expect to come back to that outlook for the year.

[Ulrik Trattner, analyst]

Okay. Great. Yes. Last question, if I can just squeeze that one in. Through that would be under-capitalized R&D, kind of an increase your year-over-year. Should we expect sort of the same level or an increase given that you're now approaching more clinical activities for the bone marrow system? What should we expect here going forward?

[Simon Østergaard, executive]

That's a good question. Maybe, Max, I'll invite you to this one.

[Magnus Blixt, executive]

Yes. I think that the clinical activities around bone marrow will have a limited effect on the capitalized R&D. That's a smaller portion, even though that project is coming to an end. And usually, we have a little lower ratio of capitalized R&D at the end of the projects in the total portfolio of activities that we have, that's a small portion. So it shouldn't affect much at all on capitalized R&D.

[Operator]

The next question comes from Christian Lee from Pareto Securities.

[Christian Lee, analyst]

I have a couple of questions, please. How should we think about increased cost control that has been introduced? Is it about maintaining current cost levels or to reduce expenses? And if so, how much will the cost of savings be? And when can we expect to see this impact?

[Simon Østergaard, executive]

Yes, Chris, first of all, we look -- we had a quite steep increase of expenses post COVID and also, yes, explicitly last year when it comes to the R&D side of business. We think that was successful. We want to maintain that level that we have, but not increase it on the R&D side. We have the capacity to run our projects that we have ambition to run. So we feel that we're well staffed on that side. If we do any changes, it will be evaluating use of consultants if we can run without or if we need special competencies, then we run with the consultants. So we believe that we can maintain that level. But when it comes to admin, sales and the other overhead costs, then we're being more cautious. And the cautiousness would be able to compensate for, let's say, inflation-driven expenses. So we don't look at significant changes. It's more being cautious when if someone leaves how do we replace these are the thoughts that we're having right now. So it's more a dampening effect than a drastic change, I would say.

[Christian Lee, analyst]

Got it. Could you please give us some color on the instrument space? Did you still see positive sales trends for the DC-1?

[Simon Østergaard, executive]

Sorry, Christian, can you repeat that?

[Christian Lee, analyst]

Give us some more color on the instrument sales. If you still saw positive sales trends for the DC-1 instrument in Q1?

[Simon Østergaard, executive]

In Q1, I'd say the small instruments were also impacted by inventory management. So it was both the large platforms and also the DC-1. So we had a relatively low Q1.

[Christian Lee, analyst]

Okay. My last question is regarding the bone marrow application. You couldn't reveal the price levels. But if you could discuss the revenue model, if you are thinking about having a subscription-based model or if you will also offer perpetual licenses?

[Simon Østergaard, executive]

No, that's a great question, Christian. Yes. So of course, not the actual price level, but the model will be that our customers will purchase the DC-1 as a platform -- that will be a platform where other things obviously can run. But then they will buy this license and the concept is that it will not be a perpetual license, as we've done historically, but it will be a license that does not impose a lot of transactions for the lab in terms of monitoring consumption, et cetera. But it will not be a perpetual license, so it will expire after, let's say, 5 years with some flexibility in terms of 3, 5, 7 years and price adjustment according to what you sign up for to begin with. So that's the thinking around it.

[Operator]

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

[Simon Østergaard, executive]

All right. Yes, first of all, thanks for listening in and not the least for these qualified questions to really understand the depth of the business. So we -- as said, we look back on 3 tough quarters for these unprecedented times. And generally, the glitching revenue sort of translate into a lower EBITDA. But we've actually come to a level of confidence that tells us that the market is requesting our solutions. So that's not the root cause here. And we have gained increasing knowledge from our partners in really understanding how we should navigate in this indirect universe where we thrive. So despite the headwind, then we are really driving our destiny. We are investing in the future. So today, we -- and as an example of that, then today, we mentioned the bone marrow as a first example of our -- under our specialty analysis pillar. So I think that you should really see that as a sign of confidence and also as an output from the R&D, there will be much more coming from our side, both for the specialty but also for new areas and not the least for the large lab segment as we drive through the coming years. It's an exciting time. But we appreciate you staying with us, and we are looking forward to updating you again in July. I believe it is-- thank you very much for dialing in.