Good morning, and welcome to the AngioDynamics Third Quarter Fiscal Year 2018 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded..

The news release detailing the third quarter results crossed the wire earlier this morning and is available on the company's website.

This conference call is also being broadcast live over the Internet at the Investors section of the company's website at www.angiodynamics.com, and the webcast replay of this call will be available at the same site approximately 1 hour after the end of today's call..

Before we begin, I would like to caution listeners that during the course of this conference call, the company will make projections or forward-looking statements regarding future events, including statements about expected revenue, adjusted earnings and free cash flow for fiscal year 2018.

Management encourages you to review the company's past and future filings with the SEC, including, without limitation, the company's Forms 10-Q and 10-K, which identify specific factors that may cause the actual results or events to differ materially from those described in the forward-looking statements..

A slide package offering insight into the company's financial results is also available on the Investors section of the company's website under Presentations. This presentation should be read in conjunction with the press release, discussing the company's operating results and financial performance during this morning's conference call..

I'd now like to turn the call over to Jim Clemmer, AngioDynamics' President and Chief Executive Officer. Mr.

Clemmer?.

Thank you, Rob. Good morning, everyone, and thank you for joining us for AngioDynamics Third Quarter 2018 Earnings Call. With me on the call is Michael Greiner, AngioDynamics' Executive Vice President and Chief Financial Officer..

Today, I will provide a brief overview of the operating highlights for the quarter. Michael will then provide a detailed analysis of our financial performance and an update to affirm our fiscal 2018 guidance. After that, we'll open the call to your questions..

Our third quarter results demonstrate continued execution against our operational goals. We achieved meaningful gross margin expansion, we drove strong profitability, we delivered positive free cash flow despite not growing revenue in the way that we had hoped..

Our net sales for the third quarter of FY '18 were down 2% year-over-year to $83.9 million as growth across the majority of our product portfolio was offset by pressures in our Venous and our PICC product lines.

Additionally, we faced a negative comparable related to the exit of our RFA product line in Japan, which, as you may recall, was the subject of an inventory write-off last quarter..

In January of 2017, we recorded an RFA sale in Japan of $1.7 million, subsequent to which we discontinued the product line in Japan and had no additional sales, which created a negative comparable this quarter..

Now I'll briefly discuss the performance of each of our businesses during the quarter and what we're doing to improve our performance in each of those areas..

Our Peripheral Vascular business was down approximately $400,000 due to the previously noted year-over-year decline in our Venous Insufficiency business. This decline was mostly offset by mid- to high single-digit growth in the remainder of the PV portfolio..

AngioVac procedural volumes remained strong and were up 17.6% year-over-year in the third quarter. We continued to make targeted R&D investments in our thrombus management products while also seeking to identify inorganic growth opportunities..

While performance of the Venous Insufficiency business remained below our expectations due to continued competitive and reimbursement headwinds, we continue to work hard on returning this business to positive growth..

Our Vascular Access business revenue declined during the third quarter, but at a slower rate than we've seen in prior quarters, as continued growth in Midlines and other BioFlo-related products was more than offset by declines in sales of PICCs as well as our non-BioFlo products..

The ongoing mixed shift to BioFlo products is evidence of the value that this one-of-a-kind technology is delivering to our customers. Additionally, our lawsuit against C.R.

Bard is moving forward as planned, and we continue to believe that if our PICCs are able to compete on a level playing field, we can grow our business in this market, particularly given the gains that we've seen from our BioFlo Midline ports and dialysis product families. We anticipate hearing from the District Court soon..

Our Oncology/Surgery business decreased 7.2% year-over-year, as lower sales related to the discontinued RFA business in Japan were only partially offset by mid-teen growth sales of both NanoKnife and the Solero Microwave Tissue Ablation System.

Excluding the $1.7 million Japanese RFA transaction from January 2017, our Oncology business grew by 6.7% year-over-year, driven by Solero growth of 15% this quarter, and that product is receiving very positive response from global physicians..

We remain focused on optimizing our product portfolio through both organic and inorganic investments in order to spur top line growth. We continue to seek out value-creating M&A while also evaluating reshaping our overall product portfolio..

As an example of this focus on investing in our product portfolio, we've recently introduced the Biim wireless ultrasound with our partner Biim Technology, and we are excited for the added level of convenience and accuracy that this groundbreaking product will deliver to vascular access clinicians..

With that, I'll turn the call over to Michael Greiner, our Executive Vice President and Chief Financial Officer. .

Thanks, Jim, and good morning, everyone. Before I begin, I would like to remind you that we have posted a presentation on our IR website summarizing the key items associated with our third quarter results. This information is intended to complement our prepared remarks as we now walk through the quarter's results..

As Jim mentioned, our net sales for the third quarter of fiscal 2018 totaled $83.9 million, which represent a 2% year-over-year decrease. The 9 months ended February 28, 2018, net sales were $256 million, a decrease of 2.6% compared to $262.7 million for the same period a year ago..

Our gross margin for the third quarter of fiscal 2018 expanded 300- basis points to 54.2% from 51.2% a year ago, largely as a result of ongoing operational improvements and recently completed facility consolidations..

Based on our performance this quarter and ongoing efficiency improvement efforts, we remain confident in our ability to end the year with an annualized gross margin approaching 52%..

Our R&D expenses during the third quarter of fiscal 2018 were $6.5 million, or 7.7% of total sales, compared to $6 million, or 7% of total sales, a year ago.

We're spending more on R&D year-over-year, but our expected full year spend is tracking below what we had anticipated at the beginning of the year as a result of our more disciplined R&D process that we have previously discussed..

Selling, general and administrative expenses for the third quarter of fiscal 2018 decreased slightly to $25.7 million, or 30.7% of total sales, compared to $26.5 million, or 30.9% of total sales, a year ago.

The decrease in SG&A on a dollar basis was primarily attributable to our continued focus on cost reduction as well as the impact of our lower-than-anticipated sales..

Our adjusted net income for the third quarter of fiscal 2018 was $9.5 million, or $0.25 per share, compared to adjusted net income of $6.9 million, or $0.19 per share, in the third quarter of fiscal 2017..

For the 9 months ended February 28, 2018, our adjusted net income was $19.9 million, or $0.53 per share, compared to an adjusted net income of $20.2 million, or $0.55 per share, a year ago. .

Adjusted EBITDAS in the third quarter of fiscal 2018, excluding the items shown in the reconciliation table of our presentation, was $16.8 million compared to $14.9 million in the third quarter of fiscal 2017. For the 9 months ended February 28, 2018, our adjusted EBITDAS was $41.5 million compared to $44.4 million for the same period a year ago..

Now moving to the cash flow and balance sheet. The third quarter of fiscal 2018, we generated $4.3 million in operating cash flow and $3.9 million in free cash flow, the difference being spend on capital expenditures..

As of February 28, 2018, we had $53.6 million in cash and cash equivalents and investments as well as $93.8 million in outstanding debt. This excludes the netting impact of deferred financing fees that are captured on our balance sheet.

Additionally, our free cash flow generation continues to strengthen our balance sheet and underlines our focus on financial discipline.

Our strong balance sheet enables us to continue seeking out potential acquisitions that align with our long-term growth initiatives while also empowering us to make targeted investments in new product R&D and ongoing operational improvements..

Now on to our financial guidance for the remainder of the year. We are reaffirming our previously announced financial guidance as we continue to expect our fiscal year 2018 net sales in the range of $345 million to $350 million and free cash flow in the range of $30 million to $35 million.

This excludes the approximately $12.5 million cash payments that we anticipate making during the fourth quarter related to the previously disclosed legal matters for the Department of Justice..

Additionally, we continue to expect our adjusted earnings per share in the range of $0.64 to $0.68. This excludes any impact from the recently enacted 2017 Tax Reform Act..

As previously discussed, with regards to the recently signed tax reform, we will see a positive impact to our adjusted EPS primarily due to the decline of our global statutory tax rate from 36% to 23%. And as I mentioned, this was not included in our previously issued formal guidance.

Including the impact of the Tax Reform Act, we anticipate adjusted earnings per share in the range of $0.70 to $0.74. .

With that, I'd like to turn the call back to Jim. .

Thanks, Michael. Now before I close, I'd like to update you on our progress with NanoKnife and with our ongoing dialogue with the FDA. On January 24, 2018, we announced that the FDA granted the expedited access pathway or breakthrough designation to our NanoKnife system and proposed indication for use for the treatment of Stage III pancreatic cancer..

The breakthrough designation is designed to help patients gain more timely access to medical devices that may provide more effective treatment of life-threatening diseases, for which no approval or cleared alternatives exist..

The recent proliferation of studies published in peer-reviewed articles describing the use of the NanoKnife system to treat Stage III pancreatic cancer supported our application for the breakthrough designation.

In addition, we made a fundamental switch in our approach to securing an expanded indication for the use of the NanoKnife system to treat pancreatic cancer..

After discussions with the FDA, we believe that the PMA pathway will provide a more predictable path to a successful outcome. In addition, we believe that an ultimate PMA approval includes numerous ancillary benefits not associated with the 510(k) approval..

We are actively engaged in discussions with the FDA to develop our data development plan to support the PMA submission, utilizing the collection of real-world evidence..

first, to secure an expanded indication pursuant to our PMA; second, eliminate as many variables as possible to articulate the medical community that the improved outcomes for patients with Stage III pancreatic cancer are directly attributable to the NanoKnife system; and third, to support payers, including CMS determination that the use of NanoKnife is reasonable and necessary for coverage and payment purposes..

We believe that our current plan provides for the most efficient and effective structure to collect data to support these 3 goals. As we finalize details around our plan, we expect to provide additional public comments..

In closing, as we look forward to the last quarter of the fiscal year and beyond, we continue to believe that our portfolio evaluation in reshaping efforts will drive sustainable long-term top line growth..

I've been at AngioDynamics for almost 2 years now. And in that time, we've executed against most of the operational goals that we initially laid out. That being said, the one area that still needs to be addressed is our product portfolio, which in its current form remains our largest inhibitor to top line growth..

During this past quarter, we grew 8 of our 11 product categories, and we're addressing the ones that we missed. We remain committed to optimizing this portfolio. We know where the softness lies, and we're working to address it..

Thank you for joining this morning. And now I'll turn the call back to Rob for questions and answers. .

[Operator Instructions] Our first question is coming from the line of Jason Mills with Canaccord Genuity. .

This is actually Cecelia Furlong on for Jason.

And I was just wondering, could you provide a bit more outlook on the M&A front, what your current capacity for M&A is, what you'd comfortably be willing to invest and just your thoughts around current valuations you're seeing across medtech in general?.

Thanks, Cecilia. This is Michael. Great question. So as you may be aware, we have approximately $55 million of cash on our balance sheet. At this moment in time, we have a revolver of $150 million that is untapped. And so we continue to remain active as we talked about in the second quarter.

But direct to your question around valuation, we've been unable to, for a variety of reasons, including valuation, been able to get anything across the finish line at this point in time. What we are excited about is, in the strategic area that we're focused on, we do see a lot of opportunity.

And so we're confident that over this next 12 months, we anticipate closing some deals. We're also going to do it with an eye towards being thoughtful around valuation. .

Great. And then just turning quickly to NanoKnife.

Can you just provide a little more color around how your interactions with FDA have changed subsequent to receiving the designation versus prior? And just also how this affects and alters your thoughts around your R&D allocation on a go-forward basis?.

Sure, Cecilia. So our discussions with FDA I'll describe as being very collaborative. Over the past 12 months here at AngioDynamics, I think you're aware, Cecilia, we've added some new people to our team. People have joined us that have good experience in doing projects like this and have done it in their past lives.

So we added some capability to our team, which is helpful. We then engaged in a collaborative discussion with the FDA, where we mutually, I think, agreed that the PMA pathway using this new breakthrough designation was really a great pathway for this product because of the unmet need for these patients with pancreatic cancer.

So you really have 2 things coming together at once. The need to treat these folks, a really great device, now we need to get with the FDA and prove that the clinical data is real, and we're working to do that. So that's been great.

Number two, back to your comment on R&D, we're committed, as I told you before and Michael's reiterated, to R&D spend at the rates we've shown you, roughly 7% to 8%, and we mentioned again that in FY '18, we set aside extra spending.

We're spending a little bit under our anticipated rate, but we're committed to a new R&D process, that we'll spend our funds wisely, and blending the R&D process with external M&A and licensing and distribution opportunities are a few of the ways that we'll grow in the future. .

And if I could just squeeze one more in.

Just regarding gross margin expansion, could you provide some additional color around expected impact of the recent facility consolidation just both near term as well as going forward? And can you walk us through the other primary drivers of gross margin expansion just on a go-forward basis?.

Sure. Great. Thanks, Cecelia. Yes, so as we mentioned, we -- this quarter ended at 54.2%. There was a mix of items that contributed to that, mostly net productivity. In that net productivity number were the closure of the plant facilities. But that was only a little piece of it this quarter because we just completed it in quarter.

So as we go out, we'll get to see the full impact to them -- those particular plant consolidations in the fiscal year '19. As we reiterated, we expect approaching 52% for gross margin for the full year, which is doing math means our fourth quarter will be in that 54% to 55% gross margin range as well.

And so we have 6 months of -- you're ending the year with 6 months at 54% to 55%, logically you could conclude that, that would be the way that we think about entering the full year of fiscal year '19. Again, you're going to start to feel the whole $4 million to $5 million of overhead expenses that we've eliminated through the plant consolidation.

As you're putting more volume in plants, you'll see more absorption opportunity as well as just taking a step back and saying, are we using the footprint the right way in the plants that we now have remaining in upstate New York, so we'll continue to move towards that.

The one headwind we did see this quarter is with the reduction in Venous Insufficiency revenue. That is a very attractive gross margin product so that did provide us a little bit of a headwind related to mix. .

Our next question comes from the line of Matthew Mishan with KeyBanc Capital Markets. .

I think this is going to be a multipart question.

But could you give us a sense of the timing and the scope of the portfolio evaluation and the kind of reshaping you're talking about? And then what are some of the parameters you were looking at for businesses that you may add through M&A and then businesses that you currently have that you kind of view as core versus noncore?.

So Matt, good question. About a year ago, we had our first Investor Day. If you go back to what we presented there, our thinking is still very much aligned with that. Think what we did at that day was to show you and show everybody that we're looking at our portfolio in a couple of different ways.

We identified some of the core -- as you identified -- core product categories that we have in our portfolio. And those will probably receive a little less attention in investment over time. Now that doesn't mean they can't grow. I'll give you an example. Our fluid management business continues to outperform its market in the space it plays.

This is primarily due to really great execution. It's a really well-managed business. Our people inside internally are managing well, and the sales force is very strong and is executing well. So that's a great business. But it's not going to receive a lot of attention in investment going forward.

Think we identified to you 4 categories last year at Investor Day that we really like, we'll invest in, and we'll continue to do so.

So if you look at where we'll invest, Matt, it's probably targeted to the area that we've shown our investors already because we see really more of a right or reason to win in some of those areas due to existing technology that we feel is exclusive or highly beneficial to our caregiver partners and our patients.

So building around that mix also makes sense for us. .

And also, Matt, just to add to that and feeding off the facilities question as well, we are going to remain focused in the M&A space on more of a target bolt-on type of acquisition, those that fit our stated strategy to Jim's point and with an eye towards appropriate valuation and, obviously, as I think any of us who are on this call recognize, evaluations are a little frothy right now.

So we will remain disciplined there because we recognize that the long-term story here is around creating value. And if we're going out and, obviously, paying too much in premium, that just makes the math much harder to overcome. .

And then I think maybe you'll give more detail on this a little bit down the road.

But on NanoKnife, as you're kind of working towards the PMA pathway, other than just having like more data, which is clear, can you give us a little bit more color on how you're thinking about organizing, presenting and designing studies a little bit differently this time than from what's been presented in the past?.

So, Matt, good question. And Stephen Trowbridge, as you know, our General Counsel and Head of Our Clinical Affairs Department, has joined us. I'll have Steve answer that question. .

Thanks, Jim. Thanks, Matt. I think it's a good point. We are thinking about organizing our data a little bit different way than what you've seen in the past. Historically, we've talked about some investigator-initiated trials that have had great results and have done a really good job pushing this technology forward.

However, in the discussions that we've had with FDA, it's become clear that we have to augment the body of evidence that's out there with some more traditional type evidence that you would expect to see.

So as Jim mentioned in his prepared remarks, when we are having our conversations with the FDA, we're organizing our trial and our evidence development activities to give it 3 main goals.

One, to get the FDA approval, but sometimes, even more importantly, is to organize that data in a way that's going to be very meaningful to the physicians that haven't already bought into the NanoKnife story. So we want to make sure that we can continue to build on what's out there to prove the benefit that NanoKnife provides to these patients.

And then third, which is as important as the other 2, to make sure we can articulate a value proposition to the payers, whether those are private payers or CMS. And so we're going to go after a very comprehensive strategy here to build on the really good evidence that's already out there. .

And then for Michael, just how sustainable are these gross margin trends? You kind of exited the -- you're exiting 3Q at 54%. I mean, your guidance would imply you're kind of same rate around 4Q.

As you kind of go into next year, I mean, is there a seasonality in the back half? Or do you think that as you kind of get into next year, you're a mid-50s gross margin company?.

Good question. Thanks, Matt. So we are working through our budget process now, so I don't have a strongly held view towards next year.

But as I responded to Cecelia, I think you look at 54.2% this quarter, somewhere in that range or higher for the fourth quarter, and at some point, you start to realize that you've got a cost structure that supports this mid-50% gross margin profile.

Again, a lot of it is, especially as you go to next year, specific costs that have been taken out of the system through the consolidation of the 2 plants. We'll have a full year without any of that royalty. So we had 5 months this year of the royalty. Next year, we'll have no royalty for the year. That was a specific driver as well.

So it's really going to be dependent next year, quite frankly, once we get kind of our hands around our budget is what is our mix. So if our mix is really attractive with some of our higher margin products, we absolutely can see a full year in the mid-50s to maybe slightly above that.

If our mix is a little less attractive from a gross margin standpoint, we'll probably be more in this 54%, 53.5% range. But we've definitely moved out of that bucket of the high 40s, low, low 50s that we had seen for many years. So I am confident around that. .

And last question, just on the guidance, can you help us -- can you walk -- help me walk from the $0.64 to $0.68 to the $0.70 to $0.74? What piece of that is the tax rate going from 36% to 23%? What piece of that is the med device tax, which was -- the exemption for the med device tax, which was extended? And then is there any piece of that, that is operational as well?.

Yes. So none of the med device tax relates to -- the difference between $0.64, $0.68, $0.70, $0.74 to the med device tax was put into our selling, general and administrative piece, so that's all operative. So no tax implication of the med device tax coming off.

And there was approximately $0.02 that we had anticipated as a headwind, assuming it came back in January 1. The difference between $0.64, $0.68, $0.70, $0.74 is 100%, the fact that our blended rate for the full year, which means, in our case, 7 months of 36% and then 5 months of 23%, we get 5 months of 13% less tax rate -- statutory tax rate.

It's 100% related to that. .

Our next question is from the line of Matt Hewitt with Craig-Hallum. .

This is Charlie on for Matt. A couple for me.

First, the announced launch of that wireless ultrasound device, should we be looking at this as a meaningful contributor? What's the TAM here? I guess, how should we be thinking about that launch?.

open up the discussion again around the right product at the right time, help our clinicians understand our product portfolio, really give them access to visualization in a new manner. So what you'll see from us when we give you FY '19 guidance, it will include what we expect for the Biim launch in FY '19.

I expect the product is going to do a great job. If you look even this past quarter that we reported, our Vascular Access business, we grew 3 of our core product categories in that quarter. They did a great job. As you know, our PICCs were down. We have that competitive pressure from the way that Bard approaches the market.

But with the Midline's ports and dialysis catheters, all 3 of these were up year-over-year. So this group is doing a really good job executing. I would expect nothing less when it comes to the Biim product in its bag. .

Okay. That's helpful there.

And then related to NanoKnife, have you seen an increase from -- in use from physicians using the product off-label for pancreatic cancer now that we've got the Stage III EAP designation from the FDA?.

We don't always know exactly what organ that the physician is treating when they use our NanoKnife. So we're not exactly sure which organ that they're treating with NanoKnife's use. .

Yes, and I don't think that's exactly the right way to look at it, right. The EAP designation was a filing that we made with the FDA that will enhance our communications as we move through the process trying to get this expanded indication. It's not something that is a promotional piece at all. .

[Operator Instructions] The next question is from the line of Jason Bedford with Raymond James. .

So I guess, the surprising kind of news, I guess, for us is just the PMA pathway on NanoKnife. This is, obviously, not the most efficient pathway, and PMA is something new to the company.

So can you give us an idea as to the size of the clinical trial and the cost of running a PMA trial?.

to support the FDA approval; convince the medical community that may not have bought into NanoKnife yet; and then support our payer strategy. While we get data that's at probably a higher level than what we've seen with some of those IITs before. Again, those IITs were great. They did a very good job moving the technology forward.

They proved out the benefits of NanoKnife. But we're going to be able to use this new strategy to coalesce and have a more comprehensive approach to getting that data to do all those 3 things. Is it going to be a little bit more expensive than if we had just stood on the current data to get a 510(k)? Absolutely.

But we're going to get data that's going to be far more appropriate and beneficial for us. And again, once we have final details through our conversations with the FDA, we'll get back to you. But I wouldn't think of this as something that's otherworldly from where we had been before. .

Okay.

When do you expect to get the label?.

Yes. Again, that's, I think, part of the process. Once we have more details, we'll know. The good thing is that we do feel that we'll be able to have additional conversations with you guys. As we go through the breakthrough designation process, we can gauge any spreads and get more interactive, timely answers back from FDA.

So as soon as we have those, we'll do it. .

Okay.

But, let's say, realistically, this is not a label that comes in fiscal '19, correct?.

I think that's probably right. But as we go through this, there's a lot of things that we're looking for. So it's label, it's payment. As we go through this process, we're going to have enhanceability to train our physicians, which I think will be good for the overall position of the technology.

So I don't know that label in and of itself is kind of the biggest end-point from how we move technology forward. .

When do you think you can start the PMA trial?.

That, we certainly hope, is a very early FY '19 event. .

Okay.

Maybe just switching gears, what can you do to change the trend in Venous? Or is it just a matter of waiting for some of these headwinds to anniversary?.

Two things, Jayson. You just mentioned one of the 2. Some of the -- majority of the loss that occurred this year we've identified and talked to you about where it's at, and that's going to annualize soon. But more importantly, beyond that, we're looking at our portfolio.

There's things that didn't have in our portfolio that we're going to add to the portfolio. There's opportunities for us to grow. As you know, we have the world's best laser #1 market share. But that's not the full portfolio that we desire in the future.

We want to make sure our clinicians have access to other ways to treat patients as technology changes. We've also got to make sure that our clinic partners are profitable using our products. So right now when there's been some reimbursement headwinds for us, we're aware of those who are addressing them.

So I think, over time, you'll see the folks in that division have a good strategy to have a portfolio additions process. We'll add some technology to our bag. .

Okay.

And, Jim, can you give us an idea just within Oncology, what's your mix of microwave versus RF today?.

Good question, Jayson. I'll give you the ratio in a second here. .

Roughly. .

Just broadly speaking is -- RFA is about 20%, microwave's 40% and NanoKnife's 40%, with some other stuff mixed in to round that out. .

At this time, I will turn the floor back to management for closing remarks. .

Thanks, Rob. I think what you've seen from AngioDynamics this quarter, again, as I reiterate, 8 of our 11 product categories had positive growth. That hasn't happened in a long time in AngioDynamics. We've done really good job executing in the field with our customers and our clinician partners.

We've seen products like our Solero Tissue Ablation System -- our new microwave -- get widely adopted, and we've got 2 really strong competitors there, with Medtronic and J&J.

Our global sales force did a really good job working with our physicians to trade out the old Acculis system and get a new Solero utilized, and we're seeing great response from those physicians. Watching what our Vascular Access business did this quarter, growing 3 of its 4 categories, is really dynamic and special.

And looking at our PV business, yes, we're struggling in Venous, but tremendous growth in our thrombus category, great physician adoption, growth of what's happening with our AngioVac product line, great growth in our fluid management category.

So hopefully, you're seeing those commercial execution wins, combined with the back-end we talked to you about, where operations and quality people are running our systems, our plants and our full supply chain.

That's what will help to add to our gross margin expansion, contribute to our overall results and give us a great balance sheet to leap forward from. So again, we will use the platform we have here.

We'll make sure AngioDynamics is a stronger company, utilizing our current assets, utilizing our new R&D process, looking for partners to either license or distribute products with and, yes, ultimately, with our strong balance sheet and our tools, looking to acquire technology that will enhance our overall portfolio. So thank you for your time today.

We'll speak to you again soon. .

This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation..