Mark Quick - Director of Business Development and IR Brad Mason - President and CEO Doug Rice - CFO.

Anthony Petrone - Jefferies Jeffrey Cohen - Ladenburg Thalmann Ryan Zimmerman - BTIG Jim Sidoti - Sidoti and Company.

Good day, ladies and gentlemen, and welcome to the Orthofix Third Quarter 2018 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. Following managements prepared remarks, we will have a question-and-answer session, and instructions will be given at that time.

[Operator Instructions] As a reminder, today’s conference is being recorded for replay purposes. It is now my pleasure to turn the conference over to your host, Mr. Mark Quick, Director of Business Development and Investor Relations. Please go ahead. .

Thank you, operator, and good afternoon, everyone. Welcome to the Orthofix third quarter 2018 earnings call. Joining me on the call today are President and Chief Executive Officer, Brad Mason; and Chief Financial Officer, Doug Rice. I’ll start with our Safe Harbor statements, and then pass it over to Brad.

During this call, we’ll be making forward-looking statements that involve risks and uncertainties. All statements other than those of historical fact are forward-looking statements, including any earnings guidance we provide and any statements about our plans, beliefs, strategies, expectations, goals or objectives.

Investors are cautioned not to place undue reliance on such forward-looking statements as there’s no assurance that the matters contained in such statements will occur. The forward-looking statements we make on today’s call are based on our beliefs and expectations as of today, October 29, 2018.

We do not undertake any obligation to revise or update such forward-looking statements.

Some factors that could cause actual results to be materially different from the forward-looking statements made by us on the call include the risks disclosed under the heading Risk Factors in our Form 10-K for the year-ended December 31, 2017, as well as additional SEC filings we make in the future.

If you need copies of these documents, please contact my office at Orthofix in Lewisville, Texas. In addition, on today’s call, we’ll refer to various non-GAAP financial measures.

We believe that in order to properly understand our short-term and long-term financial trends, investors may wish to review these matters as a supplement to financial measures determined in accordance with U.S. GAAP.

Please refer to today's press release announcing our second quarter 2018 results for reconciliations of these non-GAAP financial measures to our U.S. GAAP financial results. At this point, I'll turn the call over to Brad..

Thanks, Mark and good afternoon, everyone. I'll start by giving you a summary of our third quarter 2018 performance, after which Doug will discuss the financial results that we reported today. I will then follow up with our outlook for the remainder of 2018, before taking questions.

In the quarter we not only had solid top and adjusted bottom line performance, but also made great strides in aligning our Orthofix Spine businesses. Starting with the top line, we reported net sales of $111.7 million, representing a year-over-year increase of 6.1% as reported and 6.6% in constant currency.

As announced in June, we are aligning our business unit structure around two pillars, spine and extremities. Within Orthofix Spine, there are three reporting segments. The first is bone growth therapies, formerly called BioStim.

This segment consists of spinal fusion therapy, which includes our Spinal Stim and Cervical Stim products and bone healing therapy, which is our Physio Stim product. The second segment is Spinal Implants, which includes Spine Fixation our legacy fusion implant products and spine motion preservation, the spinal kinetics M6 disc.

The third segment is Biologics, which includes our various biologics tissue forms. This alignment of our spine product lines under a single Orthofix spine organization is intended to drive both organic and inorganic growth.

The platform of market leading differentiated technologies coupled with both an improved product development pipeline and continued business development execution puts Orthofix Spine in a position for accelerating and sustainable growth.

In total the Orthofix Spine including bone growth therapy, Spinal Implants, Biologics and Spinal Kinetics, produced $84.8 million in reported sales in the third quarter, which was a 6.3% increase over prior year. Now beginning with the bone growth therapies reporting segment, we reported net sales that grew 8.2% in Q3 over prior year.

As expected and as I discussed on our Q2 call, we benefited from a larger to normal open order volume at the end of Q2 that translated into sales in Q3. Even when normalized for this impact sales increased 5.9% over prior year.

In Spinal Implants, we reported a year-over-year increase of 9.7% overall, with a decrease in sales of 4.5% is Spine Fixation for the quarter, with Spinal Kinetics contributing net sales of $2.9 million. The primary driver of the decrease in Spinal Fixation was the expected international softness that we commented on in our last earnings call.

And to a lesser extent the normal disruption that comes with a business reorganization and leadership transition that I also spoke about on our last call. We expect this to be a short-term issue at the benefits of the Orthofix Spine alignment comes together in the next few quarters.

Reported sales decreased in our Biologics business compared to prior year by 3.8%. The sales in this business continue to be negatively impacted by the contractual reduction in the marketing service fee percentage Orthofix receives from MTF Biologics.

When normalized for this change which start -- which occurred in March of this year, sales increased by 3.7% the period, with Trinity volumes increasing 4.6%, offset by a slight ASP decline. We are seeing a nice recovery in the previously underperforming region that I spoke about.

And we remain optimistic about the additional opportunities the realignment of our spine businesses will create for Biologics in the future. Turning to our Orthofix Extremities business, formerly Extremity Fixation, reported and constant currency net sales increased 5.8% and 7.5% respectively in the third quarter over prior year. Both OUS and U.S.

performed well in the period. As in our Bone Growth Therapies business, Orthofix Extremities also benefited from the carryover of an unusually large number of open orders at the end of the second quarter that were fulfilled in this period. Now moving on to the non-sales metrics, we are very pleased with our performance in the quarter.

Adjusted earnings per share was $0.43 compared to $0.42 in Q3 of 2017. Excluding the delusional Spinal Kinetics adjusted EPS was $0.50 per share or 19% increase over prior year. Adjusted EBITDA as a percentage of net sales excluding Spinal Kinetics was 21.1% compared to 20.1% in the prior year period, a 100 basis point increase.

Free cash flow was $11.7 million for the third quarter, which was a $2.6 million improvement over prior year. Adjusted trailing 12 month ROIC was 11.6%, compared to 10.7% in 2017 and when excluding Spinal Kinetics, adjusted ROIC was 14.6% in the period. And lastly, we had a total cash balance of $56.2 million as of September 30, 2018.

I'll now spend a few minutes giving you more color on the important initiative we are undertaking in our Spine businesses. In June, we announced the formation of Orthofix Spine, which is the alignment of the Bone Growth Therapies, Spinal Implants and Biologics recording segments.

In the third quarter, we made significant strides in optimizing the organization through a unified approach of strategy, leadership, marketing, operations, R&D and sales logistics. This work has been essential in preparing us to more fully leverage our market leading bone growth therapy and biologic technologies and upon USFDA approval the M6 disc.

Orthofix has a unique combination of products that we believe differentiates us in the spine market and will be the platform for future accelerated growth.

And more specifically with the M6 disc and our current cervical spine product offerings, we believe that Orthofix will have the most complete and differentiated cervical spine solutions of any company worldwide, including the only FDA approved osteogenesis device for use infusion of the cervical spine.

Regarding the M6 disc approval process, we still anticipate the mid-2019 approval and limited market release. But this can be earlier or later in the year depending on the timing of the FDA approval process.

In summary, we had a very good top-line and adjusted bottom line results in the quarter, we made significant headway and aligning the Orthofix Spine businesses, we finalize the re-domicile of the company to Delaware and overall are very pleased with our positioning heading into 2019 and beyond. Doug will now give you the financial details.

Doug?.

Thanks, Brad and good afternoon, everyone. Our financial results had many highlights this quarter including strong top-line growth, margin expansion within our organic business, a lower effective tax rate and increased cash flow.

I'll start by providing some additional details into our net sales and earnings results and then discuss some of our other financial measures. As Brad noted, total net sales in the quarter were $111.7 million, up 6.1% on a reported basis and 6.6% on a constant currency basis when compared to the third quarter of 2017.

When adjusting for Spinal Kinetics sales and MTF Biologics' contractual fee change, net sales were up 5% over prior year in constant currency. The growth in the quarter was primarily driven by our Bone Growth Therapies and Extremities businesses with stabilization in Biologics.

Under the new ASC-606 revenue recognition standard that we were required to adopt at the beginning of 2018, we generally recognize revenue at the time of invoice and no longer on receipt of cash for certain of our OUS net sales to stocking distributors.

As I previously mentioned, the differences between the current and historical methods may vary on a quarterly basis but overtime, we believe that the differences will not be significant.

When comparing our Q3, 2018 growth to the prior year period using the newly adopted revenue recognition methodology for both periods, our constant currency growth rate was 6%. Please refer to today's earnings release and the footnote in the 10-Q for further analysis.

Gross margin in the third quarter of 2018 was 78.5% compared to 77.5% in the prior year period. The 100 basis points increase was driven by continued improvement in our inventory management initiatives and cost savings resulting from our U.S. restructuring in late 2017.

These improvements more than offset the non-cash purchase accounting related inventory fair market value adjustments related to the Spinal Kinetics acquisition. For the full year 2018, we now expect gross margins to be between 78.5% and 79.0%.

Sales and marketing expenses were 44.7% of net sales in the third quarter of 2018, down from 45.1% of net sales in the third quarter of 2017, primarily as a result of lower commissions. We continue to expect sales and marketing expense as a percent of sales for the full year to approximately track with 2017's results.

Non-GAAP net margin in the quarter was 33.8% of net sales, which was up 150 basis points from 32.3% of net sales in the third quarter of 2017. This improvement was due to the improvement in both gross margin and sales and marketing expense as a percentage of sales over prior year.

G&A expenses were 20.3% of net sales in the third quarter of 2018, which were up from 17.2% in the prior year period. This increase is due primarily to higher share-based compensation as well as higher strategic investment spending, which includes cost from both the integration of Spinal Kinetics and our corporate redomicile to the U.S.

R&D expenses were 8.6% of net sales in the third quarter, which were up from 6.6% in the prior year, primarily due to cost pertaining to our regulatory efforts associated with the FDA premarket approval of the M6 cervical disc. We now expect R&D spending to be between 7% and 7.5% for the full year.

Adjusted EBITDA including the expected dilution from Spinal Kinetics during the third quarter decreased to 19.2% of net sales from 20.1% of net sales in the prior year. The decrease was primarily driven by the increased R&D spending from the M6 disk PMA process that I just mentioned and previously discussed in our guidance.

However as Brad mentioned, excluding Spinal Kinetics, our organic margin expansion during the quarter was 100 basis points, which was primarily driven by the improvements in gross margin. Other expense was $5.2 million during the third quarter as compared to other income of $500,000 in the prior year period.

This increase in expense in Q3 was primarily driven by a non-cash $4.4 million impairment charge related to our investment in Bone Biologics, a development stage public company focused on a proprietary recombinant human protein growth factor that promotes bone regeneration.

Together with MTF Biologics since 2013 we have made a series of equity investment in Bone Biologics' common stock that totaled $3.3 million of cost basis. Following this charge the previous book value of $4.7 million is now valued at $200,000.

Now turning to tax, we had income tax benefit for the quarter of $115,000 or 9% of loss before income taxes as compared to income tax expense of $6.2 million or 65% of income before income taxes in the same period of 2017. This year-over-year decrease in our recorded tax provision was driven by the benefit of our recent redomicile and the lower U.S.

tax rate offset by a certain unbenefited or non-deductible expenses including the write down of our investment Bone Biologics. As a reminder based largely on the expected benefits of our redomicile effective with the third quarter we have lowered our non-GAAP long term tax rate from 35% to 29%.

For the third quarter 2018, we reported GAAP net loss from continuing operations of $0.07 per share as compared to net income of $0.18 per share for the third quarter 2017. After adjusting for certain items and when normalizing for tax using a non-GAAP long term tax rate adjusted EPS was $0.43 compared to $0.42 in the third quarter of 2017.

As Brad mentioned when excluding the inorganic operating losses associated with Spinal Kinetics, our organic adjusted EPS was $0.50 per share in Q3, which represents approximately 19% growth compared to the prior year period.

Moving onto the balance sheet highlights, day sales outstanding or DSOs were 61 days at the end of the third quarter 2018, up from 53 days at the end of the third quarter of 2017. As noted on the last call this increase was due primarily to the increased receivables from our adoption of the new revenue recognition standard at the beginning of 2018.

Our inventory turns at the end of the third quarter 2018 were 1.2 times flat to the third quarter of 2017 as inventory management improvements were offset by an $8 million increase in inventory related to the acquisition of Spinal Kinetics.

Cash, cash equivalents and restricted cash at the end of the third quarter were $56.2 million compared to $81.2 million at the end of 2017. The decrease in cash was primarily related to the $45 upfront payment for the acquisition of Spinal Kinetics.

Cash flow from operations for the quarter was $15.8 million, up from $13.8 million in the third quarter 2017. This increase was due primarily to improvements in inventory management. Capital expenditures were down slightly in the quarter $4.1 million from $4.7 million in the prior year.

Free cash flow defined as cash flow from operations minus capital expenditures was $11.7 million during the quarter compared to $9.1 million in the prior year. This improvement primarily reflects the operating cash flow improvements that I just noted. With that, I will now turn it back to Brad. .

Thanks, Doug. I'll now finish my prepared remarks with our updated guidance. For the full year, the company is narrowing its expectations for reported net sales from $450 million to $456 million to $451 million to $455 million, which represents a year-over-year increase of 4.0% to 4.9%.

This guidance is based on current foreign exchange rates and includes the impact of the MTF split change in the Spinal Kinetics acquisition. For the fourth quarter, we expect reported net sales to be in the range of $119 million to $123 million. At the midpoint of this range, this represents 3.5% reported and 4.1% constant currency growth.

When applying this year's new revenue accounting standard to prior year period, year-over-year growth in the fourth quarter is expected to be 8.6% reported and 9.6% in constant currency and for the full year 5.5% reported and 5.8% in constant currency. Please refer to the table in the earnings release for a reconciliation.

Regarding the full year growth contribution from each reporting segment, we continue to expect Bone Growth Therapy business to grow in the 4% to 5% range.

We now expect Spinal Implants growth including Spinal Kinetics to be in the range of 10% to 12%, which reflects our lower expectations for international Spinal Implant sales and some disruption in the U.S. business due to the realignment.

Including the impact of Spinal Kinetics, we now expect to achieve adjusted EBITDA in the range of $85.8 million to $87 million for the full year 2018, and adjusted earnings per share to increase to $1.70 to $1.75 using weighted average shares of 18.9 million and a non-GAAP long term tax rate of 35% for the first half of the year and 29% for the second half.

For the fourth quarter, we expect adjusted EPS to be in the range of $0.46 to $0.51. With that operator, we're now ready to open up the lines for questions..

Thank you. [Operator Instructions] Our first question comes from the line of Bruce Nudell of SunTrust Robinson Humphrey. Your line is open. .

Hi, this is [indiscernible] on the line for Bruce Nudell. Thank you for taking my question.

Can you just quickly comment on the prospects for the rebound in biologics and international spine?.

Sure. Sorry, I didn't catch the name..

Stan. .

Hey, Stan this is Brad. .

Hi, Brad..

Hi. So in terms of Biologics, we had a nice quarter with 4.6% growth in volume, we expect the -- obviously the MTF split change will come off -- that comp will come off in March of this next year and should get back to some normal sorts of growth rates.

But I think that the big opportunity in the Biologics business is really the realignment of our overall Spine businesses. In our Biologics business we have many, many distributors out there that are smaller in nature.

I think once we can attract larger more influential distributors in addition to who we have out there today by -- through the attraction of our M6 disc and our Bone Growth Therapies products and those sorts of things I think we will see a nice uptick in the Biologics business over time.

So I think may be starting mid next year, we should start to see that sort of impact. I've mentioned that before and we still have that same expectation.

In regards to the OUS Spinal Implants business, that's now under new sales leadership, it's under Tom Afzal, who was the president of Spinal Kinetics business and all of their businesses currently OUS, he has a great network setup worldwide, particularly in Germany where they're a very large player and other places around the world.

So we're doing some hiring there and I would give that another couple quarters before we see that start to tick up and that would be my expectation. .

Okay.

And my next question, can you just comment on the impact or if any on the increased focus on the larger competitors on closed robotic spinal systems to garner increased pull through of their entire product lines? Is there any associate impact on your markets?.

Not at this point Stan that we're seeing. I mean, overall, robotics is still less than 15% of the procedures out there. We do recognize that that is going to be a significant part of the future. And I know the estimate show in the next three years at 15% could go to 30%.

So as we think about our business development opportunities that's certainly one of the areas where we will focus and making sure that we don't get left behind in whole wave of navigation and robotics..

Great, thank you for taking my questions. .

You bet, Stan..

Thank you. Our next question comes from Raj Denhoy of Jefferies. Your line is now open..

Thanks. This is Anthony for Raj.

How you guys doing?.

Good Anthony, how are you?.

Doing well. So, couple start on the top-line, just high level. I'm just wondering, if we reconcile for ASC-606, our math is telling us just from the numbers in the queue that it would be around 4%. I'm just wondering if that's the correct way to look at it.

And then the top-line one also would be what was the contribution from Spinal Kinetics in the quarter in dollars if you have that? Thanks. And I have a couple ups..

Sure. Spinal Kinetics in the quarter with $2.9 million and in terms of -- we have a little bit different numbers in terms of 606. But Doug can speak to that..

Yes. We've got a lot of different things going on with revenue this year with Biologics (inaudible) the rev rec change in the Spinal Kinetics. But on a new-to-new basis, which we covered, our reporting growth would have been 5.5%. And on a new-to-new basis, which we think is more appropriate at 6% for the quarter constant currency. Thank you..

All right. With a follow-up on that as well. But maybe a couple of follow ups, just one would be in Extremities obviously the rebound there. I'm just wondering, Brad, you mentioned the catch up order.

So should we interpret it that the entire $1.4 million was sort of recognized in the quarter and that some of that carry into the fourth quarter? And then also does that include and I'm not sure if it does, but the launch of RIVAL foot and ankle I think that's still to come?.

So it was not quite the full $1.4 million, but it was pretty close to it for the quarter. Where I expect to see whatever was left to come through in Q4, but say 90% of it came through in Q3. Anthony, and then, it does not include anything for RIVAL, we don't anticipate to be relaunched until probably mid-next year at this point. .

Okay.

And then, the last one for me would just be maybe high level comments as we think about margins next year maybe directionally, what do you think in terms of overall margins from the realignment Bone Growth Spinal Biologics in 2019? Will it take longer than next year to realize? Do you expect an impact at the adjusted EBITDA line? And then maybe also just Spinal Kinetics, how will that be margin accretive as well in 2019? Thanks..

Sure, Anthony. So the realignment of the -- or the alignment of the businesses that we're doing in Spine is really not about cost savings. I think ultimately as we get into 2020 probably we will see some there, it would be my expectations. That's really about driving top-line more than anything else.

So we do have -- I have committed to 100 basis points per year for three years or sooner on our organic business. And I'm happy to say that on our organic business year-to-date, we're at -- when we adjust out stock-based comp and other adjustments out of EBITDA we’re up 192 basis points.

We’ve made very, very good progress I expect that to continue into 2019. Not sure we'll get all the way to the 300, but hopefully we will on our organic business. Now the Spinal Kinetics business will be a little bit dilutive to that.

And because of the spending that we're going to do to launch the product as well as the R&D spending to get the product approved from the regulatory agencies. So I hope that answers and if not I'm happy to follow up further. .

That's helpful. Thank you. .

You bet. Thanks for calling. .

Thank you. Our next question comes from Jeffrey Cohen of Ladenburg Thalmann. Your line is now open..

Hey, Brad and Doug, how are you?.

Good, Jeff.

How about yourself?.

Just fine. So could you give us a little further color on the succession and the softness? More specifically, could you give us a little deeper color as far as specific geographies? Where they were light kind of some of the ancillary commentary from the field as far as turnaround both specifically on geographies outside U.S.

as well as U.S.?.

Sure. So outside the U.S. is where the majority of our shortfall was in the quarter. It was down 19% over prior year, where our U.S. business was pretty close to flat, but down about 1.5 points. But outside the U.S., it really is in -- the shortfall was in Germany and Australia, couple of places that we know the issues.

Germany is a place where we expect to kind of realign our business there overall, not just in our Spine products, but also in Extremities. And Tom Afzal who's the General Manager of Spinal Kinetics for us was the CEO there.

He has very strong connections in Germany and we're hopeful that he can have a pretty significant impact there as well as Australia and other territories as well. So I would give that a few more quarters before we -- we'll give him a little bit of time to ramp up and work as magic.

And then in the U.S., it was pretty broad based a little shortfall to what we would have normally expected for the quarter. Anytime you make leadership changes Ray Fujikawa and Bob Goodwin were both Presidents, one of Spine Fixation and one of Biologics. They're transitioning out of the company.

That makes distributors sales agents a little bit nervous. But as we bring everything together under Brad Niemann name and with the talent that he has on his team in both leading the sales, although we're keeping the same sales management in each of these businesses, or each of these product lines.

But also on the marketing side and R&D and other areas, we think that they will pretty quickly see the benefit of all of that and realize the benefit of that. And we'll recover in the U.S. business in the next few quarters as well. So it would be my expectation..

Okay, got it. And Doug has clarified the $4.4 million impairment piece out of the $5.2 million from Bone Biologics. You expect a couple of hundred thousand follow on for Q4.

And is there anything else expected in the fourth quarter?.

No other changes expected at this time. We're still very hopeful about the technologies that the company is developing this $200,000 is our net remaining exposure that will remain on our books until we give further information..

Okay.

And another quick one on taxes for modeling purposes for the balance of this year as well as for 2019 you said use 35% for the front half of 2019 and 29% for the back half, is that correct?.

Just for 2018 we use 35% in the first half of the year and effective July 1 in the third quarter we lowered it to 29%. So short of any changes that's the rate that we're using to adjust our long-term rate. .

Okay.

And you said that was for 2018 or 2019?.

Well, first half of 2018 was different at 35% and we lowered it this quarter for Q3 to 29% and that will stay in place until we get -- until we reevaluate. So I would expect that rate to stay at or near that level in the 2019..

Okay, perfect. And one more if I may. You talked about the guidance on percentage increase for Spinal Implants.

I think you said 10% to 12% were you indicating that for the fourth quarter or for the full year 2018?.

That was for the full year 2018..

10% to 12% for the full year. .

Right. And I think I missed something in my prepared remarks here too just to let you know, Jeff, we continue to expect Biologic sales to decrease in the mid-single-digits for the full year primarily due to the MTF fee reduction. And we now expect Orthopedics Extremities sales to grow in the mid-single-digits for the full year. .

Okay, perfect. That does it for me. Thanks guys. .

Thanks, Jeff. .

Thank you. Our next question comes from Ryan Zimmerman of BTIG. Your line is now open..

Thanks for taking the question.

So, a lot of questions have been asked, but you know I just want to check how are you guys thinking about the commercial launch of the M6 disc in the midst of all these changes in the Spine segment? I mean, how do we know that all the issues will be resolved and the launch of the M6 won't be delayed in Spine because of what you're going through right now with the leadership changes?.

Well there -- hey Ryan, it's Brad. They're unrelated. So the team that has done all the work on the M6 disc in the U.S. is at Spinal Kinetics and still very actively engaged, there's no crossover, no risk that any kind of changes to our overall leadership affects that at all.

Certainly we don't know what to expect totally from the FDA, so our best guess is still July of next year. We've got a submission to make here in the very near future. And once we make that submission they’ll have some time to respond to that and then depending on the response we go from there.

So that's the normal process that everybody goes through and -- but there's nothing in the market and there's nothing that's with the FDA nothing that’s with our realignment that will affect that in any way at all..

Okay. Thank you for taking the questions, guys. That’s it for me..

You bet, Ryan. Thank you..

Thank you. Our next question comes from Jim Sidoti of Sidoti and Company. Your line is now open..

Good afternoon.

Can you hear me?.

Sure can, Jim. .

Hey, Jim. .

Great. So I understand the disruption outside the U.S. in the Spinal -- for the Spinal distribution with the changes made there. Can you remind me what the disruptions were in the U.S.

for the Spinal distribution?.

Yes, just a just a change in leadership of that business remembering that the vast majority of our independent reps are out there are not exclusive to us. So as they see change they can tend to get nervous and back off a little bit and maybe sell some of their other lines a little bit more aggressively than ours.

Once they -- so it's a little bit of an engagement issue. Once they see the new structure, the people taking hold and things going well and giving them more opportunities than that flips pretty quickly and we re-engage. And again this isn’t huge numbers we're talking about hundreds of thousands of dollars not millions of dollars here.

So as you -- as we think about this I want to keep it in perspective. So that we expect we're seeing good signs in October and hopefully that will continue. But I would give it another couple of quarters to kind of resolve itself as the new alignment takes hold..

Okay.

And then my other question was the charge for strategic investments in the quarter, is that related to new acquisitions or is that related to the integration of Spinal Kinetics?.

Yes. Yes. It’s both. Yes, it's a combination. .

Got it. All right, thank you. .

Great, thanks Jim. .

Thank you. Ladies and gentlemen this concludes today's question and answer session. I would now like to turn the call back over to Brad Mason, Chief Executive Officer for any closing remarks..

Thank you operator and thank you all for joining us on the call today. I look forward to speaking to you again soon and have a nice evening..

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program you may all disconnect. Everyone have a great day..