Harvard Bioscience, Inc. (HBIO) Q1 2015 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen and thank you for standing by. Welcome to the First Quarter 2015 Harvard Bioscience Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Cheryl Schneider of Dian Griesel International ma’am. Please go ahead.

Thank you operator and good morning everyone. Thank you for joining us today for the Harvard Bioscience first quarter 2015 earnings conference call. Leading the call today will be Jeffrey Duchemin, CEO and President and Robert Gagnon, Chief Financial Officer of Harvard Bioscience. But before I turn over the call over to management, I'll read the Harvard Bioscience's Safe Harbor statement. In its discussion today, the company may make statements that constitute forward performance may differ materially from what it has projected due to risks and uncertainties, including those detailed in its annual report on Form 10-K for the period ending December 31, 2014, as well as its other public filings. Any forward-looking statements, including those related to the company's future results and activities represent its estimates as of today April 30, 2015 and should not be relied upon as representing its estimates as of any subsequent day. At this point I’m delighted to turn the call over to Jeff Duchemin. Jeff, please go ahead.

Thank you, Cheryl. Good morning, everyone. Thank you for joining us for our first quarter 2015 conference call. I'm pleased to be addressing you today of our Harvard Bioscience first quarter results, while we’re disappointed about our financial results, which we’ll discuss momentarily. We remain firmly focused on our long-term growth strategy. And we believe the company is stronger now than it has ever been. We’re on track with and fully executing the strategy we put into place at the end of 2013. Thanks for the efforts of our new leadership team and the work of our employees worldwide. Let me give an overview of the quarter, which had its many challenges, but was also a very exciting and rewarding one as well. As approximately 35% of our business is in Europe our financial this quarter like so many other companies in our sector. We’re adversely affected by foreign exchange headwinds caused by the strengthening US dollar and the resulting impact of grants and budgets denominated in Euros. In addition, we continue to see softness in the academic and government markets, which comprise up to 80% of our revenue. On a positive note as of quarter progressed we saw the performance in both sectors. What did address -- what we did to address the softness in our top line was to take immediate action. Our sales and marketing teams have been working closely with our customers implementing volume restoring programs. On the bottom line we’ve also initiated cost containment programs to help stay lean and constantly assess the operational efficiencies, while it’s still early in the second quarter we have already began to see improvement in our market. Everyone in the company is onboard and addressing our performance. Our sales and marketing teams are working diligently to improve sales levels as I mentioned our initiatives are working. As you saw today’s press release we have reduced our guidance for the year based upon the results of the first quarter and anticipated continued stronger than expected FX headwinds through the remainder of the year. Rob Gagnon, will provide more details of our guidance later on in the call. Let me provide you a brief overview of our financial results for the quarter. Revenue for the first quarter was $25.8 million and less than 1% decrease, compared with last year's first quarter revenue of $25.9 million. Including the revenue this quarter with the on target contributions from our three acquisitions Triangle BioSystems, Multi Channel Systems, and HEKA Electronik, excluding the effects of foreign currency translation. Revenue would have grown approximately 3.8% over the last year’s first quarter. Our non-GAAP income from continuing operations for Q1 was $0.8 million or $0.02 per diluted share, compared to $1.7 or $0.05 per diluted share in Q1 of last year. In terms of geographic breakdown sales in China continued to be on the lower side of our expectations due to the slower release of funds from the Chinese government. With Asia market still expected to produce very strong industry growth. We’ve prepared by increasing our channel relationships in Asia and expanding our commercial presence in those markets. Despite the lower sales volume we weren’t distracted from our long-term growth strategy. Our teams delivered in other phases of our strategy during the quarter and I’m really pleased to share our results with you. First let me begin with our acquisition of HEKA Electronik in early January. The integration of HEKA along with Triangle BioSystems and Multi Channel Systems, the two companies we acquired in Q4 of last year is going extremely well and on plan and contributed to our top line growth this quarter. While the HEKA acquisitions one of the highlights of the quarter our overall mission continues to be to deliver on each element of our strategy commercial excellence and organic growth, new product development, business development acquisitions, and operational efficiencies. Let me take a moment to update you on all four phases of our strategy commercial excellence and organic growth. Our sales and marketing teams are aligned and continue to implement global growth programs driving key initiatives such as expansion to the electrophysiology market along with geographic expansion. Last year our focus was China. In 2015 we’re focused on other emerging markets such as South Korea, Japan, and most recently Latin America, while also expanding our focus in China. In February we hired a new Vice President of Sales at our Denville Scientific Subsidiary. Denville remains an important part of our strategy and a growth driver for Harvard Bioscience. To drive growth in our Denville business we opened a new distribution center in Charlotte, North Carolina during the quarter along with moving customer service to Holliston Massachusetts. The new operation will deliver improved service levels to customers along with cost savings to the business. The second phase of our strategy we want to highlight is our new product development process. We continue to improve our product offerings such as the touch screen behavior products long with product line expansions. One other area that will growth in future quarters is the development of new products for our global OEM customers. And last we’ve received exciting news last month for a two year Topper grant to develop innovative wireless electrophysiology technology based on our TBSI expertise’s. The third element of our strategy involves business development acquisitions. Our successful acquisition of three companies in the electrophysiology market HEKA, Multi Channel Systems, and Triangle BioSystems contributed as planned toward our top line growth this quarter. Our portfolio of electrophysiology products now make us a market leader in this growing segment of research. Within a very fragmented market we continue to evaluate and pursue acquisitions both here and abroad that will help grow and diversify our portfolio of products into segments such as BioPharma and fit in well with our goals. We continue to take a very strategic approach to these opportunities. The fourth and final element of our strategy involves operational efficiencies. We implemented numerous steps to improve our operations this quarter most available with the shutdown of our New Jersey distribution center. We moved all distribution activity to our Denville Scientific distribution center in North Carolina in doing so we extended from 12,000 square feet to 40,000 square feet in the state-of-the-art facility. There is amazing example of engineering and efficiency. Additionally our relocating to North Carolina we’ll avoid many the weather related issues that impacted us in the Northeast during the quarter. We successfully implemented Phase I of our new ERP system, the new system will not only provide us better controls and information management, but will also enable to smooth integration of future acquisitions. We’re in the process of moving our Biochrom manufacturing facility from England and consolidating it into our Holliston headquarters, which will provide further cost savings, synergies, and controls. And last we achieved ISO certification for seven of our manufacturing facilities. So to recap the business strategy we put in place a little more than a year ago. When we began to realign our operations create organizational efficiencies, and embark and cost reduction initiatives, talent acquisition and geographic expansion is working well. We’re executing in all areas of our strategy as I outlined a moment ago. We have successfully completed and integrated three acquisitions. We expanded our commercial presence in China and elsewhere in Asia and revamped our new product development process to focus on our core products. We’re on track with all of our plans along with executing to our strategic plan we’ve added two new Board members both active CEO’s of publicly traded companies Bertrand Loy, with Entegris and James Green, with Analogic Corporation no relationship to David Green. The positions were created with the retirement of Chane Graziano in 2013 and most recently the retirement of Robert Dishman from our Board in April of this year. To sum up we had a challenging yet exciting quarter. Thanks all to our accounted worldwide employees for their incredible hard work and dedication, which makes our continued success possible. We intend to continue to execute on our strategy and look forward to additional success throughout the year. We’re energized and ready to perform for our shareholders and customers. At this point, I will turn the discussion over to Rob Gagnon, our CFO, who will provide more insight into our financials. Rob?

Okay. Great thanks, Jeff. Consistent with previous quarters, much of my focus will be on non-GAAP quarterly results, which we believe better represent the ongoing economics of the business, it reflects how we set and measure our incentive compensation plans and how we manage the business internally. However, I will briefly review the GAAP results, the differences of which are outlined in the earnings release we issued today, which can be found on our website under Press Releases. Also our results for Q1will reflect the results of our three recent acquisitions, Triangle BioSystems, Multi Channel Systems, and HEKA Electronik. Additionally, any material financial or other statistical information presented on the call, which is not included in our press release will be archived and available in the Investor Relations section of our website and a replay of this call will also be available for one week at the same location on our website at www.harvardbioscience.com. As Jeff, discussed this was the challenging quarter on the top line due to number of factors. In addition to the focus on sales. We have commenced cost containment measures to offset some of the weakness. These measures include the advancement of certain facility relocation plans as well as decreases in certain spending areas across the entire P&L. One important note here we do not expect these measures to slow down or impede our strategic plan as we continue to remain focused on our long-term strategies and growth plans. One key area of our strategic plan is acquisitions and in the first quarter we completed the acquisition of HEKA, HEKA adds to our strengthening electrophysiology franchise and it’s a great addition to the Harvard Bioscience family. As it relates to the operational efficiencies as Jeff, mentioned this quarter we completed the relocation of our Denville Scientific business from New Jersey to North Carolina and we have commenced the consolidation of our UK manufacturing operations into our Holliston, Massachusetts facility. More on both of these changes in a moment, but I’ll begin with the top line. Revenues in the first quarter were $25.8 million a decrease of a $100,000 or 0.5%, compared with revenues of $25.9 million in the first quarter of last year. The negative impact from currency translation was $1.1 million and was due largely to the weakening euro relative to the US dollar. In addition to negative currency translation revenues were negatively impacted by lower sales from customers based in Europe of our US produced products compared with sales levels in the first quarter of last year. We believe this was also due to the sudden decline of the euro relative to the US dollar in the first quarter. Due to these factors we estimate the overall impact of a weaker euro on the top line was closer $2 million to $2.5 million in the quarter. And on an extrapolated basis this would be $8 million to $10 million annualized. This is higher by $2 million to $3 million than we had expected and communicated when we provided financial guidance in February during the Q4 2014 earnings call. Finally we continue to integrate the three businesses we acquired in the past six months and we’re pleased that revenues from these three businesses net our expectations based on the guidance we had previously provided at the time of the acquisitions. Now turning to bookings and backlog, bookings in Q1 were $26.7 million an increase of approximately $300,000 or 1.2%, compared with bookings of $26.4 million in the first quarter of last year. The increase in bookings in Q1 is due to the three businesses we acquired offset by the weakness highlighted. We finished Q1 with a backlog of approximately $7.7 million up more than 38%, compared to backlog of $5.6 million at the end of Q1 last year. Now turning to costs and expenses. Cost of revenues in Q1 were $13.9 million, a decrease of approximately $200,000 compared to $14.1 million in Q1 of last year as a result our gross profit was $11.9 million this quarter compared with $11.8 million from last year’s first quarter. Our gross profit margin was 46.2%, in Q1 an increase of 70 basis points compared to 45.5% in Q1 of last year. Overall we were pleased with the outcome in gross margins given the challenges on the top line. Operating expenses for Q1 were $10.9 million, an increase of $1.8 million compared to $9.1 million in Q1 of last year. And included in the Q1 results this year the operating expenses of the three acquisitions. But also this quarter as mentioned we completed the relocation of our Denville Scientific business from New Jersey to North Carolina. And we also commenced the consolidation of our UK manufacturing operation into Holliston Massachusetts. The UK manufacturing operation is a second largest manufacturing site within Harvard Bioscience. The cost benefits and margin expansion of both of these moves will began to accrue to us next year and represent a major step forward and our plans to optimize our manufacturing footprint and reduce the number of sites and cost. In Q1 we incurred approximately $200,000 in cost for these moves of the $750,000 to a million dollars and total cost that we had communicated on our Q4 earnings call. We still expect to incur this amount in cost this year to complete these moves. And as communicated previously we still expect to realize savings of a similar amount beginning annually in 2016. Operating income in Q1 decreased $960,000 as compared to $2.7 million in Q1 of last year. Operating margins in Q1 was 3.7% on a non-GAAP basis indicative of a lower revenues and investments we’re making on the expense side. This compares to the operating margin in Q1 last year of 10.5% on a non-GAAP basis. While the cost incurred to optimize our footprint contributed to the decrease in operating margin. We continue to believe that the payoff of these investments will result in higher operating margins over the long run. Our non-GAAP effective tax rate was 18.6% in Q1 compared to 29.4% in Q1 of last year the decrease in effective tax rate was due to lower profit before tax in overall geographic mix. We continue to forecast our effective tax rate in the range of 28% to 30% over the long run. Our GAAP net loss was $1.4 million in Q1 or $0.04 per diluted share, compared with net income of $719,000 or $0.02 per diluted share for Q1 of last year. However, non-GAAP net income for Q1 was $756,000 or $0.02 per diluted share a decrease of $0.03 per diluted share or 60% compared with $0.05 per diluted share in Q1 of last year. And weighted average shares outstanding was $32.9 million from both Q1 of this year and last year. Now turning to the balance sheet. We finished Q1 with approximately $8 million of cash and equivalents, a decrease of approximately $6.1 million compared to $14.1 million from Q4 last year. The decrease is primarily due to the acquisitions of HEKA. Accounts receivable as of Q1 were $16 million compared to $16.1 million as of Q4 last year essentially unchanged. And inventory at the end of Q1 was $22.1 million compared to $20.5 million at the end of Q4 last year. Inventory turns were 2.6 times compared to 3.4 times in Q4 last year. In addition to the inventory associated with the acquisitions the increase in inventories relate to the temporary transitional requirements needed to accommodate a consolidation of our UK manufacturing facility with Holliston Massachusetts. Capital expenditures were $1 million for Q1 compared to $781,000 for Q4 of last year. The increase in capital expenditures is due to investments in our infrastructure and ERP system as well as build outs related to the consolidation of the U.K. manufacturing facility and the new Denville facility. We expect capital expenditure levels will be lower and more comparable to historical levels following completion of these programs. Debt at the end of Q1 was $21.9 million compared to $21.5 million at the end of Q4 last year. The increase was due to net rise in our revolving credit facility to fund the temporary working capital requirements to accommodate the two site moves offset by scheduled principle payments made during the quarter. I will now turn to annual guidance. Today we’re updating our financial guidance for the full year 2015 to reflect the additional negative impact of foreign currency due to the strengthening of the US dollar and the top line softness experienced in the first quarter. For 2015 we now expect revenues of approximately $110 million to $112 million. We now expect reported revenues will be lower by $8 million to $10 million compared to prior year and $2 million to $3 million lower than our previous guidance issued during our Q4 earnings call. For non-GAAP EPS we now expect $0.21 to $0.23 also reflected in this guidance this is the cost we will incur in 2015 to relocate and consolidate certain manufacturing and distribution facilities of $750,000 to $1 million or approximately $0.02 per diluted share. As mentioned on past calls the differences between our GAAP and non-GAAP financial guidance including EPS and reconciliations are outlined in the earnings release we issued today, which can be found on our website under press releases. We’ll now open the call to questions from participations. Operator.

[Operator Instructions] Our first question comes from the line of Paul Knight with Janney Capital Markets. Your line is open. Please go ahead.

Hi Jeff and Rob you had mentioned the kind of up $2 million as much $2.5 million from FX. The question I had is regarding the customers who suddenly have 25% increase of their buying products based in dollars. Are they recovering, how are they recovering meaning are you seeing the recovery in their budgets. What do they have to do to recover from that. So how does that really rollout do you think this year?

Hey Paul, it’s Jeff. How are you? Thanks for the question. Yeah we’re starting to see a little bit of settle down I think early in the quarter FX obviously was at its most unstable point. From a customer base I think customers have settled in. There is less money being spend especially for US manufactured products being sold to Europe, but on the flip side our Euros on manufactured products being sold here in the US gives us an advantage to look at maybe some pricing scenarios where we can drive our growth of business. So we’re working with our customers where we’ll look at price where appropriate to help them with their reduced budgets in the quarter or in future quarters moving forward, but we’re seeing people are starting to settle down. As the quarter progressed we saw improvement I think we seen improvement not only because of FX, but we’ve seen improvement in the global government and academic markets. Rob you want to talk about the dollars or is there anything else to add there.

Yeah hi Paul it’s Rob, I’ll just add the impact on purchasing power of euro customers in volumes. And we estimated that to be about 3% to 4% of the decline in the quarter. And we’ve incorporated a similar assumption going forward in the guidance and the projection.

And then last question Jeff, in regards to bookings of 1.2% or backlog that you stated was up 38%. Where did you -- this is can you talk to the 38% increases from acquisitions is it better tone. What’s happening on the booking and backlog side?

Yeah, so on the backlog side we’ve brought on some new OEM customers global OEM customers, which is driving that backlog number up, which is great for future quarters. So we’re seeing a positive influence there. Bookings the bookings are not as strong as we’d like them to be right now and that is really being driven by the academic segment on a global basis. So we have sales initiatives in place that will help us drive demand of our products. And those initiatives were put in place during the quarter as we saw the quarter not fall out as we expect it would we started to put our plans in place and those plans are working. We’re starting to see the funnels the funnel activity increased we have some confidence level on some equipment and instruments that will be pulled through in Q2 and beyond. So the initiatives are starting to work.

And Paul frankly just to add in terms of the amounts there in backlog the three acquisitions contribute around $750,000 to that backlog and made it higher compared to last year’s comparison. And FX the FX impact of re-measuring that backlog was a similar amount a little bit less but fairly similar.

Okay. Thank you.

[Operator Instructions] Our next question comes from Raymond Myers with Alere Financial Partners. Your line is open. Please go ahead.

Thank you good morning can you hear me.

Yes we can. Hi Ray, good morning.

Great, hi guys. As I look at my close this morning I see the dollar, euro, FX it’s actually started to recover a little bit to a $1.12. So can you give us a sense of what was the FX exchange during Q1 and what was your guidance based on?

Yes sure and let me give you a little bit color there so and you’re right I mean we’re watching, we’re watching FX every day as well. And I think if you roll back a week or so it’s probably in the 107, 108 range so it’s still highly volatile everyday it’s moving around. When we set guidance back in February, it was in the range of 113, 114, 115 and pretty quickly after that in early March it got as low as I think 104 it might have been a week later or two weeks later. So we’re trying to set guidance based on a spot as opposed trying to forecast where it’s going to go. But again we’re watching it every day so the guidance I mean how we’re thinking about that now we’re basing that based off what that spot has been in the last week or so sort of in that 107, 108 range. And we’ll continue to monitor it, but again when we set guidance, it was 113, 114, and that was back in Q4 as we’re thinking about guidance now we’re thinking about a spot rate of 107, 108 and again just continue to monitor.

Okay, that sounds good. Now I want to understand the difference between the guidance that you had two months ago in the guidance now. What have you learned and can you pass out how much of it is direct currency translation versus how much of the change is the order impact from pricing that results from a lower US dollar. And then thirdly was there anything else that caused results to be weaker in the current quarter?

Yeah it’s Robert I’ll take that and let me just get you ground that the old guidance on the top line was 114 to 116 it was EPS of $0.27 to $0.28 and it was FX headwinds of $6 million to $7 million on the top line. Our new guidance as we see today we’re projecting 110 to 112 on the top line EPS of $0.21 to $0.23 and FX headwinds of $8 million to $10 million. Now in terms of the decline in EPS we’re estimating that overall that’s about $0.05. We’re estimating that about three of the $0.05 is due to the added FX and that largely has to do with that lack of buying power that you described that Jeff was talking about and the impact on budgets and grants and on volumes. So we estimate that to be and this will have in a $0.03 there is an additional 1 to 2 pennies just for the overall softness that we experienced right out of the gate in the quarter that that started to rebound.

Yeah that helps a lot and can you give us the sense to was there -- are you saying that there is it is the weakness exclusively currency related and pricing related that flows from currency changes. Is there any other government oriented or other weakness other than direct currency?

Let me just answer the second part of that and let Rob answer the first part. Ray, it’s Jeff. From a government standpoint two things we’ve yet to see China pickup like we’re expecting, but we’re positioned well there. So when things do churn in China I think we’re going to be in a very good position. The other thing that impacted us this quarter was Japan the academic segment in Japan strictly driven by the Japanese government. We have good portion of our OEM business based in Japan so those two factors played into the softness in the quarter.

Yeah I just want to add I don’t like to blame weather, but a number of our academic customers are located in Northeast that are consuming a lot consumables and that certainly had an impact. But in terms of those other factors, if you take FX out the overall weakness in the market that we experienced was about 3% or about $1 million.

Okay sounds good. Different question have you felt any improvement in service or cost or any other benefits yet from then those moved to North Carolina?

Yeah Ray, I was down in North Carolina about a week ago the facility that we build down there is state-of-the-art we have room for expansion, which is great it’s a major improvement from where we were in New Jersey and really what we’re living through in terms of managing our distribution and supply chain capabilities. This services level will continue to improve the facility now we’ve implemented in ERP system so when phase whenever ERP system, which is going well and we continue improvements where necessary. But long-term our service levels will be dramatically better than what they were of basement to New Jersey facility.

And in terms of the cost benefits of that move sure we started to see those and experience those, but it’s still it’s very early in the process and what’s muting that is this Biochrom manufacturing move is so substantial and significant for us it’s our second largest site. And it’s costing us money to move it, but that’s a good investment that’s a good investment for us to make and that’s why when we talk about the realization of savings it’s really next year we start to benefit from these two events, which are major events of the company.

Well let me turn to that, yeah.

I was just going to add one point to this too. This is not only for your question, but anyone else listening I mean we’re staying focused on our strategy to long-term strategy. This is not a one quarter strategy. And to Rob’s point around some of the activities especially around operational efficiencies and the cost savings that the business will see this is a long-term play, yeah it was a little bit of a set back with the academic market, it was a setback with foreign currency this quarter. But as we move forward we’re going to overcome this and we’re going to be able to prosper due to some of the activities not only taking place today, but it was taking place over the last 12 months.

Okay, good I wanted to ask about the progression of the UK facility consolidation that was announced that it was would be over the course of this year. Can you give us now a little more detail around when you think this year this will be complete?

Well it’s already in process we’ve been working on it for a while it’s there’s a number of products in the manufacturer there and it requires hiring, cross training there’s travel involved there’s build out of inventories that you have an adequate bridge to cut over. In terms of completion date you’re talking the back half of the year, but I should say later in the year. And again that’s just -- that’s why when we look at it we look at as a 2015 investment that begins to pay back in 2016.

Okay so later this year okay. I think one more question do you got a feel on some of your goal with the three recent EP acquisitions. Could you give us any color as to are they performing according to your expectations. And any color around how they have contributed to the business either directly financially or strategically so far?

Ray it’s Jeff. The acquisitions have met our expectations we’re on track with integration we’re on track with the financial performance of these three acquisitions. So we’re decided that we were able to go off acquire these companies, it really fits well on our portfolio it’s going to help us drive the performance not only of their products, but at the legacy core products of our Bioscience. We’re already starting to see that in cross selling in revenue synergies coming into play, because of these three acquisitions.

I just I want to echo what Jeff said they have performed well we’re pleased today we’re pleased with the performance today we’re integrating those businesses also the facilities and the cost. And at that time we made those acquisitions the guidance we provided was if you take the sum of the three it was about $12 million in the top line. Two of those larger businesses so you are denominated. But they still have performed well they’ve met expectations in once case actually exceeded the expectations so we’re happy with the performance there.

Okay, great. Thanks very much.

Thank you, Ray.

Thank you. Our next question is a follow-up from Mr. Paul Knight with Janney Capital. Your line is open. Please go ahead.

Hi Jeff I guess it’s fair to say that electrophysiology is about 30% of your revenue now. Could you talk about is that market growing. Do you want to add more like electrophysiology? And I guess generally what markets are most exciting to you right now based on customer demand queries et cetera?

Paul yeah thanks for the question the electrophysiology market is a growing market. Our three acquisitions as we just stated are really meeting the financial expectations that we had in place for Q1. One of the interesting things about electrophysiology or what we’re doing with our current physician and electrophysiology’s. There’s a lot of room for improvement here in the U.S. One of the acquisitions Multi Channel Systems majority of their business was in Europe it gives us great opportunity to grow that business here in the U.S. So we’ve increased the number of sales people in the US. We have a dedicated electrophysiology team and we expect growth coming in future quarters from electrophysiology. But to that point I’m just going to switch gears here for second. In terms of what products or markets are attracted to us in the future. One of the things that really impacted our business over the last quarter was. We have 80% of our business in academia. And that have a negative effect on us, because the softness in that space. As we go forward whether it’s the research and development, whether it’s the acquisition strategy we can better balance our portfolio of products. And really play more in the Biopharma space I think it’s going to take away the type of risk that we saw this quarter. So that those of the markets that are attracted to us right now.

And just in terms of the percentage of the total the current piece is franchise inclusive of the HEKA acquisition and also about 25% of our overall business.

Thank you.

Thanks Paul.

Thanks Paul.

Thank you. [Operator Instructions] And I'm showing no further questions at this time. I'd like to turn the conference back to Management for any further remarks.

I just like to thank everyone for calling in today we appreciate it. We look forward to speaking to you after Q2. Thank you everyone.

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