LeMaitre Vascular, Inc. (LMAT) Q1 2021 Earnings Report, Transcript and Summary

Welcome to the LeMaitre Vascular Q1 2021 Financial Results Conference Call. [Operator Instructions] At this time, I would like to turn the call over to Mr. J.J. Pellegrino, Chief Financial Officer of LeMaitre Vascular. Please go ahead, sir.

Thank you, Joanna. Good afternoon, and thank you for joining us on our Q1 2021 conference call. With me on today’s call are Chairman and CEO, George LeMaitre; and our President, Dave Roberts. Before we begin, I’ll read our safe harbor statement. Today, we will make some forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, the accuracy of which is subject to risks and uncertainties. However possible, we will try to identify those forward-looking statements by using words such as believe, expect, anticipate, pursue, forecast and similar expressions. Our forward-looking statements are based on our estimates and assumptions as of today, April 29, 2021, and should not be relied upon as representing our estimates or views on any subsequent date. Please refer to the cautionary statement regarding forward-looking information and the risk factors in our most recent 10-K and subsequent SEC filings, including disclosure of the factors that could cause results to differ materially from those expressed or implied. During this call, we will discuss non-GAAP financial measures, which include EBITDA and non-GAAP outstanding debt. A reconciliation of GAAP to non-GAAP measures discussed in this call is contained in the associated press release and is available in the Investor Relations section of our website, www.lemaitre.com. I’ll now turn the call over to George LeMaitre.

Thanks, J.J. On today’s call, I’ll cover four topics: number one, COVID’s impact on our employees and company; number two, rebuilding our sales force; number three Artegraft’s results and other biologic updates; and finally, number four, our financial results. New COVID infections at LeMaitre has declined recently. To date, 36 of our employees have been infected with 35 having recovered and one still recovering. We expect that the vaccination of our employees will prompt the return of more of our administrative personnel to the office. Massachusetts has one of the lowest vaccine hesitancy rates in the country. Perhaps this will mean a quicker return to normal for LeMaitre. Away from headquarters, the vaccines are also helping our sales reps gain greater hospital access. We estimate that 70% of our American sales force and 100% of our British sales force have received at least one vaccine shot. And now the European and Canadian vaccine efforts seem to be turning the corner. More vaccines for our sales reps likely means more sales calls and more sales. As things open up, we’re simultaneously rebuilding our sales force. At March 31, we had 86 sales reps, and we currently have 14 open rep hiring requisitions. Our field personnel report to us that doctors and nurses are showing more willingness to take sales calls. Investment in our sales force also means building a larger physical presence and stocking inventory in our – in more international locations. So, we’re expanding our warehouse footprint in three geographies, Hereford, England, Milan and Tokyo. This should create tighter customer connections and quicker order fulfillment. Soon, we’ll be shipping inventory from warehouses in eight countries, the U.S., Canada, Germany, Italy, the UK, Japan, Australia and China. As to our recent acquisition, we estimate that Artegraft will grow to $24 million in sales this year due largely to the January price hike. This $24 million figure implies 29% growth versus hospital level sales of $18.6 million in the 12 months prior to the acquisition. Artegraft has also begun to add to the bottom line, contributing approximately $3 million of op income in Q1 and $0.09 per share. In January, we also began paying Artegraft commissions to our broader U.S. sales force, which may increase unit sales going forward. There were three other biologic projects to note. First, XenoSure was approved in Japan in Q3 2020 and sales are ramping quickly, perhaps adding $1 million in 2021. Number two, we launched RestoreFlow cardiac allografts in 2020, we are also adding $500,000 of 2021 sales. And finally, number three, our Chinese XenoSure cardiac trial succeeded in meeting its endpoints, and we will be submitting our approval application to the Chinese FDA this June. We expect approval in two or three years. As for our financial results, we posted sales of $35.9 million, up 17% year-over-year. Sales were up 29% in the Americas and 25% in AsiaPac, and they were down 5% in Europe. Strong sales in Q1 and restrained operating expenses contributed to robust bottom line growth. We generated $7.9 million of op income in Q1, EBITDA of $10.5 million and EPS of $0.28. All of these metrics were 83% better than their year-ago comparisons. With that, I’ll turn the call over to J.J.

Thanks, George. Geographically, sales were driven by the U.S., up 29%, largely due to Artegraft sales, Canada, up 25%, largely due to allograft sales, and the PAC Rim, up 25% due to strong export in Japan sales. By product, Artegraft, Valvulotome and Embolectomy catheters drove Q1 growth. Our Q1 gross margin was 66.3% to the decrease of 70 basis points year-over-year. The decrease was driven by a $600,000 TRIVEX inventory write down, manufacturing inefficiencies, lower allograft gross margins and higher costs in the recently transferred Syntel manufacturing lines. Somewhat like our sales force, our direct labor force shrank in 2020 due to COVID, and we’ve now begun rehiring. Operating expenses in Q1 2021 were $15.9 million, a 2% year-over-year decrease. The decrease was driven by continued cost control, including 31 fewer employees, more than half of which were sales force related. As George mentioned, we’re now increasing the size of our sales force. We’re also hiring in other areas of the company and expect operating expenses to increase in the coming quarters. Operating income in Q1 was $7.9 million, an increase of 83% or $3.6 million versus the prior period. The increase was driven by a $3.3 million increase in gross profit and lower operating expenses. The Q1 2021 operating margin was 22%. We estimate that Artegraft contributed about $3 million to Q1 operating income as the newly acquired products benefited from strong sales and an improved gross margin. We paid our debt down by $7 million in Q1, ending the quarter with $32 million in total debt. Since June 2020 – since the June 2020 acquisition, we’ve paid down $33 million. We paid down the $25 million revolver first, and we still have access to this facility. We expect to continue to aggressively pay off our bank debt. We ended Q1 2021 with $23.7 million in cash, a decrease of $3.2 million from December 31. The decrease was driven largely by the $7 million debt repayment. Excluding this debt repayment, cash increased by $3.8 million in the quarter. In relation to our CE marks, due to the abrupt exit by our prior notified body from CE marking in 2019, we needed six CE marks. In 2020, we engaged two new notified bodies to accelerate the CE marking process. And in February of this year, one of these notified bodies, SGS issued a CE mark for LifeSpan. We expect SGS will issue three additional CE marks next month for our FlexCel carotid shunts, Pruitt F3 carotid shunts and AnastoClips. Together, these products accounted for 7% of EMEA sales in Q1 2021. We continue to work with TUV, one of our other notified bodies on the issuance of two CE marks for XenoSure and AlboGraft, which we expect by next month, though no assurance can be given. Together, XenoSure and AlboGraft accounted for 23% of EMEA sales in Q1 2021. If any of the CE marks referred to above are not reissued in May, then we could lose our ability to sell some of our devices in Europe. For more information on this topic, please see our risk factors in our 10-K filed in March 2021. Turning to guidance. At the midpoint, our Q2 2021 sales guidance of $37 million to $40 million represents an increase of 55% versus Q2 2020. And our Q2 operating income guidance of $8 million to $10 million represents an increase of 85%. At the midpoint, our Q2 2021 EPS guidance of $0.28 to $0.36 per share represents an increase of 86%. With that, I’ll turn it over to Joanna for questions.

Thank you. [Operator Instructions] Your first question comes from the line of Rick Wise from Stifel. Your line is open.

Good afternoon everybody. Nice to see the solid first quarter. Just for – to start it off, maybe from two perspectives. And the first quarter clearly came in sort of solidly in your guidance range. Where was the headwind that prevented you from perhaps reaching the upper end of your guidance? And just with that thought in mind, as we think about the second quarter and the lower end and the upper end, help us understand maybe a little better your thoughts, less about the lower end, but what gets you to the upper end? Is it more about reopening? Is it more about hiring the sales force? I just wanted to understand the dynamics going into your thinking – your experience in the first quarter and you’re thinking about the second.

Rick, thanks for your question. It’s George here. And I know you’re posing your question. Hey, you beat your guidance by $600,000, but still didn’t feel as great as it could have. I think that’s the essence of the question. And I think as we were preparing for today’s call, we started trying to funnel stuff down. And I would say if we had issues in Q1, although, again, we beat our guidance. So we felt great about that. But if we had issues, I would funnel it down into three, easy to remember, Cs, if you will. The CE Mark continues – as you can hear from J.J.’s script, the CE Mark continues to dog us in that we’re very close to getting them, but we haven’t quite gotten them. COVID, I think, is still a real issue. We’re all watching what other companies are doing right now, and some companies are breaking out of it, and some companies are still mired in. I would say we felt it more strongly in Europe in Q1 than we did in the United States, but it was still a very present issue in January and February, let’s say. And then the final C, we would call – and I think we talked about this a lot on the last call, channel loading, which is in Northern Europe, in Q4, we had a lot of reps trying to win a lot of contests. And I think we talked about it before, but we did really well in Q4. We really crushed guidance. And I think it sapped away a little bit from our ability to crush guidance in Q1. So I’d like to say, maybe those are the three Cs that you’re looking for: the CE Mark, COVID and channel loading. And then I would like to suggest, as you’re looking at our guidance, there’s nothing to look at in Q2 2020. That’s a non quarter. You’ve seen that with all your companies. Everyone’s going to report sales were up 60% or 80% or whatever. I think we’re projecting sales are going to be up 55%. But you really, I think, want to know, well, what happens between Q1 and Q2, maybe that’s the new organic growth rate for us, I don’t know. And so going from Q1 to Q2, we’re up 7%. And I think it’s – you go back to those three Cs. And I think we see all of them dissipating. The CE Mark, again, we feel it’s very close. This thing is supposed to end May 25, and we think we’re going to get five more CE marks between now and then; which would get us back on track, basically. And we feel like the vaccines, particularly in the U.S. and the UK, where 64% of our sales are located in those two geographies. So you get 2/3 of your sales are in very high vaccine regions for COVID going away "for us" for sales, if you will. And then finally, channel loading, that’s going to be over. It usually is – they sell enough stuff to win the contest. They take Q1 off and then Q2, they’re back at it. And so probably the three Cs explain what happened, if you will, why we didn’t crush guidance by more than $600,000. And then maybe they also transition in explaining Q2 for you.

Two other questions. Artegraft, clearly, $3 million in the first quarter. And I just wonder if you could help us think through or contemplate how to understand the sort of go-forward run rate for Artegraft, is it – how do we think about it? I mean, did you have the full price increase impact in the first quarter? So – or no, we didn’t really have it in all accounts throughout the quarter. So therefore, selling no more units in the second quarter – I’m making it up – it’s $4 million. I mean, how do we think about the growth in the go-forward run rate on Artegraft?

Sure. And Rick, just so it is for everyone with – I think in the call, we mentioned there’s a $24 million number that we’re putting out there for the year. And it was up versus $18.6 million. So we’re – this is the one thing we’re giving a long guide on. So we couldn’t be more clear about what we think is going to happen, $24 million of sales is up about 29%. I think was our number that we mentioned in the script. But how do we think about it? I think you can – we try to – as we run the script, we tried to let you guys know. So far, it’s just a price hike, and that’s what it is. But it was a hefty price hike. It was something like, I don’t know, J.J., Dave was it 29%, 27%?

25%, George. It was 25%.

So it was a hefty price hike, and we seem to have gotten it. I will say one thing that you saw in Q1 was January was really light. It was oddly light. And some of it may have been people adjusting to all the price hikes and wondering what to do about them. And so that – we know that. We know about January being a non month really for us. And then after that, it gets into 24 for the whole year. We do think there’s upside from here, which is also in January, in addition to price hike, we officially put it into our broader U.S. sales force bag. And I think before that happened, Rick, six reps were being commissioned, the old Artegraft reps, if you will, who are now part of our company. They’re LeMaitre reps now, but they looked like Artegraft reps in Q4. They were the only ones being commissioned on Artegraft. And finally, it found its way fully into the U.S. bag. And I think there’s about 36 U.S. reps and five Canadian reps. I think it was like 42 North American reps right now. Yes, 42, of which five are Canadian and 37 are Americans. So now it’s in the broader bag, and we think, to your question, as the year goes by, potentially, that adds to – it adds to units.

And last, it’s hard to resist asking every company. You’ve touched on specifically to Artegraft. The – just the recent trends. I mean, January was a challenging month for every company that has reported, I’ve heard. So was February, March seen – for most have seen a sharp acceleration. And those positive trends seem to be continuing into April. Is that LeMaitre’s experience? Is that how the second quarter is starting to you? Any color you can give us?

Well, okay. So going to answer two-third [ph] of your question, and then I’m going to stop at guiding into Q2 because I think we already said what we want to say about Q2. So – and this is a continuation of our conversation, you and I, Rick, last quarter, the month of January was down 14% organically. February was down 9% organically. And then in March, we saw a 7% organic increase. So those are your three additional months to add to what we were giving you the last time for all the cadences. That’s how we came out of Q1. That’s how we were emerging out of Q1. And it makes some sense because of the channel load in December. For us, it made some sense that January was bad, but I agree, I did hear from other people that January was just bad anyway. And then that’s how I back into. It was probably COVID and it felt more like a European thing.

Got you. Thank you so much.

Thanks, Rick.

Thank you. [Operator Instructions] Your next question comes from the line of Matt Mishan from KeyBanc.

Hey George, hey J.J.,this is Brett, on again today for Matt. I think Rick hit a lot of the revenue question. So, I might move down the income statement a little bit and ask about margins. So the 2Q guidance had a modest sequential gross margin lift, but still was down a little bit year-over-year. So can you walk through some of the moving pieces there? And then if you had any other directional commentary on how it could progress back, back to the historical range from there?

Yes, sure. So the sequential answer up sort of marginally as you talked about 40 basis points or so. I think ASP increases still have a little room to grow. So you rerack your prices on January 1, but you don’t get all that in the first quarter. And depending on the purchasing cycles of the customers and all that kind of stuff. So I think there’s still some room to run there in terms of ASP increases, and so that will help the margin. Maybe you get some strong – you know you have a strong Artegraft answer going, and George talked a lot about that. Valvulotome seem to be doing pretty well these days, too. Both of those are carrying nice, strong gross margins. And so that’s sort of on the helper side. But we’ve got some old manufacturing inefficiencies coming off the balance sheet that are hurting us. And seasonally, oddly, our gross margin actually tends to tick down a little bit in Q2. So those are sort of some of the dynamics going into Q2 from Q1. Year-over-year, a more dramatic answer, right, as you mentioned, down 1.8%. We had some inventory write-offs in one of our product lines. I talked about that in my script. And we’ve got some manufacturing transfers going up, particularly with the applied medical devices, Syntel and Python. And so those start-up costs and the inefficiencies of starting a line up here in Burlington, you can feel that for a little while. So it should be a few quarters and then we’ll iron those out. And then maybe at a higher level, when we came through COVID, we did our layoffs, and it wasn’t just in sales and other areas. It was in manufacturing as well. So we laid off some direct labor folks. And I think that made us a little less efficient. And those efficiencies sort of sit on the balance sheet for a while and then come through to the P&L, and we’re feeling that now. So to the extent that we hire back up in that direct labor force, which we’re doing, we should get some benefits from that moving forward.

And then moving to M&A. I was wondering if you could characterize how the pipeline is looking and which areas, in particular, you might be seeing more opportunity?

Hey Brett, it’s Dave here. So the pipeline looks good. I would say, the fortunate thing for LeMaitre is we’ve been pursuing acquisitions for a long time. We have a lot of targets. And so we’ve been pursuing those I would say at the margin, with fewer congresses and less travel, maybe that cuts into the bandwidth a little bit. But we’re fortunate, again, because we have a pretty broad set of targets that we’re pursuing. In terms of the types of targets we’re looking at, of course, the center of the bull’s eye are disposables and implantables used by vascular surgeons. But I would say, we’re starting to think a little bit more about peripheral endovascular because we’ve got so many customer relationships with the vascular surgeon and the bulk of what they do is endovascular these days. We also get 10% or 12% of our revenue from cardiac surgery. So we’re looking around there a little bit. We did one acquisition a couple of years ago, the Admedus acquisition and that space is doing well. So we’re looking there as well. The theme here is low rivalry markets. But yes, we’re out hunting and sort of the same as it ever was.

Actually, I am going to move backward and just ask one more question. I think this one is kind of important. Just thinking about Europe, you guys sounded pretty confident about resolving the CE issue. But more generally, how is the macro progressing over the couple of months and into April? And is there a chance that it might be less of a headwind to overall growth next quarter?

Okay. As I understood the question, it was how is the macro environment into Q2?

Yes, exactly. For EMEA.

Yes. And Brett, thanks a lot for your question – and your questions. We really don’t – we try to keep these calls limited to ending March 31. I don’t have any particular insight to add for you about the macro environment in Q2, to be quite honest. I see what I see, and it’s our sales, and we always like to sort of wait and package it all up as a quarter at the end of the quarter, if you don’t mind. So I’m going to stick with that approach, if you don’t mind.

No. Totally set. Thanks very much.

Thank you. Your next question comes from the line of Frank Takkinen from Lake Street Capital. Your line is open.

Hey thanks for taking my questions. I wanted to ask more specifically about the 14 reps you guys are looking to hire. Can you just remind us of the expected training time once those come on board? And more specifically, I’m trying to understand a little bit better if those come in – come on in the second quarter. What quarter do you expect those to start contributing to sales as we start to see Artegraft trend forward and then the macro backdrop improve and a bolus of new sales folks coming online and ramping, I feel like we could have some significant growth. So I just wanted to get a little better understanding on that front.

Okay. Frank, it’s George. I’ll try to handle that question. So there’s 14 reps being hired; eight of them are in the U.S. And I would think they’ll all be hired by the end of the quarter. And if you wanted to pick a median hiring date, I sort of was jotting down June five or something like that as a median hiring date. And then the question on those American reps is how quickly they come up to speed. But quite honestly, we’ve been answering this question for as long as we’ve been publicly traded company. I’m no closer to the answer. Some of them are up and running in a month and you can feel it, and some of them never get up and running. If you want to pick a number, I would say, roughly six months, keeping in mind that most medical device sales reps – and in our experience, they don’t last at companies more than three or four years. So they do have to get up to speed pretty quickly. And most of them do, let’s call it, six months. On the international side, where there are six being hired, I feel like things just happen more slowly in Europe for hiring. You have to give your notice, then you got to work two months at the old job and so on and so forth. So maybe you could say median hiring date for those six would be, I don’t know, something like July one or something like that or maybe even deeper into July, and I would give them the same amount of time to ramp up. The turnover rate with international reps is always a little bit lower. I know you didn’t ask this question, but they do tend to last a little longer. But I would say the ramp-up time is about the same. I wouldn’t distinguish.

And then secondly, on the balance sheet. You guys have been very aggressive about paying down the debt outstanding, roughly cut in half over the last three quarters. If we’re thinking about this looking forward, my assumption is the continued aggressive pay down will progress through the end of this year. Is it safe to say that this same clip of cutting in half and three quarters is a clip you’ll run at assuming you keep on generating operating cash flow?

Yes. This is J.J. Thanks for the question. I think if you look at how we’ve done this over the last three quarters, the story is changing a little bit. We paid down $4.5 million in Q3 and then $21.5 million or so in Q4 and then $7 million in this quarter and that kind of mirrors with our op income number. We were sort of in the pre COVID in the $5 million’s range sort of op income per quarter. And then we were in the sort of $10 million range op income for quarter for Q3 and Q4 when sales came back and expenses were a little slower to come back. And so that produced a little more profitability and allowed us to pay down more debt. And so I think our EBITDA this quarter was $10.2 million or $10.4 million, or something like that, and you know our op income number. And so we’re normalizing a little bit, but we’re still quite profitable. So we’ll use that cash to pay down the debt. I don’t think it feels like it did in Q4, but maybe it feels a little bit more like we just did in Q1. We’ll see how that goes, going forward.

Perfect. Makes sense. Thanks for taking my questions.

Thank you. Your next question comes from the line of Mike Petusky from Barrington Research. Your line is open.

I somehow managed to actually miss the Artegraft revenue number. I heard the op income number about three different times, but what was the revenue number?

$24 million for this year coming off of $18.6 million.

No, I’m sorry. I’m sorry. I meant for the Q1.

$5.83 million. $5.83 million.

And then, J.J., I’m sorry, I got half of what was the issue around gross margin, I heard manufacturing and efficiency, $600,000 write-off associated with TRIVEX. What were the other items you pointed out there?

So you’re looking for what went on with gross margin in the quarter, year-over-year kind of thing?

Yes.

Yes. So Mike, FX actually helped us 1%. – You’re going to stand up and close that no, yes. Please. Yes. Thank you. – Sorry, they were trying to come in and clean my office, Mike. So – helps about 1% year-over-year. It was not significant and so the ASP increases were important, too, more than 1.5%. And then a mix from Valvulotome helped with a strong Valvulotome quarter. And some of the things that are a little lower in gross margin were a little lighter in the quarter. So there was sort of a back and forth there in the mix. But importantly, we had that write-off of our TRIVEX inventory about $580,000 in that. That product line just doesn’t been performing very well. And it’s a capital equipment related product. And so, we wrote off a bunch of those pieces of the capital equipment. And we’ll see how that goes, going forward.

What’s the cost? If you’ve been able to quantify it, of just sort of the hassle of getting the CE Mark issue, attempting to put it to bed? I mean, do you have an estimate of what that’s costing you?

This is George, Mike. Quite honestly, that’s a fantastic question. I don’t think we put that together. I can tell you, it’s been extraordinary. Every time you need to go back to them, you got to fill out another form and do another clinical trial and this and that. But it’s been an exceptionally tough number. Jay, maybe – any way we can get at that, looking at the R&D here for Mike. It’s inside the R&D number, Mike. So we’re still living at 8% of sales being R&D based, and this is inside of that number, but breaking that down. It’s not something we usually do. We’re not trying not to do it. But I can tell you it’s been exceptional. And I can also tell you that when we achieve these five more CE marks, I think you can expect some amount of relief on that, although maybe the next place everyone goes is not these MDDs. That’s the old version that ends on May 25. That’s the old CE approval, but where everyone else then goes after that’s over, is the MDRs. This is the new European system of marking your medical devices. And therefore, there is expenses out there as well. But I think it will slow down a little bit is my broader point. I don’t – I can’t give you that number. How is that –

If you want to try and quantify it, like REG CLIN was sort of used to be in the $1 million range. And then it wasn’t – odd to see it pop up to $1.3 million and even $2 million last year, per quarter. And so I can’t say it’s all attributable directly to the piece you’re asking, but certainly largely. So there might be a $0.5 million a quarter to $1 million a quarter of stuff going on in and around that topic. Incremental.

Yes. Mike, this is Dave. There’s another concept. When you talk about costs, we’re obviously focused on operating at incremental operating expense. But of course, another cost is the products that have CE marks, which has lapsed, some of them have derogations. And we have had some sales decline a little bit from those. And so there’s a cost in terms of lost sales and lost profit as well as just another qualitative bucket.

And to push on that point even further, there is upside here because we’ve had sales punishment for the last nine months or so. The derogation of a CE Mark is nowhere near as effective as an actual CE Mark. So we believe once we get these, there could be something good happening after that. We baked a little bit of it into Q2, but since this is a May 25 event in Q2, it doesn’t all come to bear in Q2. Maybe one could look for that later, although, of course, we’re not guiding on Q3 or Q4 right now, given COVID.

George, maybe you could educate me and possibly some other people. So XenoSure in China, congrats on the – meeting the endpoints. And now what happens between June of this year and two to three years from that point, is there anything you can do to sort of build that product’s reputation in China in the meantime? Or does it just kind of sit?

Yes. So what happens? Yes, I suppose you could – you’re not supposed to market medical devices without an approval, but you could talk about the concept that we filed the clinical trial. We haven’t even got that far. I think we’ve been in such a mad rush to get the trial fully subscribed and to finish it, and we’re so happy that the endpoints were met and everything was successful. And again, in a month, we’re actually going to go to the CFDA and give them a 10 foot high stack of papers about the clinical trial. And then you got two or three years to wait. This has been a – you’ve been following the company for a long time now, Mike, and this has been a – you’ve heard about this one for a long. I think, start to finish. This is in the six- to eight-year lens from when we started this whole thing to when we’re actually going to selling it. So I guess we’re just real focused on getting this thing to the CFDA. And then maybe to your point, we start thinking about, how do we soften the soil for the launch two years from now.

Right. Okay. Great. And then the only other question I had is just in terms of XenoSure for the quarter, was that flat, down? What was the performance in Q1?

I think it was down 4%, trending in line with the company. And it does – it is worth noting, again here, we got something really good going on in Japan right now. I mentioned in the script, but it just started in Japan, and we’re already feeling comfortable enough to be on the call saying, we got $1 million product line in Japan this year. So I think that’s going to help. We’ve lost some sales, as you can feel from XenoSure Europe. It’s been painful over there. That’s been the – that’s the main attraction in the CE thing. And so we’ve lost some sales. We hope that will come back at some point. But in short to answer to your question, I think it was minus 4% in Q1. And Dave or J.J., you could correct me if you got anything different?

I think it was minus 5%.

Minus 5%.

Yes.

All right. Guys, thanks, and congratulations, it’s real solid start of the year. Thanks.

Thanks a lot Mike.

Thank you speakers. There are no more questions as of this moment. Do you have any closing remarks?

No. Thank you. I think we’re all set. Thanks for running this call.

You’re welcome. And ladies and gentlemen that concludes today’s conference call. I would like to thank you for your participation. You may now disconnect. Have a great day.