Good afternoon, ladies and gentlemen, and welcome to the Third Quarter 2021 Earnings Conference Call for Merit Medical Systems Inc. Please note that this conference call is being recorded and that the recording will be available on the company's website for replay shortly. I would now like to turn the call over to Fred Lampropoulos, Merit Medical Systems' Founder, Chairman and Chief Executive Officer. Please go ahead, sir.

Thank you and welcome everyone to Merit Medical Systems Third Quarter 2021 Earnings Conference Call. I'm joined on the call today by Raul Parra, our Chief Financial Officer and Treasurer; and Brian Lloyd, our Chief Legal Officer and Corporate Secretary. Brian, would you mind taking us through the Safe Harbor provision, please?

Thank you, Fred. Before we get started, I would like to remind everyone that this presentation contains forward-looking statements that receive Safe Harbor protection under federal securities laws. Although, we believe these forward-looking statements are based upon reasonable assumptions, they are subject to unknown risks and uncertainties. The realization of any of these risks or uncertainties as well as extraordinary events or transactions impacting our company could cause actual results to differ materially from those currently anticipated. In addition, any forward-looking statements represent our views only as of today, October 28, 2021, and should not be relied upon as representing our views as of any other date. We specifically disclaim any obligation to update such statements, except as required by applicable law. Please refer to the section entitled cautionary statement regarding forward-looking statements in today's presentation for important information regarding such statements. Please also refer to our most recent filings with the SEC for a discussion of factors that could cause actual results to differ from these forward-looking statements. Our financial statements are prepared in accordance with accounting principles which are generally accepted in the United States. However, we believe certain non-GAAP financial measures provide investors with useful information regarding the underlying business trends and performance of our ongoing operations and can be useful for period-over-period comparisons of such operations. This presentation also contains certain non-GAAP financial measures. Reconciliation of non-GAAP financial measures to the most directly comparable US GAAP measures is included in today's press release and presentation furnished to the SEC under Form 8-K. Please refer to the sections of our presentation entitled non-GAAP financial measures, for important information regarding non-GAAP financial measures discussed on this call. Readers should consider non-GAAP financial measures in addition to, and not as a substitute for financial reporting measures prepared in accordance with GAAP. Please note that these calculations may not be comparable with similarly titled measures of other companies. Both today's press release and our presentation are available on the investor's page of our website. I will now turn the call back to Fred.

Thank you, Brian. And let me start with a brief agenda of what we will cover during our prepared remarks. I will start with an overview of our better than expected revenue and financial results for the third quarter. After my opening remarks, Raul will provide you with a more in-depth review of our quarterly financial results in the form of financial guidance for 2021 that we reaffirmed in this afternoon's press release as well as a summary of our balance sheet and financial condition. We will then discuss some recent corporate developments before opening the call for your questions. Now beginning with a review of our third quarter revenue performance, we reported GAAP revenue of $267 million in the third quarter, up 9.4% year-over-year. Our total GAAP revenue was driven by 5.9% growth in US sales in a 14.5% growth in international sales. Excluding the benefit to our GAAP revenues as a result of changes in exchange rate compared to the prior year period, our total revenue increased 8.8% year-over-year in the third quarter on an organic constant currency basis. Our total constant currency growth was driven primarily by a 7% increase in US sales and an 11.4% increase in international sales. Our third quarter revenue results exceeded the guidance we provided on our quarter two call which called for quarter three constant currency revenues to increase in the range of approximately 5.3% to 7.6% year-over-year, the strong revenue results in quarter three were driven by strong execution from our team, and more favorable sales trends in China versus what our guidance range had assumed. Excluding the benefit to our revenue results this quarter from the lack of tender related pricing headwinds. Our total revenue increased approximately 8% year-over-year on a reported basis, and a little more than 7%…

Thank you, Fred. Given Fred's detailed review of our revenue results, I will begin with a review of our financial performance across the rest of the P&L. For the avoidance of doubt, unless otherwise noted, my commentary will focus on the company's non-GAAP results during the third quarter, and first nine months of 2021. We have included reconciliations from our GAAP reporting results to the related non-GAAP items in our press release this afternoon. Gross profit increased approximately 14% year-over-year in the third quarter, our gross margin was 49.1% compared to 47% in the prior year period, the approximate 210 basis point increase in gross margin year-over-year was primarily due to change in product mix, improvements in manufacturing efficiencies on higher volume, offset partially by inflationary headwinds we are seeing in raw materials, logistics, and labor. Third quarter operating expenses increased 18% year-over-year. The year-over-year increase was driven by a 60% increase in SG&A expense and a 24% increase in R&D expense compared to the prior period. The increase in SG&A expense was primarily due to higher selling expense, including commissions and bonus expense on the increase in sales year-over-year and lower OpEx in Q3 of 2020 from cost cutting initiatives, lower headcount and lower discretionary spending as a result of reduced travel, training, and shows and conventions during the COVID-19 pandemic. Our continued focus on managing expenses proved effective again this quarter as we were able to limit the growth of G&A only expenses to just 6% increase year-over-year. The increase in R&D expenses in Q3 was driven by the combination of lower spend in the prior year period related to COVID and outside expenses for certain R&D projects in particular related to the Wrapsody clinical study, and increased compensation expense related to our acquisition of KA Medical and…

Well numbers, Raul. Thank you very much. I appreciate your efforts. Well, first I wanted to discuss the development subsequent to quarter end. Specifically, the company made an announcement via form 8-K filed on October 22. At pursuant to an action taken by the independent members of our Board of Directors, Justin Lampropoulos is employment as our President of EMEA was terminated effective October 19. Now change at this level of leadership is a sensitive issue for any company to manage. And in this particular case, as you can well imagine, given the Justin is my son. Across many of you would appreciate that has been especially difficult situation for me. For the avoidance of doubt the decision to terminate Justin's employment was made by our independent directors in a meeting which I did not participate in accordance with our Governance Policy. The action was taken in connection with an ongoing inquiry being conducted by an independent party. Because that inquiry is ongoing, it would not be appropriate for me to discuss that work at this point. I would also like to note that other than our public disclosure obligations which were satisfied with the filing of Form 8-K Last week, we do not publicly discuss personal matters regarding current or former employees. Now I began immediately the process of engaging with our team in the EMEA region to execute a plan to minimize potential risk disruption as a result of the termination. Importantly, I have appointed as Interim President of EMEA, Dr. Richard Svec. Richard is a vascular surgeon who transitioned from practicing medicine to a number of sales and marketing roles at Covidien and Stryker over a span of more than 20 years before joining Merit in 2015. He has taken on roles of increasing responsibility on our…

And our first question will come from Mike Matson with Needham and Co.

Yes, thanks. Thanks for taking my questions. I guess I'll start with the peripheral and cardiac businesses, cardiac intervention businesses, they had really strong kind of mid teens growth that seems to be better than what we've seen from some other companies in that space. Just wondering if you could maybe talk about what some of the growth drivers were there and whether or not I think is taking share, maybe in some categories?

Yes, so a good pickup there our SCOUT radar localization products increased 27% on a constant currency basis, that was the largest contributor to our total PI growth. In addition, biopsy products increased approximately 19%. And then drainage and amyloid therapy products increased 18%. So together those represent about a third of our total PI business. So those three products they've been performing really well this year, and continue that progress into Q3.

Okay, thanks. And then I wanted to ask one on China. So it sounds like the tenders haven't happened, like you thought, but I just wonder what the outlook there was for potential tenders? Do you still expect them at some point? Do you think that they're off the table for now or just that they just been delayed? And do you still expected to be in the same kind of category that you were expecting before, which I think was the balloon inflators primarily.

Yes. Listen, Mike, we believe that the long-term growth opportunity in China, despite all of these situations that may or may not be developing remain. So we are continuing to invest with new customers, and as I think I mentioned in previous calls, that we know, we're moving into the inlands, we will discuss what we learned, we don't expect any impact on this year. But we will discuss all of this as we gather more information during this quarter, and then we'll be prepared to discuss this, as we forecast in 2020. Raul?

Yes, no, I think to the, maybe stepping back a little bit China, we were expecting low single digits at the beginning of the year, we now expects kind of a 10% constant currency growth for the full 2021. While the pricing headwinds aren't going to impact us we think this year as we had originally thought we are going to, we are, I guess experiencing some buying patterns some small changes in buying patterns from some customers as they anticipate those price reductions. So as of now, we now expect the tenders and the pricing related headwinds to really impact us in the first half of 2022. But I guess the best way to say it is in light of the delayed postpones tenders we really kind of expect China for the fourth quarter kind of flattish.

Our next question comes from Jayson Bedford with Raymond James.

Hi. Good afternoon, I guess just maybe to follow on the last line of commentary. Are you still seeing the products into China? And I'm just wondering, is that still an opportunity for growth is just expanding the bag in China?

Yes, we believe that there's a lot of opportunity in China. And we're not backing away. We've received approvals this year, the ASAP, we have in embolic. We have a lot of new products have been approved, including the Ninja. We recently were approved for the Snap. So we're continuing to invest in China, our ground strategy has changed. And, again, I won't go into a lot. I mean, I think if we addressed that we're moving inland. We're moving into I think I mentioned about last time we call we have 30 cities with over 5 million people. So there's plenty of market there. And I think our strategy is to move towards our peripheral products, where there's not much, let's say an attention is best way for me to answer it, Jayson.

Yes, I think we remain pretty confident in the long-term growth expectations for China overall, to be honest.

Okay. And then you mentioned a supply chain dynamic with endo max I believe that weighed on endoscopy growth. Where are you with cleaning up that supply chain dynamic? And is that going to be a drag here in the fourth quarter or into '22?

So the answer is that we have, I'm not going to say solved it, because solve means that conclusion, but we expect that by the end of the year that we will have that resolved. And back on track, so we're managing it, I think we're doing a very good job. It wasn't us but as you know, Jayson, a lot of people, a lot of companies that you've talked to today, and during the weak demand supply chain, this is one of them. I would just say overall, though, that we have been affected. We've seen more of it in the last six months than we did in the previous 18 months. But the good thing about being vertically integrating and being agile and nimble is many of those things we've been able to solve internally or then tapping our second source. So I think this one will be fine. But it was also offset by solid growth in the other stent products. And of course, as we continue our elation dilation balloon and our arrow mini which is really the pulmonary product line, so I think we'll have it solved and our guys have done. I mean, I've got my COO sitting here, and they've done a nice job, but it did affect us in that quarter, and it will be taken care of and we'll be back on track by the end of the year, it'll again, it'll improve monthly as we go along.

Our next question comes from William Plovanic with Canaccord.

Hey, great, thanks. Good evening, and thanks for taking my question. Your revenue was down 4% sequentially 4.7% were from Q3 from Q2. And that's more in line with historical trends. I'm just trying to understand what are you seeing in the field relative to hospital staffing and procedure trends? And, more importantly, kind of what is contemplated in your guidance for the fourth quarter of this year? And then how do you see that playing out in 2021?

Yes it's a good question; it is the question that everybody's been asking. I mean we have followed all of the other companies and that the different challenges that the industry is seeing in our product lines, generally, we have not a better yet, let me restate that we continue to see better access, and more interest. And maybe more importantly than that, and I almost reluctant to say this, but a lot of our ability to be able to deliver products that our competitors can't. So one of the things that I think that we'll continue to see is gaining of market share. So, anyway, now, if you were referring to fatigue, and staff and those sorts of things we could read the headlines that's going on every day, and everybody's concerned about it, Intermountain Healthcare here in Salt Lake, everybody's, I think everybody's tired. I mean, all of that's going on, but the beat goes on, and patients have to be treated. So it is a problem. It is a challenge. But generally, I would say that our business has been, well, I don't want to say we're doing better than others, because that would be disingenuous, but I think we've been doing just fine. And I think our product mix is very, very broad. Raul, do you want to comment?

Yes, no, I think if you look at the updated guidance that we gave it after the second quarter we had the benefit we waited to update our guidance, unlike other companies where they came out of Q1. And so we have better visibility, I think, to what we saw, and quite frankly when we looked at the back half of the year, we, it was in line with our expectations of a choppy recovery COVID flare ups in certain areas and geographies. I think that's still in play. But now you've also got kind of the logistics issues you've got to worry about, you've got employee shortfalls, as somebody mentioned in the previous question. So we're seeing all those dynamics, I think when you look at the low end of our guidance for the year; we're in 1,060 million which is a 10% increase year-over-year. And as you do the math for the fourth quarter we're really, we've essentially kind of feel like we've covered all the kind of, we've got, I guess I'll say a wide gap of the fourth quarter, right. So that's our guidance for the fourth quarter is pretty wide. And it's really trying to cover everything that we're seeing the choppiness and the recovery. And really, what I want you guys to kind of focus on are the drivers in our Q4 expectations. First of all, I think the US is probably the most stable in our growth, I think as we modeled the Q4 is very consistent with Q3. Our o-US assumptions now reflect some essentially prolonged COVID recovery, the softer trends related to spikes in the Delta related cases in recent months. Also, the China tender, no tenders, other, we're not expecting the tender impact. We are seeing some delay purchases by some distributors, as they anticipate some of those price reductions. So, I think overall, if you look at it kind of can you plug in the numbers of what's left for the fourth quarter. I think our Q4 represents constant currency growth of 3% to 5%, excluding the divestitures, 5% to 9%, excluding divestitures in Cultura. So, again, I think it's in line with what Fred and I have been saying most of the year, which is kind of getting back to normal growth rates on the back half.

And Raul, I think we've called this pretty well. I mean we haven't been overly aggressive. We've kind of calls them as we sees them. And I think that has served us well the way we've structured the way we look at the business. So we know some people criticize us, other say keep doing what you're doing. We're just looking at the numbers and just want to make sure that we can fairly represent what we see. And if we have upside, that would be wonderful. But I think we've been I think what we have tried to do have worked for us and work for our shareholders. So we're just going to continue what we've been doing.

Yes, if I could ask a second question. Thank you very much and congratulations on a really good year. It's -- you're generating a lot of free cash flow. I think you're well ahead of plan at this point, if I go back and look and just curious how you're thinking about the cap structure today. More in terms of is continued pay down a debt, the best use of cash, is it acquisitions? Is it stock buybacks? How do you think about that today versus it was a little while ago, you laid out foundations for growth, there have been a lot of changes, and especially since you're generating cash faster?

So first of all, I think the team has done a very good job. I mean and this really came from input from shareholders, and you guys were concerned about this, you ought to look at it. And it was one of the things that were very important in foundations for growth. One of the things, we've talked about the logistical issues, and all freight and all those sorts of things, supply chain. But labor is going to continue to be a problem. And even though supply issues in the marketplace may take care of those disruptions and eventually equivocate some, we don't see that in labor. So one of the things that we'll be looking at is automation projects, and spending our money on those projects that help to reduce the reliance and just become more efficient that way. So that's a big focus now to select those that will give us the best returns, and be able to support the growth that we see going forward. Raul, you want to add to that?

No, I mean, I think for now, we continue to pay down debt, obviously acquisitions you never know, when those are going to come along. I don't know that we're avoiding those, we're, I think we're just the hurdle rate, I think internally is just much higher, it can't frustrate our foundations for growth programs if we're really focused on. So again, it's not that we haven't been looking but as Fred mentioned, things are expensive. And again, we're really focused on foundations for growth, and we don't want to frustrate that program.

We are looking. And anyway, I think, again, just to make a point that we are not avoiding things, we've looked at several things, but they are expensive, and they have to fit into our plan. And if they don't, then we just have to move on or just be patient, in the meantime, run our business, and spend our capital where it'll give us the best returns, Raul.

And just as a reminder, just as a point of clarification we're still targeting $100 million in free cash flow for the year and CapEx approximately $35 million. So big ramp from where we're at right now. But again, we want to make sure that we have the flexibility to make some of the investments for foundations for growth and product line transfers for operation group along with automation if they need it. So that's why we left the budget as is.

And I wish we could see the grin on our COO's face right now.

Our next question comes from Steven Lichtman with Oppenheimer and Company/

Hi, everyone. Thanks for taking my question. This is a mere input, Steve. And I guess you guys did sort of touch upon it earlier. But I guess, is there any other thoughts you guys would have in terms or comments, I guess, on just the overall inflationary pressure within your business, and any other plans that you guys may have in terms of mitigating that pressure going forward? Thank you.

Yes. Listen, it's a big part of our daily conversations. We're seeing price increases coming from vendors. Fortunately for us we had a head start on all of us, whether it be COVID, or these inflationary things, Merit started our procurement, our freight, our negotiations, corrugate I mean, you name it, and we've been involved in these negotiations, not for six months, or three or whatever this year, we've been involved in for a year or two, as part of our program going clear back to the summer of 2019. I think we are looking in continue to pass on increases with a number of products, and a number of areas in a number of divisions. So I won't go into the specifics, because someone might take that and said, oh, well, that was on the call and they said this or guess what, but I will just tell you that it has our attention. And we are exercising it as we speak in a lot of areas. So Raul?

No, I would say we are facing the same things everybody else is facing right. I mean labor, freight, raw materials. Despite those headwinds and inflationary pressures, our full year low end guidance still represents a 48.8% gross margin. So up about 180 basis points. So we're able to absorb as Fred mentioned just a second ago, some of those expenses because we had our foundations for growth program in place. And again, as we look forward into our 2023 plan we continue to feel that confident that our FFG initiatives will drive us to our continued operating margin expansion that we set in that goal and it's big portion of this gross margin.

Yes, and I think that's really important Raul, because, again, this is what we're focused on, this is what we've been working on; this is what's giving us the result. And yes, we're being hit by as Raul said, like everybody else is. But there are a couple other internal things that we've been able to do. And that's part of what I think is one of the things that Merit does well, and that is the vertical integration. I'll give an example of one, silicon we have our own foundry, but we're able to raise prices to our customers, and offset those costs. And we have control of the supply chain. So I just have to think with our molding, extrusion, our braiding, our wafer fab, the things that we do and have been doing for a long time, have been things that are helping us because we can control those expenses, a lot better than just taking and getting the full brunt of what someone might pass on to you. So there are a lot of things that we're doing. I'll give one last thing I'm going on before I should-- longer than I shouldn't. But we had a couple of shortages from people. And we looked at our own capabilities. And we were able to deliver the products that we needed to meet product demands in house, while saving a quarter of a million dollars. That's a quarter of a million in the big picture doesn't seem like a lot. But it seems like a lot to me. I'm just saying we are as well prepared as anybody, in my view, to meet the challenges we see in the marketplace. Period.

Our next question comes from Jim Sidoti from Sidoti & Company.

Hi, good afternoon, and thank you for taking the questions. So just to keep on the cost side, Fred, do you think because of the steps you've taken to vertically integrate, you'll be able to continue to grow margins, even as costs increase over the next few quarters?

Jim, I'm not going to move beyond where what we've talked about, I think, one of the things that you have, hopefully, I think you understand this, we've really stick to the knitting, and say, we're going to talk about the periods and then we'll prognosticate and forecast when it's time to do so. Vertical integration is not something new. It's been something we've done from the beginning. So I'll leave it with that statement. It'll continue to be a benefit to Merit. But we'll leave the other stuff until we get into February. And then we'll talk more about where we're going from there.

Yes, I mean, I think we're still confident in our FFG goals.

And I think that's the important thing. I think, if you listen to the, what we put out on FFG, on cash flow on operating margins, and on earnings per share, if you look at all that stuff, those are the things that we're committed to. And that's what you should pay attention to in our view.

Do you have any pricing power, if it gets to the point where you're not going to be able to absorb these costs increases?

Yes, I think we do have some pricing power. And as again, we're very conscientious about how we do things, we don't gouge; we don't take advantage. We look at cost. We look at markets; we look at those sorts of things. So I just think we have some pricing power. Maybe that we haven't had in the past to be very honest with you. So yes, I think there is some, Raul?

Our next question comes from Jason Bednar with Piper Sandler.

Hey, good afternoon, thanks for taking the questions here. Just a couple from our side. First, not to hammer here in the cost questions. But just one more follow up just related to the inflationary pressures you called out. Would you be able to quantify what those headwinds were that you were able to offset in the quarter?

Well, I'll tell you, we, they're things that we all everybody has, but we'll go from there's labor. There's freight. There's --

Every line item on cost saving.

Yes, every line item, I mean, raw materials. Yes, I mean, everything everybody else is doing.

I think if you do the math, you get to the kind of your, as you start to kind of calculate the fourth quarter range, right? I mean, there's we have a pretty broad range for the fourth quarter. It's about 110 basis points from low end to high end, obviously, one of the largest drivers is we also have a wide range on the revenue side. And again, I think what we're trying to do is we don't want to be in a situation where we want to get ahead on our skis. And two, we're having to revised guidance. So we're trying to account for everything. And if you look at the kind of the fourth quarter gross margin, part of that is the revenue, kind of the wider range on the revenue and that how it flows through obviously, whether it's US or o-US mix, or which product category, so you'll have a mix component there. The low end of the fourth quarter gross margin also does reflect a 70 basis point decline quarter-over-quarter driven by incremental inflationary pressures, compared to Q3, as Fred mentioned, labor, freight and raw materials. But again, however, despite those pressures, I want to point you to our full year, low end guidance, which is 48.8 on the gross margin, 180 basis point improvement. And then again, I want to kind of reaffirm our foundations for growth targets and in our confidence in that 2023 target.

Again, if there may be one match, which came out today as our focus on our initiatives, it's a three year plan, where 10 months into a 36 month plan. And despite all of the other things, we have a plan to execute. And that's what we are focused on across the board. So there are a lot of factors that go into that. We've talked about automation, we've talked about this, that and the other, but we're focused on delivering what we said we would deliver. That's the message of the day.

Yes, I mean, I think to be clear, and I said this over and over again, but I'll repeat it just to make it clear we have a wide range of revenue and EPS in the fourth quarter, and to hit our fiscal year '21 guidance. But it reflects that we are confident in our ability to deliver the low end of our guidance range, but also remain cautiously optimistic, given the level of COVID related uncertainties, and all the other noise that you're hearing out there with a wide range of outcomes in Q4. So I think we tried to anticipate everything that could hit us, I guess, is the best way to say it.

Yes, absolutely. And you've all been executing very well against that plan. So you deserve congrats on that. Raul, just maybe to follow up on one other earlier question. I think it was Mike's question on China. Is your point on China, that customers are running more lean on inventory, I think you mentioned maybe distributors buying less. I guess maybe any additional color, you can add on just that altered buying pattern that you alluded to, I guess just really trying to figure out if we end up having maybe a combination of price declines, but then they maybe also some inventory normalization within your customer base in '22. Thanks.

Yes, I mean, I don't want to get into 2022 guidance or any color around there, obviously, we did mention that we now expect that pricing component to hit us and in the first half of 2022. But again, I think what we're seeing at least for the fourth quarter, what we've kind of planned on is just a lower ordering from our customers. Just I guess in light of the delayed or postponed tenders, right. So they're anticipating a little bit of that. But, again, we've tried to include it in our guidance. And once we get to 2022, I think we'll give you more color there. And I'd say dial in February 2022.

But again, but despite all of those issues, I hope you didn't miss that we're expanding into other areas with products that we have that are not in focus on very pricing issues, we have a strategy is what I'm trying to say. It's not that we're just having a coming up. We are flanking, so to speak, and delivering our products and new opportunities there as well. And our long term forecast continues to be positive in China. So that's, I don't want you to forget that it's not; I mean what I heard was just one side, you got to hear the other side and why we remain confident.

Our next question comes from Lawn Campus. Your line is open.

Hi, Fred and Raul, great quarter. That's really great.

We should have put you up first. I don't know why we waited to thank you for your patience with us.

That's all right. It was a great quarter. The only question I have is I was thinking about this tax increase that Biden is proposing, which of course is off the wall but in any event, have you done any modeling to see what effect that might have on 2022?

Yes, so as you've heard us in this entire call, we're not commenting on that. I would say this. If we were doing that we would all have to take medications and other things because it changes every day. I mean, who knows? It's an exercise in futility. So I think we'll wait and see what happens. And then we'll report that on our forecasting. So, I mean, we're as frustrated as you are in terms of just trying to understand where anything is going, who knows. But as we gather that information, we'll put it into our models; we'll deliver it in our forecast in our views for next year.

Very good. Continued success, guys. Appreciate.

Thank you, sir. Appreciate the call up, I hop you call next time, we'll put you right up on top.

Okay. Bye-bye.

All right. Thank you, sir. There are no further questions at this time. Please proceed with any closing remarks.

Thank you, Michelle. And listen, we appreciate all of you at a very, very busy earnings season. We took a full hour here. I hope we were able to answer your questions. Raul and I'll be around for the next two and a half, three hours. And we will speak further. Not anything that we haven't talked about. But just try to give maybe detail on certain things should you ask we don't know what your questions are. But we're here. Thank you very much. Listen, there were no questions regarding the 8-K and that's fine. We'll look forward to taking your questions in our private meetings that are coming out in the next hour. Thanks, everybody and best wishes for now and for holiday season. We have the holidays upon us. Enjoy the fall. God bless you all and thank you. Good night.

That does conclude our conference call for today. Thank you for your participation.