Prestige Consumer Healthcare Inc. (PBH) Q2 2022 Earnings Report, Transcript and Summary

Thank you for standing by, and welcome to the Q2 2022 Prestige Consumer Healthcare, Inc. Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. I would now turn the conference to your host, Mr. Phil Terpolilli, Vice President, Investor Relations and Treasury. Please go ahead, sir.

Thanks, operator, and thank you to everyone who's joined today. On the call with me are Ron Lombardi, our Chairman, President and CEO; and Christine Sacco, our CFO. On today's call, we'll review the second quarter fiscal '22 results, provide an updated full year outlook and then take questions from analysts. There's a slide presentation which accompanies today's call, it can be accessed by visiting prestigeconsumerhealthcare.com, clicking on the Investors link and then on today's webcast and presentation. Please remember some of the information contained in the presentation today includes non-GAAP financial measures. Reconciliations to the nearest GAAP financial measures are included in today's earnings release and slide presentation. During today's call, management will make forward-looking statements around risks and uncertainties, which are detailed in the complete safe harbor on Page 2 of the slide presentation accompanying the call. These are important to review and contemplate as everyone on the call today is well aware, business environment uncertainty remains heightened due to COVID-19 and continues to have numerous potential impacts. This means the results could change at any time, and the forecasted impact of risk is the best estimate based on the information available as of today's date. Additional information concerning risk factors, cautionary statements are available in our most recent SEC filings and most recent company 10-K. I'll now hand it over to our CEO, Ron Lombardi. Ron?

Thanks, Phil. Let's begin on Slide 5. We are very pleased with our Q2 results, which were a continuation of the impressive first quarter performance we discussed in August. We delivered record revenues of $276 million in the quarter, up 16% versus the prior year driven by several factors. First, our base business performed well across the majority of our portfolio, aided by strong consumer behaviors and our time-tested brand building. Our organic top line performance and consumption trends of about 11% reflects the strength. The rapid growth occurred across nearly all channels and was also driven by continued market share wins in many of our categories year-to-date. I'll discuss both of these factors in a bit more detail shortly. Lastly, the July 1 acquisition of Akorn's Consumer Brands generated $12.4 million in revenue and is off to a solid start. We have fully integrated the business into our processes and remain confident in TheraTears' long-term growth outlook and fit alongside Clear Eyes. As top line performance translated into superior earnings and free cash flow, we generated $1.02 of adjusted EPS and adjusted free cash flow of $62 million, both up double digits versus the prior year. Our strong free cash flow and our solid Q2 and year-to-date performance continues to enable our disciplined capital allocation strategy. Even with the acquisition of Akorn back on July 1, we finished the quarter at 4.1x net leverage and anticipate being below 4x at fiscal year-end, further enabling future capital allocation optionality. Let's turn to Page 6 for an update around the evolving consumer habits and other macro changes resulting from the pandemic. Since last year, we have witnessed a rapidly evolving consumer environment as consumer habits and other various effects of the COVID-19 pandemic continued to impact all businesses. Fortunately, for our business, many of our attributes: having numerous leading brands, a diverse supply chain and being an agile organization enables us to succeed in this dynamic environment. In Q2, we experienced some continued trends from Q1 and began to experience a few new trends. These fall under 3 major themes, and we are well positioned to manage each of them successfully. First, consumer habits around certain categories previously impacted by COVID-19 continue to normalize. We experienced a continuation of the sharp rebound in travel trends that began in Q1 and benefited our Dramamine business. In Q2, the rebound extended into additional categories as well, including higher cough cold illnesses as well as a modest uptick in head lice. Our leading brands in each of these categories, which include Dramamine, Chloraseptic, Luden's, Hydralyte and Nix are benefiting from this rebound with consumption up double digits. Second, higher consumer demand trends further fueled our Q2 performance. Both consumers and retailers have shifted their purchasing and order rates broadly in anticipation of supply concerns being noted in the media. With our leading market positions, we are top of mind for our consumers as they shop, and therefore, poised to benefit from this near-term boost. For example, increased vaccine foot traffic drove strong consumption trends in the drug channel, where we have a broad distribution and market share. This also generated higher ordering in this channel to support the increased takeaway at shelf and broad concerns of potential supply risks as retailers do not want to be without leading brands such as ours. Third, similar to others, we are watching and evaluating certain supply chain constraints, and elevated costs occurring in the global marketplace. Chris will review the gross margin impact later, but it's important to note, we are well positioned to navigate any impacts. Our asset-light manufacturing strategy and leading brand portfolio give us the ability to react quickly to challenges in the marketplace through both ongoing cost savings efforts and price actions as necessary. Now let's turn to Slide 7 for a midyear update on our brand-building strategy. For our fiscal year-to-date, market share for our brand portfolio has outpaced category growth. On the left side of the page are 3 categories where we've had particularly strong performance in the first 6 months of fiscal '22. In GI, our strong performance is supported by the travel rebound I just discussed, but we also continue to experience solid long-term growth for both Gaviscon in Canada and Fleet. In Skin, we continue to experience long-term market share growth in Compound W as consumers seek our leading brand for work treatment. This success is driven by utilizing the full spectrum of brand-building efforts shown on the right side of the page that continue to deliver a superior consumer experience. And in Eye Care, Clear Eyes continues to expand its market-leading position in redness relief. Clear Eyes remains a leader in the category with year-to-date success helped by brand marketing, innovation and a recovery in the convenience channel for our Clear Eyes Pocket Pal product. We look forward to executing many of these same strategies with the TheraTears brand in coming quarters. We are proud of our share performance year-to-date with the vast majority of our largest brands and categories growing market share. This result is a testament to our portfolio positioning and long-term strategy. Now let's turn to Slide 8 for an update on e-commerce. When we began our prior fiscal year, we saw a rapid acceleration in our e-commerce business, which effectively doubled overnight to over 10% of sales. Impressively, our sales continue to grow double digits in this channel despite the year ago comparison. This is driven by our early and continued investments in e-commerce that today enables our success as a leader in consumer health care, e-commerce across all of our online retail partners. We continue to win with consumers across e-commerce through our investments in online content and digital advertising. We use engaging, targeted and timely messaging with the end goal of expanding our share with consumers. Shown on the right of the page are a few examples. For Compound W, its treatment finder and engaging web content help consumers find the right skin product solution for them. Meanwhile, online campaigns behind other brands, such as DenTek help deepen connections with consumers. For the DenTek oral care enthusiasts, our online campaigns are a reminder around the broad assortment of offerings used as a part of their daily oral care routine. These are 2 examples of the many efforts we continue to engage in and that position us for further e-commerce growth. Now I'll turn it over to Chris to walk through the financials.

Thanks, Ron. Good morning, everyone. Let's turn to Slide 10 and review our second quarter fiscal '22 financial results. As a reminder, the information in today's presentation includes certain non-GAAP information that is reconciled to the closest GAAP measure in our earnings release. Q2 revenue of $276.2 million increased 16.3% and 10.5% on an organic basis versus the prior year, the latter excluding the acquisition of Akorn, which added $12.4 million in the quarter as well as the effect of foreign currency. As Ron highlighted earlier, Q2 continued to benefit from favorable consumer trends in many of our categories previously impacted by COVID-19. By segment, North America revenues were up approximately 16%. Nearly all product categories grew with the largest organic increases in GI, cough and cold and dermatological categories. As Ron discussed earlier, a return towards more normalized travel trends helped drive a significant lift for certain brands versus a year ago, led by Dramamine in GI and Clear Eyes in Eye and Ear Care. International OTC increased approximately 15% in Q2 after excluding the effects of foreign currency. The increase was attributable to a more favorable comparison in the prior year as well as an increase in Hydralyte sales from more normalized consumer trends around illness and activities in Australia. Adjusted EBITDA increased in Q2, approximately 15% while EBITDA margin remained consistent with our long-term expectations in the mid-30s. Adjusted EPS for the quarter was $1.02 per share, up over 31% versus the prior year, driven primarily by higher sales and lower interest expense. Let's turn to Slide 11 for more detail around consolidated results for the first half. Revenues for the first 6 months of fiscal '22 increased 17% versus the prior year. On an organic basis, revenues grew 13% after excluding a $12.4 million contribution from the acquisition of Akorn as well as the effects of foreign currency. Similar to Q1, this performance was driven by the favorable year-ago comparison, long-term brand building efforts and improved trends in certain COVID-impacted categories such as travel, cough and cold and head lice. We continue to experience year-over-year double-digit consumption growth in the e-commerce channel, further building upon the sharply higher online purchasing shift that occurred throughout fiscal '21. Total company adjusted gross margin of 58.4% in the first half was approximate to last year's gross margin of 58.2%. This consistent performance was reflective of the higher-than-expected sales performance as well as favorable product mix, partially offset by rising supply chain costs. As a reminder, our diversified supply chain and leading product portfolio are an advantage when it comes to managing inflationary pressures. We are constantly executing cost-saving efforts across our business as well as evaluating pricing actions to offset inflationary pressures. As discussed back in August, we have already taken a number of tactical price increases on certain of our leading brands. As a result, even with the current environment that is causing higher costs, we now anticipate a gross margin of approximately 57% for fiscal '22. This assumes a 56% gross margin in the second half, which reflects the supply challenges and cost pressures we and others are experiencing. We anticipate further price increases moving forward as necessary to continue to offset these inflationary headwinds. Moving down the P&L. Advertising and marketing came in at 14.7% for the first half, up slightly versus the prior year due largely to the abnormally low rate of spend in Q1 of last year due to COVID-19 shelter-in-place restrictions. For fiscal '22, we still anticipate an approximate 15% A&M rate as a percentage of sales. And for Q3, we anticipate A&M of approximately 15%. Adjusted G&A expenses were just over 9% of sales in the first half. Looking ahead, G&A dollars should decline sequentially in Q3, owing to the timing of certain expenses. For the full year fiscal '22, we anticipate G&A of around 9.5%. Adjusted EPS for the first half of $2.16 per share grew 31.7% over the prior year. Higher sales and lower interest expense drove this growth. We still anticipate interest to approximate $63 million for the full year. Now let's turn to Slide 12. For the first half, we generated $129.7 million in free cash flow, up about 12% versus the prior year due to the strong operating performance just discussed as well as lower CapEx. We continue to maintain industry-leading free cash flow conversion based around our asset-light model. At September 30, our net debt was approximately $1.6 billion, and we finished the quarter with a covenant-defined leverage ratio of 4.1x. We now anticipate leverage of below 4x by year-end fiscal '22. We continue to operate with a disciplined capital allocation strategy focused around debt reduction in the near term. And with that, I'll turn it back to Ron.

Thanks, Chris. Let's turn to Slide 14 to wrap up and discuss our increased outlook for fiscal '22. We are very pleased with our first half of fiscal '22 performance which is underpinned by our strong portfolio and business strategy. We anticipate a continued dynamic environment in the second half but are confident that our proven business strategy will allow us to navigate the dynamic market. As a result, we are raising our outlook for fiscal '22. For the full year, we now anticipate revenues of $1.05 billion to $1.06 billion, which includes an organic revenue growth expectation of about 7%. The acquisition of Akorn is still expected to contribute approximately $40 million to net sales. For the third quarter, we anticipate revenues of $260 million or more. The guidance reflects our current thinking around modest recoveries in the peak season for cough/cold and head lice areas of our business as well as the strong consumer environment. These positive effects are partially offset by the strong consumer stock-up trends experienced in Q2 we discussed earlier. We are also raising our full year earnings outlook. We anticipate adjusted EPS of $3.93 to $3.98 for fiscal '22. For Q3, adjusted EPS is expected to be $0.88. Our strong cash generation and financial leverage to continue to enable double-digit earnings growth for the second half. The strong earnings outlook includes an increase in costs and supply tightness as discussed earlier, that is impacting gross margins surrounding the supply chain by approximately 200 basis points in the back half of fiscal '22 compared to the first half. Our strong overall financial profile, ongoing cost savings and price actions that Chris noted earlier, are helping to offset these effects and expect to be well positioned for the following fiscal year. Our business attributes also translate into strong free cash flow, and we still anticipate adjusted free cash flow of $245 million or more and are well on our way following the $130 million of adjusted free cash flow generated year-to-date. In closing, we remain confident that our proven business attributes will continue to deliver superior results. We look forward to executing long-term brand building that rewards our stakeholders in coming quarters and beyond. With that, I'll open it up for questions. Operator?

[Operator Instructions] Our first question comes from Jon Andersen of William Blair.

I wanted to start with the guidance, I guess. The organic growth in the first half of the fiscal year has been quite strong, 13%, as you pointed out. It looks like the midpoint of your revenue guidance for the full year now implies a pretty significant decel in the second half of the year. I'm thinking organic growth kind of flattish almost in the second half is what's implied. Could you talk a little bit about why that's the right way to think about the second half of the year, given the apparent momentum in the business?

Sure. So let me start, Jon, and then I'll have Chris add some additional comments. The first thing I'd like to remind everybody when we start talking about comps and business trends is that we're in the middle of a 3-year period of unique trends and tough comp periods, right? We all know what happened last year. And the COVID disruption lines up very well with our fiscal year, right, beginning on April 1, right? It was disrupted last year. Our first quarter of sales were below $230 million. You get to this year, we're seeing concentrated recoveries in certain quarters, right, the first quarter ended June. And then the most recent quarter, which is comping against impacted periods last year. And then, of course, we'll all see what unfolds next year as things continue to come out of the COVID impact. So first thing I'll remind you is that the comps are not all equal here as the big driver. So Chris, maybe some specific around the numbers?

Yes. So -- just a couple of other things, right? Just a reminder, we do have some seasonality around demand for some of our products like Dramamine, or Compound W, for example. We talked on the prepared remarks about consumer and retailer demand for products being heightened in the second quarter. We think about $5 million benefited Q2 that would have been timing related out of Q3. So when we think about our expectations for the back half, generally, continued rebound in certain COVID categories, and travel will be less of an impact because of seasonality that I mentioned. Regarding cough and cold, if incidence is called for a second wave of retailer purchases, there could be some upside to our expectations. So the second half, we left largely intact from our prior guide, which called for more normalized trends on the base business with the exception of that $5 million of timing. And I guess I would also just add as a reminder that our fiscal Q3 is the most difficult quarter to call given the holiday season. This year, in particular, may prove to be less predictable than years past, which is why we thought it was prudent to maintain the second half assumptions at this time.

So fundamentally, John, we still feel very good about our business and portfolio and the underlying consumption trends that we have.

That's helpful. On that consumption point, how do your shipments compare in the quarter compared to consumption for the business in aggregate. I'm not sure that may have been in the presentation, I didn't see it. But talk a little bit about your consumption measures and whether there were any dislocations between shipments and consumption and where that might have been?

Yes. I believe in my prepared remarks today, I commented that consumption in organic sales trends were pretty much the same at about 10% or so. And we saw the same thing more or less in the first quarter as well.

Okay. Great. And then are you -- are you seeing anything -- you've talked about how dynamic the market is, understandably, where are you in terms of -- and your retail partners with respect to maintaining appropriate trade inventory levels in stocks? Are you experiencing any disruptions that might resolve themselves during coming quarters. Just the whole relationship and some of the puts and takes between your business and the retailers' plans, which have obviously impacted your shipments at various quarters over the past few years?

Yes. First of all, I'll answer the question about our inventory at retail. In general, we continue to be in pretty good shape across the portfolio at the retail shelf. I guess the next comment is we're seeing many of the same supply chain stresses that many other companies are talking about. But the backdrop for us is, the quarter ended June and then our most recent quarter ended September, we've been able to deliver record levels of sales, right, 270-some-odd million in the quarter ended June. And $275 million plus this quarter. So although we would like to have more inventory in our warehouse, and I think the retailers would like to have more inventory of our products in their warehouses, we're generally keeping up with the takeaway at shelf and are in pretty good shape. We'll see how that goes. One of our business attributes is a diverse supply base that is as nimble as we are. So we'll continue to focus on it, but hard to predict how things will unfold here over the next couple of quarters.

And then last one for me. The online business continues to perform very well. Where are you today in terms of the percentage of sales that you're doing online? And do you continue to expect that to just remain a source of strength within the context of the various channels by which you go to market? And are there any implications we need to be thinking about in terms of profitability or your brand positions online versus offline?

Yes. So as we said during the prepared remarks, the online e-commerce part of our business continues to grow nicely, and we continue to focus on it. And not only the big player Amazon here, but we're working with and investing with all of our retail partners who have online businesses. We want them all to be successful. At the end of the day, we want to be available wherever the consumer chooses to buy our product, and it's how we think about it. So we believe we're going to -- we're in a position to continue to grow well there. And 6 quarters into this, our financial profile in terms of margins for those online sales has continued to hold up. We continue to win and grow market size and market share as a result of consumers moving to online. So it continues to be a bright spot for us that we were well positioned to take advantage of, and we're going to continue to focus on it.

Our next question comes from Rupesh Parikh of Oppenheimer.

So I guess, Chris, just going back to your commentary on gross margins in the back half of the year. So you guys do expect some pressures there. But just given presumably pricing actions that you guys are taking and other actions, would you expect to get back up to that 58% level next year?

Rupesh, so as a reminder, I'll just start with the benefit we have of having a diverse portfolio, it also helps us diversify our cost components, right, as well as the benefit of having mostly #1 brand. So we had previously contemplated some inflationary pressures in our guidance and our current fiscal '22 guide is approximately 57%. It's going for about 150 basis points of incremental pressure in the back half. So as I mentioned in my prepared remarks, we plan to mitigate these through -- these pressures through a combination of cost savings and pricing actions. We've already executed some tactical pricing actions this year. As this environment continues to unfold, we are contemplating further action. But I think it's important to put these inflationary pressures in perspective, given what you are probably hearing from others in the space. Our updated guidance is calling for about $10 million to $15 million of pressure here. We've already taken pricing actions that approximate $10 million on an annual basis. So of course, there's always a lag in timing of -- between costs and savings and pricing and when it runs through your P&L, but at this point, we have no reason not to expect our margin profile for the business to recover to more historic levels over time.

Okay. Great. That's really helpful color. And then, Ron, I guess going back to your earlier commentary just on retailers and consumers potentially stocking up. So you quantify the retailer side of it? Is there any way to quantify how much consumers are talking up or the impact or the benefit you saw during the quarter?

Yes. I mean that's hard to estimate how much product was bought and is sitting on the shelf waiting for future use. Most of our portfolio kind of doesn't fit that case. We have a small portion in cough/cold, 7%, 8% of our total revenues that might fit that. So we're keeping an eye on it. It's really hard to predict the changing consumer habits here. But for the quarter, of the $15 million of sales increase above our outlook for the quarter, we think about maybe half of it was timing that came out of the second half into the second quarter.

Okay. That's helpful color. And then maybe one final question. Just on TheraTears. The commentary seeing is positive so far in the integration and what you guys are seeing there. But just any surprises thus far with the business?

So far, no surprises other than it continues to be as great an opportunity as we thought it was when we wrote the check and closed that day. So our diligence here is pretty well defined, and we do a good job at it. So we tend to dig in and find out a lot about the business during diligence. So we continue to feel very optimistic about the long-term growth opportunities for the brand.

[Operator Instructions] Our next question comes from Steph Wissink of Jefferies.

Ron, this one is for you. It's on the drug channel, I noticed in your prepared comments that you talked about an inflection, I think you said in traffic. I wanted to just give you a chance to talk a little bit more about that channel, which in the past has been a point of pressure. It seems like it actually could be a point of support. So if you could just share a little bit about what you're observing in that channel, that would be helpful.

Sure. So I think the easy observation is that foot traffic is way up in the drug channel as people have gone in for their COVID shots. And that's what the retailers are announcing. I think one of the big players announced strong performance just this week. The more people that show up in a store, the more chance you get to have them take your product off the shelf and buy it. So that's the kind of trend that we're seeing. We're seeing our sales up meaningfully in that channel as a result of that increase in foot traffic. Time will tell how that plays out. But I'll go back to my earlier comment, which is we're focused on making sure that our product is broadly available so that wherever the consumer chooses to buy it, it's there waiting for them. And we're riding that wave in the drug channel right now.

And then I have 2 follow-ups. Chris, maybe one for you, and Ron, the other -- it's a follow-up to Rupesh's other question. So let's start with that one, which is on TheraTears. It looks like the business is run rating better than that $40 million for the year. I'm just wondering if there's any seasonality we should be mindful of the Akorn business? And then, Chris, for you on the balance sheet inventory, I think Ron mentioned that you'd like to have a little bit more, but you've had a couple of quarters of down inventory and still delivering really strong sales. Is there a step function that you've experienced in the working capital velocity of your business that you think you can hold on to into the future? Or do you think that this is just a temporary period that you'll invest more in balance sheet inventory to support the longer-term growth of the business?

Actually, I'll let Chris take both of those questions.

Okay. So from a seasonality perspective, not really around the TheraTears business. If we compare it to our Clear Eyes business, certainly, right now, we're seeing a little bit of benefit as folks are getting back out just like we're seeing with Clear Eyes. But always difficult to call that first quarter after you close an acquisition. So at 12.4%, just slightly above what we had called which I think was around 10% for the period. But Concerning inventory, remember please that in this opening -- or I should say, in the September 30 balance sheet, I've got my new Akorn inventory in there. So my base business is a little bit lower than it looks like by about $5 million. In this environment, we're really looking to just make sure we can support our customers. And so that's the priority and the focus for now as opposed to working capital management and we'd like that number to be higher as we continue through this uncertain time.

Yes. Historically, our #1 focus is on service levels to our retail customers, and our service levels really aren't quite where we would like them to be. So we haven't found that we can support our business at lower levels of inventory. Our financial profile allows us to invest in inventory to have best-in-class service levels. And that's the way we think about it. So we'd like to see more inventory so that we can see our service levels inch up over time.

Our next question comes from Mitchell Pinheiro of Sturdivant & Co.

So are you seeing any ad inflation, any ad spend inflation, given on the digital side, at least the Apple's changes move through the digital industry.

Yes, Mitch. In general, we expect some inflation in the advertising and marketing arena, just like we're seeing it in most other areas of our business, right, in a lot of cases, driven by wage inflation. So we're anticipating it, and we'll continue to pivot our focus on the most effective areas of the investment. So it's something we're thinking about and planning around, Mitch.

Okay. And then just staying on the inflation theme. Obviously, there's inflation and you delineated what the second half impact is going to be. But I was curious whether there were any of your input costs, ingredient costs, anything there that you note is on the inflationary side?

Yes. We've begun to see inflationary pressures begin to creep in, as Chris talked about. And we've been executing price increases. We continue to focus on cost reductions to address them. I think the important thing around inflation for us is that the magnitude of it is $15 million. You're hearing many other CPG companies talk about hundreds of millions of dollars of inflationary pressures that they're chasing. So we're all over it. We may have a little bit of a lapse to get ourselves ahead of it, which our second half outlook reflects. But for the most part, we're focused on it, Mitch.

Is there any -- I mean, any pushback by any of your customers on any pricing conversation?

For the most part, no, right, because it's something that they're hearing from every single one of their suppliers, right? I think we even heard one CPG company talk about 1,000 basis points, whatever it is of inflationary impact. So we're not unique in terms of addressing pricing for our products out there. And again, having leading brands with significant market share puts us in a position to be effective at executing these.

Okay. And then in terms of the recap channel, excluding e-commerce, what was your -- any particular strength there? Anything to call out? Was everything equal or were some better than other?

Yes, Mitch, we called out drug, right, with the increased foot traffic was pretty strong. That was probably -- we've talked about convenience in terms of year-over-year comps as folks get back out and travel, and that's benefited our BC, Goody's brand, but really Clear Eyes brand. So those are probably the big outliers for this quarter.

Okay. You had 3 categories that were sort of, I will say, underperformers, but certainly relative underperformers: Analgesics, Women's Health and Oral Care. Anything particularly you want to -- if you haven't called out before anything else about those categories that were notable?

There's nothing really notable or anything that would impact kind of the expected trends over the remainder of the year or longer term for any of those categories. We've got some oddities of comps. The first quarter for Women's Health last year was an outlier with extremely strong shipments, particularly into e-commerce. So we've got some comp issues here and some timing from quarter-to-quarter, but nothing really to call out.

Okay. And then just one more question. Is the G&A of $27 million, excluding the step up. Is there any -- is that the right level for the back half? Or is there anything unusual in that number in the second quarter? You called it out, I apologize for not hearing.

Yes. No, Mitch, Q2 for us for certain reasons is always higher than other quarters. I did call for the dollars to step down sequentially. But think of G&A for us on a full year basis of about 9.5% and that will get you there. The quarterly flow is really just timing in terms of expenses. And I would think Q3 and Q4 would be pretty comparable.

Okay. And then is -- and I think I missed this, but what was your comments regarding the advertising and marketing spend for the back half?

We've talked about advertising and marketing to be approximately 15% for the year, with 15% in the third quarter.

I'm showing no further questions at this time. I'd like to turn the call back over to Ron Lombardi for any closing remarks.

Good. Thank you, operator, and thanks to everyone for joining us today, and we look forward to future updates. Thank you.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.