Good day and welcome to PROCEPT BioRobotics Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Matt Bacso, Vice President, Investor Relations, for a few introductory comments.

Good afternoon, and thank you for joining PROCEPT BioRobotics third quarter 2023 earnings conference call. Presenting on today’s call are Reza Zadno, Chief Executive Officer; and Kevin Waters, Chief Financial Officer. Before we begin, I’d like to remind listeners that statements made on this conference call that relate to future plans, events or performance are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. While these forward-looking statements are based on management’s current expectations and beliefs, these statements are subject to several risks, uncertainties, assumptions and other factors that could cause results to differ materially from the expectations expressed on this conference call. The risks and uncertainties are disclosed in more detail in PROCEPT BioRobotics’ filings with the Securities and Exchange Commission, all of which are available online at www.sec.gov. Listeners are cautioned not to place undue reliance on these forward-looking statements which speak only as of today’s date, November 01, 2023. Except as required by law, PROCEPT BioRobotics undertakes no obligation to update or revise any forward-looking statements to reflect new information, circumstances or unanticipated events that may arise. During the call, we will also reference certain financial measures that are not prepared in accordance with GAAP. More information about how we use these non-GAAP financial measures as well as reconciliations of these measures to their nearest GAAP equivalent are included in our earnings release. With that, I’d like to turn the call over to Reza.

Good afternoon and thank you for joining us. For today's call, I will provide opening comments and a business update, followed by Kevin who will provide additional details regarding our financial performance and updated 2023 items before opening the call to Q&A. Starting with our quarterly revenue results. We are pleased to report another record quarter with both increased customer utilization and strong system placements. Total revenue for the third quarter of 2023 was $35.1 million, representing growth of 72% compared to the third quarter of 2022. Growth in the quarter was driven by strong U.S. system sales, increased U.S. utilization from our expanded install base, and increased international revenues. As we have previously discussed, we believe our strategy of focusing on outstanding long-term clinical data, gaining reimbursement coverage, and building a top-performing field team have led to consistent growth of the use of Aquablation therapy. The third quarter, we sold 38 robots in the U.S., representing unit growth of 46% compared to the prior year. The number of robot placements in 2023 was driven by growing awareness of Aquablation therapy, and the addition of new capital reps in Greenfield territories. As a reminder, we added 10 new capital reps in late Q4 2022, which expanded sales capacity by 50%. As expected, the capital reps added in the fourth quarter of 2022 have hit their stride as a typical productivity ramp is six to nine months. While we recognize and monitor the challenges of the macro environment very closely, we entered the fourth quarter of 2023 with a robust capital pipeline that continues to grow meaningfully. Given the current hospital capital spending environment, and now having the largest and most senior capital sales force in the company's history, we continue to feel very good about continuing our strong commercial execution…

Thanks, Reza. Total revenue for the third quarter of 2023 is $35.1 million, representing growth of 72% compared to the third quarter of 2022. U.S. revenue for the quarter was $32.3 million, representing growth of 73% compared to the prior year period. U.S. handpiece and consumable revenue for the third quarter was $17 million, representing growth of 113% compared to the third quarter of 2022. U.S. handpiece revenue growth was driven by an increase in the install base of robotic systems. Monthly utilization per account of 6.4 increased sequentially by 5% compared to the second quarter of 2023. U.S. handpiece revenue growth in the third quarter was driven by both strong surgeon interest at new accounts, with most program launches having multiple surgeons. Additionally, we continue to see increased account level utilization over time as we continue to train new surgeons and increase utilization of our existing surgeon base. We shipped 4,873 handpieces in the U.S. in the third quarter, representing unit growth of 112% compared to the third quarter of 2022, with average selling prices of approximately $3,140. In the third quarter, we sold 38 robotic systems, generating total U.S. system revenue of $13.5 million, an increase of 37% compared to the third quarter of 2022. Our U.S. install base at the end of the third quarter is now at 271 systems, which is an increase of 95% compared to the third quarter of 2022. Third quarter system average selling prices were $353,000 and remained within our expected range given quarterly variability. International revenue for the third quarter was $2.8 million, representing growth of 62%. Growth margin for the third quarter of 2023 was 54% compared to 50% in the prior year period. Growth margin expansion in Q3 is primarily due to the increase in revenues and our ability…

Thanks, Kevin. In closing, I want to thank our employees, customers, and shareholders for all their support to help us along our journey to becoming the standard of care for BPH. We will continue to leverage our commercial and clinical investments to execute on our long-term strategy. Have a great day and I look forward to seeing many of you at upcoming investor conferences. At this point, we will take questions. Operator?

Thank you. [Operator Instructions] Our first question will come from Craig Bijou of Bank of America. Your line is open.

Great. Good afternoon, guys. Thanks for taking the questions and congrats on a very strong quarter. I want to start with utilization, as I usually do, and it seems pretty important to you guys. Reza, I appreciate your comments on trends of previous cohorts, but would love to hear as you're adding a number of new systems, how those system utilizations, the newer systems, how they ramp and just a little bit more color there.

Craig. We're going to give us one second here. We just had a fire alarm go off in the building. It's just turned off. I apologize to everyone here. Can you please repeat your question? We're going to reset here. Thank you very much, Craig. Sorry about that.

No problem. All right. So Utilization. So I guess the question just comes down to I wanted to know how you guys are seeing utilization with some of the new systems that you're adding. I appreciate Reza's comments that the older cohorts are still increasing, but I wanted to understand when you place a new system, how you're seeing that ramp.

Thanks Craig. Sorry for the disruption. We are very happy with the utilization we saw in Q3, and some of the underlying trends. I want to talk about those. Historically, Q3 is flat, but we saw in this quarter, we saw an increase. That was number one, our existing surgeons. Generally, existing [Ph] surgeons is flat. We saw an increase in our existing surgeons. We also had the largest number of new surgeons in this quarter that entered, and that contributed to this increase in utilization. And also the retention. So these are the three factors that led to a very good utilization in Q3. I'll let Kevin to add to this.

Yes, it's a good summary. Craig, when we look at new accounts, we are seeing today, and I think it's a testament to our focus on our Aquablation sales rep team and focusing on utilization. So when we launch new accounts today, we typically have two to three surgeons in that account. And again, a lot of that is due to our sales team, but a lot of it is due to general growing awareness and market acceptance of Aquablation. If I go back two years, pre-IPO, most accounts would launch with one surgeon. Now, we're seeing two to three. On top of that, we're seeing many program launches within the third quarter. It was a really nice quarter for new account launches.

And we are also hearing our surgeons telling us that the patients are asking. Awareness among patients has increased and they are asking for this treatment.

Great. That's helpful. And I want to ask also about the sales funnel. You guys have tracked that rather closely. I appreciate you guys expect a sequential pickup in systems in Q4 versus what you saw in Q3. I just wanted to see any changes in the conviction or the confidence that you have in your visibility and any lengthening of sales cycles or anything else that may be capital market or capital purchasing impacted.

I want to answer the first part of your question. The demand is really driven by surgeons. As we have said in the past, once we identify the surgeon champion, it's very difficult to lose that deal. It generally goes to the finish line. There is a demand by surgeons for our technology. We have also increased our sales force this year. It's about 50% larger than the same time last year. Awareness among the surgeons has increased. These are the parameters driving for the capital and that's what gives us confidence. And Kevin to add…

Yes, I think specifically, Craig, to your question, I think we have a higher degree of confidence and conviction today in our capital pipeline than we did when we entered the year. Our guidance still suggests that 55% of all of our sales are going to come in the back half of the year. And now that we are kind of only one quarter left to go in the year, we feel much better about our ability to achieve that number given the times gone by. The second point is this is the first year where we had such a large addition to our capital team. We were really dependent on those folks being productive in the back half of the year. That was not known at the beginning of the year. And I think now we see in our pipeline these reps being productive. We see deals coming into the funnel. We see the same sales cycle. We don't see any lengthening. We see similar close rates. So I think all of those things give us more confidence today than when we entered 2023.

Thanks for taking the questions, guys.

Thanks, Craig. Sorry again about the hiccup there at the beginning.

Thank you. One moment please for our next question. Our next question will come from Joshua Jennings of TD Cowen. Your line is open.

Hi. Good afternoon. Thanks for taking the questions. And congratulations on another strong quarter. I wanted to follow up on Craig's question, Reza and Kevin. Just thinking about 2024, streets just north of 200 million, applies 50% plus, revenue growth. I think you probably had some of the key drivers of strong revenue growth in 2024. I know you're not issuing guidance. I was hoping you could just take us through some of those key drivers and how we should be thinking as we're thinking about updating our models and forecast for 2024.

Thanks, Josh. I'm not providing financial guidance, but as I summarized in my previous remarks, we feel very good about the business going forward, and every metric is moving in the right direction. These are the tailwinds that have a strong pipeline. We saw the increased utilization. United coming on board, down 95% access to this therapy among patients. We demonstrated also a prudent cost control, and with the recent financing, we strengthened our balance sheet combination of these rules. They cost profitability. I also want to mention that we are very early still in this round, whether it's on utilization or robot placement. These are all those parameters that gives us confidence going to 2024. Kevin, do you want to?

Yes, Josh. I mean, the drivers specifically that you referenced. At the end of the day, our business is fairly simple. We sell capital, and the capital is used through what we measure as utilization. Those drivers don't change. In 2024, I do think you see a business, though, that shifts more heavily weighted, obviously, to disposable as we grow our install base. That's point one. Point two, we're obviously aware of the management team. It has a company, the street expectations. If you look at utilization expected of the company in 2024, it's roughly equivalent to what we're guiding to in Q4 of 2023, which I would suggest is a proof point that what expectations are not terribly ahead of even where we're at today. That's point one on utilization. Then point two, we still believe our ability to sell capital is directly correlated to the number of capital reps that we have in the field that are productive. We're going to exit the year probably close to the 35 to 40 range of capital reps, which we think if you just take average productivity, I mean, you could do the math yourself and back into kind of what a system number would look like for 2024. But to Reza's comment, we're very early in our penetration, and therefore, we don't expect diminishing returns as we have capital reps. So I appreciate we're not answering your question directly on 2024, but as Reza mentioned, the growth drivers of the business are in place to allow this business to continue to grow at, I'd say, rates that far exceed most other med device companies.

Now that was very helpful. Thank you. And just to follow up, as you're seeing the AQUABEAM system, the AQUABEAM relational treatment being adopted at centers and deeply penetrating those accounts, becoming standard-of-care at those centers, I was just hoping to get a feel for what's being displaced. Is there a low-hanging fruit in the Resective either approach or technology bucket? TURP, HoLEP, Greenlight Prostatec [Ph], MERS, really broad-based, I guess, replacement of those approaches. I really wanted to ask that and just hear also about just the conversion of HoLEP surgeons and that rate to date in the United States. Thanks for taking the questions.

Thanks, Josh. So when we ask this question from our surgeons, definitely TURP and Greenlight are the ones that we ask them if you didn't use our technology, what else you could use. The majority of the cases are from TURP and Greenlight. And that's because TURP, again, with the data we have still, it was the largest Resective treatment. And as far as the larger prostate, we definitely, we are, physicians use our product for larger prostate. The advantage compared to other therapies is the shorter therapy time, faster recovery, and also not that much dependent on surgeon skill. So these are definitely for larger prostate, the advantage we have is in those areas.

I'd also just add specific to your question on HoLEP. I mean, if you look at the Resective market, Josh, HoLEP is about 10% of the Resective surgical market, maybe something slightly less of that. And the reality of that procedure, it's a very long procedure. It's difficult to perform. It's highly specialized. I don't think anybody would suggest that HoLEP would have the ability to become the standard-of-care over time. So as Reza mentioned, it primarily is TURP and Greenlight. I'm sure we're getting some HoLEP cases, but there's also, I would say many HoLEP loyalists that our growth is not dependent on cannibalizing in the near term.

Great. Thanks again.

Thank you. One moment please for our next question. Our next question will come from Matthew O'Brien with Piper Sandler. Your line is open.

Afternoon. Thanks for taking my questions. And I'll refrain from trying to make a joke about the smoke alarm going off because your business is on fire.

We appreciate it.

First call in the new facility here, but it was interesting. We're good.

Got it. So on the utilization side, I'm just curious about the performance there because, again, in Q4, we're expecting a pretty big step up as far as utilization goes for the existing systems. You grew 5% sequentially in what's typically a seasonally slow quarter. So can you just talk about some of the momentum you're seeing? And again, kind of the Craig's question, across the cohorts are some of the people that have been using you for a while at 10 cases per month on average. And then, what kind of benefit are you baking in for United in Q4 specifically?

Yes. So I think all of your questions point to kind of our comfort around our ability to expand utilization in the fourth quarter. Right. I mean, that's really what it comes down to. And our Q4 guidance implies utilization of about six and three quarters, 6.8 procedures per month per account in the fourth quarter. And when you look at that metric regarding cohorts, so to achieve that in the fourth quarter, we do not need any accounts that purchase systems in 2023 to be at that corporate level. And that means by definition that the accounts that have been with us prior to 2023 are doing north of 6.8. And in many cases, as you pointed out, well north of 6.8. And that is what is expanding utilization in the fourth quarter. I'd also suggest that in BPH procedures, it is an elective procedure. We do expect some normal seasonal tailwinds from our existing surgeons in Q4 as they do more procedures than they did in the previous quarter. And I guess just the last point around kind of how we are comfortable with expanding utilization, our historical growth in 2022 was that the growth we experienced last year in our fourth quarter, the guidance we are giving today is very comparable to that sequential growth. It's about 5% to 6% sequential increase in utilization in Q4 2023, which would be very comparable to what we did in Q4 2022 as well. So the multitude of factors that get us comfortable that we could continue to expand utilization even with a greatly expanding install base in the fourth quarter.

Got it. Appreciate that feedback. And then, Kevin, another one for you. Just more on the margin side of things. Gross margins down just a little bit, not the end of the world. Love to hear what happened there. But then also it looks like the cash burn came down quite a bit. And I know that's an area investors have been focused on. So can you just talk about some of the levers that you're pulling on, on the operating margin side of things and the cash burn side of things? Thank you.

Yes, I'll address both. So first, margins. So those gross margins, they were around our expectations. But as you pointed out, down sequentially. But the main contributor for margin being down sequentially is really the impact of our system ASPs and the impact of that on overall gross margins. If we had capital pricing similar to Q2, our growth margins, in fact, would have been roughly 180 basis points higher, which would have translated to 56% versus 54%. But as we've continually said on previous calls, we do expect quarter to quarter variability on system pricing. And we actually see that rebounding back to 370 in Q4. So we think that's kind of a temporary situation. I'd also point out, while not as material as pricing, we did produce as a company relatively fewer units in the third quarter. And therefore, our average costs were marginally higher. But now that we're fully into our new facility, we do expect production volumes to return to more historical levels. And this won't negatively impact margins in the future. But we feel good, although I appreciate there's quarter to quarter variability, that the trend over time is up and to the right with gross margins. Your second question, I'm glad you asked, on cash. This was as you pointed out from an operating cash flow point, significantly improved over the previous two quarters. We were in the $35 million in Q1, $28 million in Q2. And you saw that number drop below $20 million in the third quarter. And this is purposeful by the company, particularly given our recent equity rate. We feel that, as a business, we're definitely investing in the long-term. We're investing in our commercial team. But at the same time, we're being prudent with our cash. And we understand in this environment that a pathway to profitability and having OpEx discipline is important. It's always important. But particularly in this environment, we believe that we need to show investors that we can grow the top line and demonstrate leverage on the bottom line. And that's what we feel we did in the third quarter. And our guidance suggests on OpEx that that's going to continue in the fourth quarter with relatively flat operating expense.

Very helpful. Thank you.

Thank you. One moment please for our next question. Our next question will come from Richard Newitter of Truist Securities. Your line is open.

Hi, thanks for taking the questions. Congrats on the quarter. Just a couple for me. You mentioned, I think, Kevin, productivity for your capital reps. In the past, I think you said you target that getting north of four to five systems per rep if you're heading into next year with 35 to 40. I mean, is that the right kind of rule of thumb to just be thinking about broad strokes?

Yes, broad strokes is a good rule of thumb. I would remind you that you said to get to that productivity, it does take a rep on average six to nine months, but we believe that productivity is in the ballpark, correct?

Okay. And then can you comment at all on the percent of IDN either orders or I know you said that you're at the highest level of IDN contracting exiting 2Q or entering 2023 maybe. That was the comment. Can you just talk about those percentages and one, what percent are you at and where do you expect to be as you exit the year in terms of IDN as percentage of total orders? And then two, how, if at all, does that impact pricing? Do those reflect multi-system orders and or is there anything you can give us in terms of IDN orders and where they fall on the kind of the range of ASPs that you've delineated in the past between 350 and 400,000? Thank you.

Yes, thanks, Rich. Let me start with pricing. So our IDN relationships do not impact our system ASPs negatively. So I'll just start with that. That's the quarter-to-quarter variability around system pricing is not a reflection of IDN deals. So I'll just start with that one. To your broader question on IDN, we do continue to partner with IDN affiliated hospitals. As we've mentioned, we do believe we're on track to have the majority of all large IDNs under contract by the end of 2023, which for a business at our stage of commercialization is something, we're really frankly proud of as a management team here. And I just think it's a great testament to the technology. With that said, I think you're hearing from other companies that sell capital, and we're not any different. We are not seeing large bulk buys from our IDN partners in 2023. And our guidance is not dependent on any improvement in this environment in Q4. I think when we entered the year, while we said we weren't dependent on large bulk buys, I think we were thinking, we had the possibility to get a few this year, but those just are going to be pushed into 2024. And if anything, I think we view our IDN relationship as a future tailwind for us, because we're able to meet our 2023 capital expectations really without any bulk buys. It's been kind of onesies and twosies negotiating with individual hospitals under their RFP process as opposed to any type of large bulk buys. So none in our current sales in the first half or in the first nine months of 2023, but something we continue to work on and are working on deepening those relationships daily.

Okay, thank you very much.

Thank you. One moment please for our next question. Our next question will come from Neil Chatterjee of B. Riley. Your line is open. Pardon me, Neil Chatterjee, your line is open. If your phone is on mute, please unmute your line. If you're using a headset, please put on your headphones. Pardon me, Mr. Neil.

Go to the next one.

Thank you. One moment. And again, one moment for our next question. The next question will come from Brandon Vasquez of William Blair. Your line is open.

Hi, everyone. Thanks for taking the call. One, maybe a quick clarification question and a little bit about future plans. On the capital rep side, I think you had just mentioned you'd exit this year with somewhere between 35 to 40. Are you able to shore us up on where you are today? And then as you look to next year, I think you discussed before that there's room for further expansion. As you look to 2024, do you hire a cohort for 2024 as we go into the year, or do you hire that cohort in 2024? Any updated thoughts around that?

We're probably, in regards to cadence we're about halfway, to be fair, to where we want to be. So, think of around 35 sitting here today, which means we have another class of probably five coming in here in the next two months. I'd also suggest that in 2024, the plan isn't to stop, but at the same time, I don't think we're in a position to call out the exact number of capital folks we're going to add. As the business gets more complicated and we get into more accounts, it's not just going to be capital reps we hire. We're looking at things like strategic account managers. We're looking at key accounts. We're looking at IDN relationships. So, I think it becomes a little messier so to speak in 2024, but we definitely continue to plan to invest in that business. But we still want to make sure we're investing responsibly, making sure we're not sacrificing outcomes, making sure we're not moving too fast, being very methodical about how we have to keep a little organization.

Okay. Thanks. So, then internationally I mean you guys have had a couple of nice wins, especially in the U.K. You've mentioned that you might step up investments in the U.K. through 2024. Can you talk a little bit about what those investments are, when that can accelerate? I mean, you have good reimbursement there. You have endorsements. You're making some investments. Is there any reason that U.K. opportunity can't be a high-growth area or as high of a growth of an area that we're seeing in the U.S?

Definitely, we are very pleased with another solid quarter we have from international. Our international strategy has always been to market development and working with KOLs and increase awareness. As you mentioned, recent announcement by NICE, having this third arrangement is a great driver and catalyst for our product in the U.K. For that, we will increase our sales infrastructure in the U.K. And international, definitely Japan staying more focused on U.K., our immediate action will be increasing infrastructure. But, I'm going to let Kevin...

I just think the only point I'd add to Reza's comments is I don't believe our commentary around investing more in the U.K. is going to change kind of the OpEx leverage of the business. So, I think we're investing in the U.K., but it will be absorbed into the run rate of the company as opposed to anything materially incremental if you're thinking about it from an OpEx standpoint.

From an opportunity point of view, international, we are targeting those geographies that is a great market. We see international as a great opportunity, but we are moving very methodically and making sure we have the endorsement and KOL and awareness in place.

Got it. Thanks a lot for taking the questions.

Thank you. One moment for our next question. Our next question will come from Neil Chatterjee of B. Riley. Your line is open. So, Neil Chatterjee, your line is...

We'll send Neil a separate note. Why don't we keep moving here? I think Neil's having technical issues. We'll try and...Let's put him at the end and see what happens.

Okay. Thank you. One moment please for our next question. The next question will come from Nathan Treybeck of Wells Fargo. Your line is open.

Hi, guys. Congrats on the great quarter. I just want to...Can you just touch on the drivers of system ASP variability quarter-to-quarter? I think generally there were expectations that ASP will be down, sequentially in Q1 and then kind of stable Q2 through Q4. So, maybe if you could just touch on what was driving the variability? Thanks.

Yes. Thanks, Nathan. So look, we've mentioned this on previous calls, and we have talked kind of about our overall mission to partner with our hospital customers, drive procedure growth, and gain market share. And, we do have internal limits for so to speak on pricing. But at the same time, we are willing to negotiate on capital. And if that means we can get a system in sooner, if we have a committed surgeon that we know is going to do a lot of volume, we will be willing to negotiate on pricing. And I think you are going to start to see in our business some seasonality, not only in system sold, but also in system ASPs. And it appears to us that Q1 and Q3 appear to be, I would say, a weaker capital quarter where, we've seen ASPs now be roughly in the 350 to 355 range. But we saw Q2, as you pointed out, at 370. And when we look at the funnel in Q4, we see an increase in Q3. So I do think there's just going to be some quarter to quarter variability. But at the same time, when we make the decision on price, it's always in light of the bigger opportunity and how fast can that hospital become an Aquablation standard-of-care center, so to speak. And that's a tradeoff, we're willing to make. And it's individual negotiations with each hospital. What we don't have as a management team, any concerns kind of about our long-term capital pricing and our ability to get a fair price and a fair margin for our system.

Okay. Thanks for that. And then in terms of just system sales outside the U.S., they were down pretty meaningfully quarter-to-quarter. Can you just talk about what drove this and I guess your outlook for Q4 and then maybe into 2024? Thanks.

It's timing, Nathan, to be honest. I mean at these volumes if you think of European customers particularly in capital, I mean, I think the seasonality in Q3 is even more pronounced than the U.S., quite frankly. We did see strong utilization overseas, even with that seasonal factor. But when we look at the pipeline, we had a very robust Q2. You're talking about relatively few units as well, right? And we see a good funnel in Q4 and I would expect capital to rebound in Q4 based on what we see in the pipeline. But we're not reading into anything other than timing on capital internationally.

Great. Thanks. Thank you very much.

Thank you. And one moment for our next question. Our next question will come from Mike Kratky of Leerink Partners. Your line is open.

Hi, everyone. Thanks for taking our question. Can you provide a little more color on next steps for Aquablation in prostate cancer? How are you thinking about the overall size of that market opportunity and just your level of confidence that that could be an effective treatment option for patients?

Thank you for the question. We are very excited about the cancer opportunity. But this is very early. And the reason we started this study, as we mentioned, from the very beginning of the company, they were asking us to enter this segment. And because this is the same anatomy, same procedure, and the same surgeon, and it made sense considering some of the data we had gathered in our FDA trial on the procedure. If we can show similar results in the cancer treatment, this could be a great opportunity for millions of men who are sitting on the sidelines. But again, this is very early. This is a great opportunity very early. It makes perfect sense for us to have that as our next indication.

I'm going to add, even though you didn't ask, I think the beauty of this indication for PROCEPT is the project currently doesn't require any material increases for R&D spend or R&D group. This is purely a clinical effort over the next one to two years, which is nice as we get to move forward and make a lot of progress. But keep 99% of the organization's resources and focus on our opportunity in BPH. So we're really excited about it.

Understood. Thanks.

Welcome. Glad to have you on board.

Thank you very much.

Thank you. This will end our Q&A session on the call. I would now like to turn the conference back to the CEO, Reza Zadno, for closing remarks.

For attending our earnings call, we look forward to seeing you and speaking with you in the future conferences. Have a very nice day.

This concludes today's conference call. Thank you all for participating. You may now disconnect and have a pleasant day.