Proto Labs Q2 2024 Earnings Call Transcript

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Provided by Quartr
August 2, 2024

Key Takeaways

  • Proto Labs reported Q2 2024 revenue of $125.6 million, up 2.8% year-over-year in constant currency, and first‐half non-GAAP EPS grew 25%, driven by improved AI-enabled pricing, automation and cost management.
  • For Q3 2024, management expects revenue of $117 million to $125 million and non-GAAP EPS of $0.29–$0.37, reflecting continued manufacturing contraction and softer customer ordering patterns in June and July.
  • The number of customers using Proto Labs’ combined factory and network offer rose over 50% in the last 12 months, and revenue per customer contact increased 7% year-over-year as larger orders shift toward production work.
  • A major reorganization separates regional revenue teams from a new global operations group to enhance customer engagement and fulfillment, eliminating regional GM roles and impacting two executive positions.
  • Proto Labs highlighted persistent headwinds—manufacturing PMI in the US hit an eight-month low and Eurozone activity has contracted for two years—pressuring customer demand amid higher interest rates and cost-cutting.
AI Generated. May Contain Errors.
Earnings Conference Call
Proto Labs Q2 2024
00:00 / 00:00

There are 8 speakers on the call.

Operator

Greetings. Welcome to Proto Labs Second Quarter 20 24 Earnings Call. At this time, all participants are being in a listen only mode. Question and answer session will follow the formal presentation. At this time, I'll now turn the conference over to Jason Trankman, Vice President and Corporate Controller.

Operator

Jason, you may now begin your presentation.

Speaker 1

Thank you, and welcome everyone to Proto Labs' 2nd quarter 2024 earnings conference call. I'm joined today by Rob Bedore, President and Chief Executive Officer and Dan Schumacher, Chief Financial Officer. This morning, Proto Labs issued a press release announcing its financial results for the Q2 ended June 30, 2024. The release is available on the company's website. In addition, a prepared slide presentation is available online at the web address provided in our press release.

Speaker 1

Our discussion today will include statements relating to future performance and expectations that are or may be considered forward looking statements and subject to many risks and uncertainties that could cause actual results to differ materially from expectations. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10 ks for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward looking statements made today. The results and guidance we will discuss include non GAAP financial measures consistent with our past practice. Please refer to our press release and the accompanying slide presentation at the Investor Relations section of our company website for a complete reconciliation of GAAP to non GAAP results. Now, I'll turn the call over to Rob Fedor.

Speaker 1

Rob?

Speaker 2

Thanks, Jason. Good morning, everyone, and thank you for joining our Q2 earnings call. Despite operating in a challenging macro environment, on a year over year basis Proto Labs' first half twenty twenty four revenue grew 2% and non GAAP earnings per share grew 25%. In an environment in which manufacturing activity has contracted in the U. S.

Speaker 2

And Europe, we continue to take share and improve our industry leading profitability. We've improved the efficiency of our AI enabled pricing algorithms, increased the automation in our digital factories and managed our costs with volume. No business is immune from the manufacturing headwinds currently at play in the market, but our resilient model has produced growth and improved profitability. In the Q2 of 2024, we made good progress against our 2 strategic initiatives, increasing the number of customers using our comprehensive offer and driving higher revenue per customer through larger orders. Our customers continue to recognize, adopt and benefit from our comprehensive offer fulfilled through both Bakria and network.

Speaker 2

As we previously discussed, our comprehensive offer enables customers to use Proto Labs as a single source manufacturer throughout the product lifecycle from prototype to production to end of life. We are still in the early stages of customers fully utilizing our combined offer which presents an incredible long term growth opportunity and we're focused on driving adoption. In fact, in the last 12 months, the number of customers using the combined offer is up over 50% year over year. We're also focused on driving higher revenue per customer through larger orders across services. While large one time orders decreased slightly compared to the Q1, 2nd quarter revenue per customer contact increased 7% year over year.

Speaker 2

There will be fluctuations in larger order quantities quarter to quarter as we continue to shift toward more production work, but we strive to increase revenue per customer contact over the long term and I'm pleased with this result. Let me now share an example of the value we bring customers with our unique capabilities. Medical device company called Solmedex was working to launch a new water treatment product for dental offices. Time to market was critical for this product and it was also important that the learnings captured in the prototype phase were transferred to the production of these critical components. SOLMETICS was looking for one supplier to partner with on prototyping through production.

Speaker 2

With our combined factory and network fulfillment model, Proto Labs was the perfect fit. We manufactured prototypes through both 3 d printing and injection molding in our digital factories, enabling SOLMedix's innovation through our world class lead times. We then fulfilled injection molding production quantities by the network. So prototyping the factory production through the network. Solmedix is fully utilizing Proto Labs combined offer to add value to their customers and their own business, which aligns with our 1st strategic initiative.

Speaker 2

As for our 2nd strategic initiative, our relationship with SOLMEDIX has also increased our revenue per customer contact because of the production work. So this is really a wonderful example of how our combined factory and network offer enables a customer to gain value by using Proto Labs as a single source manufacturer throughout the product lifecycle. While we are seeing a growing number of customers use Proto Labs for both prototyping and production, there are still many cases in which customers order prototypes from Proto Labs and eventually go elsewhere to procure their production volumes. Capturing additional production work from existing prototype customers is a massive growth opportunity for Proto Labs. However, we're currently operating in an environment that is challenging and customers have been impacted by macro factors including higher interest rates, reduced demand for manufactured goods, broad based cost cutting efforts and moderating capital expenditures.

Speaker 2

As I mentioned earlier, we grew in the first half of twenty twenty four, while U. S. And Europe manufacturing activity contracted. In fact, manufacturing indices have indicated contraction consistently for the last 2 years in the U. S.

Speaker 2

And the Eurozone. In the U. S, we have seen continued slowing growth in orders for core capital goods, industrial machinery and other durable goods since the post COVID surge in 2021. And just yesterday, we learned that the U. S.

Speaker 2

Manufacturing PMI in July hit an 8 month low as manufacturing activity enters deeper into contraction. Despite these persistent challenges, we continue to focus on what we can control and are taking action in order to accelerate our growth. While we showed growth in the first half of the year amidst the constrained broader manufacturing environment, I am not satisfied and believe Proto Labs can grow much faster, faster than we have in the past few years in fact. We operate in a large addressable market and Proto Labs capabilities are unique. So in order to unlock accelerated growth, we're making changes to our internal structure.

Speaker 2

I'd like to take a few minutes to walk you through these changes that we believe will better position the business for improved financial performance in the long term. Going forward, we're separating revenue generation from the operational and fulfillment work. Our regional organizations will now be entirely focused on revenue and ensuring the best possible customer engagement and experience. And we will have a global operations organization with the sole responsibility of seamlessly fulfilling customer part orders as a single unified offering encompassing both factory and network. This change enables the regional revenue teams to focus on executing our strategy of serving more customer needs across the product lifecycle and accelerating revenue growth.

Speaker 2

The new org structure also ensures complete integration between factory and network. The global operations organization will also allow us to more efficiently serve customers' production needs. So I'm excited about this change. But as a result of the reorganization, we've eliminated the regional general manager roles, impacting 2 of our executive team members. Mike Kennison, former GM of the Americas, has transitioned to a newly created position as Head of the Global Operations Organization.

Speaker 2

In this role, Mike is now responsible for our global manufacturing strategy focused on world class global fulfillment through both factory and network. Mike has nearly 30 years of manufacturing operations leadership experience and led operations for Proto Labs in the Americas from 2006 until being named the GM of the Americas in 2021. So Mike brings a wealth of experience in operational leadership and I am confident that he is the right person to lead the new operations organization. As noted in our SEC filing on July 24, Klaas is no longer GM of our EMEA region. Led our European business for almost 7 years and we are very thankful for his contributions.

Speaker 2

I am personally thankful for Bjorn's leadership over that period and I truly wish him the best in his future endeavors. But I'm very excited about the potential growth that our new regional revenue organizations will drive. Going forward, the Americas revenue organization will be led by Sean Farrell, our current VP of Sales in the Americas. Sean joined Proto Labs in 2023 and has extensive leadership experience in B2B sales. The Europe revenue org will be led by Piotr Horowitz, currently Managing Director of Proto Labs Network, which he joined in 2022.

Speaker 2

Proto Labs Network has performed very well under Piotr's leadership and in his new role he will draw on prior successes in several B2B sales leadership roles. The leadership of Shaman Pyotr to experienced sales leaders with strong track records of driving growth is a key reason for my optimism that this reorganization will enable our sales teams to accelerate our revenue. We believe our strategy will continue to drive strong top and bottom line results and we've aligned our org to support that strategy, accelerate our next phase of growth and improve efficiency while diligently managing our costs. I am confident these changes will enable us to serve customers from prototyping to production and accelerate customer adoption of our comprehensive offerings. These changes make me even more excited about the future of Proto Labs.

Speaker 2

Proto Labs delivered year over year growth and strong profitability and cash flow in the first half of twenty twenty four despite a challenging operating environment. As we move into the back half of the year, our priorities remain intact and we believe our unique combined offer, industry leading brand and reputation for reliability and quality will continue to provide advantages in a very dynamic marketplace. I am incredibly proud of our team's deep commitment to serving our customers and executing on our strategy. Thank you to all Proto Labs employees. I'll now hand it over to Dan to cover our financials in detail as well as our outlook for the quarter.

Speaker 2

Dan?

Speaker 3

Thanks, Rob, and good morning, everyone. Our financial results begin on Page 7 of the slide presentation. 2nd quarter revenue of $125,600,000 grew 2.8% year over year in constant currencies. Proto Labs network revenue was $24,700,000 in the quarter, up 22.7% in constant currencies. Turning to revenue growth by service in constant currencies outlined on Slide 9.

Speaker 3

2nd quarter injection molding revenue was flat year over year. Injection molding orders from larger project customers continued to grow while smaller prototype orders declined. CNC Machining grew 6% year over year driven by continued strong growth through Proto Labs network. 2nd quarter 3 d printing revenue grew 1% year over year. Sheet metal revenue was flat year over year and up 10% compared to the Q1.

Speaker 3

Turning to Slide 10, 2nd quarter non GAAP gross margin increased 10 basis points sequentially to 45.7%. Proto Labs network non GAAP gross margin was 32.8%, up from 31.7% in the first quarter, factory non GAAP gross margin was unchanged sequentially. Non GAAP operating expenses were flat compared to the Q1 of 2024, as a decrease in employee related expenses was offset by an increase in various discretionary costs. As a result, 2nd quarter non GAAP diluted net income per share was $0.38 at the top end of our expectations and down $0.02 compared to the Q1 of 2024. The sequential decline was due to lower volume partially offset by a slight improvement in gross margin.

Speaker 3

As Rob mentioned earlier, our first half twenty twenty four adjusted EPS increased 25% over the first half of twenty twenty three. Our industry leading profitability continues to improve year over year, driven by increases in both factory and network gross margins. Total Proto Labs non GAAP gross margin in the first half of twenty twenty four was 45.6%, up 190 basis points year over year. Transitioning to cash flow and balance sheet highlights on Slide 11. Cash flow from operations was $14,400,000 Our business model generates best in class cash flows, allowing us to invest in growth and return capital to shareholders.

Speaker 3

We repurchased $10,900,000 of common shares in the quarter. On June 30, 2024, we had $112,900,000 of cash and investments and 0 debt. Our outlook for the Q3 of 2024 is outlined on Slide 13. This outlook reflects a more pronounced challenging operating environment than we have experienced in previous quarters and manufacturing contraction across geographies that we operate. Customer ordering patterns softened in June and that has continued in July.

Speaker 3

We expect to generate revenue between $117,000,000 $125,000,000 Order rates in early July were low due to the U. S. Holiday. Historically, we have seen an acceleration in daily rates as the Q3 progresses. Accordingly, the guidance reflects a pickup in August September.

Speaker 3

We expect foreign currency to have a $200,000 favorable impact on revenue compared to the Q3 of 2023. Moving to earnings guidance. We expect to incur $500,000 of one time costs associated with the reorganization that Rob mentioned earlier. We anticipate non GAAP add backs in the 3rd quarter to include stock based compensation expense of $4,400,000 and amortization expense of $900,000 We currently estimate a non GAAP effective tax rate between 22% 23%. In summary, we expect 3rd quarter non GAAP EPS between $0.29 $0.37 To reiterate, Rob mentioned earlier that we are not satisfied with our recent performance and believe ProLabs can grow much faster.

Speaker 3

As a result, we are taking action. The organizational changes Rob described represent a new structure to support our strategy and accelerate our revenue growth in the long term. Regional revenue teams will be better positioned to focus on the customer and serve them throughout the product lifecycle. The global operations organization will focus on driving efficiencies and fulfillment as a single unified offering via factory and network. We believe this new structure will improve the customer experience and accelerate growth.

Speaker 3

We are focused on efficiencies across Proto Labs, not just through fulfillment. As such, we will continue to be prudent with our expense management and maintain best in class profitability. Earnings are a key differentiator for Proto Labs and we will continue to drive that and preserve our advantage. That concludes our prepared remarks. Operator, please open the line for questions.

Operator

Thank you. We'll now be conducting a question and answer And our first question will be coming from the line of Brian Drab with William Blair. Please proceed with your questions.

Speaker 4

Morning. Thanks for taking my questions. I guess I just was hoping we could start with the reorg and I'm not sure I caught all of it the first time through. So I was wondering, Rob, if you could just elaborate on what you're doing and what the impetus is for it and how it accelerates growth? And then like a follow-up also is, what it sounds like the team is slightly smaller now and what kind of what is the potential impact in the medium term on margins or cost takeout?

Speaker 2

Yes, sure. Thanks for the question, Brian. So the purpose of the reorganization is to really focus us around serving our customer even better than we have been and more holistically, and it does that in several ways. So one, we're moving from regionally organized where we had all our P and Ls were regional in the U. S.

Speaker 2

And in Europe and we had general managers, right, who were overseeing that. And that came from our old model of really fulfilling in the regions where we were going to market from the factory business. We're now moving to a global operations organization, right, where whether it's factory or network, we've got one unified organization whose job it is to bring our broad comprehensive offer to every customer in a unified way so that we can really ensure that we're giving our customers the best experience and full exposure to our full capabilities from an operation standpoint and that we can then find opportunities to drive productivity in that. From a go to market standpoint, now we've got revenue on customer facing teams in each region focusing on driving customer demand in a unified way with they'll be having single unified incentive plans and really just focusing on bringing that offering to our customers even more effectively than we had been. So that's the rationale for the reorganization and we're very excited about it here internally.

Speaker 2

You asked about my

Speaker 4

Yes, I asked about the cost. But before we get to just maybe an example of a customer benefiting from this reorg would be helpful. Is this the just how this would benefit Proto Labs and the customer, I guess. But I'm just picturing like maybe it's a customer in Europe, for example, who is doing a lot of product development activity and running fast with the factory, but then they're moving to production and then maybe you're going to use the network and that same team then will provide a more seamless customer experience and suggesting that they move to the network for some higher volume production work that maybe will be done even in Asia or something, but it's all more holistically offered. Is that kind of am I on the right track at all

Speaker 1

there?

Speaker 2

You got it exactly, right. So it's one unified team, they're seeing the full scope. We removed the need for handoffs and therefore we can just serve the customer more efficiently with that comprehensive offer.

Speaker 3

Ryan, what I would also just highlight, you've got a team that is just focused on the customer. They're just focusing on getting the customer what it needs, what it wants, right? And that could be in terms of our customers, that could be the fastest speed prototype out of our CNC facility or that might be somebody who's in production and they need that fulfillment out of the network. And they're not worried about, oh, I need to get so many revenue into one fulfillment option or another. They're just worried about getting the customer what they want.

Speaker 3

The operations organization is then fulfilling that in the most efficient way possible through our broadest kind of scope of fulfillment options that are available. So it is narrowly focusing our organization on the things that matter to drive success to the customer.

Speaker 4

Yes, that makes sense. Okay, thank you. I've got a couple more questions, but maybe I'll just ask one more now. How do you foresee in the next year or so the trend in your customer count going because it has been challenged, right? The customer count is down.

Speaker 4

I know that your revenue per customer is up nicely because of the network strategy. But do you think that ultimately like that you're going to be able to get that total customer count kind of reverse course and start growing again?

Speaker 2

Yes, we absolutely do. And our focus is on driving that and driving overall growth, right, by improving our revenue per customer. Now, of course, we all understand that this is a difficult macro environment. And as you talk to our customers who are manufacturers, they're dealing with high interest rates, inflation, uncertainty politically because of elections, uncertainty because of trade policy, etcetera. So many of them are having a difficult time in this period.

Speaker 2

And I attribute what we're seeing with total customer count, reflection of that kind of macro. So we're driving what we can drive and driving what we can control around serving our customers better about being for them, being there for them throughout the product lifecycle. I think we have a tremendous opportunity for growth as we go forward. Last year we served 53,000 customers. They came to us for their prototyping.

Speaker 2

They've told us that they want to use us more broadly across the product lifecycle. We are working hard to get them to be adopting that. We saw 50% growth year over year in customers using us in that way. That alone is driving significant leverage and increase in our average revenue per customer. So our focus is on better serving the customers.

Speaker 2

We reorganized to really make us exceptional at doing that so that we can grow in the long term and that's what we're focused on right now. Thank you.

Speaker 5

All right.

Speaker 4

Okay. Thank you very much.

Speaker 2

Thanks, Brian.

Operator

Our next questions are from the line of Troy Jensen with Cantor Fitzgerald. Please proceed with your questions.

Speaker 5

Gentlemen, congrats on a good Q2 in a tough environment.

Speaker 3

Thanks, Greg.

Speaker 2

Maybe just a couple

Speaker 5

of questions. You're very welcome. For Daniel, can you talk about what you think gross margins is going to look like with kind of the midpoint of the guidance range for Q3? Then also following up on Brian's question about cost takeouts. Do you think OpEx is going to be up, flat or down sequentially on an absolute basis here in September?

Speaker 3

Yes. So with the middle of the guidance range, I would expect gross margins to be down slightly quarter over quarter. We are still pushing efficiencies automation through our factory and continue to working the algorithm on the network side. But there is going to be some pressure from the volume. So I would see the gross margin down slightly quarter over quarter.

Speaker 3

From an operating expense perspective, I would expect operating expenses to be down slightly quarter over quarter as well. I think if you factor those things in, you get to the middle of our guidance range from an EPS perspective. Okay. Was there a second part to that question or did I answer it?

Operator

Well, there is a follow-up

Speaker 5

to that Daniel. Okay. And I'll take one of you guys actually. But just the hubs business, I know on a year over year basis, it's been growing nicely, but the last four quarters we've been stuck in kind of $23,000,000 to $25,000,000 I know your biggest competitor out there is growing significantly faster. So can you just talk about share shifts or kind of why Hub isn't growing as fast as maybe some of the others out there?

Speaker 2

So I think our focus has been on really serving the customer holistically and driving production with them. And I think we've seen that that has been quite successful for us, whether that's in injection molding or in CNC through the network. I believe that long term we are going to be able to see really strong growth in that as we continue to expose that to our customers. Of course, right now in this environment, there's clearly headwinds for customers in terms of the use cases and their adoption. And so I think that that's affecting us, right.

Speaker 2

We're not independent of the overall market.

Speaker 5

Got you. That's fair. Okay, so good luck here in Q3.

Speaker 4

Thanks, Rick.

Operator

Our next question is from the line of Jim Ricchiuti with Needham and Company. Please proceed with your question.

Speaker 6

Hi, thanks. Good morning. So if we think about this reorganization, it appears to be more of a redeployment of resources as opposed to as you go through this process. Would you anticipate any additional investments having to be made? And how soon do you think you would anticipate seeing the benefits of the reorganization or at least we'll see some of it be able to see the benefits?

Speaker 2

Yes. Thanks for the question, Jim. So the purpose of the reorganization again is really revenue focused and it is about redeploying our resources in the most effective way, make sure that we are operating seamlessly as one team as we face the customer and as we work to fulfill their orders and fully leverage our full global capabilities, right? So that's really what it's about. We believe that longer term, this will set us up to find additional there?

Speaker 3

You? Jim, when I look at we grew EPS 25% through the first half of the year, but we only grew revenue 2 percent, right? And growing in a tough environment is good, but as Robin stated earlier, we're not satisfied with that level of growth. And realigning and getting the organization focused on the right things for the customer are extremely important to us in order for us to really grow meaningfully, grow through production, grow through improved customer experiences. And so this alignment does this.

Speaker 3

With that growth, right, over time, we will see a pickup in margins as our growth numbers get larger and larger. The other thing I would tell you is streamlining into a unified operations organization will have a longer term benefit and we'll see efficiencies through that streamline over the longer term.

Speaker 6

Got it. Thank you. The slowing that you called out in June and in July, it seems to be pretty consistent with what we're hearing out there. But I'm wondering if you could provide any additional color. It appears to be in both your major geographic regions.

Speaker 6

Any other color you could provide in terms of the market verticals where you're seeing some changes?

Speaker 3

Yes. So Jim, we saw a slowing at the beginning of June. And honestly from the desk I was sitting at, I was like, okay, well, there'll be some pickup before the 4th July. Before people go on holiday, they're going to put their orders in and that didn't that really did not happen. Then after the 4th July, while we saw increasing order rates after that U.

Speaker 3

S. Holiday, they were not to the increasing level that we've seen in prior years. As we talk to our sales people about what's going on, I think generally what we're hearing is starting in June, as you talk with a customer about closing a project and so forth, it would go through more approval cycles. There was more delay and trying to get an answer to close an order. And that type of hesitancy continued into July.

Speaker 3

And so that's the environment in which we're playing in, but we're still focused on solving our customers' problems with what we have and driving the growth and capturing as many of the opportunities that are there.

Speaker 2

So you asked also about industries. I would say that we're seeing this to be pretty broad based and affecting most of the industries that we serve. But I would just also add, Jim, that this has been a tough environment for the last 2 years in the U. S. And in Europe.

Speaker 2

And I think we've proven that we can outperform in this environment. We grew all of last year. We grew in the first half of this year. We've been executing our discipline around cost management and been able to expand margins in this environment. I think if you look back in our history in strong economies, we outperformed GDP by multiples.

Speaker 2

So I think we have a very robust business. We are profitable. We are strong cash generator. We carry no debt. We are focused on serving our customers best as possible in any macro economy and we're driving what we can control, which is to make sure we serve our customer in the best way possible.

Speaker 2

We will absolutely weather this storm and when the cycle improves, I expect we will be demonstrating strong growth.

Speaker 6

Got it. That's helpful. Best of luck going forward. Thank you.

Speaker 2

Thank you.

Operator

Our next question is from the line of Greg Palm with Craig Hallum Capital. Please proceed with your question.

Speaker 7

Yes, good morning. Wanted to just dig in to that July comment a little bit more. Dan, it sounded like it sounded based on your past answer that maybe orders picked up a little bit in July. But I think what you said was the guidance was based on what you saw in July and assumes an improvement or recovery in August September. Those don't exactly tie out because I think that would assume that July trends were pretty awful.

Speaker 7

So can you maybe just tie that out if you can?

Speaker 3

Yes. It's not a recovery. What I'm talking about is normal seasonality patterns that we see on a lower base, right? So if you draw that trend across August September, right, August September will be lower than what we had last year, which is why the guide is down year over year, if that makes sense, Greg.

Speaker 7

Okay. I mean, could you give us any sense in terms of like quantifying the declines in July and what's baked into the guidance or at least sort of ballpark?

Speaker 3

No. We just give guide on the overall quarter, right? And not specifically on what is month to month. But I would say in general, the decline in July is consistent with what the middle of the guide is year over year.

Speaker 7

Okay. And I'm curious, under this new organizational change strategy that you talked about, does it change how you view revenue by service? For instance, sheet metal, which has been declining basically every year since that business was acquired. And even if I look back at 3 d printing, which was historically a pretty good grower and it's kind of stagnated here the last couple of quarters. I guess what I'm trying to figure out is how much of this is due to cyclical versus structural reasons?

Speaker 7

And is there any focus on either deemphasizing that further or walking away from certain processes? Just would like to get a little bit more color there.

Speaker 2

Yes. Thank you for the question. So in terms of the reorganization, again, this is about how can we serve our customers holistically services that we are bringing to market. And the services that we are bringing to market and we want to continue to be able to bring to market all services to meet the needs of our customers as effectively as possible. Certainly, we have some services that are performing better than others in this macro environment, and we are working to drive and improve our overall revenue.

Speaker 2

And that's really where my focus is.

Speaker 7

So I guess, I mean, do you think some of the organizational changes could help reaccelerate activity in some of those lower performing segments then? Is that the whole?

Speaker 2

Absolutely. Absolutely.

Speaker 7

Yes. Okay. All right. I will leave it there. Thanks.

Speaker 3

Thanks, Craig.

Operator

Thank you. This will conclude our question and answer session and also conclude today's conference. You may now disconnect your lines at this time. Thank you for your participation.

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