Thank you for standing by and welcome to the Colfax Third Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advice that today's conference is being recorded. [Operator Instructions]. I would now like to hand the conference over to your speaker today Mr. Kevin Ross. Thank you. Please go ahead sir.

Good morning everyone and thank you for joining us. My name is Terry Ross and I'm Colfax' Vice President of Investor Relations. Joining me on the call today are Matt Trerotola, President and CEO; and Chris Hix Senior Vice President and CFO. Our earnings release was issued this morning and is available on the Investors section of our website colfaxcorp.com. We will be using a slide presentation to walk you through today's call which also can be found on our website. Both the audio and the slide presentation of this call will be archived on the website later today and will be available until the next quarterly earnings call. During this call we'll be making some forward-looking statements about our beliefs and estimates regarding future events and results. These forward-looking statements are subject to risks and uncertainties including those set forth in our SEC filings. Actual results might differ materially from any forward-looking statements that we make today. The forward-looking statements speak only as of today and do not assume any obligation or intent, and we do not assume any obligation or intent to update them except as required by law. With respect to any non-GAAP financial measures made during the call today the accompanying reconciliation information relating to those measures can be found in our earnings press release and today's slide presentation. Now I'd like to turn it over to Matt who will start on slide three.

Thanks Terry and good morning. We are pleased to report another strong quarter achieving the upper end of our earnings commitment in Q3. In addition, we completed the pivot of our new Colfax portfolio at the beginning of Q4. With the sale of the Air & Gas Handling business. We remain on track to deliver our guidance for the year and Chris will walk you through our financial outlook later in the presentation. Our Medical Technology segment accelerated for the second quarter in a row with organic growth improving sequentially. And we continue to focus on driving near-term operational improvements. And we're off to a strong start on our CBS journey with DJO. Our Fabrication Technology business posted another quarter of margin improvement up 290 basis points for the prior year in spite of softer conditions and somewhere end markets. We're on track for a year of global share gain and very strong margin progress. On Slide 4, you can see the continued growth achieved at DJO. The business organically grew 4.5%, up 100 basis points from the second quarter an early indicator of the growth potential over time. The Prevention and Rehabilitation product lines grew year-on-year by 3% marking the return to positive growth for these businesses. The Reconstructive product lines delivered 8% core growth with continued double-digit growth in the surgical businesses. Adjusted EBITDA margin was up 200 basis points sequentially from the second quarter, driven by lower costs and higher productivity. Seasonally stronger volume in the fourth quarter is expected to bring further margin benefit as we close out the year. On Slide 5, you can see DJO's improving growth performance and the potential that attracted us to this business. The third quarter was another step-up for the business and we now expect even stronger organic growth…

Well, thank you Matt. Slide 9, shows our results on a continuing operations basis which excludes the Air & Gas Handling business that was divested immediately following the end of the quarter. Year-over-year Colfax was up sharply in all measures reflecting the acquisition of DJO and our pivot to a higher growth more profitable company. We posted organic growth in the quarter as a result of improvements at DJO and effective price cost management at ESAB that together more than offset ESAB's volume decrease. Gross margins were materially higher due to the structural step-up from DJO and the strong margin performance by ESAB both of which also contributed the higher operating margins. We continue to invest in DJO operating improvements to quickly return the business to healthy growth, which also has a balancing effect on the pacing of the margin improvements. Operating performance for the quarter was slightly ahead of expectations and contributed to our $0.50 of adjusted EPS. In the quarter, we had a 26% tax rate as we worked our way through the Howden divestiture efforts. We are expecting the rate to return to the low-20s in Q4. Looking forward to the full year, we are reaffirming our guidance range of $1.90 to $2 per share of adjusted earnings for the year. I also want to highlight some important balance sheet developments. When we completed the Air & Gas Handling divestiture at the beginning of the fourth quarter. We use the 1.6 billion in cash proceeds to pay down debt. In the quarter, we also closed out another large pension creating a non-cash charge of 33 million in our GAAP results. With this move coupled with many other efforts, including divestitures. We have reduced our pension liabilities by about 80% in recent years, contributing to our expected higher cash flows next year. Concluding on Slide 10, this has been an exciting quarter at Colfax, we successfully divested the air and gas handling business and sharply reduced our leverage. Our new portfolio is structurally more profitable, let's expose the cyclical headwinds enable to generate more consistent cash flow. Our existing ESAB business continues to execute to take share and make strides in its long-term journey of profit improvement. DJO has clearly returned to growth reflecting market leadership operating improvements and innovation. We expect to finish the year on a high note and are reaffirming our guidance. 2019 is a breakthrough year at Colfax. Operator we'll take questions now from the callers.

[Operator Instructions]. Our first question comes from Jeff Hammond from KeyBanc Capital Markets. Your line is open.

Just a couple of housekeeping items to start. Can you give us kind of pro forma leverage since the deal didn't close by the time you, I guess your quarter end? And then just on free cash flow. I don't know if there's some noise in there around Air & Gas, but maybe give us a better sense of free cash flow for the go forward businesses?

So we're expecting the leverage pro forma to be roughly in the neighborhood of 4 turns or 4x leverage on a pro forma basis. And free cash flow that we see in the quarter to your point had a bit of noise and it's related to the divestiture of Howden and so on. As we look into Q4 we're going to have a little bit more of that as we pay taxes related to the Howden divestiture and have some other transaction fees and costs. If you look through all of that we expect to see the free cash flow in the quarter being in somewhere on a clean basis of say $70 million to $90 million. And for next year we're confident that we can generate the $250 million or more that we previously communicated.

And then just give us a sense of where MedTech margins came in versus expectation. I mean could, certainly very good top-line momentum. And where was the progress versus 2Q? And are there still some costs you're taking to kind of rightsize and fix the business? Thanks.

Yes. We're definitely pleased with the growth progress in MedTech and we had a nice couple hundred basis point step-up in the quarter consistent with our expectations there. But we have been clear from the start that we'd make some extra investments there and making sure that we address the supply chain issues proactively as we have and then make sure that we're investing in the growth of the business.

Our next question comes from Nathan Jones from Stifel.

A couple of questions here on the growth in the MedTech business in DJO. Clearly a great step-up here and a good expectation in the fourth quarter. And you did talk about the highest level of new products in 5 years and the pipeline going into next year. You're going to do close to 4% organic growth in 2019, which is well above what you've targeted. Is a growth level around that area sustainable in 2020? Is this some aging comps from 2019 versus 2018 and we should expect growth to moderate a little bit in 2020? Just how you're thinking about that going forward?

Yes. So first I'd say when, we had shared early on that we expected that we could ramp this business to 4% to 5% growth range as a consistent growth range a couple years out. And we still see that very much as an opportunity that is getting continually validated here. And we're probably a little ahead of schedule on the progress there. As it relates to next year specifically though this year does have a little bit of tailwind from some backlog clearing and some second half easier comps and the extra day that we commented on. And so we expect that next year will be a very constructive step toward that 4% to 5% range that we feel very comfortable with for the business in the future.

I was also interested in a comment that was in the press release where you talked about Reconstructive share gains and surgeon conversion in particular. I think that's probably a pretty important avenue for you to grow and I know those surgeons are pretty sticky. So maybe you could talk a little bit about the process that you go through looking to flip those surgeons to your products and the traction that you've seen so far on that.

Our surgical business has continued to have very nice double-digit growth which is, it's clearly share gain in that industry. And it's really been our formula for a while now that bringing innovation to the market partnering with surgeons to create those innovations using the success on those innovations to attract other surgeons and then filling out the bag with other technologies. So we convert surgeons and then we throw out the range of the different products shoulder surgeon. We've got more at the bag at this point but still actively working on filling out the bag there. And the knee surgeons we've still got quite a bit of runway in terms of continuing to fill out the bag there. The surgeon conversions continue. That's an active process. We're constantly working on that. We also have a great fellow program where we're getting surgeons exposed early on to our products and technology and brand and that becomes a nice feeder pipeline. And so we look at those kind of new surgeon growth or new store growth and kind of same-surgeon growth same-store growth and those are both on a healthy trajectory that we can see plenty of opportunity to continue.

A quick one on the balance sheet and M&A. Chris said, you're about 4 turns on a pro forma basis. Matt you talked about maybe bolt-ons to accelerate growth in the DJO business. What, how much capital would you be comfortable deploying say in 2020?

Nathan as we've talked about with the new portfolio businesses that we've got here we have a pretty clean line of sight in 2020 on a healthy level of cash flow that we think gives us plenty of firepower to continue to build out the businesses that we've got here. And that in conjunction with increasing levels of EBITDA and other things we think will contribute to, and give us that ample firepower.

Our next question comes from Joe Giordano from Cowen and Co.

Just want to shift to Fabrication quickly. And I know a lot can happen between now and when you give your next set of guidance. But as you kind of enter 2020 can you kind of go through a regional breakdown of where you think those markets stand and like what is the most likely kind of directional movements there?

Yes. Sure Joe. I mean as you saw in our results we saw a step-down here in the third quarter and we expect the markets to still be in a touch zone for the next 2 quarters here. And we're really certainly focused on making sure that what we show good healthy year-over-year margin progress in the fourth quarter and deliver a strong year even below tougher markets down the stretch here. Yes, we've certainly got some time and work to do on the planning for next year. But if you look at the external signals most of the industrial GDP signals as well as some of those more specific end markets signals point to things getting more constructive as we work through next year and back into a positive kind of growth range and down the back half of next year. That's kind of the external signals at this point. We're going to be preparing for a range of possibilities over the next few months here and certainly give you an update at our Investor Day in December in terms of how we're seeing next year. As far as the specific regions both Europe and North America had a step-down here in the quarter. I think the European step-down was driven probably the most heavily by Germany but also some knock-on effects in other places. On the other hand we see India. India has been a little bit tougher through the middle of this year and we see that starting to gain some traction with some good policy things going on down there. Brazil everybody thought would get better this year but took a little longer to get the engine working quite right down there. But there's a lot of kind of positive thoughts about where Brazil is heading as we move into next year. And the slow business in China is still not bad. Some of the more project-based up there is more ups and downs but the flow business in China is not in a bad zone either. So we're, we've been focused on making sure we drive share gain in as many places as we can and we feel like we've been able to do that this year. And we're going to stay close to those market signals as the year finishes up and make sure that we're thinking proactively about productivity and cost actions to be sure that we can continue to show margin progress in that business.

And then if I shift over to medical is there anything major left on an operational standpoint that you guys have to take care of? I mean it seems like you handle that pretty quickly. And if you can just comment at least on the seasonal margin profile next year that was a really big step-up in the second half of the next year versus beginning of the year. Like can you just talk about how that typically looks over a 4-quarter kind of period?

Yes. On the operational front we had some important issues to hit right out of the gate and then we've worked very well together on getting those fully stabilized. But now we've got a long journey of continuous improvements not just in the supply chain and the operational aspects of that but also in the reimbursement processes in the back-office processes. And so a lot of work to do a lot of opportunity there but feeling very good about the progress we've made and definitely have gotten a clear signal that some of the real customer pain down the back half of last year and the beginning of this year has been mitigated. And now we can work on just making things better and better over time. Maybe Chris will talk a little bit about the margin path.

Yes. The margin profile of the business typically follows the seasonal sales patterns which means generally we're going to see stronger margins in the first and fourth quarter and less margins relative to the full year average in the second and third quarter. And we think that's still the primary driver for margin performance in the business.

Our next question comes from Nicole DeBlase from Deutsche Bank.

So maybe starting with one on DJO. I know this year you guys are, you talked about how you're benefit being a bit from inventory cleanings and easy comps the extra selling day. Is it possible at all to like quantify how much all of those items are uplifting your organic growth? Just, I'm kind of surprised that you say that you're going to take a step toward 4% to 5% in 2020 when we've already seen a 4.5% result this quarter. So maybe if you could kind of talk a little bit about the benefits you had this year and how it flows into next year.

Yes. Nicole we'll certainly get pretty darn specific about that at our Investor Day when we talk about next year. But what I'd say is that I think what we've seen year-to-date and we're going to see down the back half of the year is some incremental tailwind versus it being the fundamental driver of the improvement. I think we've been having some good inherent underlying improvement in the business but then a little bit of tailwind on top of that. And I think the kind of growth range that we've been in last quarter and this quarter is in a kind of, in a good range. But then we're going to head to a better place in the fourth quarter with the extra day and a little easier comp and we just want to make sure that people understand that some of that is in the year tailwind and need to be backed off before we kind of take a step forward next year.

And then maybe just on FabTech. So you guys talked a little bit about like geographic trends in that business. If you could talk a little bit about what you saw from an end-market perspective areas that got substantially worse during the quarter? And if you've seen continued deterioration into October or if you've seen stabilization in trends?

Yes. Sure. I think from an end-market standpoint I think it's, I mean everybody's talking about how automated, automotive took a big step down. We've got a little less exposure to that particularly in North America but we do participate kind of down the automotive supply chain in Germany and some other parts of Europe. And I think definitely some of the step-down here in the quarter was related to some pressure in that segment in Europe. I think the oil and gas part of North American market has been under some pressure in the last quarter or 2 and that's definitely part of the step-down there as well. And then there is some broader industrial pressure from the tariffs that's affecting a number of different segments. And then finally the yellow good segment has been pretty public about some of their significant backlog reductions and changes. So on the flip side there's some good area doing infrastructure in a number of places in the world. A number of, even the other construction markets are positive. There are some places in the world where wind power and oil and gas investments have been on the positive swing. So it's a diverse market with a lot of different end uses and geographies. I think that's something that gives welding some resilience. And we're working hard to make sure that we're gaining share and that we're focusing on the areas that are going to grow and are going to make sure that we keep improving the margin of the business.

Our next question comes from Julian Mitchell from Barclays.

Maybe just circling back to the free cash flow. So accounts payable and CapEx each about $100 million outflow I think in the first nine months. Maybe just give us a sense of where you think those 2 items end up for fiscal '19 as a whole. And also in context of that $250 million-plus free cash guide for 2020 how are you thinking about those 2 items for next year versus this year?

Yes. So Julian the numbers through the first nine months are going to have the 3 businesses in it that is, including the Air & Gas Handling business that we've divested. So the numbers going forward will look a bit different. You will recall that we did make a $40 million investment of the working capital of DJO when we acquired the business to help secure the supply chain and contribute to the operating improvements that we're now seeing reading through in the growth of the business. That $40 million is reading through largely in the accounts payable number there. Certainly that's a factor at work. In addition to that that number includes in the Air & Gas Handling business the business that we've divested that includes some other moving parts that relate to customer projects that you won't see recurring with the existing run rate businesses that we've retained in the new portfolio. So it's important to keep that in mind. And then the CapEx number includes the 3 businesses going forward. We expect the MedTech business to continue to have CapEx in the range of sort of 4% to 5% revenue the FabTech business more in the 1.5% to 2% consistent with what we've seen in the past.

So then my second question partly as a follow-up on that one would be around what's the seasonality of the free cash flow in the go-forward Colfax. Do we wait until Q4 to get most of the free cash for the year? Or is it a lot more linear now? And on the balance sheet not many companies talk about a lot of M&A at 4x leverage. So just wondered what your view is on the go-forward appropriate leverage level for the company.

Okay. So maybe I can start by addressing the seasonality of the cash flow. We do expect the cash flow to be a little less seasonal heading forward but it will still retain on element of seasonality as the first quarter tends to be a strong sales quarter for both of our businesses. So going to that's naturally pull in some working capital investment that you'll see get sort of released throughout the course of the year. So we still expect to see the highest cash flow quarter likely to be the fourth quarter and the lowest to be the first quarter for those reasons. On the balance sheet side. As we've talked about the longer-term goal of the company is to continue to drive the leverage down into the, more closer to 3x zone that we've operated at consistently over time. With the cash flow that we've got in the businesses going forward we've got the ability to make some of these M&A investments and continue to work the leverage down to the longer-term target. And so the cash flow that we've guided the business here for the next 36 months we think will lend itself to a considerable M&A bolt-on activity that continue to build out the MedTech and the FabTech businesses.

Yes. And just to add to that. The funnel that we're actively working now is in line with the kind of bandwidth that we'll have over the next 12 to 18 months. And so focused on a number of attractive kind of smaller bolt-ons and maybe some sort of medium-sized bolt-on but nothing in the large range is actively being worked right now.

Your next question comes from Joe Ritchie from Goldman Sachs.

So I'd like to see if we can maybe parse out some of the operating leverage that you saw in FabTech this quarter. Clearly pricing came through very strongly but pretty impressive margin expansion on a year-over-year basis. And so I'd be curious to hear how much of a tailwind was price/cost this quarter versus just internal productivity initiatives to help drive that strong leverage.

Yes. So productivity is always going to be a part of the story Joe. As you know we've got our teams consistently leveraging CBS throughout the businesses to drive that. We've also got various restructuring projects that we found that continue to drive and improve cost structure. So those are going to be key elements. If you look of the journey of the price/cost management over time it's, we are very public about being, chasing the inflationary costs throughout 2017. Getting into 2018 that started to stabilize a bit but it had a diluting effect on the margins that we were clear about the substantial impact on the margins. And it's only as we've really gotten into 2019 that that is stable and starting to claw back some of the price/cost issues that we had back in 2017. So we're still on the journey to get back to equilibrium but definitely in a better place in 2019 than when we started the journey in 2017. And along the way the company's really built some very good discipline and muscle in process around managing price that we can continue to leverage in the future.

And maybe just kind of following up on that. On the price cost side as you think about it for 2020 or at least the next few quarters your base metals have been coming down. And so it seems like we're in this little deflationary period right now. And so should that become a better benefit for you in the upcoming quarters? Like how are you guys thinking about it internally in your own planning?

Yes. So first thing I'd say Joe is it varies market-by-market around the world as to whether the cost side is coming down or in fact even still going on up like in South America. So for us as a very global business I'd say the net is definitely a little in the down direction but there's not any kind of a wholesale drop there. Second thing I'd say as Chris said if you look at the longer-term journey yes we're getting kind of in the range of, caught up to where we're getting a little bit of benefit. But we don't feel like we're in a range where we're profiting from the long-term price cost to where we're going to need to be kind of passing that back. So I think that the margin process that we've made is sustainable and we continue to make margin progress. But for sure as the price of steel comes down in different markets around the world the, there will be a pass-through effect to that. In some cases direct pass-through and in other cases something that more happens over time. And we'll be making sure we make proper calls about how we manage through that.

And if I may just ask one on MedTech. It was nice to see the positive momentum in the Prevention and Rehabilitation side. I know that this is an area that DJO a couple of years ago underinvested in. And it sounds like you've got a lot of new products in that area specifically. So as you're thinking about the sustainability of this growth rate on the go-forward I mean is this kind of like the starting point of what we should see on the go-forward in terms of the momentum and the growth that you see specifically on the Prevention and Rehabilitation side?

Yes. Well that's the part of the portfolio where we've got the most tailwind from some of the operation issues we are clearing through. But at the same time even though we've launched a lot of new products this year the revenue contribution from them is fairly limited because it's a combination of large products and small products and they've been ramping through the year. And so we're in the very early days in terms of the innovation-based impact on growth in that business in North America in particular. And so we expect that as we clear some of the tailwinds from clearing the operational issues we then have got some healthy runway over time in terms of bringing through the benefits of the innovation pipeline both the things that have been launched this year and a lot more that are coming in the next few years. And then we'll be working hard to recreate a robust pipeline on the backside of that and already have some very good ideas about the next wave of innovation possibilities both in the products and in some of the more kind of connected medicine opportunities as well.

Our next question comes from Walter Liptak from Seaport Global. your line is open.

I wanted to ask kind of maybe a, go a little bit further into the DJO surgical business. And understanding with this momentum that you're seeing in the growth rate are there metrics around the number of surgical groups of surgeons that you can give us? And the thing I'm trying to get to is, are we early days with starting to try and win back market share? Or is there more penetration that you can do on the market here that we can see in 2020?

Yes. I mean we talked a little bit about that. On the shoulder side of the business which is the largest part of that business yes that's a high single-digit growth market mid- to high single-digit kind of growth market. And we've been gaining share in that market. We are a leader but have a small enough share position that there's still ample opportunity to gain share. We've been a strong leader in reverse shoulder part of that business but have a smaller position there in the anatomic and still plenty of opportunity even here in the U.S. where we've got a leading position but also global expansion opportunity in that strong broken shoulder franchise which is a very healthy growth market. Yes. In hip and knee that's more of a low single-digit growth market. But we've got a very, very small share position in that market. And so a whole lot of runway to have strong growth by taking share without needing to become one of the largest players in the market or anything like that. And there are plenty of surgeons. We don't release data about the exact number of surgeons etc. but this is, there are many, many, many surgeons that did make up our position and many multiples of times that there are available still out there for us to grow into.

Okay. Sounds great. And with the new products is there a lag between new surgeon adds and when they start using the prevention and rehab? Like is it more difficult or easier to convert to the new products like on rehab after you've won a new customer?

Our bracing and rehab products, I just want to be clear so our surgical products it's often the new products that attract the surgeons. And then we really kind of fill out the rest of what they're using over time. In our bracing and rehab business we've got very strong channel position very strong position in the clinic in North America with our MotionMD solution. And so there as we bring new products to the market we're often dropping them into an existing channel position or bringing them onto a contract at a key hospital group. And so that's being added to existing positions in those cases versus the tip of the spear in our surgical business.

And then I wanted to ask you about the, yes margins are great in MedTech. And I wondered if there was still any purchase accounting or stabilization costs in this quarter that don't recur next quarter.

Yes. The way we report the EBITDA margins we exclude the purchase accounting effects from those margins. So they should be largely clean margins. And that's why we're continuing to work through the operating improvements in the business. So that's got a bit of a natural drag on the margins. But really the purchase accounting is largely out of those numbers.

Our next question comes from Andrew Obin from Bank of America. your line is open.

This is David Ridley-Lane on for Andrew. What's the, just so we all have the same starting point. What's the comparable fourth quarter '18 revenue number for DJO?

Sorry Dave just, give us just a second. Yes I think, I mean you need currency and different things.

Yes. David let me get back to you off-line. I just don't have it here in the room.

And then just on a rough basis how much annualized fixed costs has been taken out permanently in FabTech? I guess what I'm trying to think about is if volumes are down somewhat over the next few quarters is there potential for margins to be flat? Anyway to sort of size maybe the fixed cost amount that's been taken out?

Every year in the business we've taken out typically somewhere between $10 million and $20 million of costs and the current year is no exception to that. Some of that benefit does flow from the current year to the following year just as it did in 2019. The biggest drivers in the business tend to be the ongoing productivity what we do on the sales side the price and volume and then additional restructuring projects that we put into play.

Got it. And last one for me. Is there a benefit to FabTech's margins from the tension settlement this quarter?

No. That doesn't flow through. The biggest benefit that we'll get from producing the tension liability to down from roughly $1.6 billion to $1.7 billion down to the low hundreds of millions is on the cash flow side. In the past we would fund the pensions it wouldn't be surprising to have a year where you have $40 million or more. And I'd surprised if it was much different than $5 million next year. So you can see the substantial improvement in cash flow that that contributes to.

We do have a follow-up question from Jeff Hammond from KeyBanc Capital Markets.

Just again great work on the margin side on ESAB. If we kind of continue in this malaise or start to see kind of low single-digit growth what's the confidence level into 2020 you think you can kind of hold the margin kind of where they've been this year on great progress?

Yes. I think part of why we included the long-term margin picture is to show that good times and bad steel up steel down we've been able to drive consistent margin improvement in the business. And even the '18 when it shows flat in the chart there was this kind of mathematical pass-through. So there's a lot of underlying margin improvement. And so we continue to do the right things in terms of productivity improvement new products continuing to get after-structural opportunities to make sure that we can keep expanding the margins of the business within any reasonable range of market situations.

Okay. And then just back to the pipeline and balance sheet capacity dynamic because I think the messaging before was "Hey we're going to spend the year to kind of delever." And it seems like you're more willing to do deals. Is that informed by just what's in the pipeline and what's available? Or is that informed by your view on much more resilient business and cash flow? Just what's changed there?

Yes. And the one comment I'll make and I'll let Chris jump in I think we said out of the gate we're going to sort of take this year off. In terms of any meaningfully sized acquisitions and focus on deleveraging. And that's what we've done and made good progress there. Our plan from the start was to, as we worked through this year start to get to work on creating and then working the funnel of acquisition possibilities with the hope to get back to doing some acquisitions next year. And maybe Chris can talk about how we're thinking about the envelope there.

That's right. Yes. And it's still the dual path that we've envisioned which is the continued deleveraging of the business as well as the continued investment in M&A. And it's not outlined the scale and scope of what we're looking at in the M&A. It's a big funnel. That's a big funnel of opportunities that fit neatly within the existing platforms we have and are not significant steps.

There are no questions at this time. Please continue.

Great. I want to thank everyone for joining us today and we look forward to updating you on our next call.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.