Q1 2024 Medifast Inc Earnings Call

Participants

Steven Zenker; Vice President, Investor Relations; Medifast Inc

Daniel Chard; President, Chief Operating Officer; Medifast Inc

James Maloney; Chief Financial Officer; Medifast Inc

James Salera; Analyst; Stephens Inc.

Linda Bolton-Weiser; Analyst; D.A. Davidson & Co.

Presentation

Operator

Greetings. Welcome to the Medifast first-quarter 2024 earnings conference call. (Operator Instructions)
I will now turn the conference over to your host, Steven Zenker, Vice President of Investor Relations. You may begin.

Steven Zenker

Good afternoon, and welcome to Medifast's first-quarter 2024 earnings conference call. On the call with me today are Dan Chard, Chairman and Chief Executive Officer; and Jim Maloney, Chief Financial Officer.
By now, everyone should have access to the earnings release for the quarter ended March 31, 2024, that went out this afternoon at approximately 4:05 P.M. Eastern time. If you have not received the release, it is available on the Investor Relations portion of Medifast's website at www.medifastinc.com. This call is being webcast and a replay will also be available on the company's website.
Before we begin, we would like to remind everyone that today's prepared remarks contain forward-looking statements and management may make additional forward-looking statements in response to your questions. The words: believe, expect, anticipate, and other similar expressions generally identify forward-looking statements. These statements do not guarantee future performance and therefore, undue reliance should not be placed on them.
Actual results could differ materially from these projected in any forward-looking statements. All of the forward-looking statements contained herein speak only as of the date of this call. Medifast assumes no obligation to update any forward-looking statements that may be made in today's release or call.
And with that, I'd like to turn the call over to Medifast's Chairman and Chief Executive Officer, Dan Chard.

Daniel Chard

Thank you, Steve. Thank you all for joining us today. With me today as Jim Maloney, Medifast's CFO. I'll give you an update on the progress we're making in our continued business transformation, and Jim will then provide an update on our quarterly financial results.
Medical innovation is empowering more people than ever before to achieve their weight-loss goals, and that presents a remarkable opportunity for Medifast as an organization. The expanding use of GLP-1 medications for weight loss, as well as expected further innovations in the medically supported weight-loss space, is creating new markets in both the care and support segments of the weight loss industry. It is anticipated that these two areas will become an integral part of the health and wellness journeys of many individuals, as more and more people begin to use medication and make the necessary lifestyle modifications to help achieve greater long-term health and wellness outcomes.
For Medifast, the focus of our business transformation is to build a set of differentiated capabilities that will allow us to be a leader in this dynamic and changing health and wellness space. Consistent with our historical focus, we will also continue to support other related health outcomes that are tied to adopting healthy lifestyle habits. With our recent moves to expand our product offerings and target supporting individuals in the medically supported weight-loss market, we believe we have significantly expanded our total addressable market by broadening the scope of our consumer offer.
Independent research that we commissioned shows that approximately 50% of our prospective customers would consider using GLP-1 medications to aid in their weight loss. As such, it is clear that this high-growth area offers considerable opportunity and fits well with our expertise with over 40 years of history of helping people improve their overall health and wellness. Lifestyle modifications remains as relevant and important as ever and is an important element to long-term success in the weight loss for those on medications. In fact, the medications themselves are required to be prescribed by licensed clinicians and include instructions for the user to make lifestyle modifications. And we believe our offering and network of off to the coaches make us uniquely qualified to provide the support in a clinical study of the new generation of GLP-1 medications, people that were on placebo instead of medications and who followed lifestyle modification guidance lost 3% to 5% of their initial body weight weight loss for those who use GLP-1 medications and followed lifestyle modification guidance was 15% to 21% of their initial body weight, inclusive of both the effects of the medication as well as the benefits from lifestyle modification. Sales of GLP-1 medications alone are projected by many to reach up to 100 billion or more by the year 2030. This is this opens up a huge opportunity to provide support products and services to this rapidly growing consumer base. A recent BCG study commissioned by Medifast determined that the GLP-1 support market, which includes products and services purchased by those on GLP-1 medications, excluding those medication costs, is roughly 13 billion today and could grow to 50 billion or more by the year 2030 individuals on GLP-1 medications are currently spending an average of around $200 a month on nutritional shakes bars, vitamins and other related items to aid in their efforts to improve their overall health and wellness in conjunction with the medications according to the same BCG study support from nutrition products for those on weight loss and medications, however, is just part of the lifestyle modification equation, a holistic program that includes personalized support to help people learn new lifestyle habits and stay accountable on their transformation journey is another important element to helping individuals succeed in their health and wellness journeys. One of the primary goals of such a program is muscle maintenance to avoid the 20% to 50% weight loss from lean muscle mass that many GLP-1 medication users suffer as part of their experience. The fact is that since we launched Activia just under eight years ago, we've gained some important insights. We know that people do better and their health and weight loss when they have a coach, and they also do better when they're able to plug into a community of like-minded people. It's also abundantly clear that people do better when they learn healthy habits and can leverage them into the creation of a healthier lifestyle. A clinical study sponsored by manifest showed that those on the optimal weight five & one Plan with support of an off the via Coach successfully lost 10 times more weight and 17 times more fat than those who tried to lose weight on their own.
While the health and wellness environment may now have changed due to the weight loss medications, these insights have helped to drive our strategic focus as we continue to transform our business coaches and now clinicians are integral to success. So we will offer a holistic solution that puts support from them at the heart of people's health and weight loss journey, we will integrate customers into a welcoming and engaging community. It is on the same journey as each of these individuals by plugging into what we already do best and adjusting to meet the nature of today's medical innovation, we can offer integrated solutions that align with customer demand and behaviors in collaboration with Life MD, a leading telehealth provider. We are now able to deliver a unique holistic offer for consumers who want to use GLP-1 medications that helps them achieve their personal health and weight loss goals with all of our coaches and Life MD clinicians. Working together, we provide consumers with the nutrition, education and support necessary to help make living a healthy lifestyle. Second nature, an integrated solution is more efficient targets, a much broader market opportunity and should increase the lifetime value of our customers. That will be important in helping to offset an expected decline in our average monthly revenue per new customer. That signs up for a medically supported weight loss solution, which will be offered at a lower monthly cost than our historical program. While we recognize that GLP-1 usage is accelerating rapidly and should continue to do so for many years, we remain completely customer focused as an organization rather than a single solution oriented. In other words, we listened closely to the unique circumstances of each individual. And then I worked to find the weight loss and Health Transformation approach that is right for each of them. Sometimes that could mean using a medication other times that might mean learning to adopt healthy habits and sometimes in my mind, utilizing support products to help make the wellness journey easier regardless of each unique pathway, the presence of a coach and the community creates a platform that helps drive positive and outcomes. And that has helped positively impact the lives of more than 3 million people to date.
Turning to our first quarter results, they came in largely as expected, with continued headwinds impacting customer acquisition, primarily from the macro factors, including the growing popularity of GLP-1 medications. We ran a promotion from March, which extended into early April, and this did provide a small lift, but we believe that right now a much more effective way to grow our business is to focus our resources on building out new channels for customer acquisition through both life, MD collaboration and co-lead marketing. Jim will go more into the quarterly detail shortly.
Regarding our collaboration with life, MD, we are pleased with our execution to date, and we continue to make progress on rolling out our integrated offer next month, we intend to take a key interim step in that rollout as we begin offering a GLP. one support nutrition package in conjunction with Life MD at a price point of as low as $282 per month plus the cost of any medication for a six month commitment package will include a lifestyle program with a dedicated off to the coach balanced nutrition options with our GLP-1 nutrition support kit and through life, MD access to a medical provider and blood work and prescription and insurance support over the upcoming months. We will continue to refine the model and evaluate and test the effectiveness and adoption rates of the offer. We expect to add further improvements to the care and support process as we move through the second half of the year, including enhancing the website and the apps utilized by our customers and coaches. We are working diligently on developing the technology to allow for an enhanced customer experience and expects to rollout incremental improvements throughout the rest of the year. These are expected to create a more cohesive way for customers to sign up and Remec payments for the holistic offer as well as additional functionality to make the user experience easier and more integrated with life MDs capabilities.
We are also working to develop new products specifically for those on GLP-1 medications, which are currently expected to be ready late in the year. As we have previously disclosed, we will be making a significant investment in marketing at the company level. Medifast is committed to driving growth and enhancing brand visibility through a 30 million investment in Company led marketing efforts throughout 2024 this high-profile national campaign led by Dentsu creative, a renowned global marketing and advertising firm and ice prospect, a leader in performance. Digital Marketing aims to drive customer conversion, elevate brand awareness and foster engagement with new and existing customers with an omnichannel approach. The digital first campaign is expected to introduce new branding and elevate the website and digital experience. These investments will ramp up later in the second quarter and even more so in the second half of the year, helping form the foundation of the company's strategy to return to growth. And in broadening and deepening our acquisition channels to focus on three key pillars, our marketing initiatives, expansion of our coaching network and our strategic collaboration with Life MD to collectively drive forward our mission to empower individuals on their journey to optimal health and well-being. Importantly, our co-lead marketing efforts and our collaboration with Life MD gives us two new channels for acquiring customers in addition to the traditional channel where our coaches source customers via their own word of mouth campaigns in their local communities. And in social media, I've talked about our coaches and how they are the center of everything we do. This is a clear differentiator for Medifast versus others in our industry. The vast majority of our coaches started to adopt the VA's customers and therefore understand the mindset and needs of someone looking to better their overall health efforts have been underway for a while.
Regarding the coaches learning about the GLP-1 market and the specific needs and challenges faced by those utilizing the medications with a more complete offer to take to their prospective customers, including access to weight-loss medications through a life, MD clinician in addition to our line of nutrition products and support from a coach and a community that is on a similar journey. The value that the coaches can bring to their customers has never been more compelling. There can be little doubt that the weight loss market has seen seismic changes over the past 18 months as medically supported weight loss adoption has accelerated more rapidly than perhaps anyone could have expected. But with that uptick in consumer focus comes significant opportunity with a comprehensive holistic approach that brings together customers, coaches and clinicians. Medifast is uniquely positioned to provide the nutritional and healthy lifestyle support that GLP-1 users need to achieve their lifelong transformation that they're seeking. And we believe that Medifast has the financial strength and strategic flexibility to invest in our ongoing operational and marketing effectiveness and the scientific and medical heritage that provides us with the credibility to play in this rapidly developing space. Most importantly, we have an experienced team that has shown a consistent ability to pivot and take advantage of the opportunities as they emerge and a strategy in place working alongside world-class partners to help deliver on the exciting possibilities ahead. We look forward to sharing more on our progress on future calls. Now I'll turn it over to Jim to review the quarter.

James Maloney

Thank you, Dan. Good afternoon, everyone. 2024 first-quarter results were in line with our guidance, as we continue to execute our business transformation initiatives that we believe are integral to our success revenue for the first quarter of $175 million was at the upper end of our guidance range of $155 million to $175 million, a 49.9% decrease versus the year earlier period, primarily driven by continued pressure on customer acquisition amid the growth in popularity of weight-loss medications, which has led to a decline in the number of active earning off of the coaches and lower productivity per active earning offer via Coach. We ended the first quarter with approximately 37,800 active earning Octavia coaches, a decrease of 35.6% from the first quarter of 2023.
Average revenue per active earning off the VA coach for the first quarter was $4,623, a year-over-year decline of 22.2%, reflecting the continued headwinds to customer acquisition. Gross profit decreased 48.3% to $127.3 million for the first quarter of 2024, driven by lower revenue, gross profit margin improved 220 basis points to 72.8%, positively impacted by efficiencies in inventory management and cost savings from the fuel for the future initiatives, partially offset by increased shipping costs.
SG&A expense was down 38.1% to $119.4 million for the first quarter of 2024, primarily due to fewer active earning coaches and decreased Coach compensation on lower volumes, partially offset by the start of company LED advertising expenses, which continues to be in the early stages as well as market research and investment cost related to medically supported weight loss. Sg&a as a percentage of revenue increased 13 hundreds basis points to 68.3%, primarily as a result of the loss of leverage of fixed cost due to lower sales volumes as well as factors I just mentioned on a non-GAAP adjusted basis, which excludes one-time costs to initiate and operationalize the Life MD collaboration. Sg&a decreased 38.8% to $118 million and moved 1,220 basis points higher as a percent of revenue to 67.5%. Income from operations was 7.9 million in the first quarter of 2024, down 85.2% versus the year earlier period, driven by lower gross profit, partially offset by lower SG&A. As a percentage of revenue. Income from operations was 4.5% in the first quarter, a 1,080 basis point decline versus the year earlier level. On a non-GAAP adjusted basis, which excludes the one-time expenses described previously, income from operations decreased 82.7% to $9.3 million. As a percentage of revenue, non-GAAP adjusted income from operations was 5.3%, a decrease of 1,000 basis points from the year ago period. The effective tax rate was 28.2% was higher than the 25.1% recorded in the prior year's first quarter due to an increase in the tax shortfall for stock compensation and the rate impact of research and development tax credits, partially offset by the decrease in the limitation for executive compensation and various other miscellaneous items on a non-GAAP adjusted basis, the effective tax rate in the first quarter was 28.7%. Net income in the first quarter of 2024 was $8.3 million or $0.76 per diluted share compared to $40 million or $3.67 per diluted share in the year earlier period. On a non-GAAP adjusted basis net income in the first quarter of 2024, which excludes the mark-to-market adjustment of our Life MD stock holdings, as well as the onetime cost to initiate the Life MD collaboration was 7.2 million or $0.66 per diluted share.
Turning to our balance sheet, we ended the quarter with $156.4 million in cash, cash equivalents and investments and no interest-bearing debt. This is up from $150 million as of December 31st, 2023.
Now I'll turn to our guidance, we are expecting second quarter revenue to range from 150 to $170 million, reflecting continued near-term challenges to customer acquisition. As a result of the growth of GLP-1 medications in the marketplace. We expect our EPS for the quarter to range from $0.05 to $0.4. The EPS range excludes the costs related to the initiation of life, MD collaboration and any gains and losses from changes in the market price of our Life MD common stock. While the operating environment remains challenging, we continue to believe that meaningful spending on driving customer acquisition from two additional sources, co-lead marketing and customer flow from Life MD and the ability to offer access to clinicians will lead to an improvement in customer acquisition trends beginning late in the year to foster that improvement, we expect to spend around $30 million this year on advertising and other marketing initiatives to increase the visibility and customer engagement around our Octavia brand and its offerings. An elevated level of spending is expected to continue into 2025 as we believe it will be effective in bringing in new customers that will help us grow in the future. These investments in customer acquisition initiatives as well as the negative impact of lower volumes on operating leverage are expected to continue to pressure profitability over the remainder of 2024.
In summary, we are steadfast in continuing our transformation journey, focusing on our integrated offering in the medically supported weight-loss space while also making strategic investments to grow the business in the future. Our strong balance sheet and continued expense reduction efforts helped mitigate the short term weakness in our results and we expect the actions we are undertaking should drive improvement as we move into 2025 and beyond.
With that, let me turn the call back to the operator for questions.

Question and Answer Session

Operator

(Operator Instructions) James Salera, Stephens, Inc.

James Salera

I guess my second question, I wanted to start with the 2Q revenue guide. If I just take the midpoint, it looks like it's down around 46%, which isn't much different than 1Q. But I would think between the easing comp in 2Q and then the ramp-up of the Company lead marketing, that there would be a more significant improvement there. Is there something I'm overlooking or any color you could offer on that would be helpful.

Daniel Chard

Sure, Jim, this is Dan. I'll let Jim answer that question, but I just wanted to make a couple of points that will kind of help inform how we how we're thinking about that guidance. As you know, we've made some significant progress that started the end of last year that with collaboration agreements. And importantly, as we're looking at how we look forward at the as the new market, we're specifically focused on the support market, which for the first time we are measuring, and we're doing this through a study that was commissioned by us with with BCG that has this support market GLP-1 support market at $13 billion this year, growing to 50 billion.
Again importantly, we've now launched a new product bundle, which is now bundled with what is offered by Life MD and that the bundle is going be signed for now $282 and includes both the clinician prescription bloodwork and insurance support as well as our traditional support of the coach community nutrition support, which is which as the nutrition dense feelings are off the via app and the Habits of Health so that that number 282 doors is roughly well, this is comparison to $400 of what we used to offer our introductory bundle of five & one Plan. So you can see there's a pretty significant and change in that. We also are going to be launching a new set of products by the end of the year. And also we'll be announcing in Q3 and Q4, some additional integration that will create a seamless payment and ordering system for the two for the two platforms. So we expect what we expect in the back half of the year is to start to see the impacts of these initiatives. So Q3, Q4 first with improved coach productivity, so driven by client acquisition and revenue per coach, and then going beyond that to improved client retention as we're able to keep particularly GLP-1 clients for a longer period of time.
And with that, I'll turn to Jim to answer your question about guidance.

James Maloney

Yes. So when you when you consider our guidance for our Q2, Jim, we're assuming the current headwinds on customer acquisition continue in the near term, and the rollout of the advertising will not happen until the very latter part of Q2. So So our guidance does not come. So that impact and the amount of spend that will happen is really tilted towards Q. threes. So there will be a little bit higher level of them, so of advertising versus Q. one in Q2, but really the spend is going to occur more rapidly in Q three. So that's what you're seeing there.
Some regarding some we're making headway with life, MD we are seeing and we're happy with the level of of some support that we've been able to do with life MDs. So the number of customers that are going in using the Life MD solutions is increasing. But we do believe it's going to take continued time and we're hopeful that we're going to see that into Q2 three and beyond as we have the integrated solution fully up and running in Q3.
So hopefully, that helps us.

James Salera

Yes, yes. I appreciate the color, guys, Jim, but maybe ask you a follow-up just on the cadence of the marketing. If I read the the slide deck, right, you guys spent about 2.5 million in 1Q, which means you have $27.5 million for the rest of the year. Can you just give us a sense for how steep the ramp is in the back half? I guess from whether dollars or percentage, how much of that, you know, 3Q to 4Q?

James Maloney

Yes. So the it is very steep. We're expecting that the level will be up a little bit higher in Q2, and that's why you're not seeing and the benefit of that happened in Q2 versus our guidance. So it's slightly higher, but it's not it's not to any degree that that would be meaningful. So we're still in the learning phase of this, and I tried to indicate that in my my part of the script that we're in the early stages of this. We are going to launch some new messaging in Q2, but it's going to be at the very end of Q2. And the ramp of it is going to happen into Q3. So the majority to answer your question specifically, the majority of the 30 million of spend will happen in Q3.

James Salera

Okay, perfect. Thanks. Back in the queue.

Operator

Linda Bolton-Weiser, D.A. Davidson.

Linda Bolton-Weiser

Yes, hi. Can you please talk about them? So in terms of the pricing for the new integrated program. My understanding is Life MD charges very low for the drug itself. So the 282 per month is sort of all inclusive roughly I mean, it's the coaching, the Rx script to the blood work and really most of the drug cost. Am I understanding that correctly? And also, can you explain how is the revenue going to be booked? Are you going to record a portion of it, 200, 82 in revenue or a day, or is it split or how is that revenue split going to?

Daniel Chard

Yes, let me answer the first part of your question and then I'll let Jim answer the or the revenue question. So the $282 is inclusive of both the services from our up to the program as well as Life MD. It does not include the cost of medication, and you pointed out, Linda, that there are some different, very price competitive options through life, MD that are both branded and compounded by the $282 does not it included the cost of the medication. And the split between the two is roughly $217 for the product and coaching bundle and six roughly $65 for a six month Commitment to Life MD?

James Maloney

Yes. So Linda, we're not going to be recording $65 is that Dan is referring to for life and these portion of this. So they're going to have a therapy, they would record the $65 and we would report the $217. The $65 overlay light BMD requires a six month commitment so that's on that's still, you know, the the commitment that you have to make for Life MD, the $217 odd, there is no our commitment for that number from a customer.

Linda Bolton-Weiser

Sure. And then the 217 includes some food products, some fueling or what clarify, what are they?

Daniel Chard

It includes our our active whey protein supplement and links. And so both of them at a kind of a program designated amount for a full month. In addition to that includes the Time Inc. and from a coach personalized coach and access to the community access to the Opta via app. That includes the the recipes as well as weight trackers, which is integrated with a WiFi scale. And that also includes the access to the Habits of Health Transformation system.

Linda Bolton-Weiser

Okay, thank you. Can I also ask yes, so much. So in terms of the life, MD use of the compounded products and has there been any change of the availability of their compounded product? Because we know that at some point it may kind of go away? Or is there any update on that and what do you anticipate as a strategy if there is constraint of compounded availability, like if the drug becomes $1,000 a month for the customer, how do you how does the customer afford to pay another $300 a month? What's the strategic thoughts on that change?

Daniel Chard

Yes, we're working very closely with the life. Md team is very keyed into this. This key part of the questions. The strategy to date has been to offer a branded solution for those who are insured or who can afford to pay the out-of-pocket. And there are cases either that they may not be insured or in some cases through the because of the shortages, the branded solutions are not available, whereas the compound solution solutions have been readily available in the case of how long that this current structure will last. And that's, I think will be determined largely by the FDA, as you know, and compounders are operating under an exception, which is that they're allowed to offer a compounded solution when we're in a period of scarcity. And we continue to be in this period of scarcity that's projected to last, I believe several years as the pharmaceutical companies build more capacity. And I think there are some other elements that will impact us as well as the which would include how quickly insurance companies and Medicare. I cover the the drug beyond the current exceptions, which so I think what I would say is we feel confident and comfortable that the approach, which is to offer both branded and compound, the solution where appropriate is appropriate is is relevant for the short term and even the next several years.

Linda Bolton-Weiser

And then on one of the issues. I guess what is going to happen here is that you have a large number of coaches, even though they've declined on just from a moderate amount of new people running the drug life, MD only has been a small number of clinicians. So I think it's somewhere around 55 bureau clinicians that they have, how that number of clinicians going to be able to handle on such a large potential number of new customers for the for the script that well, like are they planning to ramp up the number of clinicians or can you give a little color on that? Thanks.

Daniel Chard

Yes, Life MD specifically uses physicians in their in their services that are licensed in all 50 states. So that that helps with part of it, they can support patients across the country. They also have a very specific and focused high-risk value, which has allowed them two to keep up with their demand and working closely on close collaboration with, we're working in close collaboration with them to ensure that they understand how are the massive increase. And at this point, we believe they have the capacity in the short term as well as the capability in the long term to scale that number of clinicians to support and the growing demand.

Linda Bolton-Weiser

Okay. And then is there just the timing difference thing that Tom, of the 9.1 million, can you just kind of explain what that is? Is there does this shift 9.1 million of revenue from first to second quarter? Or can you just explain more about that? Thank you.

Daniel Chard

So that's referring to. That's that's actually refer, I believe what you're referring to Linda is last year, we did a change in revenue recognition, so there's no impact to 2024. That was actually 2023. And it was in the earnings release, we just were referring back to 2023. And the reason for the change of the fee, the revenue recognition was due to the change that was made with the terms and conditions that we have with our customers and that all occurred in Q1 of last year. So there's once we get past Q1, there's no impact for the remainder of 2023 or going into 2024 at all.

Linda Bolton-Weiser

Okay. Got you. And do you have an anticipation of how much capital spending will be in 2024?

Daniel Chard

Yes. I mean, we're looking at spending at the same levels were a little bit more than 2023. So we didn't really give guidance all the way for 2024 but I would say it's going to be at least the same level as 2023, if not a little bit more than that, just because of the investments that we're making regarding the seamless offer in the technology spend that's going to be hitting capital spend in those areas.
Yes.

Linda Bolton-Weiser

Okay. And then finally, just wanted to ask about gross margin. I guess that was the area of the report that was most below my modeling, but I kind of think I didn't fully recognize the seasonality like usually gross margins kind of lower in the first quarter anyways. But Tom, do you do you kind of foresee like stability in gross margin percent or like for some reason I had modeled for the full year kind of flattish, but and what is there any color you can give to help us on the gross margin outlook?

Daniel Chard

Yes. I mean, when you when you look at the gross margin, we were 220 basis points higher than 2023. And most of that, our impact versus the prior year was due to the fuel for the future initiatives that we referred to, which helped the health gross margins. And so I would expect that gross margins would be steady for the next quarter. The reason is because we're really when you look at commodity inflation, we're basically seeing it to be flat for at least for at least the next quarter. So I would expect it to be very similar.

Linda Bolton-Weiser

You mean flat with compared with Q1 flat sequentially? Frac crews flat sequentially?

Daniel Chard

Correct.

Linda Bolton-Weiser

Okay. Thank you. That's very helpful. That's all I have.

Daniel Chard

Thank you.

Operator

And since we have no more questions, I will now turn the call back over to CEO, Dan Chard, for closing remarks.

Daniel Chard

I want to thank you all for joining us today, and we look forward to speaking with you at upcoming conferences and on our second quarter earnings call in early August. Thank you.

Operator

And this concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.