Alphatec Holdings, Inc.

Christine Zedelmayer - Head of IR Jim Corbett - President and CEO Mike O'Neill - CFO

Josh Jennings - Cowen & Company William Plovanic - Canaccord Genuity Glenn Novarro - RBC Capital Markets Ebun Garner - General Counsel

Good afternoon, and welcome to Alphatec Spine's quarterly update conference call to discuss our first quarter 2015 financial and operating results as well as provide an update on our outlook for 2015. This afternoon, our comments will build on the press release we issued earlier this today.

Before we begin, I would like to remind you that this conference call contains forward-looking statements that involve risks and uncertainties, including statements regarding the company's expectations regarding its financial performance, strategies for revenue growth and operating improvement, development of new products, customer acceptance of the company's products, and overall trends and economic conditions in the company's markets. The company undertakes no obligation to update the information presented on the conference call.

Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors. For more information about potential factors that could adversely affect our business and financial results, we suggest you review our filings with the Securities and Exchange Commission.

Throughout the conference call, the company will reference some financial metrics that are derived in accordance with Generally Accepted Accounting Principles, or GAAP, while other metrics are not in accordance with GAAP. This approach is consistent with how management measures the company's results internally.

However, non-GAAP results are not prepared in accordance with GAAP and may not be comparable to non-GAAP information provided by other companies. Non-GAAP information should be considered as supplement to and not as a substitute for financial statements prepared in accordance with GAAP.

Now, let me introduce the other members of the Alphatec Spine management team that are here with me today: Jim Corbett, President and Chief Executive Officer; Mike O'Neill, Vice President and Chief Financial Officer; and Ebun Garner, General Counsel. I will now turn the call over to Mr.

Jim Corbett.

Thanks, Christine. Good afternoon, and welcome to Alphatec’s quarterly conference call.

I’m going to begin with an overview of the results on a high level, followed by an update to our strategic initiatives, which we have called the three pillars during our quarterly call at the end of February. On the revenue side of the business, we were up 5% in constant currency over prior year, $51.8 million against $49.2 million over prior year.

On as reported basis, we were at $48. 6 million in Q1 2015 and $49.2 million in Q1 of 2014.

On the geographic breakout, in the U.S. we had sales of $30.5 million in Q1 2015 against $32.1 million in Q1 2014.

More about that later in my comments. Internationally, we did $18.2 million as reported against prior period, up $17.1 million.

On an operational basis, we had a really strong quarter in international, up 25% in constant currency. I will also have some more comments about that here in a moment.

Let’s start with a little color around the U.S. number.

The obvious question for us, and I’m sure anyone, is what’s going on? Well, forty, this is an area where we’ve been spending considerable time.

As I’ve been formulating a product strategy, what obviously goes with it is a commercial strategy. I’ve been working on our U.S.

sales model for the last several months. One of the things that we learned in so doing is that we had a sales person assigned to less than 10% of the surgeons in the U.S.

market, which then of course leaves more than 90% of the surgeons available for us to be promoting our new suite of products over the next 24 months. So underlying this Q1 results was the very obvious: When you have under 10% of a market that you are participating in, you’re subject to a rather narrowing phenomenon of caseload and price effect.

That said, we formulated our U.S. expansion plan well before this quarter, and we are heavily engaged in executing it.

We are focusing on expanding into 40 of the top 100 U.S. metro areas where we currently have virtually no sales presence and no sales.

We’ve made good progress on this sales force expansion to date, and I’m confident this progress will continue through Q2 as well. We believe this initiative will accomplish our goals of increasing commercial participation and driving top line growth.

I’ll explain our specific expansion strategy when I update you on our transformation progress later in the call. With respect to international, we had a significant growth over prior year.

As I mentioned, on a constant currency basis, we were up 25%. What is particularly exciting about this for us is that we did this well ahead of almost all of our commercial expansion activities becoming reality.

So during the quarter, we did establish sales in four of our eight European target companies. With that said, these results didn’t have any material impact from those initiatives yet.

When I look at what is driving this growth in Q1, I believe it is the result of better international management. Six months ago, we hired a dedicated senior vice president of international, a position that did not previously exist at Alphatec.

Four months ago, we hired a new vice president of Europe and recently a new country manager in the U.K. Along with all of this, our team in Japan continues to execute at a high level.

With this strong leadership team, we believe we’re beginning to build the momentum that will deliver the second half story for international. Next, I want to update you on our strategic scorecard.

Last quarter, we outlined the three pillars of our transformational strategy for Alphatec. Let me take a few minutes to update you on our progress on these initiatives.

First, pillar number one, the one I personally get most excited about. It is our product portfolio and our R&D pipeline.

We’ve made tremendous progress here. First and foremost, Arsenal went into full launch in February.

We’re in full inventory, unconstrained launch. Now that we’re in full launch, we have to change the way we look at things.

During the limited market release, we were very focused on a 50-50 ratio between new users and existing customers. We did this for the primary purpose of stress testing the competitiveness of Arsenal, and although overall it was low volume, the number of new users was significant: over 50% of the cases performed.

We learned that Arsenal is a very competitive product and this product line really has legs to grow in the future. We’re very excited as we move here in Q2 with a full unconstrained launch throughout the U.S.

However, we won’t remain in the 50-50 mode. We’ll be focusing on growth, but we will also be upgrading our current Zodiac users to Arsenal whenever they are ready.

Now, how does this translate into our broader product strategy? Arsenal is in the biggest market of spine, which is stabilization and fixation.

We are also going into early release of the Arsenal Cortical Bone System, an extension of Arsenal, or as we call it, Arsenal CBX, during Q2. If you look at that, it’s a differentiation of the Arsenal product line, one that significantly narrows the companies that we will be competing with.

With Arsenal, we are able to differentiate from a relatively broad group of companies to a narrower group, which is competing in Degen and in cortical bone. And then, when you follow that with our focus on Arsenal deformity, you’re talking about one of the broadest, most competitively designed product systems in the stabilization and fixation market.

Some have said to me, “You’re going back to the most competitive part of the market.” And I respond with, “First of all, for them, our competition.

It is the most competitive part of the market. For us, it’s mostly all new opportunity.”

We’ve taken the Degen line, we’ve differentiated it with cortical bone, and we’re further differentiating it with deformity, which we expect to launch in the first half of 2016. With this, we cover almost 90% of the whole stabilization and fixation opportunity.

This is a great place to be. Back to our commercial model, which I’ll comment in in a moment, these connect.

Product first, commercial strategy second. Along with Arsenal, we also have Battalion.

This is our next generation interbody system: titanium-coated PEEK interbody with a new instrument set, a new disk prep set, all inspired by Arsenal. The ergonomic benefits that we’ve so carefully designed into the Arsenal system translate into how we designed the instrument set for Battalion.

The titanium-coated PEEK is the forefront in the current practice of surgeons where the titanium is believed to provide a better environment for bone in growth. I recently spoke to a surgeon who said to me, “Everybody is getting into titanium-coated PEEK,” and I said, “Yes, they are, but today, less than 5% of the market this month purchased titanium-coated PEEK.”

We’re actually going to be on the forefront of this wave. We’re really excited about that.

The combination of the Arsenal system and Battalion, our titanium-coated PEEK interbody system, really gives us broad participation in such a huge portion of the spinal fusion market, another great opportunity for us. As we look forward at the product pipeline this year all the way through next year, we continue to strengthen our product line.

I talked about Arsenal CBX, Battalion, and Arsenal deformity. We also have a lateral program underway, so our two pipeline programs we are focused on are deformity and lateral.

Lateral delivers greater access to the remainder of the interbody fusion market to us. This system that we have in development will be ready in the first half of 2016.

Again, combining the flow of products today that we’re launching this year and the programs we have planned through next year, we have a rich product pipeline, one of the strongest product pipelines in spine. With respect to different launches geographically, how these products play a role, first, there is Arsenal in Japan.

Japan is our strongest market share position in the world where we have a direct subsidiary. We had planned Arsenal for later in the year, but we achieved early regulatory and reimbursement approval and have initiated early launch in Japan during the month of April.

So what we’re getting is a big head start on that market. It should make a big difference for us in Japan during the second half of 2015, so Japan is also a core part of our second half story.

Along with this, let’s talk about some other big geographies that we are targeting. Brazil.

I’m always amazed at this number: 200 million people live there, representing a significant market opportunity for us. Both the Zodiac and ILLICO MIS were launched in Brazil in late Q1.

They will achieve full launch during Q2, and again, during Q3 and Q4 we’ll really start to see the benefits of both the Zodiac and ILLICO MIS in Brazil. With respect to China, I mentioned during our last call that we are working on a strategy to broaden our position in China.

We are a spending considerable amount of time and attention on that. More updates will be coming, and I expect to have something tangible here to discuss in the coming months.

Let’s now spend a few minutes on pillar two. If you recall, pillar number two is to increase our commercial efforts in large geographic markets across the world, so we can take advantage of this ever-growing product portfolio that we have.

Let’s start with the U.S. in Q1.

Remember my earlier question: What’s going on? When I step back from it, what I can see is that during the last several months, while I have been aggressively working on our sales model, we’ve initiated a number of changes.

One of the most obvious changes to us was coverage. It’s that coverage challenge that led to the Q1 results.

We participate in under 10% of the U.S. market today in terms of coverage.

To be specific, we have a sales rep assigned to less than 10% of the surgeons in the U.S. market, which then of course leaves more than 90% of the surgeons available for us as an opportunity for growth.

And that is what really is driving this pillar of commercial expansion. We’ve focused first on expanding into 40 of the top 100 metro areas where no Alphatec products are sold and no Alphatec sales representatives exist.

We’ve made really great progress. As of May 1, tomorrow, we will have 32 of those 40 positions filled.

This will make a modest difference in Q2, but Q3 and Q4 is really where it’s at for them. And that’s where this commercial expansion is going to make the difference, both in coverage, which is rather basic, but also combined with our rich product pipeline.

With respect to our international markets, I’ve stated that our intension was to expand into eight basically untouched European country markets. We have initiated sales in four of these countries, and we expect to sign the rest of them before Q2 is over.

This is going to give us a strong momentum in the second half of our international expansion. Suffice it to say, those four new country initiatives didn’t really contribute to the 25% growth we achieved during Q1, and again, this leads us to the second half story.

With respect to pillar number three, transforming manufacturing and distribution operations, I can report that the second wave of Arsenal instruments, which resulted in the full launch, were received at the targeted 50% reduced cost basis that I mentioned in prior calls. This causes us to spend less capital than we would have otherwise spent to achieve the same launch with greater efficiency.

This is rather core to our return on invested capital objective and accumulating cash for the next two to four years. With respect to our physical distribution strategy, Arsenal is already operating in our new model, where we centralized inventory and managed the set terms.

So although Arsenal will achieve higher turns than the rest of our set inventory, we have formulated our final strategy in terms of how we’re going to manage physical distribution. We will be rolling that out here in Q2 and Q3 and expect to have it fully implemented by Q4.

We’ve made great progress on the manufacturing side, where we continue to experience significant improvement from our Lean manufacturing methodology. This leads us to lower inventory over time, so we continue to experience improvement in our manufacturing margins and our ability to manage inventory at lower costs.

So I look forward to the Q&A, where we can talk about any of your questions or thoughts that you have about our results and our progress on our strategic initiatives. Now, Mike is going to take a few moments and take you through the details of our financial results and provide an update on our outlook for the remainder of the year.

Thank you, Jim. As Jim has already provided the key revenue highlights of the first quarter, I will focus the majority of my remarks on the reported operating performance for the first quarter that ended March 31, 2015.

I will then provide an update on our full year 2015 guidance. Before I go into the financial details, I would like to discuss currency as it relates to our first quarter results.

The strong U.S. dollar affects us more than most of our pure play spine peers due to our higher share of ex-U.S.

revenue. Approximately 37% of our business as reported this quarter was international.

This represents our highest quarter of international contribution to the top line. While the impact is most evident in our top line, currency and geographic mix also impact our gross margins and adjusted EBITDA.

Our consolidated revenues were impacted by $3.2 million of currency headwinds, primarily related to declines in the valuation of the Japanese yen and euro against the U.S. dollar.

When adjusted for currency, consolidated revenues were up 5.4%. Our consolidated gross profit for the first quarter was $32.9 million, compared to $33.3 million for the first quarter of 2014.

The decline of 1.1% over prior year was primarily due to lower sales volume in the U.S. Our Q1 gross margin of 67.7% was unchanged over prior year.

During Q1, we realized margin improvement because of our continued due diligence at managing overall costs and capital utilization. However, those improvements were offset by unfavorable variation in regional mix, where international margins are generally lower, combined with the negative effect of foreign currency translation.

Our U.S. gross margin was 70.8% in Q1 compared to 71.9% in Q1 of 2014.

In Q1, we realized margin improvements in the U.S. associated with continued underlying improvements in operations.

However, unfavorable variation in product mix more than offset these improvements. International gross margins on a reported basis were 62.5% for Q1, compared to 59.8% in Q1 of 2014.

Against a backdrop of negative currency, we continue to reap the benefits of restructuring our French operations in 2014. Total operating expenses for Q1 2015 were $31.8 million, a decrease of approximately 16% compared to the first quarter of 2014.

When compared to the prior year, Q1 of 2014 included $4.8 million of trial related expenses associated with the OrthoTec litigation and $800,000 associated with the French restructuring. After adjusting for these items, total operating expenses for the first quarter of 2015 decreased by $500,000.

The leadership team is regularly evaluating the business and realigning resources and priorities to offset the foreign exchange impact and the fund the execution of our strategic pillars, including the lateral and deformity programs and global commercial expansion. Adjusted EBITDA, a measure we guide to, was $6.5 million in the first quarter of 2015, or 13.4% of revenues, compared to $6.7 million or 13.6% of revenues reported for the first quarter of 2014.

Again, adjusted EBITDA was unfavorably impacted by fluctuations in foreign exchange flowing through gross profit during Q1 when compared to prior year. Please note that adjusted EBITDA for the first quarter excludes the effects of interest and other expenses, taxes, depreciation, amortization, and stock based compensation.

Having generated a GAAP operating profit for the fourth sequential quarter, our GAAP net loss position is primarily a function of our debt structure and the associated interest expense. GAAP net loss for Q1 2015 was $4.6 million, or negative $0.05 per share, basic and diluted, compared to a GAAP net loss of $6.7 million or negative $0.07 per share, basic and diluted, for the first quarter of 2014.

Our total current debt is approximately $84 million, approximately $58 million from Midcap Financial, our senior secured lender, and $26 million from Deerfield. As a result, we expect to incur approximately $7 million to $8 million in cash interest expense throughout 2015.

As of March 31, 2015, unrestricted cash and cash equivalents were $11.4 million compared to the $19.7 million reported at December 31, 2014. Additionally, the company has $5.7 million of restricted cash, which must be used for the future payment obligations associated with the OrthoTec settlement obligation.

With that, I would now like to provide an update on our forward-looking guidance for 2015. We base our guidance on two things: an assessment of the overall spine market and our strategic focus for the year.

As Jim mentioned, we’re making progress on our strategic pillars. We expect progress to be reflected in our results for the back half of 2015.

As a reminder, given the foreign currency headwinds, we issued revenue guidance in constant currency versus 2014. In 2015, we are reiterating our guidance of full year constant currency growth of 3.9% to 7.2%, which represents constant currency revenue of $215 million to $222 million.

As our momentum on commercial expansion gains traction, we believe you should anticipate revenue accumulation to occur in the second half of the year. We reiterate our guidance for non-GAAP adjusted EBITDA and continue to expect it to be in the range of $34 million to $37 million, or 10.4% to 20.1% over 2014, and representing 15.8% to 16.6% of annual revenue.

Our adjusted EBITDA guidance reflects the continuing improvements associated with our global business as well as our commitment to improving the profitability and cash flow of the company. The leadership team is actively managing for profitability.

While we experienced some challenges in Q1, we know what the issues are. We have the right team in place, and we are executing on our plans to realize our second half expectations.

Earlier in the year, we publicly articulated the management team’s strategic direction for the company. Today, Jim has spent time reviewing the three strategic pillars and the commitments we have made with respect to our public scorecard.

The senior leadership team is confident that the actions we are taking and the plans that we are executing should deliver our strategic objectives of accelerating revenue growth, generating free cash flow, and improving the return on our invested capital. With that, I’d like to turn the call back over to Jim.

Thanks, Mike. 2015 will be a year of transformation for Alphatec.

Together with the leadership team, I am focused on our three strategic pillars: one, innovating in large, market-driving product segments; two, expanding and deepening our penetration in large global markets; and three, improving profitability through improvements in manufacturing and our physical distribution model. We believe this refocusing of our product development strategy, combined with the expansion of the company’s U.S.

and international commercial footprint, will enable us to compete globally and accelerate revenue growth. At the same time, we are executing on strategies to increase our return on invested capital and accumulate cash through a reduction in the cost of goods sold and the implementation of processes aimed at lowering our capital commitments.

The combined effect of these initiatives should yield an improvement in the fundamental quality of the business, leading to achieving our ultimate goal of 20% EBITDA margins within the next three years. We believe this will result in our ability to more efficiently provide products and systems for physicians treating patients who need spinal fusion, increased profitability, and enhanced valuation of the company.

With that, I look forward to answering any questions you may have.

Jim and team, congratulations on the progress in each of your three strategic pillars. It’s only been one quarter into the strategic initiatives that you’ve laid out, at least publicly.

And I guess just with the progress that you’ve made, you call out 75% completing the expansion into new metro areas in the U.S., 50% complete sales distribution in the European Union, but how quickly can you complete these initiatives? And then how should we think about those timelines?

Could some of these be done by the end of 2015?

That’s actually a great question. Let me try and characterize them for you.

Let me take the pillars in order. The product development and the go-to-market strategy is on schedule.

So for example, Arsenal is right now in full launch. CVX, we have our first cases scheduled in the limited market release here in the coming weeks.

The same is true for Battalion. And those are principally the big product initiatives that we’re expecting for this year.

The lateral and deformity systems we’re expecting in the first half of 2016. Those are on schedule.

When you move to the commercial footprint, our first stage of the U.S. expansion was to establish representatives in 40 of the top 100 metro areas.

And we’re at 32, and we believe that we will accomplish all of those 40 within Q2. So that means through the second half of the year, we’ll be developing those new markets.

With regard to the European Union, the additional four markets we plan to enter, we plan and believe we’ll have that also executed in Q2, which will give us the second half to, again, develop those new markets. The fundamental physical distribution transformation, we expect to compete by Q4.

And that will have a big effect on our ongoing capital needs for replenishment of instrument sets, because we’ll be managing them much more effectively. With respect to Lean manufacturing, that’s quite an ongoing activity.

We’re in a market that has consistent, although not dramatic, price competition in the mid-single digits. For us to constantly maintain margin, we have to, of course continue to improve our manufacturing efficiency, which we expect to continue doing.

So we’ll see a lot of things happen. The second half is really when we should see the benefits of these initiatives.

And maybe if I could follow up with just a focus on the U.S. sales force expansion, especially in light of the Q1 performance in the U.S.

and thinking about how that can rebound. Can you just give some more color in terms of how you’re building onto these metro areas and maybe if you want to quantify the number of sales rep adds, essentially where they’re coming from and their background?

And then when they can potentially star to contribute meaningfully to domestic revenue growth?

As I said, 32 of the 40 will be filled by tomorrow. And in terms of background, virtually all of them are coming from a spine background.

So from a training point of view, they will be rather up to speed from an anatomy and physiology and technology point of view. They will be establishing Alphatec in new markets and we do expect that will take some time, although Q2 will be, I would say, probably a modest contribution.

Q3 and Q4 is where we should start seeing the impact of those positions. Now, the other eight of the 40, we do expect also to have during Q2, and we are targeting a spine background sales rep.

These actually all are employees in virtually every case.

And then last question is just with all the progress you plan on making in 2015, and with some of the, I don’t want to call it restructuring, but with these initiatives in play, 4% to 7% constant currency growth, I know you don’t want to give out your guidance here or 2016 guidance, but maybe directionally how we should be thinking about a revenue growth in the out years? Should we be expecting or modeling revenue growth acceleration?

We aren’t quite prepared to give out 2016 guidance, but it is our strategic goal to achieve double-digit growth over the next three years. So if that can be helpful to you, you might think about that as our goal.

My first question is, U.S. sales were down about 5% year over year.

I think if you look at your strategy, you’re basically taking territories and you’re just cutting them. So you’re taking away what the reps aren’t using.

So I wouldn’t have expected the revenues to be down if everything you’re doing is incrementally additive. So my question is, is it pricing?

Was it volume? What drove that year over year decrease in the U.S.?

It’s a great question. We studied this issue very deeply.

Let me characterize it a couple of different ways for you. First of all, in our previous model, our coverage, our reps, both sales agents, sales distributors, and a few direct reps, did not add new treating physicians on a very consistent basis.

That was underlying the sales model. And by going from geographic sales territories to physician-centric defined sales territories, it enabled us to expand.

The adds weren’t happening, so it only takes a rather what I would describe as a phenomena of combination of price and caseload. When you’re not participating in a full market… We know the market is growing.

It didn’t for us during this quarter, and we had very consistent with market experience in terms of price decline. Our volumes were about the same year over year.

And so if you just apply a market price decline, you end up where we were without adding significant new customers. So for us, this transformation strategy, where we are expanding into these 40 metro areas, is going to be a real opportunity for us to increase our top line.

But to clarify that, if you’re down 5%, your volumes are flat, that means your pricing is down 10%. So you would either lose a couple of docs, which is fine, or your pricing was down 10%, per that statement.

Where am I wrong?

The pricing wasn’t down 10%, but you’re dissecting something. We had case volume down, broadly, in our population of physicians.

And we didn’t add a lot of new physicians during that time. So it had the result it did.

That’s one of the consequences of a narrow base. You get accelerated effect of both price and case volume.

So as you’re basically going forward, as the new reps become productive, they add new docs and this all starts to turn around as we head into the back half of the year, is the takeaway?

That is absolutely the takeaway.

And then the next thing is, you were expecting to launch Arsenal in Japan in the third quarter from the timeline you gave us previously. Does that move up with the approval that you have in Battalion in Q2?

Do you change and accelerate the launch plans for Japan giving the clearances?

Yes. Well, I may have miscommunicated that.

So, Arsenal has been launched in Japan, in April. Is that the question you’re asking me?

We have moved up the launch.

But we did move it up, that’s correct. We did move it up.

I’ve got the question now. We had anticipated that we would get approval in Q3 and launch in Q4.

And what occurred is we received approval in Q1, both for regulatory and reimbursement, and we shipped our first Arsenal sets in early April to Japan and they’ve been trained and we have commenced doing cases.

And then what about Battalion? Is that going into Japan now as well?

Or is that delayed?

It isn’t delayed. It wasn’t scheduled until later in the year.

And so it is not delayed. We haven’t received approval for it yet.

First, on the revenue guidance for the year, you maintained your constant currency guidance, but the dollar probably has strengthened a bit since you last reported. So what do you anticipate in terms of reported revenues, growth rates or exact numbers?

We’re not in the business of forecasting exchange rates, and so we’re sticking with the constant currency approach that we identified with our annual guidance for 2015, and we’re reiterating that. I don’t see value in the company trying to forecast what future exchange rates are going to be.

Okay. Sometimes, companies will say on their calls, you know, if you take current exchange rates today, this is what the reported number would look like.

But you don’t even want to go there?

No, I really don’t. I think the exchange rate situation is well documented.

We went at length to provide constant currency guidance, and we’re sticking with it.

My second question has to do with the Arsenal launch. I wonder if you can give us some more specifics regarding how many surgeons have been trained so far in Arsenal.

What percent of these surgeons are new to Alphatec? And then what is the capture rate?

In other words, of the new surgeons coming in to be trained on Arsenal, what percent actually, after the training, go back actually to cases and start to become current or consistent users?

Those are great questions, I’ve got to tell you. [laughter] Some of those things we don’t disclose publicly, but here’s the one that we do.

Up through February, well over 50% of the surgeons who used Arsenal between July and February were new users for Alphatec. So that’s one element.

Now, when we plan forward, we can imagine that the 40 positions that we are filling in 40 of the top 100 metro markets, almost everyone they go to will be new for us. So we do expect and believe that Arsenal is going to be an important contributor to our growth, and that might be a framework that you can use, hopefully.

That’s encouraging, because that’s where incremental growth comes from, picking up new surgeons or surgeons using Arsenal. And then just last, on Arsenal, is this being priced at parity with the older Zodiac system?

Is it a premium? Is this going to give an overall lift to your pricing power in 2015?

The answer is, we will price and compete in the market. For us, although it’s a premium to Zodiac, it’s quite a jump in competitiveness.

At the same time, we are competing in the market, and we will price competitively to gain share. So for us, gaining share is the core objective.

Our margins are quite strong, and we expect them to stay that way. And we will, therefore, be pricing consistent with market.

Thank you to all of you for calling in today. I think that concludes the questions and our time for today.

Thank you.