STAAR Surgical's (STAA) CEO Barry Caldwell Presents at 39th Annual Deutsche Bank Health Care Conference (Transcript)

May.10.14 | About: STAAR Surgical (STAA)

STAAR Surgical Company (NASDAQ:STAA)

39th Annual Deutsche Bank Health Care Conference

May 07, 2014, 03:30 PM ET


Barry Caldwell - President and Chief Executive Officer

Stephen Brown - Vice President and Chief Financial Officer


Seth Damergy - Deutsche Bank

Seth Damergy - Deutsche Bank

I'm Seth Damergy, I'm a member of the Deutsche Bank Healthcare Banking Team, and I'm pleased to introduce the management team from STAAR Surgical. With us we have Barry Caldwell, CEO; and Steve Brown, CFO. And basically we're going to go through a little maybe 20 minute session, then we'll open it up for Q&A. And we're using [indiscernible], so if you have any questions in the audience, just please log-in and we'll attend it.

With that, I'll turn it over to Barry.

Barry Caldwell

Great. Thank you, Seth. And I want to thank Deutsche Bank for putting on such a strong conference, and the hospitality that they extend it's been a real good day here. Thank you, Seth.

First of all, as you've seen all day-to-day, there will be forward-looking statements made here, and you should look at our regulatory filings to get all the current information as to our products and projections.

We participate in vision correction. Two large market opportunities here. We've got some nice competitive advantages. We're well-positioned with new products coming out as well as new products in our robust R&D pipeline. Our balance sheet is pretty good and get stronger and we've got nice leverage in our P&L going forward.

So the key areas in which we focus are strategically are lenses that go inside the eye and delivery systems associated thereof. So there are two basis different types of lenses in which we focus. First of all, cataract IOLs, huge market. We have to be very careful in what markets we participate. We have to go and get a premium. You can see it was 33% of our business last year and the same was true during the first quarter.

The real strategic driver of our business is the refractive ICL. This is a lens for refractive surgery. You can see it was 61% of our business during the first quarter and that was same for all of last year as well. It carries a higher gross margin. And in lens-based approach to refractive surgery, we're in number one share position.

So as we look at STAAR today and going forward, what's an easy way to look at it? I think, first of all, in terms of the ICL penetration, this is a market we would anticipate double-digit growth annually. Our gross margins here are 85%, though we're only directing in three markets today, that's Japan, U.S. and Spain, and we've got a nice set of new products that are being launched throughout the different regions of the world today.

Secondly on the IOL side and the target here is profitable growth. We got to be careful again, what markets we enter. We expect this to be a single-digit grower for us, as it has been. Gross margins here a little different, in 60% to 65% range.

And then the other key driver for us, as you look forward is we've been going through a plant consolidation in terms of manufacturing. We will finish it at the end of June. So this has been a three-and-a-half-year project, that's cost the company over $6 million, but you'll see the benefits as we get to that side. Our gross margins will expand as well as our tax rate going from having been 50% in the last couple of years to 10% for several years.

So first, let's look at the ICL. The strategic driver, as we call it overall of our business, it's about a $3 billion addressable market. So LASIK has been under a lot of downward pressure. The majority of these procedures are performed by LASIK.

According to Market Scope's latest report, just out a couple of weeks ago, they are expecting to see growth returning to refractive surgery and you could see they're projecting over 4 million procedures in 2019.

We're currently only about a 3% player in this total $3 billion-plus addressable market. You can see our revenues last year are little bit over $44 million, which was 26% growth at an 85% gross margin.

If you look at, I'm going to show you 12 key markets in which we focus today. If we can get to an average 10% level of those markets, it's $300 million to $350 million in end-customer sales. And I'll show you one market we're over that 10% and one that we're very close to it today as we stand.

So what is the ICL? The ICL, most consumers think of it as an implantable contact lens, putting the contact lens in the eye for vision, indeed though it means an implantable collamer lens. Collamer is the material. So the basic ICL corrects distance vision or myopia. We also have a version of lens called the Toric ICL, it corrects astigmatism at the same time. And this is a product you'll hear about that we recently got a favorable vote before the FDA panel on March 14.

So we look at the competitive landscape. Two ways to look at it, the lens-based approach, where we are, and as I said, we're the dominant player here. There are other players. And two of the three larger players, Novartis, Alcon, Abbott AMO, participate in this market, but their lens is set on top of the iris, and there are some distinct disadvantages to deem there. And we're the only lens in the market which fits under the iris, which I'll show you a little bit more in a minute.

So we don't really look at the lens-based approach, as being our real competition. We look at LASIK as being the overall competition. Most people think of LASIK, they know it in the U.S. They think it's magical, it's a laser, it's not invasive, but in fact there is a flap created.

And you can see on the right-hand side of the slide that flat is created by either a blade or a laser, that flap is raised, and then tissue is burned away. So that when the flap drops back in place, the flap creates more of a natural curvature of the beam of light back toward the back. And obviously you can't redo LASIK. You can't put back tissue that you've taken out.

With the ICL, the incision is made. It's about the opening and the end of view ballpoint, that's about the size of the opening. The lens is rolled up and goes into the eye. That wound heals in about 48 hours. Whereas that LASIK flap you see, if you were to come back three, four, five years later for an enhancement, surgeon will basically take a pair of forceps, lift that flap back up. It doesn't need to recut, because it doesn't actually heal.

One of the reasons we deal real low with the U.S. army here is when soldiers is sent off to places where there is a high amount of wind or sand, dust in the air, a LASIK patient, if you aggressively would have rub your eye, you can't dislocate that flap. And if that happens to a soldier in the field, they have to come back home to the U.S. and that's a big expense overall to the army.

The ICL for some reason, you didn't like it, there's wrong power, wrong link, you can take it out and put the right one in. There is no inducement of dry eye, whereas with LASIK there is an inducement to dry eye, since you're cutting into layers of the cornea. And one of the things with ICL we're learning more now today is that future options are preserved.

So for example, with the LASIK procedure, we're learning now patients who have LASIK 15 or 20 years ago as they become of cataract age, they're not being offered some of the newer technology, cataract IOLs like multifocal or accommodating, because since the cornea has been altered, they can't precisely get the right power of lens to put in the eye.

With vision correction, it's very interesting, patients come in the door and tell surgeons what they need. I need LASIK. Doc, I can't see distance or my distance is blurry, unlike other medical issues. It turns out though 8% to 12% that come in the door saying, I need LASIK or I want LASIK really aren't candidates for LASIK for multiple different reasons.

So if they already have dry eye, they're contraindicated. Their cornea could be too thin, they could have too high of a degree of myopia and/or stigmatism. And our initial thrust is, as I said getting into that 10% level is just to get these patients that are contraindicated for LASIK overall.

Our latest version of the ICL is called CentraFLOW. And what we've done with this is we put what's called the KS-AquaPORT right in the center of the optic. You can see down on the bottom left of the slide, that's an ICL. On the right hand side you can see where it fits. The brown or greenish there is our iris, that's our colored part of the eye.

That crystalline lens bulb, which is yellow, that's our natural crystal lens, which we all have today, but when we get older, it gets cloudy, it gets hard, we call it cataract, we want it out. And the blue is where the ICL fits. And you can see it kind of creates a barrier between flow from the back of the eye to the front of the eye.

So today in the U.S. for example, if a patients comes in, you want ICL, the surgeon will say, let me measure the power, order a lens, schedule surgery two weeks from today, but a week from today I want you to come back and I want you to come back because I'm going to YAG laser and I'm going to make two holes in the colored part of your eye, the iris, two little ports in the iris, so that they know the flow of fluids going to be adequate from the back to the front of the eye, once the ICL is put in place.

That same patient goes to Europe today with our CentraFLOW technology and a doctor will say, let me take a power reading, come back tomorrow, we'll do surgery, because of the port in the center, the flow is adequate within the eye.

Now, last half of last year we got approval in India as well as Korea for this technology. It was approved all of Europe last year. We got Japan approval, March 3 of this year. And on May 15, we have a China FDA panel meeting on this, which we should be notified within the five days, after May 15. You can see that during the first quarter, 60% of all of our ICL shipments were the CentraFLOW technology.

This is a market data and what it shows is, this is from Market Scope, a third-party, kind of the Bible of refractive medical device companies. And these are the 12 target markets, which I told you earlier, if you take a look at. And you can see overall refractive procedures, in eight of the 12, which is the pink or the red there, they decline. The ICL procedures on other hand grew in all 12.

So you can see we grew market share and some of these shares, Korea, last year, 12.4%; Middle-East, 9.3%. But if you look at the top three, where some of the technology is just now being approved, China 1.6%, U.S. 1.2%, Latin America 1.7%. There is a lot of room for opportunity of growth in those larger markets overall. And if you combine all 12 of these markets, you'll see that overall refractive procedures declined 4.6% last year, whereas the ICL technology grew 25.5%.

And this shows regionally how that breaks down and by those 12 key markets. Last year, Europe grew 29%, Asia-Pacific grew 19% and North America grew 19%, also in terms of overall procedures. So procedure growth globally last year was 22%. Revenue growth was 26%. You can see in Europe, it was 41%, Asia Pacific 20% and North America 16%.

Technology that we have under submission right now for CE Mark, which we believe will have late this quarter. It's preloading the ICL. Currently, the ICL comes in vial. And the vial is like this. There is an ICL in here trust me. It's hard for even me to see, even though it's right here in front of me. And today, a surgeon or scrub nurse in a low-light environment has to go in with forceps, push this out, put it into a cartridge system properly, close the cartridge, put it into injector systems.

You can see at the bottom, basically we are sterilizing the ICL already in place in the injector systems and only that reservoir needs to come off and they're ready to implant the ICL. It takes away about one-third of the procedure time overall, makes the delivery much more consistent.

Next project we're working on in terms of evolution of the ICL technology is called, and this is an already project 6a and 6b. First, let's talk about 6a. We all, most of us know or kind of know or don't want to recognize the fact that at some point our eyes start to change, and we no longer can read, for example, myself. I don't like to stand in front of you with glasses as Seth pointed out before I started, but if you look at me all day long, while I'm working into computer or reading I have to wear glasses. I see better without my glasses for distance vision, but I can hardly read or a little bit without them.

So let's say, you are a patient, and you have myopia, maybe you're 35 years of age. And you're trying to make a decision here. Do I go have LASIK or ICL or do I do nothing. And one of the factors is that in early, say about, age 42 or 43, you're going to start to need reading glasses. So basically the trade-off is for seven years I can go without glasses for distance, but then I'm going to need them for reading.

With the 6a, what we're doing is we're putting in a reading ADD of about two diopters, so your brain would go to use that optic for reading once you become 42 or 43 and you may get an extension till age 50, for example, where you won't need any correction for reading. So now that five or seven years being without glasses with age 35, might be 15 years or more. So this helps penetrate our current market and be more competitive against LASIK or do nothing for that patient.

The 6b is really for someone more like myself. Presbyopia is fully set in. I need over three diopters of reading ADD to be able to really read properly. And if you told me, I could get rid of my glasses by putting an ICL in with a multifocal type optic or trifocal optic, knowing that maybe I can get seven or eight years before I develop a cataract, maybe little longer, and I can go without those reading glasses, I am in. This is a huge market. This is a market we don't address today.

There are about 3.6 billion eyes in this market. And this has taken a proven platform like the ICL where over 425,000 implants have been made and putting on a known optic that works today. So we're excited about this. We think this product should be available in Europe early 2016. The V6a should be available at the early part of the 2015.

So looking at expanded market opportunities, I said we got a favorable vote from the panel at March 14 here in the U.S. for Torik. So we're hopefully looking forward to launching Torik in the U.S. here shortly. And I told you about Japan approval and other approvals that we're working on overall.

Now let's talk a minute about the U.S. opportunity. When we look at the 60-plus markets where we have both the regular myopic ICL as well as the Toric ICL, about 40% of the units are Toric -- I'm sorry, 50% of the revenue is Toric. So as we look at the U.S. opportunity, what we would expect to happen is that our U.S. ICL sales should basically double in the first 12 months.

Now, we do have surgeons talk about and we have surgeons who came during the public session of the FDA panel meeting and testified they have a list of pent-up demand of patients. So they start calling those, how many of those were actually come back in, I don't know. But we will be focused on them.

This shows you an example of the patient group from the Toric ICL study for the U.S. The image on the left is what a normal 20-20 eye would see. The image on the right is what the patients in the study could see without glasses or contact lenses. As you can see it's just barely a ghost of the image is. However, post-op, 82% could see on the left, like a 20-20 eye and over 50% of the eyes could see even better than that. So it's really a life changing technology particularly for the average patient group that was in the study, which was presented to the FDA.

One other things we've experienced that we've been good at, and I'm going to flip-forward one slide here is that we've had success recently in our social media work, trying to create a consumer awareness and consumer education about the ICL.

In the U.S. today the ICL is barely know, but if you go to other markets like Korea, it's well-known. And so we've been getting very good hit rates overall on patients having surgery, having visited our website. So we're looking to expand that this year and nibble little bit more on the pull side of marketing, whereas we think we've been pretty good on the push side in the past.

The IOL side, large market, 60% to 65% gross margins, we have to be careful what markets in which we participate. Our sales last year grew 5% in constant currency. Over half of our IOL sales are in Japan, that's why I quote, constant currency. First quarter, we had 12% growth in constant currency.

We had some supply issues last year from the third-party vendor. We've renewed a relationship with them and we now expect to get significant increase this year in terms of these IOLs. So we expect this to be in upside for us overall this year. And you can see first quarter growth was 4% as reported and 12% in constant currency, while our units increased 16% during the first quarter. And this shows where that growth comes from, Japan and Europe mainly, that's where this KS-IOL product is distributed.

This shows you our first quarter results overall. We did have $1.4 million of FDA panel expenses that hit us during the quarter. The March 15 panel meeting was originally scheduled for February 15. We had our whole team of about 50 people in Washington when the snowstorm hit. And we were stranded there for three days. So in essence, we did during the quarter paid for about two FDA panel meetings instead of one, so we actually only had one.

And then on non-GAAP basis you can see our results. Overall, we ended the quarter with balance sheet strong, $21 million in cash. We've been making investments. We invested over a $1 million in ICL inventories, preparing for the transition of closing our Swiss facility at the end of June. Also building up our Toric ICL inventory for potential launch in the U.S. as well as adding sales reps in the U.S.

We have had four facilities that's consolidating all into one. As you can see, the costs $6.4 million over three-and-a-half years will be finished in June. We're expecting to have a nice impact on our gross margin as well as our tax rate. And this kind of shows you what the P&L will look like.

On the left, here are the 2014 average estimates by the five analysts that cover us and you can see what their projections are. What we've said is draw a line in the sand beginning the second half of year, in the first 12 months after consolidation, what are the changes in common. You can see in gross margin, it goes from about 72% overall, based on their estimates to 78%, 80%.

And then we'll go down to the difference between the net income line and EPS. You can see our tax rate drops to 10%. And that 10% rate will be in place for full year in 2015 and should led us till 2020 or 2022 depending upon our growth.

Some key catalyst in front of us. The CentraFLOW approvals throughout the world; launching the preloaded ICL in Europe; hopefully, getting the opportunity shortly to launch the Toric ICL in the U.S; getting through consolidation and starting to see the P&L benefits in second half; getting an increased supply of our acrylic, that's the KS-IOLs that we had limited supply last year. And then launching in the first half of 2015, the V6a project overall.

So with that, Seth, if you like we can open up to any questions, if you or others have.

Question-and-Answer Session

Seth Damergy - Deutsche Bank

Thank you, Barry. So we've got our 40 minutes on. I think we have a couple of questions in the audience. So go ahead.

Unidentified Analyst


Barry Caldwell

Thank you, Christine. And then I'll repeat just to make sure the webcast could hear that. The question is limiting [ph] gain factors potentially, when you can launch Toric in the U.S.?

So let me first go back to our game plan. Our launch plan is to focus on the top-150 current users of the ICL, that represents about 80% of usage in U.S. today and just fully penetrate those accounts. So you mentioned pent-up demand, making sure that we get through that pent-up demand, that we have good visibility to what the demand is.

In the other markets, it's about 40% of the units. So we're prepared and we've been investing and building inventory in Switzerland for this launch. So we think we're fine if we have about the same unit number of Toric ICLs for the first 12 months as we have myopic ICLs. If the pent-up demand is higher than we expected, then we could have some backorder issues or some delays.

Now, with the Toric ICLs there are a lot of SKUs. And currently we're able to ship 75% to 80% straight from stock. So 20% to 25% have to be custom made. I suspect in the U.S. depending upon how quickly it ramps up, that rate maybe lower. We may start at a 50% to 60% straight from the inventory.

That only takes us about three, three-and-a-half weeks to make a lens, but that would put delay a little bit overall in the procedures. So as long as the pent-up demand is kind of what we think it is and we're able to gage it closely, I think from a manufacturing product supply point of view, we should be fine.

Seth Damergy - Deutsche Bank

So Barry, I mean to piggyback off that question, with Toric coming on line, you've got -- first, do you think Toric opens doors that previously had been closed. And then second, as you start to fill out the bag and you add CentraFLOW in the future, V6a and V6b, I mean does that enhance your ability to better serve the patient population and capture more share?

Barry Caldwell

Yes. Good question overall. One of the things that we really have to be careful of I think in the U.S. with the launch is that our sales force remains focused. So one of the things we plan to do is we're going to commission them on those top-150 accounts. If they choose to go outside of those accounts, bring somebody new in, because I think they bring a long-term opportunity, they can do that, but I don't think we'll pay them commissions on that. So it's hard to discipline and stay within our focus, but I think it's very important likely in the first eight to 12 months of launch that we do that.

There will be more surgeons in the U.S. who now want to adopt the ICL technology, because they didn't have toured before, so they didn't want to kind to get one foot in the door instead of two. But I would think those surgeons are going to -- they're going to have to go through a training process, so it's going to take them a while before they could get product anyway. I think it's very important that we focus on those 150.

Now, we have added four or five new sales reps in the U.S. in anticipation to this launch. But one of the things we've also started investing in more so is our social media consumer awareness. And we've had some really nice benefits, as you saw in the slide, in terms of patients who have gone to our website looking for surgeon, actually converting into an ICL surgery or even in some cases a LASIK surgery.

We've been out recruiting for last eight or nine months to bring in -- we cover the Med-Device side pretty good, professional training, education of surgeons, but most of them is like myself, not experienced on the consumer side much at all. So we've bee out recruiting try to bring someone in, who would head up the consumer side of marketing for the ICL.

We extended an offer and that was just accepted earlier this week. So we're expecting new individual to start in about two weeks and really help focus in on what we've learned already. We've got six people currently in our social media department, they are focused in China, Japan, U.S., and in the Middle East. And make sure that we're getting all the target markets appropriately and that we're following it up. So a good example it is.

The last half of last year, the patient leads that we got through our social media work, only 68% were followed up by the surgeons. So that sounds bad, but it used to be 42%. So it's improved, but 68% obviously is not good enough.

And if a surgeon or his office doesn't properly follow-up than we're not going to jump, we're not going to move the leads there. But what's very, very interesting of the leads that were contacted by a surgeon's office, 62% of those had an ICL surgery, another 10% had LASIK. So a 70% hit rate on leads that we're generating for offices. That's very high.

So how do we get better than that, how do we generate more leads with that kind of hit rate, that's part of the objective we have on this new focus on the consumer side of our business. And we've seen in markets like Korea, where we were 12.4% of all refracted procedures last year. Our distributor there has focused on consumer education, consumer awareness, they know what an ICL is.

And I'll give you a quick one of these evidence that CEOs can always be wrong. With our CentraFLOW launch in Korea, one of the things they've done in the past, which they did with CentraFLOW was they did movie theatre ads on CentraFLOW, on that hole in the center of the lens.

So I said, when I'm there I want to go to the movie theatre and I want to see this. Of course, I can't understand Korean, and of course, I didn't stay for movie. But I could see enough from the ad, they're talking to the audience about iridotomies, iridectomies, about holes in the center of lens.

I came out. We had about six of our people there, outside the movie theatre. I am telling, guys you had got it all wrong. This is not going to work. We should be educating about the ICL, not about an iridotomy or iridectomy, the things you don't have to go to. But I was wrong, because in Korea, they know ICLs. And they've had above 10% penetration rate for a few years.

They understood that in the iridotomy, iridectomy is part of an ICL procedure. And as a consequence of those ads patient started calling offices and saying, I need that lens with the hole in the middle. So there is varying degrees of consumer education around the world. But one of the things it does show is where we have good consumer education and well-awareness, our penetration rates could be much higher.

Seth Damergy - Deutsche Bank

And maybe one for Steve. In the first quarter there was, I guess significant number of moving pieces on the gross margin line. The project Comets is completing and you've got your supply of source back on the IOL side. We talked about a slide up here going up to 80% on the margin line. How gradual or quick will that happen? Do you think this is going to remain choppy or where do you see the margin going?

Stephen Brown

Well, in the first quarter we were coming up to speed on ICL production in the United States. And so as they come up on learning curve, the production value of the labor was less than what we normally experienced in Switzerland. But that we'll correct. And actually the labor rate in the United States is less than it is in Switzerland. So we won't be facing that in the fourth quarter of this year.

In the second half of this year, after we get done with manufacturing consolidation, we'll be leveraging the overhead in one facility and we won't have two facilities operating. Also, in the first quarter we had some geographic mix issues. That we'll also correct in improved margin.

One of the drags that we're going to be experiencing throughout the year is the injector sets that we sell to our third-party manufacture for a preloaded acrylic IOL, and that's just been a very popular product. So the more that they sell and we sell of that product, the more injector sets we'll be selling to them. So that will be a continuing drag. But these other factors we'll correct.

Add to that, Toric ICL in the United States, once it's approved and its about 95% gross margin will begin to migrate our way up to that 80%. It won't be this year. However, it will take a couple or three years to get there. But as we exit this year, we'll be exiting at higher gross margins in the first quarter.

Barry Caldwell

Those injector systems, they too, it's about a 30% gross margins sale. And if you were to breakup our first quarter gross margin whereas in total it was 68.8%, if you took the injector sales aside at their 30% rate, the rest of our business which we want to grow and improve in, that was 70.2% overall, despite the things that Steve mentioned.

Seth Damergy - Deutsche Bank

And just staying along the lines of I guess injector sets, but more along the preloaded for the ICL, do you think that that will increase the efficiency of your sales force and allow them to improve throughput just to speed on the case.

Barry Caldwell

Really, really good question, because one of the things that we have to be careful of, both in U.S. and outside U.S. is going to the right type doctors. And if we go to a doctor that has to go to the hospital for rent a room, first of all, the economics are not going to be so good for him. He's only got to do a handful of these a year, and that being the most difficult part is really getting it into the injector system correctly. They want one of our sales reps there every time they do it. So you can imagine, if we choose a lot of the wrong surgeons, we're going to eat up a lot of selling time by being in these four or five procedures a year.

Now, with having preloaded, some of those lower volume surgeons should, one, feel a lot more comfortable doing the procedure. And two, we're going to feel a lot more comfortable training them and letting them do the procedure rather than focusing on just the high volume guys.

Seth Damergy - Deutsche Bank

So there has been a lot of M&A activity in ophthalmology, and some of the positive fallout is to my right from Bausch & Lomb. Do you think, I mean with this Valeant and Allergan is there any fallout to STAAR Surgical, is there any benefits or takeaways?

Barry Caldwell

Well, I had denied a few times that we would have the intent to acquire Alcon. But our strategic focus is when does it go inside the eye or delivery systems associated thereof. But I think if we go back and look at STAAR, we were trying to be a broad-mind player and we were basically good at nothing. And now with our narrower focus, we're going to be very good at this before we were to expand.

So if there is anything that becomes available that we could tuck-in within our strategic focus, yes. We're looking for that. I mean, we have a pretty active new business development team, of which Steve and I sit on every week. Last year, we probably reached out to about 30 different ophthalmic companies throughout the world.

We were just here two weeks ago for the American Society of Cataract and Refractive Surgery meeting. We met with about 12 different companies. Looking for technologies we can tuck-in, whether it's an optic design or lens design or material, a different delivery approach, those are all things that we would look to tuck-in to our line.

Seth Damergy - Deutsche Bank

Are there any questions from the audience? Maybe I'll just add one more. You had mentioned you have secured your supply source on the IOL side. What's your longer-term plan for that I guess that line?

Barry Caldwell

And as Steve mentioned, this KS-IOL lines is very, very popular. It's taking an Acrylic IOL that third-party makes. It's our design, preloaded injector system, and they just work great together overall. A very good product for our Japan market as well as Europe. We cut-off China last year after the first quarter, because it's a lower gross margin and we knew we were going to be limited in supply.

We'd like to have the opportunity in second half to maybe launch that in Spain, which we're now direct. But we got to be careful, even with more supply we could go back and dilute our gross margin, if we go to the wrong market. So we really have to be careful in these distribution markets where we go. But see there's a much bigger upside overall for us to assure that we did at the beginning of the year overall.

Seth Damergy - Deutsche Bank

I think we're at the end of time, so thank you.

Barry Caldwell

Good. Thank you, Seth. Thank, Deutsche Bank.

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