ZimVie (Ticker: ZIMV) has announced its financial outcomes for the second quarter of 2024, with revenues reaching $117 million. Despite a slight decline in revenue compared to the previous quarter, the company has maintained its full-year revenue guidance and is focusing on expanding its product offerings, including the recent FDA clearance for GenTek Restorative Components in the US. ZimVie's commitment to innovation and market expansion is reflected in its strong commercial traction with new dental implants and partnerships for scanner distribution.
Key Takeaways
- ZimVie reported Q2 2024 revenue of $117 million, with a slight sequential decline.
- The company reaffirmed its full-year revenue guidance of $450 million to $460 million.
- ZimVie’s newest dental implants, TSX and T3 PRO, show strong commercial traction.
- FDA clearance received for GenTek Restorative Components launch in the US.
- Partnership announced with Medit for scanner distribution.
- ZimVie expects to achieve 15% plus EBITDA margins one year post-spine sale.
- Anticipates adjusted earnings per share of $0.55 to $0.70 for the year.
Company Outlook
- Full-year revenue guidance remains at $450 million to $460 million, a slight increase from 2023.
- Sequential and year-over-year decline in Q3 2024 revenue expected, following seasonal patterns.
- Adjusted EBITDA margin projected to be around 12% for Q3, aiming for a 15% plus margin by April 1, 2025.
- Interest expense for 2024 anticipated to be approximately $13 million.
- Share-based compensation expense forecasted to be between $17 million and $17.5 million.
Bearish Highlights
- Q2 2024 saw a modest decline in revenue, down 1.5% in reported rates and 0.4% in constant currency.
- Projected decline in revenue for Q3 2024 compared to the previous year.
Bullish Highlights
- ZimVie’s digital portfolio, including the implant Concierge service and surgical guide sales, experienced strong growth.
- The biomaterials portfolio modestly outpaced market growth.
- The company sees stability in the market as indicated by the use of bone substitutes prior to implant procedures.
- Positive performance in Asia Pacific markets, especially in Japan, India, and Australia.
Misses
- A slight decrease in total third-party net sales for Q2 2024 to $116.8 million.
Q&A Highlights
- The company's guidance software and Implant Concierge services are growing over 20%, signaling a trend towards guided surgery.
- Confidence in the premium segment is high, with potential strategic interest in the company.
- Despite competitors exiting the market, ZimVie has maintained pricing in the premium segment.
- Reduced exposure to China, with no significant volatility in the Asia Pacific business.
- An open approach in Switzerland is currently maintained, with the possibility of future changes based on market share.
ZimVie's second quarter performance demonstrates a steady approach in a challenging market. With a focus on product innovation, strategic partnerships, and market expansion, ZimVie is positioning itself for long-term growth while navigating the near-term headwinds with a clear strategic vision.
InvestingPro Insights
ZimVie (Ticker: ZIMV) has shown resilience in its Q2 2024 performance despite facing market challenges. To add further context to the company's financial health and future prospects, key data and insights from InvestingPro can provide investors with a deeper understanding.
InvestingPro Data indicates that ZimVie has a market capitalization of $476.99M, which reflects the company's current market value. The P/E Ratio stands at -8.49, suggesting that investors are anticipating future earnings growth, despite the company not being profitable over the last twelve months. This aligns with the InvestingPro Tip that analysts predict the company will be profitable this year. Additionally, ZimVie has experienced a significant revenue growth of 95.27% over the last twelve months as of Q2 2024, showcasing their strong sales performance in a year-over-year comparison.
InvestingPro Tips highlight that while ZimVie's stock has taken a big hit over the last week with a price total return of -20.17%, the company's net income is expected to grow this year. This could indicate a potential recovery and upside for investors who are considering the stock's future performance. Moreover, it's worth noting that ZimVie does not pay a dividend, which could be a factor for income-focused investors to consider.
For those interested in further analysis and additional InvestingPro Tips, there are currently 6 more tips available on InvestingPro for ZimVie, which can be found at https://www.investing.com/pro/ZIMV. These tips may offer more detailed insights into ZimVie's performance metrics and future outlook, helping investors make more informed decisions.
Full transcript - ZimVie (ZIMV) Q2 2024:
Operator: Good afternoon, and welcome to ZimVie's Second Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Marissa Bych from Gilmartin and Group for introductory disclosures.
Marissa Bych: Thank you all for joining today's call. Earlier today, ZimVie released financial results for the quarter ended June 30, 2024. A copy of the press release is available on the company's website, zimvie.com, as well as on sec.gov. Before we begin, I'd like to remind you that management will make comments during this call that include forward-looking statements. Actual results may differ materially from those indicated by the forward-looking statements due to a variety of risks and uncertainties. Please refer to the company's most recent periodic report filed with the SEC and subsequent SEC filings for a detailed discussion of these risks and uncertainties. In addition, the discussion on this call will include certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP financial measures are included within the earnings release and/or the investor deck issued today found on the Investor Relations section of the company's website. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, August 1, 2024. ZimVie disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. And with that, I will turn the call over to Vafa Jamali, President and Chief Executive Officer of ZimVie.
Vafa Jamali: Thank you, Marissa. Good afternoon, and thank you all for joining us. I'm pleased with our execution in the second quarter, achieving revenue of $117 million as we continue to innovate across our portfolio of implants, biomaterials and digital solutions. We have also advanced our efforts to improve the margin profile of our business, rightsized corporate costs and optimize our operational footprint. Meanwhile, we continue to invest and scale our differentiated solutions to give our patients and providers the best possible outcomes. I'll now provide an update on each of our product portfolios. Starting with dental implant portfolio. We see strong commercial traction with our newest line of implants, the TSX and the T3 PRO. We believe that we continue to gain market share as we strive to expand the implant dentistry market. During the quarter, we launched a series of meaningful innovations to our implant offerings to strengthen our already comprehensive portfolio of surgical tools, abutments and restorative components. Last week, we announced the FDA clearance of the U.S. launch of GenTek Restorative Components, expanding ZimVie's portfolio of end-to-end prosthetic offerings. We first launched the GenTek portfolio in Europe in 2019 and have seen tremendous success in that market to date. These components support digitally-driven CAD/CAM restorations and are designed to provide the best fit and a tight seal crucial to implant success, supporting the long-term aesthetic and functional restorations. The introduction of GenTek to the U.S. market brings a broad offering of differentiated restorative components to the ZimVie product family. We like this segment, and we look forward to competing here. As of July, we have gained 510-k clearance for an expanded portfolio of titanium bars for our biotech abutments, growing its selection to include the most widely adopted full arch restorative platforms to support some of our most complex procedures. We will continue to deliver innovation across our implant portfolio in support of gaining competitive market share while simultaneously driving the expansion of the implant industry market as a whole. Now turning to our best-in-class biomaterials portfolio. During the quarter, we drove modest growth in biomaterials offerings, providers are recognizing the quality and efficacy of our portfolio bone graft substitutes, membranes, tissue products and regenerative products. In this segment, our growth continues to outpace market growth. We believe this may serve as a future leading indicator for growth in our implant offerings. We look forward to continuing to innovate within this portfolio throughout the back half of 2024 and beyond. Finally, we saw strong growth in our digital portfolio, which aims to provide customers with greater efficiency in their workflow. Our complete digital portfolio, excluding iTero scanner sales grew high single digits in the second quarter as a result of our commitment to driving penetration by making implants more accessible and efficient procedure for providers. The increase was driven in part by over 20% growth in our implant Concierge service service. Implant Concierge service removes hours of labor and cost by providing outsourced treatment planning, services and guided surgery solutions, taking significant workflow out of the dental office. We believe this service represents a large unmet need where the size of the market for implant Concierge service could be equivalent to that of the premium implant market. Additionally, we drove over 20% growth in surgical guide sales with RealGUIDE Software. On this note, we recently announced the release of Version 5.4 of our real RealGUIDE Software. The most significant enhanced in this version is a one-click nerve detection and automated bone and 2 segmentation. These features greatly increase safety and accuracy in less time. 5.4 also introduces a new cloud library updates and efficiency tools to streamline the customer's design experience. All of these features are aimed to enhance our ability to deliver quality, efficiency and time savings in treatment planning and assortative design for both patient and the clinician. I'm also very excited to announce our newest scanner partnership with Medit. We are now distributing this powerful imaging solution alongside our existing suite of technologies, expanding our addressable market with a broader range of scanner price points and technologies. The Medit scanners include iOS-driven apps and integration opportunities to help us create a seamless experience with the rest of ZimVie's digital solutions suite. We expect these features to enhance the adoption -- adoption of downstream products based on digital imaging. We remain very excited about the growth potential of our digital solutions and believe they are a critical piece of the strategy to improve the workflow of dental offices and ultimately reduce barriers to implant adoption. Beyond product introductions and innovations, medical education and training are greatly aiding in the adoption of our technologies. To date, we have trained over 1,400 providers on our products and technologies. Our programs are booked out through December 2025 as we continue our focus on expanding our presence in the market and in the field of implant industry as a whole. Our commercial advantage continues to stem from the value we deliver across our stakeholders, patients, clinicians and then dental lab. Our second quarter results reflect the resilience of our portfolio and our team's continued commitment. I will now turn the line over to Rich to review our financial performance and forward outlook in greater detail.
Richard Heppenstall: Thanks, Vafa, and good afternoon, everyone. I'll begin by reviewing our second quarter 2024 results for continuing operations, and we'll close by providing commentary on our outlook for the full year 2024. As a reminder, we finalized the sale of our Spine business on April 1, 2024. Thus, our Spine segment is reflected in discontinued operations in our financial statements. Please refer to our 10-Q for financial results from discontinued operations. Beginning with sales. Total third-party net sales for the second quarter of 2024 were $116.8 million, a decrease of 1.5% in reported rates and a very modest decline of 0.4% in constant currency. In the U.S., third-party net sales for the second quarter of 2024, of $69.3 million increased by 0.1%. Over the past couple of quarters, we have seen pressure on capital sales, which for us is the sale of oral scanners. We continue to see that trend in the second quarter. When excluding that impact, U.S. sales grew by 0.8%, driven by strength in digital solutions and biomaterials partially offset by weaker U.S. implant sales. Outside of the U.S., third-party net sales of $47.5 million decreased 3.8% on a reported basis and 1.2% in constant currency. We have seen stability in the U.S. dental market over recent quarters and our competitive position remains strong in the core markets we serve. When we exclude the impact of capital sales outside of the U.S., the business was flat in constant currency terms. Second quarter 2024 adjusted cost of products sold was 37.0%, roughly flat to 37.2% of sales in the prior year period. We expect improvement in cost of products sold over time as we streamline the organization, cut duplicative costs, improved manufacturing efficiency and benefit from a more favorable product mix as implant sales recover. Q2 2024 adjusted research and development expense of $6.3 million or 5.4% of sales compared to $5.6 million or 4.8% of sales in the prior year. Q2 2024 adjusted sales, general and administrative expense of $62.4 million compared to $61.9 million in the prior year. Other income in Q2 '24 of $3 million reflects income from transition services agreements resulting from the sale of our Spine business and offset stranded costs that remain in SG&A expense. Adjusted EBITDA attributable to continuing operations in the second quarter of 2024 was $16.1 million or a 13.8% margin. Q2 2024 adjusted earnings per share attributable to continuing operations was $0.13 per share on a fully diluted share count of 27.4 million shares. Adjusted earnings per share in the quarter was largely impacted by the timing of share-based compensation expense in the quarter. Q2 share-based compensation was $5.7 million, and we expect our full year share-based compensation expense to range between $17 million and $17.5 million. We remain on track to deliver on our adjusted EPS guidance for the year. We are pleased with the financial performance in the second quarter of 2024 as we continue to deliver on our plan to make strides to physicians ZimVie as a pure-play dental company. We remain committed to achieving our financial objective of 15% plus EBITDA margins 1 year post spine sale. Quickly turning to the balance sheet. As of the end of the second quarter 2024, consolidated ZimVie continuing operations cash was $78.6 million, and gross debt was approximately $235 million, yielding a net debt balance of approximately $156 million. Note, our net debt balance does not include the seller note from the sale of the Spine business. In addition, we continued to maintain our $175 million revolving credit facility, which remains undrawn. Turning toward our outlook for the full year 2024. We are reaffirming our full year revenue guidance of $450 million to $460 million, reflecting an increase of 0.2% at the midpoint compared to 2023. Specifically looking at the third quarter of 2024. Our third quarter is historically the slowest of the year due to seasonal impacts of the summer months. We expect our third quarter revenue to be sequentially lower versus Q2 and lower on a year-over-year basis by 3% to 4%. This trend is largely similar to the seasonal sales patterns we saw in 2022 and 2023. In conjunction with our seasonally lower revenue in the third quarter, we expect an adjusted EBITDA margin of approximately 12%. We continue to expect fiscal year 2024 adjusted EBITDA to be in the range of $60 million to $65 million, resulting in an adjusted EBITDA margin in the range of 13.3% to 14.1% of sales. As mentioned before, we remain committed to our 15% plus adjusted EBITDA margin by April 1, 2025. Turning to our interest expense profile. Considering our recent action to pay down a substantial portion of our debt and the payment in kind interest we began accruing on the seller note resulting from the sale of Spine. We now expect 2024 interest expense to be approximately $13 million, inclusive of the $3.1 million of interest expense in the second quarter of 2024. We expect share-based compensation expense to be in the range of $17 million to $17.5 million for the full year. And lastly, we are pleased to reaffirm our adjusted EPS guidance. Specifically, we expect to generate adjusted earnings per share of $0.55 to $0.70 per share on a fully diluted share count of 27.6 million shares for the year. With that, I'll now turn the call back over to Vafa.
Vafa Jamali: Thank you, Rich. I'm very proud of our team's execution in the first half of 2024 and believe that we have a great opportunity ahead of us. With that, we'll open it up to questions.
Operator: Thank you. [Operator Instructions] Our first question comes from the line of David Saxon with Needham & Company. Your line is now open.
David Saxon: Good afternoon, Vafa and Rich. Thanks so much for taking my questions. Maybe I'll start with a higher level philosophical question, just about your positioning within dental. So I mean, you have a very focused portfolio relative to competitors. So when you think about kind of reaching your desired scale, is that continuing to build out this implants portfolio with digital capabilities organically? Or are there certain product categories that kind of if wrapped around your portfolio would be complementary?
Vafa Jamali: Great question, David. Just on that one, yes, I think right now, what we've done so far is especially post the sales plans, really focused on how unique our assets are and where we're unique and that puts us square in the premium dental implant market. And what we've been able to do, which is, again, a bit more unique is really we have excellent gross profit margins, and we've been able to hold price really well. What's working well in conjunction with this is a rapidly growing and highly differentiated digital offering, which we believe can give us a unique position to expand the market. Now I also mentioned I think Implant Concierge can be a significant contributor. So we're -- as we're adding things like GenTek, which is a restorative and we're adding more color behind endpoint Concierge. We think that we can expand this market. I think selectively, we may look at other markets that are interesting, may be pressured a little bit for price. One of the areas [indiscernible] which may require us to have a slightly different implant but add a lot of technology to it so that we make the same advances we made with implants here but make it in that group. And we've got some work that we're doing there. So I think you can look at us the segment by procedure by procedure, go after the markets that we think are somehow either underserved or could use some tech to really accelerate them. So those are the key areas. We're happy with the announcement for the addition of the Medit scanner. I think that gives us a better margin profile to compete there, gives us a different price point to compete alongside the alliance to distribute [Technical Difficulty]....
David Saxon: Okay, great. Thanks so much. You broke up a little so hopefully, you can hear me. But just maybe my next question on iTero. So the Lumina's restorative launch was delayed about a quarter or so. Did that have any impact on how you're thinking about 2024 at all? If so, what made up that delta? And then can you talk about the Medit partnership? I mean, is that going to be maybe more of a value offering? And how does that kind of help your strategy?
Vafa Jamali: Okay. So sorry if I broke up there. If you look at the digital offering and you look at the scanners, without the scanners, our business did pretty well with scanners year-over-year, it's a worse pool. So equipment hasn't been great this year. And maybe some of it is because of the alumina that is to come sometime next year. So all of our miss in digital is from missing scanner sales. So we do think that, that is an issue that will resolve itself when the new product comes out. But in the interim, we've got this new relationship with Medit, which we actually don't believe that we're sacrificing our technology. It's quite a rich offering, but it does have different positions. It does have different lines in terms of future functions -- is quite well equipped. So it will satisfy what we need to do in terms of advancing customers to a digital platform, which, as we've mentioned before, rapidly accelerates the number of implants used and, frankly, the quality of the impact that comes out of it is a more digital act. So that is where we're at. I think you didn't ask your financial details on that to you do...
David Saxon: I mean if you want to share then go for...
Vafa Jamali: Rich, any color you want to add on this?
Richard Heppenstall: Yes. Yes. So contemplated in our guide, David, is the lower equipment sales. As Vafa mentioned, right, the delay of alumina, we kind have already had that kind of baked in our numbers, and so it's already contemplated in full year guide. And one of the prepared remarks that we made relative to iTero capital sales for us in the U.S. was when you exclude actually the year-over-year impact of iTero in the U.S., the U.S. business actually grew by 80 basis points for us. So it's something that we've been watching quite a while. The U.S. market, as you know, has been pressured. And so we're really pleased with our performance in the second quarter, particularly in the U.S.
David Saxon: Okay. With that kind of gets into my next question, if I could. So third quarter down, I think it was 3% to 4% year-over-year. I mean, I guess, last year, that should theoretically kind of already baked in the seasonality. So I mean, are you seeing anything in the market that's kind of causing this decline? Or is it conservatism? I mean -- and then also, what does guidance assume in terms of patient demand and traffic? Is it more stability? Or do you things get worse? Or is there even a recover in the back half? And then I'll just have one more, say, for all the questions.
Vafa Jamali: Rich, do you want to take that one?
Richard Heppenstall: Yes, sure. Thanks, Seth. Yes. So the -- so our Q3, David, right, even though we're pleased with our performance in the second quarter, right, the market in the space in general, right, is not well on the road to recovery, right, based on kind of what we're hearing in the market, right? And so our -- what we classify as performance and good performance in the second quarter is largely related to, I think, the differentiation of our portfolio, as Vafa kind of alluded to earlier on in the call and then also execution, right? And so we're being prudent about Q3 because the market -- the underlying bucket challenges have not completely subsided as you know. And so we're just being prudent in Q3 like we historically have been in prior quarters so that we can continue to execute to our plans.
David Saxon: Okay. Great. And then lastly for me, I'll stick with you, Rich. So the cadence on the EBITDA, so I think I heard 12% in the third quarter, if I'm doing the math right, and apologies it's on the fly, so it might not be. But I think that implies the fourth quarter EBITDA margin closer to 16%. So is -- I mean, is that -- am I thinking about that right? Or -- and then I guess, if I am, like how should we think about the exit rate as it relates to 2025 margins? I know you're probably not going to give that here.
Richard Heppenstall: Yes. Yes. the way that you're thinking about it, generally speaking, is correct, right? We've historically said that $0.55 on the dollar drops to the bottom line, whether that's upswing in revenue or downstream in revenue because of our fixed cost infrastructure. And so Q3 being over $10 million lighter than Q2 of 2024. We're going to see an impact to adjusted EBITDA as a result. And so a lot of that is really around kind of fixed cost absorption in the P&L. That when you kind of step forward to the fourth quarter, that, of course, comes back the other way. And then we also have a number of operating initiatives internally within the business that to further take cost out of the organization, even though we're still doing TSAs with the purchaser of our Spine business. And so there's also a little bit of a benefit there in the fourth quarter as we continue to take costs out of the business. And then like you appropriately mentioned yet, we're -- we think that Q4 will exit us at a in good rate and positioning us for 2025, but we're not there yet to quite give any more specifics about it.
David Saxon: Okay. Thanks so much for taking my questions.
Operator: Thank you. Our next question comes from the line of Matt Miksic with Barclays (LON:BARC). Your line is now open.
Matt Miksic: Good evening. Can you hear me okay?
Richard Heppenstall: Hi, Matt.
Matt Miksic: Great. Thanks for taking the questions. Maybe a couple of follow-ups here, and appreciate all the color. Maybe on the sort of guide business to get the planning business where you have sort of a broader exposure across to a number of...
Richard Heppenstall: Sorry, I think we didn't catch it at the beginning. The audio wasn't functioning. Could you...
Matt Miksic: Sorry about that. Can you hear me okay...
Richard Heppenstall: Yes, perfectly fine.
Matt Miksic: Maybe just any insights that you're picking up from your -- you have sort of a wide, I guess, access to a lot of different platforms that are using our planning is software. And I'm just wondering from that -- are you able to sort of surmise any intelligence that tells you like general market trends or that sort of thing?
Vafa Jamali: Sure. Well, yes, the guidance software and the Implant Concierges, each of them are growing over 20%. So there is a movement towards guided surgery and a little bit more outsourcing of lab work. It should be an indicator of overall demand in the market that's kind of stabilizing. I wouldn't say -- like -- with said, I won't say it's great by any stretch, but it is stabilizing. And then another leading indicator you might look at is biomaterials, which is the bone substitute used prior to an implant. And what we are hearing from a lot of our practices is that they're using the bone substitute as a waiting period until the page at comes back. So If, for example, the procedure is going to get delayed for financial reasons, they would do this as an inexpensive in between and get themselves ready to come back for the procedure one they're ready. And that just sort of preserves the gel in the bone, so that it doesn't generate to a point where the surgery becomes. That, to me, is a bit of a leading indicator as well. So those would be the two areas where I would say we feel stability in the market certain certainly not gone. And again, we all feel pretty good about the premium segment as well.
Matt Miksic: That's great. I must say are breaking up a touch. I hope you can hear me okay, Vafa, -- so the next question, I've been juggling back and forth between a couple of calls as a lot of people are, but I'm not sure how much you've commented or maybe you said you can comment on some of the discussions you're having with potential strategic interest around the company. But just sort of theoretically, I guess, I'd love to hear like how -- as much as much as real guide and the platform that you have is a great value as is the implant line. I'm wondering if there is a way to think about if we take a platform that's being used across a broader number of implant competitors and you used to put in the implant systems of a bunch of different companies and then you get pulled into, say, another strategic that is your thinking down the road, would you thinking ever be that you just kind of remain open? Or is there a part of this where Switzerland becomes more closed? Or how to think about that?
Vafa Jamali: Sure. Okay. So I think in med tech, there's always going to be speculation around assets like ours based on the size and maybe even more so that it's -- now it's a pure-play talent plant business, which wasn't the case when we that's fine. So what we need to do is run the company like we're going to run it for 10 years, right? But we also know that we have a very unique asset that is very differentiated in the dental market. So the more that we retain our differentiation, we've been able to hold price. We've been able to participate in the premium segment. Many of our competitors have left that segment, and we're doing well and we're holding price. We also have this great, great digital platform, which allows us to help both competitive and our own. I think that if I understood the Switzerland comment around open versus closed right now, our [indiscernible] open. I would only close that if I had significant -- very significant market share. Otherwise, being open is probably good for us strategically. It's also really reset -- that will be a decision for later on when we get to that point. But as a public company, we don't plan for that, but you've got you're going to run it like you're in for the next 10 years and if something happens in the middle, you have to look at it with an open mind. So I don't know if I can say much more other than that in terms of how -- what my approach is on which you've got a different perspective on that.
Matt Miksic: Yes. No, no. That's actually a very helpful framework to think about, and I understand this is all -- I understand the running of the company without all these considerations as if you're going to be running it for another 5 or 10 years. So maybe just lastly on some of the two topics that have come up a fair amount of been capacity and Asia. And I think you touched on Asia and China a little bit in your prepared remarks, but maybe any wits or hints that you're picking up that there's a shift in capacity or any other side of it, any sense that some of the sluggishness in China is temporary or the beginning of a longer slog would be super helpful?
Vafa Jamali: I'll start, Rich, you can add some color, but we've really reduced our exposure to China. So China is really immaterial to us, and I think it's going to continue on ups and downs based on the year that it compares to. So we really mostly exited that market with respect to the exception of a very private section that we've kept with Rich, any other calls on...
Richard Heppenstall: Yes. Yes, Matt, that was correct. Yes, our exposure in China is minimal. And so we don't get wrapped up with kind of the volatility that you're referencing in China. What I would say about Asia Pacific, actually, when you kind of segment our Asia Pacific business, we're actually performing pretty well actually in that particular market. And so for us, a headline number for Asia Pacific is in reported currency, we declined in the quarter about 6.9%. But the yen had a pretty drastic change in the quarter. And so when you adjust and you actually look at our Asia Pacific business, in constant currency, that business actually grew 1.1%. And just a reminder, our biggest businesses in Asia Pacific is Japan is number one. But what we're seeing is we have a really fast-growing business in India and really a good solid business that is also growing in Australia. And so we feel in Asia Pacific outside of China, we're actually positioned in the right markets and have a right to win there. And we're, as a result, growing in Asia Pacific and constant currency.
Operator: All right. Thank you. There are no further questions at this time. This concludes the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.+
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