Qiagen N.V. (QGEN) Earnings Call Transcript & Summary

Good afternoon, everyone. I'm Matt Sykes, the senior life sciences, tools and diagnostics analyst at Goldman Sachs. I have the pleasure of welcoming QIAGEN to the conference today. We have, presenting from QIAGEN, Roland Sackers, the Chief Financial Officer. Roland, thanks so much for joining us. Appreciate you coming here.

Thank you, Matt. Thanks for having us.

I thought maybe we'd start out and let you just set the stage for a few minutes, talk about your most recent quarter, some of the changes you made to guidance and what your expectations are for the rest of the year.

Sure. Yes, as you know, I would say the start of the year for us were actually quite good for QIAGEN, particularly the second quarter went quite well, where net sales was 28%, then adjusted EPS came in at 67%, well above our guidance. I do think what is most important is that our noncorporate business in the same quarter was 52% CER, and that was clearly, I would say, a testament not only for, let's say, the focus we have on the 5 growth drivers but clearly, also, on the underlying market performance in general. It's also something, for sure will come to that, still see going on now moving in the second part of the year. We also had to update our guidance in early July, as we all know, to reflect the volatility of the overall corporate market environment, while we kept the EPS guidance on the low end of our previously communicated guidance. So the new sales outlook is now for 12% CER growth, it was 18% before. Adjusted EPS target for the full year is $2.42 CER, which again, as I said, was the bottom end of the -- so we actually communicated before. In the meantime, we clearly have seen that the Delta variant kicked off a bit, very different from country to country, quite sure that we have a couple of questions around that as well. So we feel actually quite comfortable also in a way we have given guidance. So that our guidance now is rather driven by the performance of the non-COVID business plus some assumption on the COVID side, and that volatility, even as a positive development, is rather an upside opportunity for us. And therefore, I do think it's probably the right way to address this volatile days. And while we see, for example, in all of U.S. in numbers of PCR shipped tested -- shipped tests per day significantly up. June was 300,000 PCR tests per day shipped. All-time high was 1.5 million. We are now at 1.3 million per day. So you can see there is a significant change in a few weeks. But it's different from content to country. Asia, again, is different. Good indicators, I guess all this is, for us. So I would say, overall, for us it's important, the non-COVID business. 20% non-COVID growth rate expected for the full year, which is around about 2/3 of our overall revenues. I think that's the right way to look at it. Last word from my side, when we have given the guidance in July and now for the full year, I said it was calculating to around about $600 million COVID-related revenues. But have in mind that includes also certain product groups, which we were selling in pre-COVID. That number was in 2019 around about $150 million, which probably has now increased to $200 million by '21. So in other words, the incremental revenues used for our guidance for COVID is on about $400 million for this year, just to give you a certain framework on the COVID impact for us.

Great. That's really helpful. I think maybe a lot of the focus since you've kind of taken out that guidance and sort of derisked some of the COVID-related revenues, and I understand there's going to be a lot of volatility and you mentioned the increased test shipments recently. But just if we focus on the base business, you were growing roughly sort of mid-single digits pre-COVID. You've seen a really strong recovery post COVID so far this year. What do you feel the durable growth rate is for the base business for '22 and beyond to the extent you can comment about it?

I think there's a fair opportunity for us to have -- again, we're going to see how it -- our [ thoughts ] are to go to mid- to higher single-digit growth EBIT in the long term. We see, for example, significant growth opportunities on the DNA sample preparation side. We will, for sure, talk a bit about the macro environment, where overall funding is moving in the right direction. Again, look at NIH budgets now moving into direction of it, again, a year with double-digit growth rate. We're both long enough in the industry and knowing NIH budgets, which were always growing somewhere, let's say, 3 to 4, 5 percentage range, now we're talking [ 14-plus percentage ] points. Similar trends in Europe, similar trends in the U.K. We see clearly pharma companies trying to go back into -- invest into product development, clearly quite hard performance. But also other products like -- take our latent TB product not only had a strong Q2 performance, but also, overall, we expect it already going to beat above 2019 with $255 million compared to $190 million -- for this year, compared to $190 million last year or the $240 million the year before. And again, if you look -- a lot of trends even have started, right? Q2, as I said, was strong. But even outside any larger back-to-school event, it's probably what we will see in the third quarter. Big driver for that to be is immigration, that is clearly -- whether we will expect midterm to normalize a bit more with again travel and immigration and so on going on. So there's a lot of, I would say, trends which are still very early, but being very helpful, particularly based on a good macro environment.

Got it. And just on the COVID testing environment, you addressed it a little bit, talking about 1.3 million tests shipped and the peak was 1.5 million. Just given what's going on right now and where you're currently seeing testing volumes, do you have any kind of assumptions for the back half of the year? I recognize there's a lot of volatility, but I think the question is coming back up again and just would love to get your view on testing volumes for the back half of the year, maybe as we enter '22.

As I said, we are quite happy that we have now set opportunities and I'm going to leave it there. But I would say there's a couple of factors which have changed. One thing that has changed is we clearly had, for certain products, e.g., QIAstat, larger ramp-up topics last year, so we couldn't even -- we couldn't supply the demand which was requested. Therefore, we also hold it back in selling, for example, instruments because one thing you do not want to have is to sell an instrument to a customer that you can't supply and there's enough cartridges. I think that is an area where we have seen large improvements and that is also true to other areas. So I would say, we also use time in terms of getting inventory ready. And so hopefully, being able to supply our customers the demand is getting there. I think that's number one. Number two, it's quite obvious that any instrument we're going to place on the QIAstat and NeuMoDx side has also a long-term benefit for us. So yes, we clearly see that as a positive fallout also on the larger demand for COVID. It gives a number of -- a good number of placements, which would have mid- to long-term benefit. And you have seen in the same quarter. I would not expect that it will be actually different in the third or fourth quarter. Good placement numbers in a lot of our instruments. So that is clearly something also what is good news for us. So one thing which is hard to predict, of course, is -- and I think that's too early is what is the underlying level of COVID testing, which is going to stay. That we all have gone in June, we all have gone in July and we're quite sure we will be all [ forming ] September as well because there is too many variants around that. For us, typically a good indicator is to see what happens in Israel. Of course, Israel, as we know, was always quite early in a lot of things, in vaccination the first one, in vaccination the second one, in collecting data and sharing data, also in general having their hands around it, now on the booster shots. And you see there as well as in U.S., that the number of vaccination breakthroughs is getting quite high. I think in the U.S. the word is it's now at about 20%. So 20% of the people who are tested positive in these days are actually 2x vaccinated, which I guess is a number we haven't expected 6 or 8 weeks ago. So volatility is high.

Got it. And maybe just touch on -- we talked a little bit about it, the fact this could be endemic, there'll be a certain level of testing that may continue. But there's also things like surveillance with NGS, wastewater, things like that, that actually could remain a little bit more durable. Are there any assumptions that you guys have for those types of revenue streams that might be proved to be a little bit more durable than simply just testing?

I think the good news for us is we are playing in all of these markets, but I would really go back to what I said before. We have, for example, seen in the second quarter that genomics number for us got also, not only because of that but also based on that, somewhat boosted. So I would say that is something always what happens in volatile environments. And as I said, nobody will expect that volatility is so great in the short time frame. But we believe COVID stays. We will see on which level. And I would also say that the surveillance then becomes more and more part of testing. We see anyway larger changes in the testing environment. While you can see that antigen testing is under significant pressure, you have seen companies closing down in sites, letting people go. And particularly in the Western world, a lot of decided that antigen test is a -- true or not, but it's what they're driving is we provide -- the vaccination are not high enough so there was -- they want to push antigen testing out of the system and support PCR testing because that is much more, first of all, symptomatic driven. It's typically also paid by insurances, not by government. So you will see general shifts around that. And therefore, I think surveillance testing becomes even more important because it's going to help them to track rates and help to monitor it.

Got it. And moving away from COVID for a minute. If we turn to the sample prep -- sample technologies business, highly attractive business. You've got significant share. How do we think about the growth trajectories to move beyond COVID? I know that the business faces kind of labs and hospital settings for COVID might be more durable, but also the non-COVID part of that business could see continued growth, but there is a concern in the market of an overcapacity of instruments. And how do you kind of see that playing out in terms of the sample technologies business?

First of all, I think just to remind you, sample prep is the first step in essentially any biological lab process and -- meaning gaining access to DNA and RNA and which are, as we all know, is the building block of life. And that's the foundation of QIAGEN, it's what we are known, it's where we have a significant market share. We actually also believe we have gained market share during COVID here. And you even have pharma companies, of course, their labs will do some operations at QIAGEN labs, right? So our company name is used a lot. So I think you can't get much more in terms of recognition. That business is probably $800 million a year. It's going, in general, low-single-digit CER rate. And I think that is probably also where we see that we should do better than the market for couple of reasons. First of all, I think we continue to expand our menu. And second, I think it's also important to understand, also going back to your question in terms of capacity, if a company would have a solution, e.g., you would say, for COVID testing, that doesn't mean at all that they have a solution for sample prep, for any other test. And QIAGEN has more than 200 different sample technology solutions with 40 different technologies. That took us 20 years to come up with that portfolio of product, nobody is even close to that. So again, it is a wrong conclusion to believe that if somebody would have had a larger share of that, that it is transformative into any other kind of pathogen sample prep. So I would say very beneficial for us. Also, the way the labs are set up is typically having solutions, automated solutions, where you can run many different tests at the same time on it. So you typically don't have like 200 HIV tests. Typically, it's split up in a lab or in a hospital as well, running about 5 HIV, 5 HCV, a couple of transplantation tests. This is the strength of QIAGEN, but it's also strength our customer -- the way our customer operates and that hasn't changed. And last but not least, most people don't realize that half of the sample prep market is still a manual market. So there is -- that doesn't even touch automation level. Also here, I would say, a nice opportunity for QIAGEN to gain incremental momentum.

Got it. Helpful outline. You recent -- not recently, but in the past, you've kind of realigned your segment reporting towards your areas of growth, the 5 pillars, which you referenced earlier in our conversation. These revenue streams represent a pretty solid portion of your overall TAM. Could you talk about the incremental growth we should expect to see just given the level of focus and attention on these 5 areas for you?

I would say the overall market we're addressing around about $12 billion U.S. market. And so it's, I would say, a great business and where we either maintain or try to take leadership position. I think we have also 5 out of our -- 4 out of our 5 growth drivers have nice mid- to significant double-digit opportunities, QuantiFERON, stat, NeuMoDx [indiscernible] because of COVID. And for sure, QIAcuity and sample prep, as I said, is probably more or less mid-single-digit area. But it is important to understand that if you look on our growth pillars that we -- with all of them actually other than sample prep, are quite early, right? And we had a huge benefit that we revisited our portfolio in 2019 ahead of the COVID crisis and we're pushing 3 new PCR platforms, right? QIAstat, our low-throughput platform; NeuMoDx, our high-throughput platform; and QIAcuity, our digital PCR platform. They all remain state-of-the-art. They are all, I would say, had good placement successes because of COVID. And QIAcuity on top of that is clearly addressing a significant market conversion opportunity from qPCR, which is a, whatever, $2-plus billion market just waiting to be converted to digital solution, which gives customers, for a similar price point, much more information than a very [ active ] PCR solutions. So they are all early. They all should grow nicely. There's a couple of things we have to do. NeuMoDx, for sure, it's -- we have -- while we have a complete menu ex U.S. with [ 14 ] test panels available, we still have to invest in manual expansion across the U.S. But we feel well on track on that.

Great. And there's been a lot of talk about the funding environment on the corporate side with VC and all the IPOs that we've seen. But it also seems like from the government side, the funding landscape seems to be improving quite a bit. And at least if you look at the U.S. for NIH, I think Biden came out with a 20% increase, Congress came back with 15%. And so whether it's 15% or 20% or something else, it's likely to be a significant increase. How do you see that filtering down to QIAGEN? Do you think this will be global in nature? And what's the typical lag impact that you see from sort of an increase in government funding and how it filters down to your revenues eventually?

In the past, we clearly have seen a correlation between overall government funding and what it means in general for the life science industry, and therefore, clearly also with QIAGEN. Again, we shouldn't forget that also a significant part of our growth drivers is driven by Life Science performance. QIAcuity as of today and probably also for the next few years is a life science opportunity, right? Sample preparation is a significant life science driven product. So I would say there's a lot of growth coming out of that as well. So similar trends also in Europe, as I said before, the overall understanding on how prevention makes a difference for health care has clearly also an effect on underlying research work. And there, we see also more dedication and more focus. We see an expected benefit also beyond sample prep. Digital PCR is one example. But we see it also, for example, in bioinformatics, which is also to a large extent actually going into pharma companies, but also life science research. So we have a significant footprint in this kind of environment.

Got it. And you've done some partnerships in the past, namely with Illumina in NGS, DiaSorin in automation with QuantiFERON. Could you maybe talk about your decision to partner with these companies? Is that something that you'll look to continue to do over time and how these partnerships have been going?

I would say, in general, very positively. Let's focus on 2 that you were just mentioning. Quite clear that part of the success of QuantiFERON is also due to the success DiaSorin had with placements of their LIAISON platform in the last 12, 18 months. So we have now clearly a significantly larger installed basis where we can sell QuantiFERON tests on to where the customers don't have to make any larger capital investments. So I think there is a nice win-win situation for DiaSorin but also for QIAGEN. Also NGS, it's quite obvious that, I would say, the Illumina partnership got more traction once we moved out of discussions around Thermo Fisher. We also have seen some of the drivers already being impactful for us in the second quarter. As I said, it was a combination between COVID but also non-COVID businesses. At the same time, we see our partnerships with pharma companies getting revitalized. So I think we are -- there's no mantra at QIAGEN around this partnership, we rather believe that bringing everybody's best expertise to the table doesn't require M&A, you can do it very well partnerships and generate value on that.

Got it. Maybe moving over to the margin side of things. On the investment side, you mentioned about the ramping of NeuMoDx, particularly in the U.S., expanding the test menu capabilities, as well as for QuantiFERON and just your overall investment in these 5 pillars of growth. How should we think about margins over the course of this year and into next year? Obviously, the testing margins have a very large impact in either direction depending on which way that's going. But just want to get a sense for how you're thinking about margins -- operating margins, specifically as we kind of head into the back half and into next year?

I think, first of all, I think I was just recently reviewing more or less our peer group, and I think out of the 20 leading companies in actually both life science or the clinical environment, I think QIAGEN is either #2 or #3 when it comes to overall margin profitability, I think. So I would say, so far, we did a reasonably good job in having a nice margin development. And this year, depending -- we will see where we, 33%, 34% adjusted EBIT margin probably will be another testament to that. It's also obvious that we did on the one hand side, particularly this year, a significant ramp in production capacity, which clearly has an impact on utilization ratio. So I would also expect that next year, while we see some improvement, gross margin overall will probably stay somewhat flattish. And after that, we should see a nice improvement because of both better mix but also better utilization of the investments we made in terms of production capacity. On the operational expense side, R&D investments probably stay at similar levels as we had this year for next year, while we should see further scale on SG&A. But again, a big driver for margin next year, clearly, what is overall revenue base. And we discussed it before, while we feel quite strong with a 20% non-COVID growth rate for this year, setting a strong base also for next year, I would say it's too early to see where COVID ends, and therefore, is a mid- long-term basis for the COVID business. Nevertheless, it will be above our pre-COVID businesses, which, as you know, in 2019 we left with, let's say, around about 27% margin. So it's probably the corridor where we are in.

Got it. On the flip side, on the cost side, you talked a lot about your digital capabilities, probably might be a little bit less travel to a certain extent. So there's definitely some cost savings that you achieved during COVID. That actually could be durable. I think about all the digital capabilities you and your peers have spent on. And when your customers were actually forced to use them, they actually probably realized they were fairly adequate for sales and service and other types of offerings you provide. Can you talk a little bit of how you're thinking about regarding expenses and also by your current digital offering? You already have a pretty impressive percentage of digital sales, but also on the service and support side. How do you think this is changed because of COVID? And what do you think might remain fairly sticky in terms of cost savings into next year and beyond?

Clearly, as I said, how we are or the way we engage with our customers in a very significant way and as we had also greatly accelerated our digital initiatives. And as you said, it's probably more than 50% of the transactions revenue-wise, which are digital, compared to 4 years ago, more or less around 20%. So a significant drive forward. But also the way our sales and marketing in general in our industry's platform has changed. If we do these days online broadcast to customers, for example, on digital PCR, we reached more than 4,000 prospects, for example, in a recent event in 2 days, right? You have to go to quite a number of trade shows with very different costing to get to so many qualified leads. So I would say, very targeted, very dedicated, very different cost structure. Also for a company like QIAGEN, where 85% of the revenues are in everyday consumable sales, meaning recurring sales, digital share also means that you set up significant time for sales reps to work on leads rather for incremental workforce instead of writing electric orders, which in this day get pushed by the system, right? A lot of our instruments, they need work like, what I would call, [ hotel minimalist ], you take it, you order, you get billed, that is a different scale.

Got it. One thing we talked a little bit about briefly before we started this was just when the first wave of COVID hit and the testing, it was difficult to keep up with the demand, and you've talked a little bit about the cartridges and things like that. But I'm also wondering from a resource allocation standpoint within the company. If we do see another surge in testing and it remains there for some time, how do you feel the company is positioned to be able to focus on non-COVID-related efforts that you've been doing so as not to be distracted by the test? And do you feel like you're in a better place now to be able to deal with another surge just because of what you've been through last year and the earlier part of this year?

Absolutely. Because the one thing that you have to have in mind, if you invest into, call it, production build-out, for example, it is not like specific for COVID or for non-COVID. Typically, the sample prep line doesn't ask if you want RNA or DNA product, I mean, it's all the same kind of equipment. So I think that has been very helpful and the overall scale is being helpful for QIAGEN. I think probably more important is you know that we ramped up largely our R&D investments, and that was clearly on non-COVID side, preparing in particular for the time post-COVID. And while things are -- some things are more visible because we talk more about it, e.g., NeuMoDx and U.S. menu, it is often the underlying R&D focus around sample prep portfolio enhancements, updates to bioinformatics solutions and so on, which make also a larger contribution for our customers. So I would say the number of bottlenecks we are facing is clearly significantly different compared to last year. And while the same time these investments also have, outside COVID, a future use for us.

Got it. Maybe just talking -- getting a I'll more specific on the TB testing space. We've seen some new entrants via acquisition. You've tended to have a leading share there. And I know you've said your main competition still remains the skin test, but have you seen the market dynamics change at all in that space? And how do you feel QIAGEN's position within TB?

TB probably, as of today, it's probably back over 100 million latent TB tests done annually. And that market is probably 25%, 30% converted to new -- away from skin test. So there's still, furthermore, a significant conversion opportunity while the underlying market is still growing. Second, it's quite obvious that QuantiFERON is the leader. It has probably a market share of 80-plus percent. So -- and that really is a market where we actually still gain market share over the last couple of years. Yes, we have now an entrance from a new French competitor, but I think we also all know that they launched the latent TB test under VIDAS 3 machine, which is for us a machine which is, I don't know, 9, 10 years old and probably, also throughput-wise more on the lower end. While our automation solutions, particularly on then DiaSorin side, the LIAISON side, they're probably on the higher throughput side, probably also a bit on the newer side, put it that way. So I think that's all been quite helpful. And as I said before, being helpful for us right now. Overall, market with good pricing, quite stable pricing. We have good margin on that. So we are ready for the competition, we are monitoring that, but we haven't seen any larger changes here as well.

Okay. Great. And maybe if we turn to capital deployment. Balance sheet's in good shape, continue to generate a demount of free cash flow. How are you thinking about M&A? I know you're doing a lot of organic investments with these platforms. But as you think about M&A and you look at valuations in the market, does this kind of make you shift maybe towards private or earlier stage? Or just how are you thinking about M&A here?

First of all, it's quite obvious that our industry is consolidating, and we just have seen yesterday a new announcement about a new deal, and it's good to see the valuations because it clearly, in minimum, means that QIAGEN is still at a value, but it's a different story. Probably the other topic is we continue with what we believe is our focus on capital allocation. We have since 2012, I would say, a fair balance between share buyback programs, where we are right now in a middle of a share buyback program, plus also what I would call targeted bolt-on acquisitions. We feel very comfortable with our 5 growth drivers. So you shouldn't expect us to add, let's say, another new platform. But if there's opportunities to enhance many of our existing platforms, to enhance [ value ] information breakthroughs to customers by adding incremental solutions, data base to that, happy to do so. But again, if there's another QuantiFERON deal out there -- and I still recall the days where people were shouting on us when we paid $300 million for the latent TB test, at that time $20 million of revenue, I think it turned out to be a great value driver and contribution factor for QIAGEN. So happy to do this deal. Given the cash flow where we are, we can do both.

Got it. Maybe focusing on some of the regional growth. China has been a real bright spot for you in the first half. You made some management changes in the region. Can you talk about some of the trends you're seeing there and what's driving the growth and how sustainable you think that growth is in China?

I think we have -- you might recall that we also have a new China team in place and they're doing well. We had clearly some internal issues earlier last year, and the team really turned it around. This is also important to us in that the way we address China is twofold. We have our, call it, Western Hemisphere QIAGEN brand name. But at the same time, we also have a local brand name being quite successful in China. So I would say, actually, the combination is very helpful, for sure giving us some competitive advantage here and helping us probably also have incremental growth. We still are undersized in China. And so we are continuously reviewing our go-to-market strategy, and if we have opportunities because it is clearly important country, not only generally but also in particular for health care opportunities.

Got it. And then maybe focusing on sort of Europe versus U.S. and any trends that maybe differentiate one region from the other? Or is it you're still seeing sort of the same puts and takes from either COVID being a positive or a negative, and funding being a positive or probably later on? Just any kind of differentiation you can provide on a regional basis between Europe and the U.S.

I'm not sure that the appreciation for the position of strength for QIAGEN is fully understanding both parts of the world on the same basis and how we have used COVID actually to reemerge probably even stronger post the pandemic, right? It's quite obvious that it will be -- hopefully quite obvious that it will help us because of placement numbers on QIAstat and NeuMoDx, but also on sample prep as the number of sample instruments, even if we don't talk too much about that, we saw incrementally in the last 18 months compared to the years before is significant. And that based on an environment where funding is probably as high as it never was before, that in that environment, the pharma companies probably have a larger pushback into normal -- back into oncology and other kind of spending. And therefore, the fundamentals of research, meaning everything starts with a sample, should be incrementally a benefit for us as well. I think it's also underappreciated how strong our footprint in life science is. Most people believe it is very much clinical, while we have a strong clinical footprint like products like QIAcuity, like bioinformatics, like all the things we're doing on the pharma side, and for sure sample preparation, are clearly driven also by, I would say, a very strong underlying life science business environment. So I think it's also a very risk-balanced portfolio of products we're having.

Got it. And maybe crystal ball time, but sort of a big picture question. If we were 5 years from now and looking back and what -- and hopefully COVID would be behind us, we'll see. Looking at what the long-term impact on the industry has been from COVID, there's been a massive pull forward of investment, there have been increasing competition, there's obviously been a huge growth in installed bases for you and your peers, what do you think will -- as we look back, will be some of the lasting positive and/or negative impacts from COVID for the industry and for QIAGEN specifically?

I have actually no doubt that the standing or the focus on health care will remain high because we all learned the hard way. If you do not enough around prevention, if you do not around -- if you're not focused enough, the follow-on negative costs much higher than whatever you can spend on, again, for preventive solutions. So I would say the learning curve was high. And that's not only on the governmental things, it is also, I'm quite sure, that we will see more and more people go for other kind of testing very regular. I also do believe that we will see an even stronger push into decentralized solutions and might be even into -- will go to end customers into their home because turnaround time sensitivity for sure has increased. So I would expect actually a quite healthy environment for these kind of businesses.

Got it. And maybe just to finish up here. What do you think is most misunderstood by the market about QIAGEN? You talked a little bit about it in one of your previous comments, but just kind of overall, what do you think people are still missing here?

So I think a couple of things. One focus point is clearly that it's very natural, I guess, people try to put us in a box. It's a clinical company. It's a life science company. I think we have some benefit that we are able to leverage our portfolio to different customer segments. I think people have to understand, when we're talking about segments, it is customer segments. Most of our products actually have some opportunity for us that we can sell them either to a life science customer or to a diagnostic/clinical customer, which is a nice leverage opportunity. Second, all our instrumentation solutions, workflow solutions are more or less very early in their life, spent life. And as I said, we have launched, just [ in '19 ], QIAcuity, QIAstat and NeuMoDx. So I think they are very early and long time to go. And placement numbers are high and still high even in times when people believe that COVID should go down or whatever, but the customer is buying into that probably for the reason I just said. And we typically address markets where we either be or can be a strong #1 or #2 position, which clearly is being helpful in profitability and pricing. And as I said before, QIAGEN has a track record in terms of margins and profitability, being clearly a top tier of the industry.

Great. Well, with that, we are out of time. Roland, thank you very much for participating. We really appreciate all your color and comments.

Okay. Thanks, Matt. Thanks for having us.

Thank you.