Medtronic Plc (MDT) — Q3 2024 Earnings Call Transcript

Good morning and welcome to Minnesota, where we finally have some snow. I'm Ryan Weispfenning, Vice President and Head of Medtronic Investor Relations. And I appreciate that you're joining us this morning for our Fiscal '24 Third Quarter Video Earnings Webcast. Before we go inside to hear our prepared remarks, I'll share a few details about today's webcast. Joining me are Geoff Martha, Medtronic's Chairman and Chief Executive Officer; and Karen Parkhill, Medtronic's Chief Financial Officer. Geoff and Karen will provide comments on the results of our third quarter, which ended on January 26th, 2024, and our outlook for the remainder of the fiscal year. After our prepared remarks, the Executive VPs covering our segments will join us. And we'll take questions from the sell-side analysts that cover the company. Today's program should last about an hour. Earlier this morning, we issued a press release containing our financial statements and divisional and geographic revenue summaries. We also posted an earnings presentation that provides additional details on our performance. The presentation can be accessed in our earnings press release or on our website at investorrelations.medtronic.com. During today's program, many of the statements we make may be considered forward-looking statements. And actual results may differ materially from those projected in any forward-looking statements. Additional information concerning factors that could cause actual results to differ is contained in our periodic reports and other filings that we make with the SEC. And we do not undertake to update any forward-looking statements. Unless we say otherwise, all comparisons are on a year-over-year basis, and revenue comparisons are made on an organic basis, which excludes the impact of foreign currency and third quarter revenue in the current and prior year reported as other, which stems from prior business separations. There were no acquisitions made in the last four quarters that had a significant impact on total company or individual segment quarterly revenue growth. References to sequential revenue changes compared to the second quarter of fiscal '24 are made on an as-reported basis. And all references to share gains or losses refer to revenue-share in the fourth calendar quarter of 2023 compared to the fourth calendar quarter of 2022, unless otherwise stated. Reconciliations of all non-GAAP financial measures can be found in our earnings press release or on our website at investorrelations.medtronic.com. And finally, our EPS guidance does not include any charges or gains that would be reported as non-GAAP adjustments to earnings during the fiscal year. With that let's head into the studio and hear about the quarter.

Hi, everyone, and thank you for joining us today. Our momentum and solid execution continued this quarter as we establish a track record of consistently delivering mid-single-digit organic revenue growth. Diabetes took another step forward with double-digit growth supported by a return to growth in the US. I'd also note the particular strength we saw in multiple businesses like Core Spine, Cardiac Surgery, Structural Heart, and Cardiac Pacing. And we had strong growth across International markets as we expand access to our innovative healthcare technologies all around the globe. At the same time, we've had a rapid cadence of new product approvals and we're continuing to differentially invest in our pipeline of highest growth opportunities. We're advancing innovative core technologies like robotics, AI, and closed-loop systems. And with five AI products already FDA approved, we're leading the way in bringing the tech into MedTech. We also continue to make progress on our comprehensive transformation of the company. We're incorporating a performance-driven culture that's based on execution, speed, and playing to win. And we're leveraging our scale to drive efficiencies. So when you look at our financials this quarter, you're seeing the early results of our focus on restoring earnings power and converting our earnings into strong cash flow, and we're using that cash to both invest in high-return opportunities and return value to our shareholders. So we're executing and delivering, and we expect to continue over the coming quarters and years given our momentum, our ongoing transformation, our breakthrough innovation, our exposure to strong secular growth markets, and our numerous catalysts across the business. Now, before I get into the details of our Q3 results, I do want to mention that we provided a Portfolio Management update this morning on our patient monitoring and respiratory interventions businesses. After a comprehensive review, we have decided to exit our unprofitable ventilator product line. And retain and bring together our remaining PMRI businesses into one business, which we're calling acute-care and monitoring. Now we've determined that it is in the best interest of Medtronic, its stakeholders, and the ACM business both near- and long-term to exit vents because of its increasing unprofitability and market preference shift to lower acuity ventilators. Now as we exit vents, I want to recognize the strong legacy of our business and the Puritan Bennett brand. And we're committed to serving the needs of our customers and honoring our ventilator service contracts. And I also want to thank the employees in our ventilator business, who played an incredible role during the pandemic to dramatically expand production to get ventilators to the communities around the world that needed them. And while we exit, we do believe that existing manufacturers can meet the customer demand for new ventilators going forward. Now at the same time, we decided to retain and refocus the remaining PMRI businesses. Three main factors have driven this decision. First, we have strong conviction in our ability to lead and drive growth in acute-care and monitoring, given our improved competitive position. And our ability to properly fund this business with savings from exiting vents. Second, the importance of data in this space is changing rapidly. It's becoming the basis of innovation. This fact further improves our competitive differentiation. And lastly, as a company more broadly, we continue to prioritize profitable, innovation-driven growth and category leadership, and ACM can deliver both. That does not mean we will shy away from additional portfolio moves going forward. But the bar is high for any strategic activity that dilutes our focus on profit and growth. So when you take these decisions together, we're able to provide increased investment for acute-care and monitoring, using the savings from vents and bringing two businesses together, all without creating dilution to our P&L. Now let's get into the details behind our Q3 results. We continue to look at our portfolio in three categories: established market leaders, synergistic, and highest growth businesses. In this quarter, all three grew in line with our expected growth algorithm. Our established market leader and synergistic businesses grew mid-single digits, while our highest growth businesses posted high-single-digit growth, and we expect their contribution to our overall growth to further accelerate in the quarters ahead.

So looking at our financials, our third quarter was another quarter where we delivered on our commitments. Our revenue grew 4.6% ahead of expectations, and adjusted EPS was $1.30, $0.04 above the midpoint of our guidance range. We attribute the beat to stronger-than-expected revenue growth and gross margin, offset by $0.04 from greater-than-anticipated currency impact, primarily from the devaluation in the Argentine peso in December. We're delivering durable mid-single-digit revenue growth and have now for several quarters. As Geoff mentioned, International markets were an important driver for us. Our non-US developed markets grew 6%, including 8% growth in Western Europe and 7% growth in Japan. In fact, we had double-digit growth in several of our businesses across both of those regions. Emerging markets grew 10%, we had high-teens growth in the Middle East and Africa and mid-teens growth in South Asia. China grew low-double digits as some of the VBP we expected there continues to be delayed. And Eastern Europe grew in the low-single digits given Russian sanctions. In the US, we grew 2%, we have several new product approvals that are at the earliest stages of their launches and expect those launches to positively impact our US growth over the next couple of quarters and beyond. Looking down the P&L, we delivered a strong quarter. Both our adjusted gross and operating margins were ahead of expectations. Our adjusted gross margin of 66.1% improved year-over-year, overcoming a 60 basis-point headwind from foreign exchange and continued elevated inflation. We attribute the favorability primarily to the delayed China VBP and lower freight costs. We also continue to see traction from our pricing efforts and an early benefit from our comprehensive COGS efficiency efforts. While our adjusted operating margin of 25.2% declined 70 basis points, it was entirely driven by currency. In fact, operating margin on a constant currency basis was up 160 basis points from improvement in gross margin and strong SG&A leverage, as we continue to drive efficiencies across the enterprise. Below the operating margin line, our adjusted tax rate was a little higher than anticipated, mainly due to the jurisdictional mix of profits. On the flip side, income on our investments was also a little better than expected with higher rates. It's worth noting that while our adjusted EPS was flat year-over-year, it grew 8.5% on a constant currency basis from the leverage we drove down the P&L. We also significantly improved our free cash flow and conversion in the quarter. Now turning to guidance. Given our top and bottom-line beat and continued strength in our underlying fundamentals, we're raising our full-year revenue and EPS guidance. We now expect full-year organic revenue growth of 4.75% to 5%. For the fourth quarter, we're expecting organic revenue growth to be in the range of 4% to 4.5%. On a comp-adjusted basis, this is an acceleration from the third quarter, as we continue to ramp our recent product launches. With the exit of ventilators that we announced today, we are moving the associated revenue to the other segment, starting in the fourth quarter. As is the case with all revenue in other, we will exclude it from our organic revenue growth. And additional details can be found in our third quarter earnings presentation. Regarding currency based on recent rates, we would see a full-year revenue impact in the range of an unfavorable $15 million to a favorable $35 million, including an unfavorable impact of $70 million to $120 million in the fourth quarter. On the bottom line with the beat in the third quarter, we're raising our full year EPS guidance by $0.04 at the midpoint to a new range of $5.19 to $5.21. I'd point out that given our durable performance, we've been able to increase this guidance by $0.15 at the midpoint from where we initially started the year. For the fourth quarter, we expect adjusted EPS of $1.44 to $1.46. And regarding currency based on recent rates, we're seeing an unfavorable impact of 7% on full year EPS, including an unfavorable 5% impact in the fourth quarter. Lastly, while we'll give our fiscal year '25 guidance on our earnings call in May, after we finish our planning, I want to share our early thoughts. You've seen us deliver durable revenue growth for several quarters, and we expect that to continue. Down the P&L inflation, currency, and tax are currently headwinds to earnings growth. And we expect to continue to increase our investments in R&D. That said, we're very focused on driving offsets, where we can, and improving the earnings power of the company.

And regarding the portfolio management decisions we announced today, while the Street's FY'25 numbers didn't yet reflect the potential separation, with today's decision we're able to increase investment in innovation-driven growth without near-term earnings dilution or an ongoing impact to cash flow, all with a focus on optimizing long-term shareholder value. I want to close by expressing my sincere gratitude to all of our employees for your hard work and unwavering commitment to the Medtronic mission. Your dedication was instrumental in achieving our results this quarter and making a difference for so many people around the world. Thank you. Geoff, turning it back to you to take it home. Okay, thank you. But before I wrap up, I want to note that Tom Holleran passed away last week at the age of 94. Tom provided decades of leadership to our company. First as General Counsel, next as President and as a Director on our Board for many, many years. In the early 60s, Tom was one of the instrumental people who created our Medtronic mission together with our founder, Earl Bakken. Tom was also a significant leader in the twin cities and beyond and served on several company boards. Our thoughts are with Tom's family as they celebrate his life. Now, before we go to analyst questions, I'll close with a few brief concluding comments on our progress. You see now for several quarters in a row that we're delivering on our commitments with durable mid-single-digit revenue growth.

Good morning. Thanks for taking the questions and congratulations on another nice quarter here. I wanted to just focus my one question on the fiscal 2025 comments, Geoff and Karen. You talked about durable growth, is that, should we think about that as mid-single-digit organic growth? And just help us, I think there'll be some concerns about what we're seeing in the AFib business given the low-double-digit decline in the US. What are the puts and takes to consider there? And on earnings Karen, can you quantify those headwinds inflation, tax, and FX in fiscal '25 and consensus is at about 5%, are you comfortable with consensus EPS growth? Thank you for taking the question.

Yeah, well, first of all, thanks for the questions, Larry. Maybe I'll start with the CAS one, and then Karen, maybe, Sean and I will take the AFib one and then Karen can talk about the FY'25 questions. So I'm going to phone a friend and tap Sean here in a second here. But on our AFib business, look, we are confident in the investments that we made that are going to bear fruit here. We haven't seen that translate into financials yet, but there are lots of leading indicators here that we're seeing that give us confidence both in you know one in continued, I think, stronger performance than people might think in cryo. But importantly in PFA for both PulseSelect organic program and then Affera. But Sean, do you want to comment on this a little more specifically for Larry?

Yeah, sure, Geoff. So Larry, in the US, what we had experienced was the first time ever a competitor in the cryo segment, so we had a 100% market share, and we had a competitor ramp up their production, we felt that in the fourth quarter. I think there's also some anticipation for some new products we're launching including Nitron Console, a refresh on our capital equipment for cryo. And of course the PulseSelect, which just started its launch in the United States after the quarter closed. And that's doing very, very well, the feedback has been exceptional, doing well in the United States, doing well outside the United States. And I think those catalysts to growth of Pulsed Field for both the PulseSelect, that's the single-shot technology as well as our point-by-point ablation is driving a lot of enthusiasm. So, I think we're going to see a return to growth and into next year we really feel the full force of those launches.

Thanks, Sean. And on FY'25 Larry, I would just start with the fact that we're really pleased with our performance through these last several quarters. Q3 was another solid quarter, our fifth consecutive quarter of solid mid-single digits. And I would point out that we drove that mid-single-digit growth this quarter off of mid-single-digit comps last year. And that's what we expect to continue into FY'25. You know, we've been working through our planning process, and we expect to wrap that up in advance of our Q4 earnings call. So we'll give our guidance in May. Not ready to give you real specifics, but from a high level, we've had no major changes to the puts and takes for next year that we discussed on our earnings call in Q2. And we're focused on obviously setting up guidance that sets us up for success, prioritizes innovation and allows us to deliver on our commitments.

Great. Thanks and good morning everyone. Wanted to ask on the Patient Monitoring business, the original intent was to try and sell it or spin it, you're now keeping it and exiting the ventilator business. Just maybe walk us through the thought process. What happened in the market and why this is the best outcome for Medtronic? Thanks.

Sure, I'll take that one, Robbie. A few things have changed. First, we have strong confidence in establishing profitable leadership in what we're referring to as the acute-care and monitoring business. The monitoring component, which is the largest part of the businesses we intended to spin, has seen significant developments. Our competitive position, especially in the monitoring business, has improved over the last year. As we work through this process, we continue to manage the business, which has performed well, and the competitive landscape compared to our main competitor Massimo has shifted positively for us. We believe we can sustain this positive change with increased investment. This necessitated our difficult decision to wind down the ventilator business, which has become increasingly unprofitable over the past year. The growth in that segment has slowed further, and the market is shifting towards lower acuity ventilators, while our contributions are more aligned with higher acuity hospital settings. Given these changes and the unprofitability of the vent segment, our decision to exit creates the capital we need to invest in the monitoring side of the business and enhance our competitive position against Massimo. Additionally, there has been a growing emphasis on the use of data in this space, which is becoming increasingly important. We see this as a foundation for innovation, and our ability to leverage data for rapid iterations and long-term disruption is quite strong, thanks to our advancements in AI and other areas of the company.

Okay, thank you, Robbie. We'll take the next question please, Brad.

Good morning, and thank you for taking the question. There are a lot of products that I could ask around. So I'm just going to throw a couple of headline ones out there. Diabetes, congratulations on a return to US growth. Is there a way to peel that apart a little bit on new accounts or new patients versus renewals? And I guess my second question has to do with Hugo. And if you can give us a little bit of a state of an update on how those launches are going outside the United States? Thanks.

Thank you, Joanne, for your questions. We've been focusing on our diabetes turnaround for a while now, and while it hasn't always been straightforward, we are definitely seeing progress with our 780G platform and our capabilities. We are utilizing data, such as from our Patient Monitoring business, to develop algorithms that offer unique advantages and improve patient outcomes. This success is evident both globally and in the United States. Que, could you please elaborate on Joanne's question? I would appreciate it.

Yes, we are very pleased with the progress we've made each quarter since the 780G launch. We are seeing significant growth in new patients and renewals, so both areas are performing well. It will take time to rebuild our installed base, but the pump growth we observed in the US, at high 40s year-over-year, indicates that consumables and CGM growth will follow. We expect to keep making progress every quarter, and I am happy with how the markets have responded to the product introduction.

Yeah, and thanks Joanne for the question. So we continue to see very good progress with Hugo outside the United States with an expansion of installations in countries around the globe. In fact, we entered into two new sub-regions in Central and Eastern Europe. And are continuing to see very good response to the things we've talked about previously. So the open console, the very crisp visualization and increasingly very good feedback around our Touch Surgery Enterprise platform, which on its own continues to expand and had a very good quarter with installations both with Hugo and in our broader surgical business.

I appreciate your input, Mike. Regarding this matter, the robotic system and its features are distinct and have been positively received. However, as Mike mentioned, it extends beyond that. It's really about the accompanying digital platform and the instrumentation, especially as we shift the instrumentation in our laparoscopic division to the robot, particularly in stapling and energy. These advancements create momentum and enhance our capabilities over time, which we have observed in the Spine business. Our acquisition of Mazor didn’t lead to immediate changes, but you can see the improvements over the last few quarters. It required integrating Mazor with our navigation, imaging, and developing AI-guided surgical planning systems. Each quarter has brought more progress, building the ecosystem we currently have, which is not only driving growth for Medtronic but also for the Spine industry as a whole. We anticipate replicating this success in soft-tissue surgery.

Hey, thanks for taking the question. Can you hear me okay?

Yeah, hey, Travis. How are you doing?

Good, good. Hey, Geoff, curious if you could talk a little bit more on the gross margin productivity. Some of the things you're driving there. And can you still get the kind of 2x to 3x annual cost savings on the gross margin line? And last month, at the investor conference you talked a lot about leveraged EPS growth. I'm just curious if that's a comment that applies to FY'25 or if that was more of a longer-term comment?

Sure. Let me tell you. I'll start off and transition to Karen. On the gross margin a couple of things that I'd point out. One is pricing, Karen talked about that. I do think what we're seeing here is a lot of innovation in the industry and a lot of Medtronic. And this innovation, we're finding is valued. It drives value in the health system, and I think we've gotten better at showing the health economics of the innovation that applies from the innovation in addition to the clinical value. I think in the past, we were pretty indexed on clinical value. And more recently, we keep that focus and then add the health economics, and it's getting paid for. And we're I think doing a better job of making those points and getting that pricing and I do think it's durable. So the pricing has increased, I'd say, for the company overall, 200 basis points or so relative to the past, and I think we're going to keep pushing for even more. On the converse, if you don't have the innovation, be prepared for that as well because I think hospitals have gotten more sophisticated in purchasing, and your price is going to pay for that if you're not keeping up with the innovation. But given where we are on the product cycles and giving us pricing muscle, we feel good about that being incremental especially to the historical baseline. The other you asked about is cost goods sold productivity, and the answer, the short answer to your question is, yes, we do think it's sustainable, we've got lots of opportunity here. Can you think about it, we have this pretty big footprint of factories and distribution centers and too many suppliers I have said in the past. Now with Greg Smith coming in a couple of years ago and we've centralized that, we can take a strategic look across that portfolio. And we have a long list of cost-down programs. And then we've ensured that we've effectively contracted those between our global operations supply chain team and our operating units, because it takes release product engineering to make sure that these cost programs can happen in our operating unit. So we feel good about that, and we feel that that's sustainable. So those are two big changes that impact positively gross margins now and into the future. And speaking in the future, I'll turn it over to Karen to talk about your FY'25 leverage question.

We are pleased with our gross margin performance this quarter despite facing a 60 basis-point challenge from foreign exchange and ongoing inflationary pressures. Strong pricing contributed significantly to this result, as Geoff mentioned. However, we are still experiencing delays with China VBPs in Aortic, Peripheral Vascular, and Stapling, which may start to resolve in the upcoming fourth quarter or possibly next year. When considering leverage in our financials, we are focused on ensuring that our bottom line grows at a faster rate than our top line. While we are not prepared to discuss specifics for fiscal year 2025 as it is too early for planning guidance, we recognize there are various factors at play for next year.

Hi, guys. Thanks for taking my question. And Geoff, good morning to you. I guess one on earnings question here. I look at your peers, their earnings have grown versus fiscal '19, 2019 pre-pandemic levels. Medtronic earnings have essentially been flattish. Can Medtronic commit to perhaps above trend earnings growth over the medium term as you play catch-up, similar to what your peers have done? And I think related to that, Geoff, in the past, you've mentioned about a $400 million drag from investments in RDN, Hugo, where are we on those investments? Are they still a drag, when can those be profitable to the business?

Thank you, Vijay, for the questions. I'll address the latter question regarding RDN and Hugo, and then let Karen discuss the earnings growth topics. Regarding Hugo, we see it as an essential part of our broader surgical franchise that requires investment. Specifically, Hugo demands significant resources to maintain its momentum. We are pleased with the current milestone we've reached, where the robot is performing well and features appreciated by physicians globally. The feedback has been positive, but there is still work ahead. We need to enhance our instruments, complete the US trial, and continue building our US capital equipment sales force. Although this is a significant challenge, our confidence in executing this strategy is strong. This initiative is crucial for our surgical business, which is our largest segment and a major source of profit and cash flow. While we are competing against a formidable rival in Intuitive, we believe our competitive positioning is solid, particularly against other possible robotic companies. The dynamics of this market appear to favor us, warranting our investment in this area. Regarding RDN, we are focusing on rebranding it as Symplicity and preparing for consumer education about this hypertension therapy. We are making efforts to minimize the use of the RDN term. We believe that this strategy will start yielding profits, reducing its impact as a drag, and we expect this product line, known for its high gross margins, to contribute positively to our overall performance in the next few quarters.

Okay, thanks, Vijay. We probably have time for two more questions, Brad. Take two more.

Hi. Thanks so much for taking the questions. Can you hear me okay?

Yeah, we can now.

Great. Thank you. So maybe just a follow-up here on some of the products that you've mentioned recently approved and I think some of the products that you hope to see approved in the coming quarters and I'm thinking of like Aurora and PulseSelect and maybe some additions to the US approved products in diabetes. And I know Sean mentioned sort of the rough trajectory for AF ablation. But maybe you know on that business for example, any additional color around cadence, is this something that we start to see improve in the fourth quarter or is this sort of like a early to mid '25 kind of process and some of the same commentary for sort of cadence and trajectory in Aurora, and for example, maybe the diabetes business would be super helpful. Thanks.

Sure. So maybe I'll start with Sean. Before I turn it over to Sean, as I pointed out in the commentary, all the puts and takes in our ablation business, we call Cardiac Ablation Solutions, our AFib business, we do see an acceleration in this business and even in the fourth quarter here. So, but I'll turn it over to Sean to talk about AFib and then Aurora.

Thank you, Geoff. Matt, it's clear that both the EV-ICD and the CAS business are on an upward trajectory. As we introduce these new technologies, we need to provide training to ensure physicians feel confident using them. We're very intentional about this to guarantee positive patient outcomes and ensure the technology is embraced. This is a regular practice for us, and we excel at it. The feedback has been outstanding. For PulseSelect, we're completing cases in around thirty minutes, and the acceptance of Aurora has also been remarkable. As I mentioned, we are driving growth now, but the full benefits of these innovations will really take effect next year.

Okay, thank you.

Thanks. Can you hear me okay?

Yeah, Anthony, we can.

Okay, great. I want to extend my condolences to the team and Tom's family. Now, regarding the Structural Heart and the SMART Study, I have a quick two-part question. Was it ahead of schedule, and was it expected to be presented at TCT instead of ACC? It came as a surprise to see it approved as a late-breaker. Also, how do you anticipate the study will perform once the results are available? It's a head-to-head comparison in TAVR for high-risk symptomatic severe cases. I'm interested in your thoughts on how that data will be received after it is presented at ACC in the upcoming weeks. Thanks.

Well, thanks. First of all, Anthony, thanks for the comment on Tom Holleran. He is a real legend around here. And just a great guy. So we're going to miss him. On Structural Heart, two comments before I turn it over to Sean. First, I really applaud the business for their evidence generation in total. We just did our low-risk data, and we publish it every year, not just when it's convenient. And then they had the courage to do a head-to-head, which is not, you know, something that's often done in our space. And so, I could tell you that I, for one, love that just the commitment to data and the competitiveness to go head-to-head. And I'm very much looking forward to the results that are going to come out in early April at ACC. But in terms of the specifics of what you're asking on how it might play out, I'll turn that over to Sean.

Yes, thanks, Anthony. The completion of enrollment happened in October of '22, so that's a 12-month endpoint for the study, and that pushes you really out of the window for TCT. So, I think we're on schedule, I'd say, we're pleased to have been accepted as a late-breaker at ACC. But that's really as expected I'd say. In terms of the trial itself and how it will be received, I think just right the momentum that we have on data from the notion 10-year data that's low-risk patients out to 10 years showing superior durability of our valve compared to surgical implants, and then our four-year low-risk study with hard endpoint benefits and a widening benefit on serious outcomes like mortality and disabling stroke. And of course going head-to-head in a really important patient population, those with a small analysts. We said that's about 40% of the global market. Really prevalent among women and within smaller patient populations like in Japan for example. So that's, I think it's really important and compelling data, it's a one-year outcome which portends long-term outcomes. And I think you know we're excited for the reception of those results. And we do think that, that's a catalyst for growth for us with our really unique position in that particular subset of patients, which is a big chunk of the market at 40%.

Thank you, Sean. To conclude, I want to make one last point about the ventilation and monitoring decisions. As a result of these portfolio changes, Bob White will be departing from Medtronic. He has been a significant and impactful leader for the company for many years. While our friendship will remain strong, we will certainly miss our daily collaboration with him, and I wish him all the best. I also want to thank everyone for their questions today. We truly appreciate your support and continued interest in Medtronic. We hope you will join us for our Q4 earnings broadcast, which we expect to hold on Thursday, May 23rd. We will provide updates on our progress and how we finished the fiscal year, as well as look ahead to fiscal '25. Thank you for spending time with us today, and have a wonderful rest of your day.