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ICU Medical, Inc. (ICUI) Q1 2019 Earnings Call Transcript

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ICU Medical Inc. (NASDAQ: ICUI)
Q1 2019 Earnings Call
May 9, 2019, 4:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen and welcome to the Q1 2019 ICU Medical Incorporated Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will follow at that time. If anyone should require operator assistance, please press * then 0 key on your touchtone telephone. As a reminder, this call will be recorded.

I would now like to introduce your host for today's conference, John Mills from ICR. Please go ahead

John Mills -- Investor Relations

Thank you. Good afternoon, everyone. Thank you for joining us today to discuss the ICU Medical's financial results for the first quarter of 2019.

On the call today representing ICU Medical is Vivek Jain, Chief Executive Officer and Chairman; and Scott Lamb, Chief Financial Officer. We wanted to let everyone know that we have a presentation accompanying today's prepared remarks. To view the presentation, please go to our Investor page and click on Events Calendar and it'll be under the First Quarter 2019 Events.

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Before we start our prepared remarks, I want to touch upon any forward-looking statements made during the call, including beliefs and expectations about the company's future results. Please be aware they are based on the best available information to management and assumptions that are reasonable. Such statements are not intended to be a representation of future results and are subject to risks and uncertainties. Future results may differ materially from management's current expectations. We refer all of you to the company's SEC filings for more detailed information on the risks and uncertainties that have a direct bearing on operating results and financial position.

Please note that during today's call, we will also discuss non-GAAP financial measures, including results on an adjusted basis. We believe these financial measures can facilitate a more complete analysis and greater transparency into ICU Medical's ongoing results of operations, particularly when comparing underlying results from period-to-period. We've also included a reconciliation of these non-GAAP measures in today's release and provided as much detail as possible on any addendums that are added back.

And with that, it is my pleasure to turn the call over to Vivek.

Vivek Jain -- Chief Executive Officer and Chairman

Thanks, John. Good afternoon, everybody. The first quarter of fiscal 2019 was our first quarter after two years of difficult integration work and we spent our time primarily on active customer dialogue to improve our commercial execution and implementation of some of the operational improvements to protect and improve our P&L over time. And to a lesser degree, residual clean up efforts related to all the integration activities. We continue to execute well through a large vibe of activity and feel an increasing amount of our time is now spent on external activities.

On today's call, we wanted to comment on Q1 results and discuss our current view of the business and recent performance trends; provide an update on the open residual integration issues we mentioned on the last call; outline some of the key activities and housekeeping items that we are focused on in the first half of the year; remind everyone of the first half 2019 comparison and its effect on company growth rates in the near-term; and lastly and briefly reiterate some thoughts on the longer term value creation.

The short story on Q1 was internally it was an operationally easier quarter for us versus Q4 as our system integration work stabilized and our customer service levels improved. But externally, as we have said on the previous call, it was average from a commercial standpoint. The income statement was straightforward with revenues that were generally in line with our expectations and earnings that were a bit higher. TSA savings are being realized and the cost for the systems integration was lighter on the P&L. We finished the quarter with approximately $311 million in adjusted revenue. Adjusted EBITDA came in at $78 million and adjusted EPS came in at $2.58 Similar to previous years, cash decreased in Q1 as we pay out more cash in the first quarter.

Pro forma revenue was down 9% quarter over quarter on a constant currency basis due to the comparison of the IV solution shortage in Q1 of 2018 and because we still sold a little less than we desired in that segment.

Turning to the individual segments, and please use slide 3 in the posted debt for the base comparison. Let's start with Infusion Consumables which is our largest business. Infusion Consumables had revenues of $121 million in Q1 2019 which implied 1% reported year over year growth and 3% adjusted for currency. As we said late last year, the currency is having a bigger effect than it has historically, and it is helpful to call it out. We probably expected $1 million to $2 million more in revenues here and the variance was driven in two areas. First, Europe was a little lighter than we expected in Q1 and second, we have been a bit capacity constrained on some of our oncology product lines and we just didn't get the product into the market. We certainly expect that to be resolved in the back half of the year. The rest of the segment was pretty much as we expected. This is the segment where the most advantage now is a joint entity. We have largely rationalized the product portfolio and brought together the operational efficiencies of the combination.

Commercially, we have all the pieces, all the technology, and all the scale to compete globally and should be able to offer more value to the customer. We continue to feel positive about this segment into 2019.

The second segment to discuss is Infusion Solutions. This segment reported approximately $92 million in revenues and like Q4 of 2018 had a 27% decline year over year as the 2018 IV shortage carried through the first half of 2018, and as the unique temporary industry issues have largely been resolved. As previously described, it has been a wild ride in IV solutions with a huge swing in 2018 between the first half where the trade was in a shortage position to the second half where the trade had a bit more stock in with weaker underlying demand. The latest colors we're seeing in the market was no significant customer shifts in our book in Q1 and our committed customer order volume levels were generally flat with continued erosion of our trading book as we always expected to go away.

We said on the previous call that investors should not assume that historical results should be annualized in this segment. We've been very focused on the longer-term, but we want to be clear verbatim from the first presentation on the transaction even if revenue is a little volatile, we're going to try to make economically rational decisions and not sell products at a loss. We budgeted our earnings to try to anticipate bumps and just because of variances we're not going to reshape our value proposition to the customer. Given the increase in sales due to the industry shortage from Q4 of 2017 through Q2 of 2018, we expect this segment to have significant negative year over year results through the first half of 2019. We feel like we've been clear about this on previous calls but wanted to reiterate that as it will impact total company growth rates for the first half of 2019.

We have been trying to operate with transparency to customers by illustrating the generic drug-like regulatory framework, high capital expenditures and value in a healthy supply side situation to a business that was a historical pricing anomaly. From a value perspective, we have sacrificed short-term revenues and profits for longer-term supply contracts which we believe offers us more NPV as it makes us a more competitive supplier over time. We have discussed on the previous calls the benefits of increased production and a full manufacturing network. So, if the volume doesn't come back the negative margin effect over time has been on our minds and we believe we can continue to partially offset that by moving more volume into Austin given the optionality we have with Rocky Mount. Lastly, we continue to be vigilant here on quality as Hospira and Pfizer invested significant resources which is mandatory to be in this business.

To finish the big three, let's talk about Infusion Systems, which is the business selling pumps, dedicated sets, and software. This is important because it is the business that brings in a lot of recurring revenues. This segment did $85 million in revenue and was as expected down 9% year over year as reported or 5% constant currency. As we mentioned on the previous call, Q4 had the benefit of some earlier installations and this result was exactly in line with our expectations. We feel like we're holding our own in the marketplace. There are no real changes in our commentary from our last few calls with the belief that the segment is very close to bottoming out with the lowest level install base in the last 10 years. But we feel, given our own refresh schedule and book that revenues have stabilized at or above the Q3 2018 level for the near future.

To finish the discussion on the segments, since we acquired Hospira, we've been actively calling on customers and trying to illustrate the value we can add to the systems and the value to the system in having us as a healthy participant. While it's a long journey, we do believe this message is resonating. Feedback on the products continues to be solid. The products are necessary for the system and reliable for many years. When we started the transaction with our defensive mindset for doing it, we looked at the business and saw roughly 50% of the total business. Infusion Consumables and the International portion of Infusion Systems where we had a good offering and right to win.

Today, with two years of ownership under our belt, even with the IV Solutions bumpiness, we see a somewhere better picture where we believe we have the right to win in most of the portfolio. We never assumed it was always a straight line up and even a little volatility doesn't turn our focus or commitment in the short-term decisions. We will continue investing in R&D, appropriate capacity expansion in our production network, and into commercial resources to serve our customers. The attractiveness of the industry structure and commitment required to break through a lot of the inertia merits this point of view.

We spent a lot of airtime on integration on the previous calls and about how much work it has been, so we don't need to do that anymore. But we do want to update you on some of the remaining residual issues. We made a lot of progress in Q1 on our service level for the customer and our fulfillment rates post-cutover. We have had an improvement in our customer data management and most customer-facing technical issues are behind us. We're still dealing with a handful of issues on historical data from Pfizer and are still having to manually intervene on some internal connections between our various new ERP modules but making significant progress. As we've said before, our customers don't care about any of our internal integration activity unless it affects them negatively. We care about it because it first offers deep value in the form of operational improvements and two it sort of supersizes us for the ability to handle more in these platforms. We saw the benefit of the TSA savings in Q1 and we began to take action in Q1 on certain deeper operational improvements: What we were calling the high hanging fruit as mentioned on previous calls to help protect our P&L in the case of sluggish revenues or enhance if revenues improve.

On to other housekeeping items and key activities. First, since the last call we've had a number of regulatory inspections as we said we were on the clock. We had a full FDA inspection of our Salt Lake facility and MDSAP inspections at five of our locations with another two to go. There were no major findings at any of our sites as a result of the inspections. We continue to be vigilant and expect inspections of our other facilities during this calendar year and will update on the calls as they happen. Second, we have certain new product developments and specifically some new software applications related to our IV Systems business that have entered limited market releases in OUS geographies as we try to iterate quickly. We hope to receive more feedback on our limited market releases and other consumables approvals over the next few quarters.

Okay. To come back to the topic of earnings results and how we think about the near-term of 2019 and the future. It is really important for us to be clear that because of the IV Solutions shortage in the first half of 2018, our total company growth will look abysmal in the first half. And even though that is suboptimal, and we said in the last call we wish we were selling $50 million or $60 million more in IV Solutions annually. From our perspective, we see strong differentiation in our most differentiated businesses of IV Consumables and IV Systems; a belief that we will absolutely maximize profitability in our business like we always have; and a view that we have a safe and a strong balance sheet that can protect shareholders and be deployed for value creation as we are still a pretty small company. This thinking continues into the short-term of Q2 where we continue to be cautious on the volatility in IV Solutions and as we continue to work through some of the increased supply chain costs from the integration and recent volatility balanced against other operational improvements we've made.

As we've done the last few years, we'll update any of you on the full year on our Q2 call and again it's early in the year and a lot of things can change between now and December. All of this is in a consolidated industry structure with a number of intrinsic value drivers including high quality or hard to reproduce production assets, sticky product categories, and the opportunity for more cash generation. In the best case, we'll have better execution to improve our top line performance over time, drive operational improvements, and improve cash conversions and returns. In the worst case, we continue to fight headwinds in the top line, but we can still drive operational improvements and generate solid cash returns over time relative to the capital we've deployed due to the levers we just mentioned.

As always, I'd like to close with things are moving fast. We're trying to improve the company with urgency. We're trying to take responsible actions and break some of the inertia that many companies in our position face. We may hit some bumps as we take some of these actions, but we will overcome them and emerge stronger. I really appreciate the effort of all combined company employees to adapt, move forward, and focus on improving results. Our company appreciates the support we see both from our customers and our shareholders.

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

Scott Lamb -- Chief Financial Officer

Thank you, Vivek and good afternoon, everyone. To begin, I'll first walk us down the P&L and then talk a little about cash and the balance sheet. As we mentioned on our last call, we're going to begin reporting the effects of FX on revenue going forward now that it is meaningful to do so.

To begin, our first quarter 2019 GAP revenue was $331 million compared to $372 million or down 11% over the last year or 9% on a constant currency basis. For your reference, the 2018 and 2019 pro forma unaudited revenue numbers, which exclude contract manufacturing cells to Pfizer at costs, can be seen on slide number three of the presentation. Our pro forma revenue for the quarter was $311 million compared to $354 million last year, down 12% or 9% on a constant currency basis.

Infusion Consumables were up 1% or 3% on a constant currency basis but this increase was offset by IV Solutions which we primarily sell in the US down 27%. Infusion Systems was down 9% or 5% on a constant currency basis and Critical Care down $1 million 10% or 8% on a constant currency basis.

Adjusted diluted earnings per share for the first quarter of 2019 were $2.58 compared to $2.29 for the first quarter of last year. Our tax rate this quarter was favorably impacted by excess tax benefits related to equity compensation and we continue to estimate our tax rate for the full year to be in the range of 21% to 23%.

Finally, adjusted EBITDA increased 6% to $78 million for the first quarter of this year compared to $73 million last year. Now, as you can see from slide number four of the presentation, for the first quarter our adjusted gross margin was 43.9% compared to 42.1% for the first quarter last year. The largest driver for the year over year 180 basis point increase was product mix driven by Consumables. Now, when we bought Hospira, we were originally targeting a consolidated 40% gross margin and we've been pleased with the 43% to 44% margins we've seen over the past year.

We think Q1 levels were on the high side for a couple of reasons. At the moment, we have some incremental supply chain costs as we try to improve our fulfillment levels and rapidly rebuild depleted inventory. It takes time for that to makes its way into and out of the P&L. Second, we have planned factory shutdowns in the summer just as we have over the last few years. Lastly, we are still small and the product mix is a big driver. On any given quarter, if we have more pump capital or skewed mix, margins can change.

As expected, year over year SG&A decreased by approximately $12 million and went from 23% to 22% of revenues. The decrease came primarily from TSA savings as a result of separating from Pfizer and standing up the business on our own. R&D expenses were basically flat year over year at approximately 4% of revenue and should remain at 4% to 5% in 2019. Restructuring, integration, and strategic transaction expenses were $24 million in the first quarter versus $22 million last year. This was primarily related to our final Pfizer separation costs and clean up that included a non-cash write off of approximately $13 million in related assets. Now that most of our significant system cutovers are complete, other than our self-contained manufacturing facility in Austin, we will see these integration costs decline as we move through 2019.

In addition, there was an $8 million non-cash adjustment this quarter to the carrying value of our contingent consideration payable to Pfizer. As a reminder, this is based on reaching a certain cumulative earnings target by the end of 2019. These changes impact our GAP earnings but are excluded from our adjusted earnings since this has nothing to do with the operational performance of the business.

Now, moving on to our balance sheet. Similar to last year and as expected, cash and investments decreased by $69 million in the quarter to $315 million. Net working capital increased due to a temporary increase in DSOs as the result of the system cutover and inventory also increased as we work to optimize our safety stock levels. By the end of this year, we expect to have about $450 million in cash. In the first quarter, we spent $29 million on capex for general maintenance, system integration, and capacity expansion. As we said on our last call, we still expect to spend this year similar to what we spent last year or approximately $100 million as we continue to spend on additional IT systems, integration, and capacity expansion.

We have fully separated the Hospira business from Pfizer and have only our Austin manufacturing site left to fully integrate into a single IT system. Now that we are running on a single integrated IT platform, we are better prepared to improve the long-term efficiencies of our business and now have the proper platform to scale up when needed.

With that, I'd like to turn the call the over for any questions.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, if you have a question at this time, please press * then 1 on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the # key. To prevent any background noise, we ask that you please place your line on mute once your question has been stated.

Our first question will come from the line of Larry Solow with CJS Securities. Your line is now open.

Larry Solow -- CJS Securities -- Analyst

Vivek, I know you don't guide quarterly per se and you sort of sticking with your second half guidance of slowly improving on a year over year basis. But just as we look out sequentially sort of broad brushing all your segments, I know DD and Baxter both reported sort of a little bit softer Q1s as well, but both expect improvement in the back half of the year on a sequential basis and not just from easier comp. Do you share that enthusiasm? Any color on that?

Vivek Jain -- Chief Executive Officer and Chairman

I think we felt like Q1 was average on the last call. I think we're probably a little more cautious, Larry. All we can talk about is our own stuff.

Larry Solow -- CJS Securities -- Analyst

Right. Of course.

Vivek Jain -- Chief Executive Officer and Chairman

From a macro perspective, we haven't seen census change that much. In the US we saw the big drivers like employment and stuff. We don't know if it's going to get much better. So, there are opportunities for new market creation in some of the categories we're in and we're really focused on those. We not really competing in the same exact way. That, obviously, offers growth in some of our lines. In some of the more competitive lines, we feel like it is a tighter market so we're probably a little more cautious and we didn't really try to stack the deck or build the year up from guidance. We just kind of landed proportionate to what we thought we thought we were. There is volatility in Solutions, and we have put a little money in fulfillment stuff which doesn't show up right away. So, we have to cover that with some of these other operational improvements or find a little bit more growth.

Larry Solow -- CJS Securities -- Analyst

Right. How about just on the Systems piece? I know you said it was sort of in line with your expectation and they are impacted by currency more than your other segments are and markets. It was down a little bit more than I thought it would be sequentially. I know you mentioned you have some strong differentiation there as well as obviously Consumables. As you look out, maybe not the next couple of quarters but sort of the next couple of years, what are the impediments to growth other than sort of just sticky market which helps and hurts you some? Other than that, why can't you at least sort of grow with the market?

Vivek Jain -- Chief Executive Officer and Chairman

Certainly, I think it's a more competitive market than it's been probably in the last decade. It's a good time in the market in that regard. I do feel like there aspects in the business that work for us, which is the business if you're focused on it, really has a strong incumbent advantage that all participants benefit from. But then, it's our job to develop a strong case for change on the features and merits of the product and its value sometimes on its own and sometimes integrated with other things we can offer. That's the basis on which we compete. But fundamentally, our story on the plum family of products and the things that we have been investing our R&D dollars into is around safety and workflow and the themes that people are willing to make a change for on infusion or at least willing to continue to work with you if you're holding some book. That's the points we were making. We felt like, historically, the company we bought got away from some of those points even though the product was very solid in that regard. We've at least get back out there with some of the guidelines and other things you've seen and tried to reestablish ourselves in those topics.

Larry Solow -- CJS Securities -- Analyst

Okay. Great. Thanks. I appreciate it.

Vivek Jain -- Chief Executive Officer and Chairman

Thank you, Larry.

Operator

Thank you. Our next question comes from the line of Jayson Bedford with Raymond James. Your line is now open.

Vivek Jain -- Chief Executive Officer and Chairman

Hey, Jayson.

Jayson Bedford -- Raymond James -- Analyst

A few questions. Hey, Vivek. Maybe just a follow up on the Systems side. There was a competitor recall during the quarter. Do you see that as an opportunity?

Vivek Jain -- Chief Executive Officer and Chairman

I think this whole industry lives in a glass house. Right? They should be very careful on comments there. I feel like one of the things we learned at our experience in this industry was just it's a competitive advantage to making sure you're in a good regulatory position. I wouldn't jump to any major conclusions that that situation changes the landscape dramatically because all of these companies we compete against have lots of resources and kind of an infinite amount of infrastructure and financial flexibility to deal with the problem. So, we still have to win. The product still has to be better. Right? Historically, I think people did well because others fell down. I don't really think that's going to be the case anymore. You have to actually win, proactively. That's how we feel about it.

Jayson Bedford -- Raymond James -- Analyst

Okay. Fair enough. Just on the consumable side, you mentioned your capacity constrained with respect to oncology. I think you made a reference to this will be resolved in the second half of the year. Is that kind of when you expect supply to meet demand or is the dynamic still going to impact 2Q?

Vivek Jain -- Chief Executive Officer and Chairman

It's still probably going to impact Q2 a little bit. I think two things happened. One of the underlying growth is still great. It was still great in this quarter. It's just been slow bringing on a few tools and that recall, which kind of had no financial impact to us a couple of months ago you saw, we did have to swap out some parts, some new parts from old parts. That probably grabbed a little bit of inventory from us that would have been able to be commercially sold and get that extra million bucks we wanted and expected in the quarter. That's the downside of being a little bit small. Right? But that's exactly what it was.

Jayson Bedford -- Raymond James -- Analyst

Okay. On Solutions, you mentioned volatility. I realize it's tough to gauge quarter on quarter here, but is supply and demand fairly matched right now? Is the volatility you're talking about here either on price or short-term share gain or loss?

Vivek Jain -- Chief Executive Officer and Chairman

I think it's probably more on, we believe that there is adequate and perhaps excess supply in the marketplace. So, that's different than before. There is obviously a short-term share thing that's going on that's probably a bigger driver than the other topics. So, the first and second points there and it's our job to make sure we continue to be competitive but rational in the face of that.

Jayson Bedford -- Raymond James -- Analyst

Okay. I guess my last one here is that you mentioned that if the IV Solutions volumes don't pick up, you'll bring manufacturing from Rocky Mount. Where are you in that status? Would you be ready to produce products in Rocky Mount in the fourth quarter or is that more of a 2020 event?

Vivek Jain -- Chief Executive Officer and Chairman

Austin you mean.

Jayson Bedford -- Raymond James -- Analyst

Yeah. Sure.

Vivek Jain -- Chief Executive Officer and Chairman

Capex has been heavy into Austin. We haven't taken our foot off the gas on that. By the time it is validated and up and running it will be into next year. Nothing happens quickly here. It's still plenty of runway for us to step down Rocky Mount and move more into Austin if we so desire. We have flexibility.

Jayson Bedford -- Raymond James -- Analyst

All right. Fair enough. Thanks.

Vivek Jain -- Chief Executive Officer and Chairman

Thanks, Jayson.

Operator

Thank you. Our last question comes from the line of Matthew Mishan of KeyBanc. Your line is now open.

Vivek Jain -- Chief Executive Officer and Chairman

Hey, Matt.

Matthew Mishan -- KeyBanc -- Analyst

Hey. I just want to start off with the IV Solutions and just make sure I understand it a little bit more. Is this now the normalized level of sales for IV Solutions going forward or are customers still holding back purchases because inventory is too high?

Vivek Jain -- Chief Executive Officer and Chairman

I'm not sure we have a perfect answer. Our situation is a little different, probably. I think the trade is probably a little bit more normalized. We still have a little bit of that trading float business that is out there that has, obviously, rapidly deteriorated over the back half of last year. There is still a little bit of some of that left and there is some of the share tradings that's going on out there. I don't know that we can exactly say this is the new normal. I don't want to make a mistake, Matt. I feel like that's the one sentence we really got wrong here where we thought toward the last year, we'd be somewhere else. We don't want to declare it something that we are right now.

Matthew Mishan -- KeyBanc -- Analyst

Okay. I think that's fair enough. Can you also give us a sense of the percentage of sales directionally at Austin versus Rocky Mount?

Vivek Jain -- Chief Executive Officer and Chairman

I don't know that we want to give out the exact number, but it was like -- I'm looking at Scott. Three to one plus or minus 15% to 20% variance on that. About 10% variance on that.

Scott Lamb -- Chief Financial Officer

You can back out the MSA contract sales to Pfizer on your own and kind of get close to that answer.

Matthew Mishan -- KeyBanc -- Analyst

Okay. Thanks for the color on that one. On capital allocation, the bigger piece of the story going forward, I'm just curious if M&A activity necessarily materializes, when do you think about either a share buyback or a dividend?

Vivek Jain -- Chief Executive Officer and Chairman

Dividend? I haven't heard that word in a long time. I don't know. We don't know.

Scott Lamb -- Chief Financial Officer

We would say people were very patient, which we appreciated, with us in the three and a half years that we didn't do anything with the cash. We added a much smaller enterprise value. The broader world seems like it's a little bit bumpier right now. It feels prudent to us to kind of see where things settle out a little bit before we'd have to decide on that. I don't think we're one of the big guys that have the luxury of saying we can absolutely commit to buyback and still do everything else. We wouldn't have that ability.

Vivek Jain -- Chief Executive Officer and Chairman

And we believe people would want us to, if logical, deploy it effectively.

Matthew Mishan -- KeyBanc -- Analyst

All right. Thank you, Vivek. Thanks, Scott.

Vivek Jain -- Chief Executive Officer and Chairman

Thanks, Matt. Nice to hear from you.

Operator

Thank you. We do have a follow-up question from the line of Jerry Solow with CJS Securities. Your line is now open.

Vivek Jain -- Chief Executive Officer and Chairman

Jerry Solow, how are you?

Larry Solow -- CJS Securities -- Analyst

Jerry? Do you like Jerry? Do you like that? It's funny. I'm going to change my name. I have an Uncle Jerry, actually, so that works. Quickly, just a follow up to the housekeeping for Scott. You mentioned the two effective tax rates for the year and unchanged guidance but for the quarter what was that rate?

Scott Lamb -- Chief Financial Officer

Let's see. On a GAP basis, it was --

Larry Solow -- CJS Securities -- Analyst

The GAP basis I can figure out. It's in the press release, right? What about on the non-GAP?

Scott Lamb -- Chief Financial Officer

Non-GAP I think was...

Operator

That does conclude today's question and session.

Vivek Jain -- Chief Executive Officer and Chairman

Hang on a second. We're getting something.

Scott Lamb -- Chief Financial Officer

7%.

Operator

My apologies.

Vivek Jain -- Chief Executive Officer and Chairman

So, low. Larry, are you there? Did you get it? We might have lost Larry. Okay. So, the answer to that was 7%. Obviously, we benefited as Scott said from some of the equity comps left from the quarter.

John Mills -- Investor Relations

Okay. Well, thanks, everybody. We appreciate it. A quicker call today. We'll try to keep it that way. We look forward to updating everybody as well as doing the full year in our Q2 call. Thanks very much for the support of the company. Bye.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may disconnect. Everybody have a great day.

Duration: 35 minutes

Call participants:

John Mills -- Investor Relations

Vivek Jain -- Chief Executive Officer and Chairman

Scott Lamb -- Chief Financial Officer

Larry Solow -- CJS Securities -- Analyst

Jayson Bedford -- Raymond James -- Analyst

Matthew Mishan -- KeyBanc -- Analyst

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