Jim Sidoti: Yes. Great. Alright. Thank you.
Gary Maharaj: Thank you.
Timothy Arens: Thanks Jim.
Operator: Our next question comes from Mike Petusky from Barrington Research. Please proceed.
Mike Petusky: Hey. Good morning guys. Tim, I may have missed this. Did you say whether the profit-sharing piece for SurVeil, like has that started? Are you guys participating in that at this point, or has that not been calculated yet on these first orders?
Timothy Arens: Yes. Thank you for the question, Mike. Yes, we have communicated on this topic in the past. Probably weren’t very clear on it here during our prepared remarks. But yes, the way the profit sharing works, it’s not unlike what we have to do with our royalties. For those of you who have followed the story for a while, you appreciate that given the accounting standards, we have to make an estimation of what our customers sell and what our royalty will be on the coatings part of the business. It’s not unlike that with regard to the profit sharing with SurVeil. So, when we ship product to Abbott, we calculate based upon the unit shift what the profit sharing will be based upon a number of assumptions, including the selling price and including the number of units that are actually sold.
So, we have to take into consideration units that are used for promotional or samples that aren’t charged as well as units that might expire. Recall, we have a 2-year shelf life. So, we are pretty conservative in these assumptions at the moment. We have yet to receive the first profit sharing report from Abbott. We will have a little bit more insight on the first one when we get together for the August call. But there is an amount that’s included in the products revenue, which obviously impacts the product gross margins, but we have not made any changes to our assumptions from what we included in Q1 relative to what we booked in Q2 and how we forecast for the full year, so no changes there.
Mike Petusky: Okay. So, essentially, you are saying, you could come back and say, okay, well, we did a reconciliation with Abbott and there is a disagreement so we have to sort of back off although it sounds like you are being – you are trying to be conservative with this.
Timothy Arens: Yes. I think the probability of that risk without having perfect clarity would be low. I think that there is – the probability in my view would be that it would be favorable versus unfavorable. But I am sitting here today on May 1st, not having received any reports from Abbott with regard to the key assumptions that we have modeled. We have gotten a little feedback and some insights that we have used in some market data, but I feel comfortable with regard to what we have included in our assumptions to derive or come up with our estimated profit sharing, Mike.
Mike Petusky: Okay. Alright. Very good. And then I haven’t heard this talked about, I don’t think in a while. In terms of of Abbott’s plans for SurVeil OUS, have they communicated anything there as far as timing or even plans to do it?
Gary Maharaj: There is no change. What they have communicated is that they want to really make sure they fill out this U.S. market first. And at some point, if they get to that, we will have that discussion and an appropriate point if it’s reportable, we will, but we so far, no.
Mike Petusky: Okay. So not even like sort of like, hey, we sort of run this business for six quarters in the U.S. and then we start – like there is – there is nothing on the drawing board in terms of longer term plan there?
Gary Maharaj: Yes. Just last question. We have not had those discussions yet.
Timothy Arens: We wouldn’t have visibility to that at this point, Mike. They have not commented on that, nor have we asked quite frankly. But we are – I think we are all focused on making sure that we are able to supply not only product, but technical data information that’s useful for their marketing and selling and training purposes. We certainly would welcome the opportunity to produce more units for Abbott for sale in other international markets. But that’s not what we are manufacturing today. It’s only U.S.
Mike Petusky: Okay. Thanks for that. And just last question. Obviously, the first couple of quarters of this fiscal have come in really strongly. I think a lot of people – people we have talked to are sort of interested in what ‘25 could look like. And I am just curious, I mean is there any chance that you guys may give sort of a little bit of a preview on that, say, before the fourth quarter conference call. Like is there a chance that maybe after the third quarter or something towards the end of this…?
Gary Maharaj: I want to say more likely not. And not because we are trying to be coy only, we have multiple hypotheses and assumptions that we are validating. And some of those data points, again, we are just launching a couple of products right now. So, the way we look at fiscal ‘25 is we have hypothesis of where those products get to. If it’s above the low then, we then change our assumptions before that. And given the fact that we are so close to the end of the fiscal year, even then we wouldn’t have as many data points of that would typically like to have. So, I would say until the November fourth quarter earnings call.
Mike Petusky: Okay. Fair enough. Alright. Thank you, guys. Appreciate it.
Gary Maharaj: Thank you, Mike.
Operator: We are currently seeing no remaining questions at this time. That does conclude our conference for today. Thank you for your participation.
