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Oxford Immunotec Global PLC (NASDAQ:OXFD)
Q3 2019 Earnings Call
Nov 5, 2019, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning ladies and gentlemen and welcome to the Oxford Immunotec Third Quarter 2019 Conference Call. [Operator Instructions] It is now my pleasure to turn the call over to Matt McLaughlin Chief Financial Officer.

Matthew McLaughlin -- Chief Financial Officer

Good morning and thank you for joining us to review Oxford Immunotec's financial results for the third quarter of 2019. Before we begin I'd like to caution listeners that comments made in financial information provided during this conference call include certain statements that are estimates forward-looking and or subject to various risks and uncertainties. This information reflects our current expectations assumptions and currently available data and are neither predictions nor guarantees of future events or performance. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with our business including those under the heading entitled Risk Factors in our annual report on Form 10-K for the year ended December 31 2018 and our quarterly reports on Form 10-Q. The company disclaims any obligation to update or revise any forward-looking statements except as required by applicable law. During the call we'll also refer to certain financial information on a non-GAAP basis. We believe that non-GAAP financial measures taken in conjunction with GAAP financial measures provide useful information for both us and investors to evaluate the company's performance. These include pro forma revenue gross margin operating expenses loss from operations EBITDA and adjusted EBITDA. Reconciliations between certain GAAP and non-GAAP results such as adjusted EBITDA are presented in the tables accompanying our earnings release which can be found in the Investor Relations section of our website.

As a reminder in early November last year we completed the sale of our U.S. laboratory services business to Quest Diagnostics. As such the now divested U.S. laboratory services business is shown in discontinued operations in the historical financials in our press release and forthcoming Form 10-Q. The discussion of our results and business updates on today's call will be focused on our continuing operations and to insist investors in understanding the underlying performance of the company's continuing operations we will be comparing to certain pro forma non-GAAP financials for the prior year periods. These non-GAAP financials for 2018 which were filed as exhibits to forms 8-K filed with the Securities and Exchange Commission on January 7 and March 11 2019 reflect the company's estimated revenue and cost of revenue as of the closing date of the sale of our U.S. laboratory services business to Quest had occurred prior to the respective periods. These non-GAAP financials also appear as supplemental tables in our Q3 earnings press release. The pro forma adjustments in these tables were based on the information available at the time and assumptions that management believes are factually supportable and reasonable.

With that it's my pleasure to turn the call over to Oxford Immunotec's Chief Executive Officer Peter Wrighton-Smith.

Peter Wrighton-Smith -- Chief Executive Officer

Good morning. On today's call I'll provide some general comments on our financial results and operating performance in the third quarter of 2019. I'll then hand it over to Matt who'll walk you through our financial results in detail. Once Matt has completed that he'll hand it back to me to provide our financial guidance and we'll then open up the lines to take your questions. Turning to 2019 third quarter results we posted revenues of $21.2 million which was just above the top end of our expectations for the quarter. Excluding 2018 revenues from the donor screening from the year-over-year comparison total company revenue grew 12% over pro forma revenues for the same period in 2018. U.S. revenue was $5.7 million excluding 2018 revenues from blood donor screening from the year-over-year comparison. U.S. revenue was flat in the third quarter compared to pro forma revenues in the same period of 2018. This reflects the pull forward of seasonality in our U.S. business as we've moved from recording revenue on the performance of tests to the shipment of kits and was expected given our Q2 results. For the year-to-date U.S. revenue was up 23% versus the same period pro forma revenues in 2018. Europe and rest of world revenue of $2.7 million was up 19% compared to last year or 24% on a constant currency basis. Highlights in the quarter were continued strong growth in our U.K. business and very strong growth in Russia which more than doubled versus the same period last year as the benefits from our partnership with Generium starts to bear fruit.

Asia revenues were $12.8 million for the third quarter of 2019 up 17% from the same period last year or 15% on a constant currency basis. As expected we saw a significant pickup in revenue in Japan and we shipped our first orders to China under our new or direct operating model there. I'll comment some more on that later. Although still small by comparison we're also seeing strong growth out of South Korea. Overall we're very pleased with the strong underlying momentum in the business and the continuation of double-digit revenue growth. In addition to a continued focus on driving revenue growth we're also concentrating on driving the company's profitability metrics. Gross margins continue to expand with the third quarter coming in at 73% growing about 340 basis points over the pro forma gross margin in the prior year period. We saw an expansion in product margins due to leverage from higher volumes and as we start to see the benefits of greater automation of manufacturing. We also saw a strengthening in service margins both as we've eliminated the drag on margins from the blood donor screening service and as we continue to grow volumes in our U.K. service lab. We continue to repurpose the company's spending around our new more focused business model with delivering opex leverage while also increasing investments in sales and marketing initiatives. This opex leverage combined with gross margin expansion is leading to meaningful progress in moving to adjusted EBITDA breakeven on the bottom line. Turning now to our key operating priorities for 2019.

In the U.S. we continue to focus on the success of our relationship with Quest Diagnostics. As you know a principal rationale for this transaction with Quest was to significantly increase the reach and competitiveness of T-SPOT.TB in the U.S. market. We're now seeing this strategy bearing fruit. Quest continues to make progress on implementation expanding availability of T-SPOT.TB through their commercial team and their joint venture network. In Q3 they initiated T-SPOT.TB at in Indianapolis the final of its 3 laboratory joint ventures. As a result our sales growth request is increasingly coming from new ordering providers primarily in physician offices. Over the last 3 quarters Quest has added over 19000 new prescribers of T-SPOT.TB. Our teams are working well together and partner especially effectively on national accounts where we can leverage T-SPOT.TB to win competitive accounts. For example in Q3 we won a national agreement for a major physician office chain and continue to add new hospitals to national contracts we won in previous quarters. We remain highly encouraged by the way the relationship with Quest is progressing and continue to expect it to result in further expanding growth opportunities.

Outside the U.S. we're executing on our plan to strengthen our voice and channels into new and existing markets both through direct hires and through the use of commercial partnering to expand our reach. In China we have taken the decision to go more direct into the market by hiring our own sales marketing medical affairs regulatory and back office teams. But we believe that by taking this move we can drive higher volume growth over the coming years and recapture margin that we can use to offset the cost of our infrastructure as well as to have more flexibility of our product pricing as we aim to penetrate new segments of the market. In conjunction with this move we've also agreed to terms with Shanghai Pharmaceuticals to be our non-exclusive third-party logistics or 3 PL provider in China. Shanghai Pharma is a $23 billion plus global company listed in both Shanghai and Hong Kong Stock Exchanges. They have significant reach across China and we've been very impressed with their capabilities as we work through setting up our new business model. In the new model we will have direct control over sales marketing medical affairs reimbursement strategy and regulatory activities. We now have a direct presence in China of approximately 20 people across these functions supported by a back office-based out of our new Singapore APAC Hub. We've now taken on direct relationships with our customers rather than having those customer relationships controlled by our former distributor. 3PL will perform importation warehousing and distribution to customers.

Our customers will place orders with our 3PL and the 3PL will ship to them and collect from them. It has only been a month since we made this switch so it's clearly early days. However we are very pleased so far with how the market is responding to this move. Our near-term focus remains on supporting the migration of our customers to the new model. Once we're through that we'll be turning our attention to using our direct resources to driving greater usage of T-SPOT.TB into what is a massively under-penetrated market with huge potential for long-term growth. As we see the results from this go-to-market approach we will continue to prudently add resources in China to fully benefit from the market opportunity there. More generally across Asia we see other opportunities for growth and expect to increase our resources to expand our presence and reach into other countries. In the Europe and Rest of World region our new Russian collaboration continues to track according to plan. Following regulatory approval for Generium's domestically produced products based on our technology T-SPOT.TB is now eligible for a broader roster of public tenders and our partners are seeing strong demand for the domestically produced T-SPOT.TB in both routine testing and screening programs.

As mentioned earlier revenues have more than doubled since last year and we believe that Russia has significant market potential for continued expansion in the years to come. Turning to our product development efforts. We continue our work on the T-Cell Select product. I'm pleased to report that we've just recently begun shipping product to our initial customers in Europe and are shortly to begin U.S. clinical studies with the aim of gaining FDA approval. Plans for provision of T-Cell Select in additional countries are also well advanced. Our customers remain very interested in T-Cell Select and the resulting ability to automate the T-SPOT.TB workflow. This interest stems both from existing customers who see this as a means to increase their testing volumes and from new customers who wanted to offer T-SPOT.TB but needed a simpler workflow to do that. On the operations side we have multiple COGS reductions projects ongoing including further automation of our kit manufacturing. We've now validated new equipment to automate the labeling and label QC on reagent vials. Given that we label millions of vials per year this is a major step forward in productivity which also enables us to scale our manufacturing to meet the growth and demand for our products. Furthermore in line with our commitment to continue to streamline the business and repurpose our spend around a more focused business model we have taken the decision to discontinue our CD 6 line product.

This product currently represents about $1 million of revenue to the company but it is in gradual decline and the cost of producing it mean that it is a drag on both gross and bottom line margins. In taking this decision we'll be working to wind up our activities at our Norwood Massachusetts site and consolidate our U.S. operations into a new smaller footprint site in 2020. This decision will improve gross margins improve bottom line profitability and enable us to improve our focus by eliminating the distraction from a non-core product. Matt will give a little bit more detail later about the impact of this decision on our financials. So in summary we're making good progress in executing on our strategic priorities this year. And as we continue to execute on our new business model we're pleased to see continued growth and improving profitability metrics. Having just come out of our annual strategic planning session I can tell you that our excitement about the future of the business and our product road map in TB has never been higher.

Matt will now take over to give you some more detail on our financial performance.

Matthew McLaughlin -- Chief Financial Officer

Thank you Peter. Our full GAAP results as shown in our press release issued today showed the comparison of our Q3 2019 with the GAAP numbers of our continuing operations for Q3 2018. For the reasons I've already explained when giving year-over-year comparisons I'll be referring to the pro forma numbers for Q3 2018 instead to enable the comparison on a like-for-like basis with our Q3 2019 results. You can find these tables at the end of our press release after the presentation of the GAAP results. Total revenues in the quarter of $21.2 million were up 32% versus GAAP revenues in Q3 '18 but up 12% from pro forma revenues in Q3 '18. The breaking down our reported revenues on a regional basis U.S. was $5.7 million representing 27% of our revenue Europe and Rest of World revenue was $2.7 million representing 13% of our revenue; and Asia revenue was $12.8 million representing 60% of our revenue. Turning to volumes in our TB business. We now count volumes in the U.S. based on the number of tests sold to Quest and our other kit purchasers rather than on the basis of how many tests were run in the U.S. We sold approximately 300000 tests in the U.S. via kit sales. We sold over 800000 tests in our OUS region both via kit sales and test process in our U.K. ODL service business. Gross profit of $15.5 million was up 17% from the pro forma gross profit in the prior year period. Overall gross margin for the quarter was 73% an increase of about 340 basis points from the prior year period pro forma number. Breaking down margins by product service split product gross margin was 73.6% and service gross margin was 62.1%.

Product gross margin increased about 260 basis points from the prior year pro forma as we continue to be successful in driving down cost of goods sold through for example increased automation of kit manufacturing. Service margin grew 1850 basis points from the prior year period pro forma as we no longer have the drag from our blood donor screening service and we grew volumes in our U.K. service lab. Turning to operating expenses. Operating expenses reduced by almost $1.2 million or 7% from the prior year period. Sales and marketing expenses increased to $7.4 million as we continue to make investments to drive channel and market expansion around the world. Research and development expenses reduced slightly to $1.6 million due to reprioritization of spending. Notwithstanding this quarter's numbers we continue to invest in development projects aimed at pulling through our new automated test workflow augmenting T-SPOT.TB test utility and in projects to reduce our COGS. General and administrative expenses decreased about 30% year-over-year to $5.7 million reflecting run rate savings in our spend resulting from a more focused business model as well as nonrecurring transactional expenses relating to the Quest transaction in Q3 of 2018. Operating expenses for the third quarter included approximately $983000 of share based comp. Turning to a couple of one-off items. We reached a settlement with Oxford University Innovations which extinguishes their rights to claim a share of the $27.5 million we received in our successful outcome of our patent litigation against QIAGEN in Q4 of 7 '18.

This is reflected in our settlement expense line. Additionally given our decision to exit the C6 line product we took a one-off charge of approximately $200000 to cost of goods sold to write-off inventory of that product that we think will be unsellable. With approximately $1 million of annual revenue at significantly dilutive margin rates we see this decision as a long-term positive for the financial profile of the business. Net income for the third quarter of 2019 was $717000 compared to a pro forma net loss of $4.5 million in the third quarter of 2018. EBITDA for the third quarter of 2019 was a $956000 profit. Adjusted EBITDA which excludes share-based compensation unrealized FX gains or losses and unusual items was a $1.9 million profit for the third quarter of 2019. This compares to an adjusted EBITDA loss of approximately $1.4 million in the prior year period. Both EBITDA and adjusted EBITDA are non-GAAP measures. Turning to the balance sheet. We finished the third quarter with a very healthy cash position of $184 million. We generated nearly $900000 of operating cash flow from continuing operations in the quarter. During the quarter we also repurchased $3.3 million of shares at an average price of approximately $13.67 under our share repurchase program.

I'll now hand it back to Peter who will discuss our business outlook.

Peter Wrighton-Smith -- Chief Executive Officer

Thank you Matt. Given the strong momentum in the business and the results so far in the year we are raising our revenue guidance for the full year to between $72 million and $73 million. Turning to the outlook for the fourth quarter of 2019 we expect revenues of between $16.4 million and $17.4 million. In the U.S. now that we recognize revenue on the sale of kits rather than the performance of tests we've seen a pull forward in seasonality of our U.S. revenues from what we saw previously. Consequently we expect the fourth quarter to be our lowest for the year. We expect Europe and Rest of world revenues to be approximately the same in Q4 as we saw in Q3 reflecting the strong underlying growth in the region. Lastly we expect Asia revenues to be strong in Q4 but fall back sequentially given the peak in Q3 from Japan.

That concludes our formal prepared remarks. We'll now open up the line for questions.

Questions and Answers:

Operator

[Operator Instructions] And our first question comes from the line of Bill Quirk with Piper Jaffray.

Rachel Vatnsdal -- Piper Jaffray -- Analyst

This is Rachel Vatnsdal. Thanks for taking this question. Can you elaborate on the U.S. strength. We had thought that the shift to Quest 3rd Q would be less pronounced in terms of performing. So if you could give us some additional color on that that would be great?

Matthew McLaughlin -- Chief Financial Officer

Sorry good morning Rachel. I didn't quite hear the question. Would you mind repeating that slightly more loudly?

Rachel Vatnsdal -- Piper Jaffray -- Analyst

Yes. Can you just elaborate on the U.S. strength? We had thought that with the shift to Quest that that third quarter would be less pronounced in terms of performance. So if you could give us some additional color on the outperformance that would be great.

Matthew McLaughlin -- Chief Financial Officer

Yes I think I would say that the performance was in line with our expectations. And Q4 as I said will be slightly weaker than Q3. I think that's just one down to the timings of orders rather than the demand in the market which remains strong. So I think more generally we are very happy with how the partnership with Quest is going. And I think some of the data I gave on today's call about the number of new ordering providers I think bodes very well for this partnership increasing our reach into the market. And so I think we feel very positively about what that means for the company as we look to 2020 and beyond.

Rachel Vatnsdal -- Piper Jaffray -- Analyst

Great. And then with your new partner in China how are you thinking about fourth quarter performance given the transition?

Matthew McLaughlin -- Chief Financial Officer

So we're concentrating obviously on migrating our customers over from the old business model to a new business model. We're not anticipating any sort of change to stocking in the market or anything like that we want to keep up with the kind of run rate of consumption in the market. And so our intention is to keep selling into the market at a kind of level that reflects the underlying consumption of the tests.

Rachel Vatnsdal -- Piper Jaffray -- Analyst

Thank you.

Matthew McLaughlin -- Chief Financial Officer

`Thanks, Rachel.

Operator

And our next question comes from Sung Ji Nam with with BTIG.

Sung Ji Nam -- BTIG. -- Analyst

Hi, thanks for taking the questions. Just just a couple of quick ones. Your gross margins obviously continue to see really good improvement there. I was wondering I think you had talked about kind of low 70% as potentially your guidance for the year. I was curious as you look out you -- is there a possibility of that going up even further?

Matthew McLaughlin -- Chief Financial Officer

Yes Sung Ji thanks for the question. I think as you look at obviously 3Q and then just sequentially Q1 through Q3 we've continued to expand gross margins. I think Peter and I both touched on it in terms of our cost outperformance. We see no reason to believe that's going to change at all in the fourth quarter or moving forward. So I do think it's reasonable to believe that kind of the Q3 gross margin performance is indicative of what we can achieve in Q4. And then obviously for 2020 we'll update that as we get into early next year and we talk about guidance.

Sung Ji Nam -- BTIG. -- Analyst

Okay great. And then in China you talked about growing your sales force there etc. Are there additional plans in terms of your commercial structure in China in the foreseeable future? Or do you think you have an optimal size currently?

Matthew McLaughlin -- Chief Financial Officer

No I think -- we think that -- we think the 20 people we've got provides us adequate coverage to affect the transition but clearly china is a massive opportunity and the company does intend to prudently add additional heads to fully maximize that opportunity. So you should expect the company sales and marketing spend to go up in general because sales and marketing globally but a part of that is clearly to continue to.

Sung Ji Nam -- BTIG. -- Analyst

Oh no, sorry. That's all thank you.

Matthew McLaughlin -- Chief Financial Officer

Thank you. ji Nam.

Operator

And your next question comes from Thomas Peterson with Baird.

Thomas Peterson -- Baird -- Analyst

Yeah, thanks, guys. This is Tom on for Katherine. I just wanted to get a little bit more color on the U.S. growth flat versus last year as you expected due to the shift in seasonality. But once that question integration is complete and annualized where do you think U.S. revenue growth should normalize around?

Matthew McLaughlin -- Chief Financial Officer

Yes we're going to stop short of providing guidance for 2020 and we'll do that in due course. But what I would comment on I think is the fact that the main rationale we did the deal was that we saw this as a meaningful opportunity to increase the reach and competitiveness of our test in the U.S. and I think we're starting to see that thesis play out with some of the earlier results I shared today certainly in terms of reach. Quest has made excellent progress on making the test available nationally as evidenced in part by what I talked about today which is hitting all their joint venture partners also on board with the tests. I think we've also been encouraged to see the numbers of new providers that are ordering the tests. And since a lot of those are also physician offices that's great to see because that's a very large segment of the market while we're our tests performance extremely well but where we were unable to really cover with our own sales force. And so we see those as very encouraging things for the outlook for the business in the U.S. great.

Thomas Peterson -- Baird -- Analyst

And then a little bit on the exit and margins. Understanding it's a pretty small portion of the business going forward. But could you just flesh out a little bit more about what the expected margin impact of that exit might be?

Matthew McLaughlin -- Chief Financial Officer

Yes. I think just from an overall margin impact if you just take a step back and look at the business on a total year basis it's going to be immaterial. I mean we're talking about $1 million of revenue this year dropping to about $0.5 million of revenue next year as we exit it and we will be fully out by '21. So the associated margin with that will have a negligible impact on the total.

Thomas Peterson -- Baird -- Analyst

Great, thanks, guys.

Operator

And your next question comes from Doug Schenkel with Cowen.

Doug Schenkel -- Cowen -- Analyst

First on China the decision to go direct in China didn't seem to have any negative implications in the quarter as you made the transition given what we saw in broader AsiaPac. I just want to make sure that's the case. And looking ahead as we're updating our models should we give you a little more room for error as we think about China or based on what you're seeing right now should we assume the transition to go as well as it seems to go in the early going?

Peter Wrighton-Smith -- Chief Executive Officer

Yes. I mean obviously this is a major change to our business model in China. And we spent a lot of time assessing and planning the risks I would say it's still early days but we are very happy with how things have been going. Internally we've assumed a bit of disruption from the transition. But I think offsetting that is the fact that the price in China is going to be going up slightly obviously because we are recapturing the margin that formally went to our distribution partner. Clearly we'll be paying some of that to Shanghai Pharma but at a lower level. So there is some offset in terms of price that also abrogates disruption. So that's the way that we're thinking about it internally.

Doug Schenkel -- Cowen -- Analyst

Okay. That's helpful Peter. Maybe sticking with AsiaPac for one more. I'm just wondering if you saw any pull forward of orders ahead of the Japan value-added tax increase that was implemented on October 1.? We heard that from some of your peers. I'm wondering if that impacted your business at all?

Matthew McLaughlin -- Chief Financial Officer

Yes Doug I'll take that. We did not see that at all. If you think about it it's the end user that actually gets hit with the value-added tax. So in our case it would be the person actually procuring the test and paying for it. So A it would be immaterial to someone paying for a TB test; and B to actually flow it through the full supply chain if you will they would have had to order significantly earlier than kind of right now in Q3. So we didn't see it.

Doug Schenkel -- Cowen -- Analyst

Okay. And I guess one more for you Matt. G&A expense for the company is tracking at 30% of total sales this year. That's the high relative to your peers. And clearly this is largely a function mathematically of really just the transition and business model. With that in mind are some of the initiatives that you talked about in your prepared remarks you and Peter should -- in terms of operational changes should we think that ultimately that does lead to a rationalization at the G&A line? And longer term is it possible that G&A could get down to something closer to 10% of total revenues versus what you're tracking to this year?

Matthew McLaughlin -- Chief Financial Officer

Yes. I think as it relates to G&A there's absolutely opportunities for us to -- particularly now that we do have kind of a much more focused business model there's opportunities to to reduce the overall spend. But I think broadly speaking as we think about growing the top line the G&A line will not have nearly the growth rate as the top line would. So I just think to your point on just the math working out as we become bigger and get a lot more scale you're going to see that percentage come in line. I won't comment if I see it getting to 10% in the -- clearly not in the near term but as we continue to grow the business and rationalize the cost I think you'll see that percentage come in line with peers.

Doug Schenkel -- Cowen -- Analyst

Okay, that's great. Thank you very much.

Operator

And our next question comes from the line of Tycho Peterson with JPMorgan.

Tycho Peterson -- JPMorgan -- Analyst

This is Julia on for Tycho. Thanks for taking a question. So let me just to start off on T-Cell Select. Could you give us an update on your expected time line for getting it approved? And as we think about the long term how significant is that automation in terms of unleashing market demand? And does the new product have any implication in terms of further margin accretion?

Matthew McLaughlin -- Chief Financial Officer

Yes. Thank you Julia. Excellent questions. So T-Cell Select is now -- has regulatory approval and is being sold in Europe. Obviously different jurisdictions have different regulatory pathways. I commented today on the fact that we are shortly to begin our studies for -- clinical studies with the aim of getting FDA approval in the U.S. I think it's a little too early to comment on approval timings given enrollment speeds can vary and we still have to understand the kind of review cycle from FDA. So I think we'll update you on that as we get closer to launch. In terms of the impact we see T-Cell Select as being a significant driver of future growth in the company because it does a couple of really important things. The first is it dramatically -- by automating the test it dramatically improves things for our customers in terms of their workflow. It increases that capacity reduces their labor cost to run the tests reduces their walk away time from the test reduces skill levels. But at the same time it also expands our blood storage time from 32 to 54 hours.

And so that extent -- further extends our best-in-class pre-analytical advantages and that will enable customers all over the world actually to increase their reach of samples and further increase operational efficiencies. So we see this as a meaningful benefit to customers and one that we think will support the growth rate of the company for many years. Your last question about margins I think there are -- there are some puts and takes there. So the puts are that we'll be taking out a bunch of consumables cost and labor costs from the customer and we expect to take -- share some of those gains with the customers in the form of selling T-Cell Select as an accessory. The takes might be that in some jurisdictions we might get involved in providing automation under reagent rental deals etc. that would at least initially be headwind to gross margin. So we're just going to have to see how those things play out. But you shouldn't assume that it will have a material impact on gross margins in the near term not least because obviously it's going to take some time to get a meaningful percentage of our customers fully on automation got it.

Tycho Peterson -- JPMorgan -- Analyst

That's very helpful. And maybe just to dovetail on the gross margin. Could you update us on how much of your manufacturing is currently automated? And how should we think about the additional runway from automation?

Matthew McLaughlin -- Chief Financial Officer

Yes this significant run rate still. We have had a long track record as a company of reducing cost of goods through doing what you'd expect which is to look at the components of our costs and rank -- stack rank them and work on the top ones and keep working down the list. And so we are benefiting today from projects that we worked on a year or two years ago. Tomorrow we'll benefit from the projects they're working on today and we have a long pipeline of other projects for the future years. And so I think we feel confident as a company that we'll be continuing to take cost out of our tests as we look forward.

Tycho Peterson -- JPMorgan -- Analyst

Great, thank you.

Operator

And we have no further questions at this time.

Matthew McLaughlin -- Chief Financial Officer

Okay. Thank you all for joining us to discuss our third quarter 2019 results and we look forward to updating you on our next quarterly call.

Operator

[Operator Closing Remarks]

Duration: 34 minutes

Call participants:

Matthew McLaughlin -- Chief Financial Officer

Peter Wrighton-Smith -- Chief Executive Officer

Rachel Vatnsdal -- Piper Jaffray -- Analyst

Sung Ji Nam -- BTIG. -- Analyst

Thomas Peterson -- Baird -- Analyst

Doug Schenkel -- Cowen -- Analyst

Tycho Peterson -- JPMorgan -- Analyst

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