Accuray Inc (ARAY) 2016 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Accuray Q3 2016 earnings conference call. (Operator Instructions). I would now like to introduce your host for today's conference Mr. Doug Sherk. Sir, please go ahead.

Thank you, Liz and good afternoon everyone. Thank you for joining us today as we review Accuray's third quarter fiscal 2016 financial results for the quarter ending March 31, 2016. Participating on today's call are Josh Levine, Accuray's President and Chief Executive Officer; and Kevin Waters, Accuray's Senior Vice President and Chief Financial Officer.

Before we begin, I would like to remind you that our call today includes forward-looking statements that involve risks and uncertainties including statements regarding our business plans and strategies as well as our outlook for the fiscal fourth quarter and full fiscal year 2016. There are a number of factors that cause actual results to differ materially from our expectations, including but not limited to risks associated with the adoption of the CyberKnife and TomoTherapy Systems, commercial execution, anticipated regulatory approvals and launches of new products, future order growth due to revenue and macroeconomic factors outside of the Company's control.

These and other risks are more fully described in the press release we issued after the market closed this afternoon, as well as in our filings with the Securities and Exchange Commission. The forward looking statements on this call are based on information available to us as of today's date and we assume no obligation to update any forward-looking statements.

During the question-and-answer session we request that questioners limit themselves to two questions and then re-queue if you have any follow-ups. We thank everyone in advance for their cooperation with this process. And now, I would like to turn the call over to Accuray's President and Chief Executive Officer, Josh Levine.

Thank you, Doug and good afternoon everyone. Thank you for joining today's call. In terms of our third quarter financial operating performance we generated revenue of $105.3 million, which represents 8% year-over-year growth and is inline with our objective of driving revenue growth that exceeds overall market growth rates. On a year to date basis in constant currency our third quarter revenue performance reflects growth of 12% compared to fiscal year 2015. We generated adjusted EBITDA of $13.9 million, which represents a high water mark for Accuray and demonstrates our continuing commitment to driving the business to a level of sustained profitable.

Cash decreased by $6 million in the quarter however this included the $5.5 million payment to settle litigation with our former Chinese distributor. Even with this non-recurring payment we are well on our way to generating the first positive cash flow year in the history of the Company. We finished the quarter with $150 million of cash on the balance sheet as of March 31. Kevin will provide greater detail on cash flow and the balance sheet during his section of the call.

Gross orders were $56.4 million which were off benchmark in terms of our internal expectations, but still represent growth of 9% year-over-year. Importantly we continue to grow our backlog which drives future revenue growth and finish the quarter at 7% higher than prior year. Net orders were $58 million an increase of 60% over the prior year. Our net orders were positively impacted by two orders that previously had aged out but came back to revenue and the positive impact of foreign exchange adjustment. While we do not usually expect net orders to exceed gross orders, our net order performance in the third quarter demonstrates that given the Company's definitive age out policy an order that ages out at backlog at the 30 month time line does not necessarily mean the order is permanently lost.

Turning to the quarter's commercial performance and topics related to our forward outlook, gross orders in the quarter were impacted by three factors. The primary factor was the timing of a single large multi system order in the U.S. We now expect this order to go to backlog in our fourth quarter. On a positive note, as a result of our strategic account selling activity we have been building a more meaningful pipeline of multi system order opportunities. With that said, given our relatively modest overall unit volume of orders in any given quarter we are more susceptible to these large dollar volume orders creating a reasonably significant dollar gap in the quarter if order timing slips which is what we experience in our third quarter.

The second factor impacting the quarter's gross orders is the continuing ship of TomoTherapy order volumes to single and dual vault settings. As most of you are aware, our success with Tomo in single and dual vault settings is occurring in smaller community and regional hospitals where we typically have had no prior relationship. These represent a very different account profile than our historical experience in large academic research medical centers. We are finding that the competitive pricing dynamics with these accounts is becoming more aggressive. We are competing effectively in these locations and because they are primarily bunker conversion opportunities we believe that the economics involved are a net positive for us even at slightly than lower average selling prices. With that said, the success we are generating in the single and dual vault settings is beginning to put modest pressure on gross order dollar volumes which we have reflecting in our revised gross order outlook for the full year.

The third factor impacting gross orders in the quarter was a heavier mix of TomoTherapy orders as compared to CyberKnife. In regards to this last point, we expect CyberKnife orders volumes to contribute to a larger gross order dollar volume in the fourth quarter as compared to the third.

As we think about future growth catalysts, today we announced the submission of our 510(k) pre market notification to the FDA for our Radixact treatment delivery system. The Radixact system is the next generation TomoTherapy platform and is being designed to leverage its unique architecture providing a main stream option for more clinicians. We expect to ship the first commercially released Radixact system to a customer in the European Union during the first quarter of fiscal 2017 and we will be unveiling the Radixact system at the ESTRO meeting in Turin, Italy this coming weekend.

We also announced today the submission of 510(k) pre market notification for our internally developed treatment planning and data management systems known as Precision Treatment Planning System and iDMS Data Management System. The Radixact system, Treatment Planning and Data Management Systems have been designed to work seamlessly together and improve treatment workflow processes. We expect this new platform to expand clinical capabilities while significantly increasing the ease and speed with which clinicians can provide precise radiation treatments. Multiple Radixact systems may use a single centralized data base for treatment planning and patient data management. The Radixact system is designed to provide expanding clinical options for clinicians and innovative treatment opportunities for their patients. With that said, it is important to note that we are not yet able to take orders for the Radixact system. However we do have the ability to take orders for our current TomoTherapy system, which could include a technology protection package meaning that if the Radixact system were to be available prior to the scheduled installation the customer could receive a Radixact system.

Again customers attending the ESTRO meeting later this week in Italy will have the opportunity to see the system and learn about additional product features. In addition, we will provide a review of the design objectives of this platform at our analyst day in New York City on May 20th. Kevin will provide more detail on guidance in his segment of the call, but as we think about our near term outlook full year gross order volume growth should be in the range of 5% to 8%. Support for this growth will come from continued penetration and market share gains by the TomoTherapy system in single and dual vault accounts, continuing momentum in replacement sales to enhance visibility to out TomoTherapy product road map; improved momentum in CyberKnife system sales in Q4; and booking the large multi system order that we originally forecasted for Q3. We are also continuing to focus on our previously highlights commercial initiatives and believe these catalyst will support intermediate term revenue growth in excess of overall market growth rates.

With that, I will hand the call over to Kevin to discuss the quarter's financial results in greater detail. Kevin?

Thank you, Josh, and good afternoon everyone. I will begin my prepared remarks with additional detail on our product orders, P&L and balance sheet before concluding with our financial outlook.

Let's first address our gross orders, which were $56.4 million. As Josh mentioned the primary variance between gross orders for the quarter and expectations for the quarter was the timing of a single multi system order in the U.S. from the third quarter what we expect will be in the fourth quarter. At the same time net orders of $57.6 million were above expectations. We have age out of $10.8 million during the third quarter which were offset by $5.6 million of orders that had previously aged out and were recorded as revenue in the third quarter. Net orders were also favorably impacted by positive foreign currency adjustments of $6.4 million and zero order cancellations. Ended product backlog as of March 31 was $370 million which again is a 7% increase over backlog at the end of the prior fiscal year third quarter.

TomoTherapy orders in the third quarter provided strong year-over-year growth offset by relatively flat CyberKnife orders compared to the third quarter of the prior year. While CyberKnife made up a lower percentage of the overall product mix the InCise Multi Leaf Collimator was including in all of our CyberKnife orders. We anticipate that CyberKnife order volumes will regain momentum in the fourth quarter driven by the closing of a large number of replacement deals in the funnel and significant CyberKnife growth in the EIMEA compared to the fourth quarter of 2015.

Staying with our discussion on orders, the timing of the multi system order resulted in the Americas region performing below expectations in the third quarter. However on a year to date basis all four of our regions remain on track to deliver strong results. Additionally, in terms of geographiccontributions we still expect the Americas and the EIMEA regions to be the primary growth drivers in fiscal 2016.

Moving on to our income statement. Total revenues for the third quarter of $105.3 million represented an 8% increase from the prior year period. While the currency impact for the third quarter was immaterial it is significant on a nine month basis where revenues have increased 12% on a constant currency basis. Product revenues of $53.7 million in the third quarter increased 16% year-over-year. Both TomoTherapyand CyberKnife unit volumes increased with particularly strong TomoTherapy performance in the EIMEA which was offset by lower product revenues in the Americas region. Service revenues for the third quarter of $51.5 million were up slightly compared to the prior year period and in line with our expectations. Year-to-date service revenue increased$3.3 million a modest 2% increase over the same period in the prior year.

Gross profit was $44.9 million in the third quarter and our overall gross profit margin for the quarter was 43%, a 300 basis point increase from the 40% gross margin in the year ago quarter. Both product and service margins improved in the third quarter compared to the prior year period. Product gross margins were a favorable 45% compared to 41% in the prior year. This was driven primarily by product and channel mix. Service gross margins were 40%, which were favorable compared to the prior year period of 38%. This improvement is primarily related to the increase reliability of our systems and reduced employee related spending. Total operating expenses were $39.5 million up $2 million or 5% for the quarter. The increase was primarily due to the arbitration ruling that awarded attorney's fees in favor of our former distributor in China. This resulted in an additional $2.4 million expense in the quarter. This matter is now fully resolved and we don't expect any additional expenses related to this arbitration matter in the fourth quarter.

For the fiscal third quarter we achieved operating profit of $5.4 million, which includes the $2.4 million of one time arbitration related expenses. Operating profits representing a five year high for our Company and additionally we reported GAAP net income for the third quarter. Our adjusted EBITDA was $13.9 million for the third quarter which is also five year high. On a year to date basis we have achieved EBITDA of $19.6 million, which is a $14.5 million improvement compared to the first nine months of fiscal 2015.

Turning to our balance sheet. We ended the quarter with $149.8 million of cash and investments a decrease of approximately $6 million as compared to the prior quarter. The decrease of cash during the quarter was primarily related to the one time payment to our former distributor in China resulting from the arbitration ruling of $5.5 million that was awarded in the previous quarters. For the first nine months of fiscal 2016 we increase cash and investment balances by $6 million. Driven by $11.5 million of positive cash flow if you exclude the one time arbitration related payment. This compares to a cash usage of $22.3 million in the first nine months of fiscal 2015. This is a cash flow improvement of more than $28 million. As Josh mentioned, we are well on our way to generating the first positive cash flow year in the history of Accuray.

During the third quarter we also retired $63.4 million of the $100 million of convertible notes that were to mature in August 2016. The cash used to retire the notes was primarily funded by the $70 million of non convertible straight debt financing we announced on our last call. We intend to use cash on hand to retire the remaining $36.6 million in August 2016. Regarding other balance sheet metrics, accounts receivable increased by $11.6 million compared to prior year. Several transactions particularly in EIMEA where I noted early we had strong product revenues in the quarter will be settled by way of letter of credit that are typically due 30 days after installation. We anticipate that the increase in accounts receivable in the third quarter will contribute to increased cash collections in the fourth quarter. We believe the quality of our accounts receivable remain strong despite the absolute dollar increase during the quarter. This belief is supported by the fact that during the third quarter we experienced a decrease in past due accounts.

Our inventory in the third quarter increased to $117.1 million representing an increase of 5% compared to the end of the second quarter. Inventory increased primarily to support manufacturing and collaboration units for the Radixact system we announced today as well as increases in service inventory to continue to maximize customer satisfaction. Current liabilities decreased by $44 million primarily due to the retirement of our convertible notes in the quarter and other normal account fluctuations. Turning now to our guidance for fiscal 2016. Revenue is now expected to be in the range of $395 million to $405 million tightening the previously stated range of $395 million to $410 million. This refined outlook is primarily based on weak economic development we are now seeing in Japan which also has been noted by our competitors.

This weakness is manifesting itself in the form of construction delays causing longer conversion times of orders to revenue in Japan. As a result revenue in the fourth quarter is expected to be in the range of $91 million to $101 million. With regards to adjusted EBITDA we are narrowing the range to $25 million to $30 million from the previous range of $25 million to $35 million .We now have full resolution of the arbitration matter in China, and excluding this one time approximately $8 million expense full year adjusted EBITDA would have been in the range of $33 million to $38 million, which would have put us at the high end or even above our original EBITDA guidance. We also continue to anticipate operating expenses in 2016 will remain relatively flat at the high end of our revenue guidance to slightly down at the low end of our revenue guidance compared to fiscal 2015.

We are also refining our full year gross order guidance to an expected range of $280 million to $290 million. If we achieve orders within this range we will generate gross order growth between 5% to 8% year-over-year, which we estimate is 2 to 3 times the growth rate of the overall market. This gross order achievement would result in fourth quarter orders of approximately to $92 million to $102 million.

Our outlook for fourth quarter order growth as noted by Josh is based on the following factors; the orders we have received to date, closing the large multi system order we originally forecasted in the third quarter, enhanced momentum of TomoTherapy orders because of the road map we are now able to present to our current TomoTherapy customers, and also improvement in CyberKnife orders in the fourth quarter as compared to the third quarter. With respect to future age outs and cancellation in fiscal 2016, fourth quarter net age outs are expected to be in the range of $8 million to $11 million which would represent on a full year basis a year over year improvement in age outs as a percentage of average backlog.

Finally on Friday, May 20th, we will be hosting an Investor Day in New York City. The upcoming event will highlight Accuray's technology road map including a more detailed review of our Radixact system announced today. The program will include presentation by Josh and myself as well as Chief Operating Officer Kelly Londy and Senior Vice President of Research and Development Robert Hill. Additionally we will have presentation from key clinical opinion leaders as well as a question-and-answer session. Now I'd like to hand the call back to Josh.

Thanks, Kevin. We are encouraged by the progress in operating performance that our business continues to exhibit which has lead to year-over-year growth in orders, revenue and EBITDA. We are focused on the growth catalyst we have in front of us and we are excited about our future. Now we are ready to open the call up for questions.

(Operator Instructions). Our first question comes from the line of Tycho Peterson with JPMorgan.

Thanks. Maybe Josh, just first on the gross order commentary, can you quantify the single large multi system order that got pushed out and can you give any more color on the pricing dynamics that you talked about for single and dual vault settings?

Yes, Tycho. On the multi system order as you guys have heard for really probably a rolling four or five quarters now we have been very, very focused on strategic account selling activity. That selling activity is focused on IDNs, GPOs, et cetera. And the primary reason we have been focused on that is that we believe that is the best way to bring larger volume, dollar volume multi systemorders into play in terms of our opportunities. And we are absolutely increasing the size and the funnel activity in those -- in the context of those types of accounts. So growing number of funnel opportunities related to those didn't exist a year ago let's say at this time so the opportunity set there is improving. The challenge is that given the relatively modest number of total orders we generated in any given quarter if one of those bigger volume situations or multi system situations slip from quarter-to-quarter it still creates a reasonably large degree of quarter to quarter variability or flucuation for us. I wish that weren't the case but it is kind of really where we are at this point. I think the opportunity hasn't changed quite frankly at all for us. I think if anything it has actually increased just given the way the funnel has is shaping up in terms of some of the multi system deals. But what happened in Q3 certainly was again from a timing expectations we expected that was going to happen in Q3 now it is going to happen in Q4. Again I'm not going to get more specific than that. We did say it was aU. S. based order. I think we'll leave it at that. Relative to the pricing I think again just from a commercial focus perspective over the last at least the last four or five quarters we have been showing that we have been getting a lot of traction with TomoTherapy in single and dual vault settings. And we have started to see traction there and improved and continuing momentum there. We're moving in to accounts where these are smaller community regional type hospitals. These were accounts that typically we have not had relationships with in the past. These are the vast majority of which, quite frankly, are competitive bunker conversion opportunities for us and we're seeing more competitive pricing activity in the those situations than we have in the past. I don't want -- I'm not panicked by it. I don't think there is anything here that I would say is dramatic, but even a modest impact on ASPs for us quite frankly will have potentially a significant impact when you multiple it in terms of full year basis relative to its direct impact on decrease in gross order dollar volume. And right now we estimate the lower ASPs as a result of these situations have probably contributed $3 million to$5 million decrease in gross order dollar volume versus prior year.

Okay. If I look at the fourth quarter guidance, you are down about $9 million sequentially at the mid of the range. You highlighted Japan the construction delays as the biggest swing factor there. Is that theonly reason for the tempered outlook and is there any light at the end of the tunnel?

Just to be clear the reference Kevin made to Japan I think was on the revenue side. We are seeing obviously the impact ofeconomic headwinds there. There is a relatively significant backlog of larger construction projects in general in their industrial environment. There is labor shortages and we are seeing delays in bunker build out and construction that are really directly related to that.

And just to follow up on Josh, Tycho. The revenue guidance in Q4 being as you mentioned sequentially down is a direct reflection of Japan revenue. We're probably looking any where from $7 million to $10 million on a full year basis in regards to construction projects in Japan that have started initial construction but will not finish installation to revenue until fiscal 2017.

Okay, got it. Thank you.

Our next question comes from the line of Steve Beuchaw from Morgan Stanley.

Hi guys. Good afternoon and thanks for taking the questions. My first question has to do with the Radixact launch. When I think back to the Tomo and CyberKnife launches in 2012 we had a little bit of an air pocket between the time when the products were launched and when they are were shipping and that create some challenges in the order funnel. How are you managing that this time around? what did you learn from thatexperience?

We learned that we need to be careful about being ready to release something really before it is ready for prime time. We are not going to make that mistake again quite frankly. You were kind in describing it as an air pocket. It was a painful process for us and we learned a lot from it. The good news here is that our existing TomoTherapy system, Steve, the H series product has a ton of momentum. And it is a very, very viable product we are proving that in terms of the penetration we are making in really new account profile type customer situations in single dual vault type settings. I think we have got a reasonably unique opportunity here in the same way you if you think about the way that the MLC has been a catalyst for system upgrade on the CyberKnife side. We actually think that Radixact could in fact may in fact have the same kind of impact on TomoTherapy sales opportunities going forward.

Sorry. I think you mentioned shipping time for Radixact in Europe. When would you expect to be able to take orders and ship for it in the U.S.?

We're not going to get specific about timing there with regards to a product that is in under 510(k) review. We look forward to working with the agency with their processing and their review of our application. I think it is conceivable that our regulatory group if youthink about the statutory response time lines involved in a 510(k) submission we would think it is potentially possible that we will hear back from agency with regards to any questions they might have with regards to the filing by the end of our fiscal year .

Okay. Thanks so much.

Our next question comes from the line of Brandon Henry with RBC Capital Markets.

Thanks for taking my questions. First question, it looks like you made some good progress on both gross margin for both products and services this quarter. Can you help us understand the drivers of each this quarter and how sustainable you think this level of gross margins is in to fiscal 4Q in to fiscal year 2017?

So, Brandon, we are not going to comment on -- I'll just head off your initial question on our fiscal 2017 guidance at this time. We will address that on our next call. Our increase product margins for the quarter are primarily just due to channel mix. To be honest we had a larger number of sales in direct markets at higher prices than we have had in previous quarters. I stick to my comment at the beginning of the year that we expect very modest margin improvements on a full year basis probably in the 100 to 200 basis point range. Our current fiscal year gross margin guidance out there right now would give overall margins to 40% and that is overall margins. On the service side 40% is not the new run rate of the business that we achieved in the third quarter. We had some lower employee related compensation expenses and we also had lower par consumption than we have historically have experienced. So I don't want the take away to be 40% is the new run rate on service margin. Again you can expect on a full year basis very modest improvements in the 100 to 200 basis points range.

Got it. And then separately can you provide us with an update on what you are seeing in the Chinese radiation oncology market? I think you previously said that what you were seeing on the ground differs from the weaker macroeconomic narrative in China. I think GE has talked about they are starting to see an uptick Chinese tender activity. Are you seeing the same thing here?

Brandon, our view and the optics there have not changed at all. Generally with regards to the China contributions to order our revised order outlook in Q4 non of that order outlook revision depends on issuance of Class A radiotherapy so we are in a good place regardless of what happens with regards to the timing of an announcement on the Class A licenses. And on the second part of your question just to be clear in the third quarter we moved five orders from the backlog to revenue. That were orders in the backlog that were Chinese orders. So we are not at this point still not seeing any order cancellation or anyconstruction project slow down relative to customers that have orders in the backlog or in the process of bunker construction in China.

Okay. Thank you.

(Operator Instructions). Our next question comes from the line of Anthony Petrone with Jefferies.

Thanks, and good afternoon. Josh and Kevin maybe just a couple on gross orders and the outlook. Kevin, you gave a couple of items that are factored into the fourth quarter guidance. I guess I'm just wondering how much of that guidance range is actually relying on other large orders such as the one that slipped in the third quarter and is there a risk that we are going to continuously see larger orders and getting timing on those orders will become more difficult.

The factors that I referenced in my prepared remarks stated that we are only dependent in the fourth quarter on closing the one large multi system order that we had originally forecasted in the third quarter. However to follow that up, I think we have given a range as apposed to a point estimate, which does reflect the fact that sometime timing is outside of our control. With that said, we think the other factors primarily orders we have received already to date continuing TomoTherapy orders because of the road map we are now showing these customers and lastly again CyberKnife order funnel activity in the fourth quarter is going to be significantly improved as comparedto the third. Give us right now comfort in our guidance range and the large sequential increase you see. I think it is also worth mentioning if you look at the order pattern in fiscal 2016 it is not terribly different than the fourth quarter that we had in fiscal 2015 where the fourth quarter represented significant sequential growth.

Great. Maybe a follow up on that would be age outs and the whole notion that previously aged out orders could make their way back into gross orders and backlog over time. So did that occur in the quarter and do you expect that to occur in the fourth quarter?

So it did occur in the quarter. So we had, just to calibrate the numbers, $10.8 million of orders that aged out of in the quarter. But of that $10.8 million $5.6 million aged back in, so our net age our number was more in the $4 million range. And on a year to date basis, Anthony, we actually now have$11 million which represents four orders that have previously aged out and gone to our revenue. If you look at that as a percent of all age out basis it is basically saying that 20% of all our age outs year-to-date have eventually made their way through the funnel to revenue. Again just reinforcing our belief that once an order is aged out it is not necessarily a lost opportunity. I would expect this to continue in the future.

Anthony, this is Josh. Let me just amplify this. Just to be clear I don't think Kevin nor I nor any one involved inour commercial business operations, Kelly Londy our Chief Commercial Officer I don't think any of us would be proposing or suggesting that we routinely expect net orders to exceed gross orders in terms of the dollar volume, right. Again I think I characterized our gross order performance for the quarter as off benchmark. We had higher internal expectations. We know exactly what called the miss and the timing related to it. So I just want to make sure that people are not expecting from a step up standpoint that net orders going forward are going to exceed gross orders volume on a routine basis. Where we have the kind of phenomena that occurred this quarter that Kevin just characterized with those orders coming back in you may see this occasionally but I don't think we should expect it on arolling basis.

Helpful. And then one last one would just be an update on the win rate on existing bunkers. So the ability to retain the install base as those orders come up for renewal. Thanks again.

In general I would say we are probably somewhere in the range of seven to ten -- excuse me? I'm sorry. 70% of the bunker of the deal opportunities were wins, we retained them. And I think we basically have said that essentially on a rollingbasis going forward we would expect something in the range of 10% to 20% of total order volume beingattached or connected to essentially those replacement opportunities.

Just to amplify Josh's comments, Anthony. Where we're retaining 70% or 70% to 75% of our current bunkers the remaining 20% to 25% are not normally competitive losses. What we are seeing there are the macro factors where bunkers are either consolidating or shutting down entirely or merging with other centers. The other 25% are not going to the competition. And another number to highlight is 25% of all orders in this quarter were competitive replacements as well.

Okay. Thanks.

Our next question comes from the line Toby Wann with Obsidian Research Group.

Thanks guys for taking the question. Shifting back to China for a second. Can you give us an update if you will on your product geared toward the Class B market and where we stand with that? Thanks.

That regulatory submission activity, Toby, continues to be under review by CFDA and again we have visibility already as part of their regulatory their sequential regulatory milestone process. USFDA 510(k) approval has to precede or would normally precede any final rendering that they would make decision wise one way or the other. That 510(k) approval from USFDA has already taken place so that is a hurdle or a milestone that we think is a good sign. At this point it is tough to predict absolute timing. Generally we would imagine probably somewhere in the six month time framefrom where we are right now. That would be I think a reasonable expectations.

Okay. Thanks so much and congrats on the quarter.

Thank you.

I'm showing no further questions in queue. At this time, I would like to turn the call back to management for closing remarks.

I would like to take this opportunity to thank all of our Accuray employees worldwide for their contributions in the work we did in the third quarter of fiscal we did in 2016. For those of you listening in thank you for joining us on this afternoon's call. We look forward to speaking with many of you at our analyst day in May and again on our fourth quarter call. Thank you very much.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone have a great day.