AudioCodes Ltd (AUDC) 2014 Q4 法說會逐字稿

Greetings and welcome to the AudioCodes fourth-quarter and full-year 2014 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Chris Harrison of KCSA Strategic Communications. Thank you sir, you may begin.

Thank you Jesse. I would like to welcome everyone to the AudioCodes fourth-quarter and full-year 2014 earnings conference call. Hosting the call today are Shabtai Adlersberg, President and Chief Executive Officer, and Ofer Segev, Vice President Finance and Chief Financial Officer.

Before beginning, we would like to remind you that the information provided during this call may contain forward-looking statements relating to AudioCodes' business outlook, future economic performance, product introductions and plans and objectives related thereto and statements concerning assumptions made or expectations as to any future events. Conditions, performance or other matters are forward-looking statements as the term is defined under US federal securities law.

Forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. These risks, uncertainties and factors include but are not limited to the effect of current global economic conditions and conditions in general and in AudioCodes' industry and target markets in particular; shifts in supply and demand; market acceptance of new products and the demand for existing products; the impact of competitive products and pricing on AudioCodes' and its customers products and markets; timely product and technology developments; upgrade and the ability to manage changes in market conditions as needed; possible need for additional financing, the ability to satisfy covenants in the Company's loan agreements; possible disruptions from acquisitions; the ability of AudioCodes to successfully integrate their products and operations from acquired companies into AudioCodes' business; and other factors detailed in AudioCodes' filings with the SEC, the US Securities and Exchange Commission. AudioCodes assumes no obligation to update information.

In addition, during the call, AudioCodes will refer to non-GAAP net income and net income per share. AudioCodes has provided a reconciliation of non-GAAP net income and net income per share to its net income and net income per share according to GAAP in its press release and on its website.

Before I turn the call over to management, I would like to remind everyone that this call is being recorded and an archived webcast will be made available on the Investor Relations section of the Company's website at the conclusion of this call. The call will also be archived on our new Investor Relations app which is available for free from the iTunes App Store and the Google Play market.

With that said, I would now like to turn the call over to Shabtai Adlersberg. Shabtai, please go ahead.

Thank you operator. Good morning and good afternoon everybody. I would like to welcome all to our fourth-quarter and full-year 2014 conference call. With me this morning is Ofer Segev, Chief Financial Officer and Vice President of Finance. Ofer will start off by presenting a financial overview of the quarter. I will then review the business highlights and summary for the quarter and the full year and discuss trends and developments in our industry and business. We will then turn it into the Q&A session. Ofer?

Thank you Shabtai. Hello everyone. As usual, we will be referring to both GAAP and non-GAAP numbers on the call. We disclose non-GAAP numbers to help you understand the underlying performance of AudioCodes. The non-GAAP P&L metrics include recurring non-cash items. Today's earnings press release contains a reconciliation of the supplemental non-GAAP financial information.

Revenues for the fourth quarter were $39.1 million, up 7.9% year-over-year. Revenues for the year were $151.6 million, up 10.5% from 2013. Revenues from networking were up 13% in the quarter, accounting for 89% of revenues and were up 14.5% for the year, representing 87% of revenues for the full year. Revenues from our legacy technology products, which we modeled to decline 10% on an annual basis, declined 21.5% in the quarter compared to Q4 last year and declined 10.5% in the whole 2014. Services revenues, which are mostly recurring annual agreements, were up 25.6% in the quarter from the year-ago quarter, and up 29.6% for the year, representing 21.8% of total revenues.

Revenue by customer geographical region for the quarter were Americas, 53%, EMEA, 33%, and Asia-Pacific, 14%. Our top 15 customers in the aggregate represented 58% of revenues in the quarter, of which 41% are our seven largest distributors. For the year, top 15 customers represented 47% of revenues, of which 35% are our eight largest distributors.

Non-GAAP gross margin was 59.9% for the quarter and 59.4% for the year, up 180 basis points from the year-ago quarter and up 140 basis points from 2013.

Operating income for the quarter was $2 million, up 55.7% from year-ago quarter. Annual operating income was $3.5 million, up 27.8% from 2013. On a non-GAAP basis, quarterly operating income was $2.9 million, or 7.4% of revenues, up from 5.9% of revenues a year ago. For the full year, operating income was $7.4 million, up 31.4% from 2013.

Net income for the quarter was $946,000, or $0.02 per share. For the full year, we had a net loss of $86,000. On a non-GAAP basis, quarterly net income was $2.5 million, or $0.06 per share, up from $1.9 million, or $0.05 per share, for Q4 last year. For the full year, net income was $6.8 million, or $0.16 per share.

Our balance sheet remains strong. At the end of December, cash, cash equivalent and marketable securities were $85.7 million. Days sales outstanding at December end was 73 days compared to 67 days at the end of 2013. Operating cash flows were $2.4 million for the quarter and $6 million for the full year.

We continue to buy our shares under the approved buyback plan. We bought shares for $2.5 million in the quarter, and $5.3 million in the whole of 2014.

Going into 2015, our guidance, we continue to expect topline revenue growth and operating margin expansion in 2015. We expect revenues in the range of $162 million to $167 million, and non-GAAP diluted earnings per share of between $0.26 to $0.30 per share.

Now back to you, Shabtai.

Thank you Ofer. We are very pleased to report continued momentum and record financial and business results for the fourth quarter of 2014 and for the full year. This is the 10th consecutive quarter of improved initial performance.

In 2014, we grew the Company revenue by 10.5%. But more important, annual networking revenue grew 14.5% after growing 12% in 2015. Networking, which is now 89% of revenues this last quarter, is growing very fast. We continue to see strong demand across our business lines, and continue to build partnerships with enterprise communication application market leaders, both of which should support continued expansion of our networking business in coming years. And so based on current business outlook, we believe 2015 will exhibit similar revenue growth rates and we'll be delivering a third year in a row of networking business growth of 12% to 15% annually.

The key message from the fourth quarter and from overall 2014 is the solid progress we are making in our enterprise networking and business services markets, which are the core of the Company's strategy and go-to market. As reported, we made good progress in achieving new record sales in the most important business line for us, including Microsoft Lync, market ecosystems, the enterprises we see and services. This progress substantiates our leadership in the voice solution market, in areas of unified communication and collaboration, real-time business communication services and contact centers.

Shifting our strategic focus to enterprise and focusing on building partnerships drove sales in the enterprise market to 73% of revenue in 2014, and should provide a very sound basis for business expansion going forward.

No less important is our shift in strategy from a best-of-breed product company to a solution selling accompanied by product lead services. Providing an end-to-end comprehensive high-performance voice solution and attaching to it a comprehensive services portfolio is in general superior to our competitive strategy of focusing on best-of-breed products. It also helps to often endorse enterprises and businesses with the need to plan, design, to deploy a rather complex network on a global basis or nation basis with several sized fairly complex situations. Growing solution supports larger deal size, improves overall profit margin, and supports longer-term working relationship with our end customers. Percentage-wise, services grew to 23% of Company revenue in 2014 versus 20% over the year-ago quarter.

Now let me touch some of the financial highlights, all of which are mentioned in non-GAAP numbers. Quarterly revenues rose 7.9% year-over-year to $31.1 million and 0.5% over the previous quarter. I'd like to turn your attention to the fact that the rather small increase in quarter-over-quarter revenue growth is attributed to, on one end, growth of $1.8 million in networking, or 5.6% over the previous quarter, and a decline of $1.7 million in legacy technology line, which dropped to being 11% in the quarter. So all in all, we've done great on networking, and only decline in legacy technology compared to top line by a few hundreds of thousands. So referring to networking as a proxy for our growth going forward, this represents 89% of our business. Quarterly networking revenues increased 13% year-over-year and 5.6% quarter-over-quarter. Full-year 2014 networking revenues increased 14.5% year-over-year.

More important, gross margins, quarterly gross margin improved to 59.9%. The full-year 2014 gross margin totaled 59.4%. This is up from 58% a year ago. Based on current product mix, the annual target for 2015 is to obtain a gross margin of at least 60%.

Operating margin. Quarterly operating margin improved nicely to 7.4%. Our stated goal is to reach 10% operating margin at the end of 2015, the fourth quarter of 2015, and a longer-term financial model for the Company would be to obtain an operating margin of 13% to 15% in 2017.

On the OpEx front, we have done a good job controlling expenses down to $20.5 million, already the second quarter of declining OpEx. As discussed in previous quarters, non-favorable FX exchange rates in 2014 and investing in building the new cloud R&D center in Beer Sheva have weighted upon our annual expenses in 2014. It's important to know that both are a nonissue anymore going into 2015, and we expect less than 2% to 3% increase in OpEx in 2015 compared to 2014. The same with headcount where we had good control and grew only seven positions to 661 employees, about 1% of growth. In 2015, we plan on increasing headcount by no more than about 3% to about 680 employees.

So going to the bottom line, full-year 2014 non-GAAP net income totaled $6.8 million, up 26.5% year-over-year. While planning for higher profit in 2015, we are still pleased with the ability to grow profits in such a way in view of the FX and cloud center headwinds which were not anticipated originally.

Services business is growing very well for us. Services activities exhibited very impressive growth. In 2014, revenue grew 30% over 2013 to a record level of $33 million compared to $25.5 million a year ago. Most notable is the growth in professional services, which posted more than 50% growth in the fourth quarter in bookings and is expected to continue to grow above 35% in 2015.

So let me point out what are our targets for 2015. The key objective for the 2015 operation, annual operation, are as follows. On the business front, we plan to increase our leadership in the enterprise voice solution area in several partners' ecosystems. We intend to increase the solution selling and services over selling of products. We intend to keep growing the momentum in the linguary space and protect our number one position in the lean voice market. And we will keep developing our session for the controller line and the associated tracking for business services.

On the financial front, objectives are grow revenues by 10%, grow profits north of 50%, achieve operating income of 10% by Q4 2015, and grow annual gross margin to 60% and above.

Now let me touch some of the business highlights we're seeing. It's a few years now that we focus much more on enterprise than on the service provider market. In the enterprise voice market, we partner the leading unified communication collaboration application vendors, and build their voice networking foundation. We work closely with Microsoft, which is really finding unified communication for the Fortune 5000 companies worldwide, working with BroadSoft, delivering PBX services; working with companies like Avaya, Genesis and Interactive Intelligence in the contact trend market, taking customer interactions to the next level. In 2014, about 73% of our revenues were related to enterprise customers, and we believe that will keep growing.

Just turn your attention to the fact that, in 2012, our overall sales into the enterprise voice market was about 60%, which grew to 69% in 2013 and 73.4% in 2014. Even more important is our go-to-market and very close relationship with some top partners. I've mentioned the names. About 44% of our revenues in 2014 relate to those top five partners. Another evidence for the strategy and how sound it is is looking at the overall revenues derived from the ecosystems of those partners in the last three years.

In 2012, we sold more than $47 million into the ecosystems of the top five. In 2013, we grew to $54 million, about 20%, selling to the same ecosystems, and in 2014, we grew again 20% to $66 million. This is a very, very sound trend, and this is where we are putting most of our resources and attention. And the fact that we are selling to the end customers, we're not selling to OEM, and that the majority of the transactions are not greater than a few hundreds of thousands to a few tens of thousands means that there's much stability and consistency in the growth spectrum of that strategy.

Now let me touch Lync, Microsoft Lync, how we did in that ecosystem. We've seen great success. All in all, we met our stated goal of growing 36% in that market and reaching $30 million of sales, which represents about 20% of Company revenues. Even more successful is one specific product we introduced middle of the year, One Box. We've already seen a very nice contribution from it to sales and I'll get to it further.

It's important to know that selling into the Microsoft Lync environment means that selling to enterprise translates to continued momentum in large enterprises projects which usually span over two to five years and which supports sales of a few hundred thousand a year for each of these single customers.

To give you some example of some of the names that we have been selling to in 2014, we, over three years, we sold more than $1.5 million to a very large NASDAQ 100 global IT software vendor. We sold about $900,000 in the past three years to one of the world's largest semiconductor makers. We sold into two very large accounting firms, part of the Big Four. And again, sales to each of these companies was north of $0.5 million. We sold to two large global pharma companies with tens of thousands of employees worldwide. And we won a recent very important win in selling to a large North American-based Railway Company.

All in all, this is a very sound, very strong trend, and we believe that will keep us growing forward. So in 2014 we grew to $30 million, up from $22 million a year ago. We believe that is a sustained growth rate. And we believe we should be able to pass 30% growth on an annual basis in each of -- in 2015, 2016 and 2017. If we are successful doing that, we will have more than doubling our revenues in 2017, reaching somewhere around $65 million just in the Lync environments.

What are the growth enablers in that market? It is the strategic channels that we have built throughout the year. It's our One Voice for Lync solution selling. It's our brand in the channels and the enterprise, and the best-of-breed products we have.

We have grown -- basically if we break down -- we break down revenues in the markets of Lync ecosystem, we combine them into three different groups. One is connectivity, which combines gateways, SBCs and SBAs services, which combines basic services and professional services. And then another group combines IP phones, One Box and software.

We've been growing very nicely. We believe that, going forward, percentagewise, both services and the other group will start to contribute substantially more than just connectivity. So we see connectivity keep growing at least 10% a year, but more of the growth will come from the new introduction in that ecosystem. As you can imagine, AudioCodes' strategy would add continuously more and more components to a market where we feel strong and confident in our ability to sell and we have the channels already put in place in the market.

In terms of regional analysis, we grow very nicely, both in North America and EMEA. And we believe we've also seen lately some nice growth in Asia-Pacific and we believe that will keep growing 2015.

Again, let me touch on the One Box 365. It is providing a very effective solution to bringing enterprise voice alongside Office 365 in both pure cloud and hybrid on prem configurations. Our solution has proven to be successful in the first weeks of deployment. It is, for us, one of the fastest growing products in Company history. We believe that the introduction of higher capacity One Box enterprise and PRO model announced earlier this month will help to further increase the success of these product lines. And we believe that already in 2015 we will see contribution of several millions to our revenues from that product family.

Just before concluding my part of the session, I'll touch on some of the highlights in the SBC market. SBC sales grew more than 70% year-over-year. We have seen our market share doubling from 6% to 12%, and we now stand side to side with Oracle and Santos in that market. Most of our SBC sales went into the Lync space, about 50% for our sales in North America. We've seen traction in the BroadSoft market, and that has picked up nicely in 2014. We have seen new wins in managed SBCs market by a service provider, and that will contribute to recurring revenue and brand awareness outside of the Lync environment. We have penetrated session building controls in the core for our services providers. We've seen the first NSV customer for us in the SBC area. All in all, we are very pleased with the progress we've done and we assume similar growth of 40% to 50% in 2015.

And with that, I have concluded my section. Thank you very much. Back to you, operator.

(Operator Instructions). Rich Valera, Needham and Company.

Good morning gentlemen. Saw a nice quarter-over-quarter increase in gross margin, and it sounds like you are now looking for 60% gross margins going forward, which I guess is 100 BPS up from where you were thinking last quarter. So just wondering if you could give us some color on what's going on in the gross margin and your confidence in keeping it at that 60% or better level going forward. Thank you.

Yes. A, I think shifting our focus to enterprise from service provider helps us in the fact that the mix of products that flow to enterprise carry larger gross margins. Also most of our services are applied to enterprise segment, so again growing services and professional services contributes to larger gross margin. All in all, we believe that adding services and software solutions will help maintain and grow that level, so we definitely feel confident we should grow gross margin going forward.

Great, thank you for that. I'm wondering if you could give any highlights on the developments in your cloud development center that is part of -- that you established as part of the OCS grants, or sort of give us a sense of what you are developing there and when those products might start contributing to the top line.

Okay. Just to remind everybody, the original goal was to set up a center that will employ 100 engineers by the end of 2016. We started out in about in April, May 2014. We already have on board about 50 employees there. We intend to add about 20 this year. The majority of the development done in that new development center is related to what we call the One Voice operations center. That is a key product. I haven't mentioned it before. I've mentioned EMS and SEM. EMS stands for element management, net management solution, and SEM stands for session experience management. All in all, it's a set of services in the software which resides in the cloud and/or on prem and basically provides the glue logic to just take products installed in many places in a network, in gateways, SBCs, clones and other products, in routers, and basically make it a full working solution allowing companies to control all of their voice network very efficiently from their network operations center, from the NOC. So we are doing well in growing the stuff there. The projects are going on. We already got first delivery to the market. Our IP phone solution is very successful lately in the past few months since we released the EMS for IP phone, which basically allows you, in the Lync environment, it allows you basically to manage your phone in a very easy way while they could be deployed over thousands of miles in different locations. Usually without a good management tool, it's very hard to maintain as the lead subscriber change addresses, etc. So the first delivery of the OVOC, the one voice operations center, has already been delivered, and we intend to deliver more such components in 2015 and going forward.

That's very helpful. And you mentioned the very strong growth you were seeing in your professional services in 2014 and expect to continue to see. I'm not sure if you actually gave the dollar amount of professional services in 2015. Is that a number you can give out?

I don't have the exact number with me, but I can tell you that it is about 15% of services. I've mentioned services reached $33 million, recognized services. Actually booking was at least 15% higher. But out of those $33 million, I believe that professional services are about 15%.

5-0? 50%?

1-5.

1-5, okay, thank you. Sorry about that. Great.

And then just on Lync, obviously seeing some real nice traction there. I just wanted to clarify. I think this is already sort of been put to bed. But Lync did undergo a rebranding late last year to using the Skype brand. I just wanted to clarify that that doesn't change anything with respect to your relationship or what you provide into a Microsoft Lync environment.

Right. We haven't seen any change, and we do not hearing about any change that's coming. We know that -- we've been told the purpose is to increase the attractiveness of the Lync solution by attaching to it the hundreds of millions of Skype users worldwide and enabling a rather easy consumer-to-enterprise UC communication. We did not -- we believe actually that will be a good catalyst for better business.

The more, by the way, visible change which we see happening is the move of Lync from being an on-prem solution only to a solution that will be deployed also in the cloud. So we see much work and planning definitely in terms of networks and architectures in moving the solution to be not only on-prem-based, but also cloud and grid based. And obviously coming back to One Box product family, that has been providing Lync licenses from the cloud.

Great, that's very helpful. Just one final one if I could, I don't know if this is for Ofer. Any color you would be willing to give on the first-quarter revenue expectations, maybe relative to the fourth quarter? Should we expect maybe flattish sequentially? Or any color you would be willing to give there would be appreciated.

I think it's seasonally like it has been in previous years. It's call it a flattish quarter, which might be a slight decline like 2014 versus 2013. So we don't see any change in seasonality.

Okay. Very good. Thanks very much gentlemen.

Dmitry Netis, William Blair.

Great, thank you. I have a quick follow-up to Rich's question on the services side. Could you guys discuss the growth in 2015? I believe, Shabtai, you mentioned that on the call. I didn't catch that number. I know you did $33 million, which is, I believe it's roughly 29.5% growth this year. What do you expect for 2015? What's the growth going to look like?

Okay. Again, we will play conservative here, but we trust at least 15% growth in 2015.

Okay. I think that's the number I missed. Okay, great.

And then again going back to your guidance, actually I have two questions on that front. One is as your bracketed consensus here with your 7% to 10% growth outlook, what are some of the drivers to get you to the low end of that guidance and also the high end? Some of the maybe inhibitors of growth as well as some of catalysts that will get you to that 10%? Can you discuss that? That's number one.

And then maybe for Ofer, if I look at the margin guidance, gross margin guidance, of 60%, and I use sort of the middle of the range for your topline growth projection, and then I think you said to expect OpEx to be up in the 3% range, if I do that, EPS basically will wind up north of $0.30. So I'm just trying to get a sense of how you get to that 26% of 30% and what are some of the, again, inhibitors to that number that you provided on the bottom line? Thank you.

This is Shabtai. Let me start with the first question. So, generally, I've said that our plan basically is to grow annually between 12% to 15% on networking. We've done that in previous years. We see no reason for that to change in each of the coming years. Actually, if you'll do the math of 10% or 11% a year for the next three years, you can see we've put for ourselves a target to reach $200 million by 2017. But still while we do 12% to 15% in networking, we still have legal fees. That's about 11%. And we are talking here about the technology. We also need to take into account, and we don't know when that will start to happen, that at some point gateway sales in the enterprise will either be flat or start to decline. So, we need to put some protection against such phenomena.

So just trying to be conservative with our guidance going forward, we see networking growing 12% to 15%. We may see some setback from legal fees of minus 1%, minus 2%. All in all, when we put all of that into the equation, in instability in the markets, we've seen Russia with current turmoil with currencies we may see in other parts of the world. So just to be safe, we gave that guidance, but the target is to get to 10%.

And then second question please? Thank you.

I think you are right. If you do the math, I think we built into it if we are seeing a higher top of the guidance growth, we may increase expenses to take advantage of the growth and increase some sales and marketing ahead of what we currently plan and being a little bit more conservative just to make sure that we don't miss.

Great. Thank you very much.

Mike Latimore, Northland Capital.

Thanks a lot. I think you gave the SBC growth rate in the quarter, but I didn't quite get that. Can you repeat that?

Actually, we did not provide the quarterly growth in SBC. We just talked about the annual growth, which was 70%.

70%, okay. Got it. And then on the services gross margin, how should we think about that? When you're adding more professional services, would that be a detriment to gross margin, or do you think you can hold services gross margin relatively stable?

I think the gross margin will pretty much be stable. The growth in the annual recurring business is very high gross margin. Basically, it's essentially we had very few people and a lot of new customers. So on the professional services, it's a little bit lower than that, but on average it's higher than the product gross margin, and I think it helps the product. It's very sticky. With the customers going forward, the gross margin would stay the same.

Okay. And then just on your technology category, what do you think caused the sort of accelerated decline there, and kind of what's of your general view on that category next year?

Okay. The situation in that line very simply is that we are selling in the technology line three lines of products -- chips, communication blades and blades for recording applications. The chips sales are pretty stable. Also, we can anticipate to have behavior and trend in the blades for recording. Purchase order for communication blades is coming from old established accounts which we really have no control of. It's not too many accounts, so on a quarter basis, you could see some change. And we've seen, the fourth quarter, that has really not been the case. We went down substantially from the previous quarter by $1.7 million. That is not something that we control. However, on the more happier side, we have more efforts invested in that, so it's really a type of cash cow.

Just last question, just in the sort of SIP trunking arena, how are you seeing that as a driver in 2015 versus 2014? Is it the same kind of driver, better, worse, anything like that? Just color on SIP trunking would be good.

Generally, I would say that the market is growing in similar growth rates. I would tell you that AudioCodes is much more mature in its ability to provide a solution in that market in 2015. This was the point we were entering into 2014. So, I expect that we will sell more, and also our collaboration with partners like BroadSoft and its partners may help to increase SIP trunking revenues, related revenue.

Okay, thank you.

Michael Leonard, Oppenheimer.

I have a question about the guidance, specifically on the operating margin, your 10% exiting -- that was exiting 2015, correct?

Yes.

So on that, what's the risk that, as you have an increased presence in the market, there's stepped up level of competition which either forces you to offer more discounts or increase more for sales and marketing? It seems like a pretty aggressive target given your operating margin progression over the last couple of years.

If you look at Q4, we exited at 7.4%. So if you just do the math, increased revenue and controlling expenses, we should be able to do 10%. And our competition -- there's always competition. I think opposition in the market, which is a little bit different than the competition, we are issuing -- offering a full solution versus a product-based offering only I think will give us the edge and essentially we do see, specifically in the Lync market, we have a great edge of the competition. And we'll have to dig with the competition. That's life in the market.

You haven't seen any change in competition, any aggressiveness in your competitors as you've become -- as you increased your market share?

No, we haven't seen anything over the last few months that is new.

Okay. And then I have one other question. You mentioned bookings growth in professional services I think? Can you just clarify the numbers there for the growth in bookings?

We didn't give the number for the bookings, but unlike in the product where we -- people send us the purchase order and we ship the product, essentially the booking and the sales are the same. In the services space, people sometimes they order two to three years on the support side. And also professional services, when we have a large project, sometimes they order the services ahead of time and we recognize the revenue on the services only when we do the work. So, it's something new for AudioCodes, but it's something new which is good. This will give us better visibility and you know, going into each quarter, a higher level of visibility on the services side.

Okay. All right. Thanks a lot. I'll pass it on.

Thank you. It appears there are no further questions at this time. I would like to turn the floor back over to management for any additional concluding comments.

Thank you operator. We would like to thank everyone who attended our conference call today. Based on the strong business momentum and execution in the past two years, we believe we are on track to achieve a third consecutive year of growth and success in 2015, and to continue to build a sustainable, profitable business for coming years. We look forward to having you on our next quarterly conference call. Thank you very much. Bye-bye.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation and you may disconnect your lines at this time.