AXT Inc (AXTI) 2015 Q2 法說會逐字稿

Good afternoon, everyone, and welcome to AXT's second-quarter 2015 financial conference call. Leading the call today is Dr. Morris Young, Chief Executive Officer, and Gary Fischer, Chief Financial Officer. Also available for questions is Dr. Hong Hou, AXT's Chief Operating Officer.

My name is Robert and I will be your coordinator today. As a reminder, today's conference is being recorded. I would now like to turn the call over to Leslie Green, Investor Relations for AXT.

Thank you, Robert, and good afternoon, everyone. Before we begin, I would like to remind you that during the course of this conference call, including comments made in response to your questions, we will provide projections or make other forward-looking statements regarding, among other things, the future financial performance of the Company and our ability to control costs and improve efficiency, increase orders in succeeding quarters, improve our competitive position as the market improves, as well as other market conditions and trends.

We wish to caution you that such statements deal with future events, are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. These uncertainties and risks include, but are not limited to, overall conditions in the market in which the Company competes, global financial conditions and uncertainties, market acceptance and demand for the Company's products, and the impacts of delays by our customers on the timing of sales of products.

In addition to the factors that may be discussed in this call, we refer you to the Company's periodic reports filed with the Securities and Exchange Commission and available online by link from our website for additional information on risk factors that could cause actual results to differ materially from our current expectations.

This conference call will be available on our website at axt.com through July 30, 2016. Also, before we begin, I want to note that shortly following the close of today, we issued a press release reporting financial results for the second quarter of 2015. This information is available on the Investor Relations portion of our website at axt.com.

I would now like to turn the call over to Gary Fischer for a review of the second-quarter results. Gary.

Thank you, Leslie, and good afternoon. Revenue for the second quarter of 2015 was $21.0 million compared with $20.1 million for the first quarter of 2015. This represents approximately 5% sequential increase in quarterly revenue. In the second quarter of 2015, revenue by geography from North America was 14%, Asia-Pacific was 59%, and Europe was 27% of total revenue.

In the second quarter, we did have one customer that generated more than 10% of revenue, and the top five customers generated approximately 36% of total revenue, reflecting again our diversification of both products and customers.

Gross margin in the second quarter was 20.9% compared with 23.7% of revenue for the first quarter of 2015. This decline was primarily due to product mix. Total operating expenses in the second quarter were $5.2 million compared with $6.5 million in the prior quarter. This sequential decrease was largely the result of a decline in professional fees.

During the first quarter, AXT incurred $1.2 million in fees relating to the internal investigation of certain potential related party transactions. The investigation was completed during the first quarter, and there were no charges associated with it in Q2.

Total stock compensation expense was $466,000 for the second quarter of 2015, of which $5000 was included in cost of revenues, $417,000 in SG&A, and $44,000 in R&D.

Operating loss for the second quarter of 2015 was $780,000 compared with a $1.7 million operating loss in the first quarter. Other income for the second quarter was $1.1 million. This net number consists of four major categories: number 1, foreign exchange gain of 30K; number 2, sales of IntelliEPI stock for a gain of 491K; number 3, net interest earnings on our $46 million in the bank, plus other items adding up to 213K; and number 4, equity earnings of our unconsolidated joint ventures which was a gain of 410K.

Net loss in the second quarter of 2015 was $3000 or $0.00 per diluted share compared with a net loss of $1 million or $0.03 per diluted share in the first quarter of 2015.

During the quarter, we closed our acquisition of Crystacomm in an all cash transaction that was announced via a press release at the close of market today. The terms of the deal have not been disclosed, but it is not expected to have a meaningful impact on our depreciation costs going forward.

Accounts receivable net of reserves were $19.3 million as of June 30, 2015, compared with $18.8 million in March 31, 2015. So basically, revenue increased almost $1 million and AR increased $525,000 sequentially.

Net inventory decreased in the quarter and ended at $38.9 million compared with $39.5 million as of March 31. Ending inventory consisted of approximately 53% in raw materials, 41% in work in progress, and 6% in finished goods.

Depreciation and amortization in the second quarter was $1.4 million and CapEx was $1.5 million. We also used cash in Q2 to repurchase our stock, and this cash used was $904,000.

Cash and cash equivalents with maturities of less than three months, short-term investments and other investments in high-grade debt securities with maturities of less than two years was $46.3 million at June 30, 2015, which represents a slight decrease of $1.2 million compared with $47.5 million as of March 31.

Okay, this concludes the financial review. I'll now turn it over to Dr. Morris Young for a review of our business. Morris.

Thank you, Gary, and good afternoon. In addition to posting solid second-quarter results, we continue to [receive] AXT to focus our resources on many new emerging business opportunities in the fiber optics, solar cell and RF communication markets.

One of our key priorities this year is to ensure we are well positioned in certain strategic areas of our businesses where we believe we have a competitive lead. As such, we are actively investing in our substrate technology across all four of our product groups, including internal R&D development, the upgrade of our manufacturing infrastructure, the increased automation. These investments should enable us to reduce costs, improve efficiency and competitiveness, and to ensure long-term consistency in our product quality and technical specifications.

We also continue to build strength in our management team, attracting some of the highest caliber talent in our Company history. We are very pleased to announce this quarter that Dr. Hong Hou has joined AXT as Chief Operating Officer. Hong has extensive technical and executive level experience in our industry.

Having previously served as CEO of Emcore Corporation, he has a demonstrated record of success. And he brings the vision and skills necessary to drive further improvement in our operations and to help us prepare the business for its next level of growth. I look forward to work closely with him and to leveraging his expertise and industry knowledge and long-standing relationships.

Now turning to our markets, indium phosphide continues to be a strong contributor to our business for both new and existing applications, including optoelectronic devices for fiber-optic communications, passive optical networks and data-center connectivity, as well as solar cells and next-generation wireless amplifiers.

In the first half of 2015, our indium phosphide revenue have grown well over 50% from the comparable period a year ago. As many of you know, we have long been investing in this area, establishing an early leadership position with our VGF technology. The landscape of indium phosphate substrate providers have been limited as a result of relative technical difficulty in producing substrates that meet the stringent specifications for various optoelectronic and electronic applications.

But over time, as the demand for indium phosphide increases, the market is likely to attract more interest. As such, we are pleased to announce today our acquisition of Crystacomm. It is a leading provider of LEC-based indium phosphate substrates, headquartered in Mountain View, California. The acquisition, which I will characterize as primarily technology and equipment, is highly synergistic to our current indium phosphide business and provides further competitive differentiation and cost benefits.

It allows us to broaden our technology base and give us the flexibility to serve customers with varying technical requirements. The equipment will be installed in our Fremont, California facility, and Dr. George Antypas, Crystacomm's founder and CEO, will stay on as a consultant to AXT to assist us in bringing up the LEC indium phosphide crystal growth and poly-synthesis processes.

George is a pioneer in the development of indium phosphide technology for commercial uses. Crystacomm was the first company to introduce 2, 3, and 4 inch indium phosphide wafers that have since become an industry standard as demand for larger indium phosphide wafers have increased. It has also been an industry leader in the development of 6-inch indium phosphide technology.

One of the potential drivers for 6-inch indium phosphide substrates is next-generation wireless communications. 5G networks, which the industry believes could come as soon as the year 2020, promises speeds of up to 40 times faster than the 4G to enable, among other things, the ultra-high definition video on mobile devices.

It is also likely to offer greater network intelligence to manage the emerging complexity of Internet of Things. As such, we expect to see frequencies up to 25 GHz which will be challenging for silicon or even gallium arsenide to support. Indium phosphide is a natural choice as it has the properties to enable the increasing requirement of 5G, and it is lower in cost and power consumption than gallium nitride.

This acquisition comes about opportunistically as a result of our long and positive relationship with Crystacomm. While we are not expecting revenue in this calendar year, we believe that additional capability will provide incremental business opportunities for AXT in the years to come.

During the second quarter, we posted sequential revenue growth in gallium arsenide substrates, as we continue to expand our engagement with customers in both mobile and nonmobile applications. We believe that the market has stabilized at this current level, having evolved significantly in the past several years. Though we are conservative in the way that we forecast this area of our business, we continue to look for opportunities to increase market share and identify new applications for our products.

Semiconductor gallium arsenide revenue also grew in Q2, although the fierce competitive landscape in LED and excess capacity continue to present business challenges. For applications such as backlighting, signage and automotive where the specifications are more stringent, we have better success in maintaining a more reasonable margin profile.

However, we are consciously stepping away from certain highly competitive low-end opportunities where pricing pressure would damage our consolidated gross margin performance and devalue our product at high end. As such, we are not expecting to see meaningful progress in this area in the near future.

Turning to germanium substrate. As we expected, we saw a modest improvement in revenue in the quarter, with growth coming largely from traditional aerospace applications. While germanium substrate business can be lumpy quarter to quarter, we believe that we have the opportunity to grow and diversify our customer base over time.

For this reason, we are pleased to be able to leverage Hong's extensive industry contacts to engage with a wider set of customers. Hong, as you know, cofounded Emcore's photovoltaic division and led the commercialization of high-efficiency multi-junction solar cell technology for space power applications.

In addition to traditional space applications, we continue to monitor growing industry investment in commercial space applications such as satellite Internet where constellations of low and mid Earth's orbit microsatellites will provide universal high-speed Internet. If successful, these applications could drive increased demand for germanium substrates over the next several years.

Finally, revenue from our raw material joint ventures were down in this quarter, following several quarters of healthy growth. Gallium pricing has continued to drift lower and we do not expect any major changes in the pricing environment in the near term. However, these joint ventures provided us with profitable revenue and additional benefit to our vertically integrated business model.

In closing, Q2 was a solid quarter for us. We continue to evolve our business as the market evolves, and we are investing in the technology that align with growth trends in the compound semiconductor market. We believe that the Crystacomm acquisition will present great opportunity for us to broaden our capability and strengthen our position in an emerging market.

We are also very excited to continue to attract great industry talent like Hong Hou who we believe can leverages expertise as we prepare AXT for our next-phase growth. Our transformation will not occur overnight, but we believe we are making the right investment in our technology and in our operations and management team to maximize our business opportunities and drive increased value for our shareholders.

This concludes my prepared comments. I will turn the call back to Gary for our third-quarter guidance.

Thank you, Morris. Looking to the third quarter, we are expecting some near-term lumpiness in our germanium substrate revenues, as well as continued pricing weakness in our raw material joint ventures. As a result, we believe that revenues will be in the range of $19.5 million to $20.5 million. We are expecting the bottom line to be in the range of a loss of $0.03 to a loss of $0.01 per share, based on 32.2 million diluted common shares outstanding.

This concludes our prepared comments. Morris, Hong and I would be glad to answer your questions now. Operator.

(Operator Instructions). Richard Shannon, Craig-Hallum.

Thank you for taking my questions. I guess I've got a few of them. Let's start with the second quarter. Gary, I'm not sure I caught all your comments regarding the growth profile by segment, and especially as it relates to gross margins which were down a couple hundred basis points.

Did I hear right that the raw material segment was the only one that was down sequentially?

Raw materials was down sequentially, but the general gross margin decline was basically product mix.

Okay. And then as we get into the third quarter here, it sounds like based on raw materials declining we could see gross margin similar, maybe slightly down. Is that a fair guess?

Yes, I think that's a fair guess. We hope it can be better, but I think it's wise to be conservative when we have these discussions.

Okay, I agree. That's helpful from that perspective. You gave a nice number for your indium phosphide in the first half of the year. I think you said greater than 50% growth year on year.

What do you think that could look like for the second half of the year on a year-on-year basis?

That's a great question. First of all, I haven't looked at our loss year second-half numbers. I think safely say, I think year over year we definitely expect good growth. 50% could be a good target for us to shoot at.

Okay, fair enough. Maybe a couple questions on your acquisition of Crystacomm. You mentioned you are not expecting revenues here in the near term. Maybe I'll just throw a couple quick ones at you. When do you expect the 6-inch wafers to be ready? What kind of OpEx adder should we expect here as you bring the group on here?

And then it's interesting that you are dealing with an LEC technology here versus your VGF. What are the merits of that, the advantages and disadvantages versus VGF?

It is a whole bunch load.

Sorry, Morris.

So I love to answer this question. I think AXT has always been focused on VGF. We are proud of the fact that VGF can deliver great product and with low defect density. And in fact, as you know, with VGF we really conquered the world on the gallium arsenide. Nobody wants LEC-based product no more.

But I think the challenge for VGF sometimes is that it's a little bit difficult to make the diameter larger, although we have been very successful in bringing up 4-inch VGF-based indium phosphide. But LEC definitely gives us another view of delivering larger diameter substrates. And as you know that the wireless, since they've already gone to 6 inches, I believe is difficult for them to switch back to 4-inch. So we hear rumors out there, they always want 6-inch product. So this will enable AXT not only to provide 9-inch VGF but also give us a crack at 6-inch LEC. So it's a very good complement to us.

To answer your question, what OpEx is concerned, this acquisition is very, very nice. Let me describe it in this way. It has -- the first part is actually easy. It has a very unique technology to synthesize indium phosphide material. And since this is a poly material for indium phosphide, it actually turns out to be a significant part of our cost of goods sold.

With this acquisition, we believe we can drive the cost of our indium phosphide poly down, and that we expect to utilize that capability relatively in the short term. And we don't expect to spend a lot of money and facility increases to get that done.

As far as the crystal growth development is concerned, that's a very evolved process. And believe me, even with the Crystacomm LEC acquisition, 6-inch full wafer development is a tall order.

So let me give you an analysis. When AXT was developing the 6-inch gallium arsenide, actually we got some help from the United States government in the tune of $8 million. So MACOM and Litton at the time each got $13 million and $18 million to develop a 6-inch gallium arsenide. Indium phosphide is a lot more difficult than gallium arsenide can ever see.

So that's a challenging job, I tell you. I won't say it's a very easy job and all we have to spend is a few million dollars to get that into the market. But the reward is definitely just as great as well.

Okay, I appreciate this perspective, Morris. I will jump out of line. Thanks a lot.

Edwin Mok, Needham and Company.

this is Arthur filling in for Edwin Mok. Thanks for taking our questions. Just had a few quick ones. So we've recently heard some data points about some weakness in China Mobile, possibly some excessive inventory. I was wondering if that had any effect on your GaAs business and if you could provide some color on that.

Well, as you know, the wireless business in our total revenue contribution right now is relatively small. Although it is still there, but I would not expect it to -- we did enjoy the ride up. I don't expect it to hit us that hard. But then, of course, as the world economy -- I think we probably got hit more because of the raw material slump. Pricing on gallium is coming down. We are very diversified, by the way. So I don't think the wireless itself has hurt us as much.

Great, thanks for that. Then regarding the indium phosphide, do you see any stronger demand pull from any sort of the various drivers you had mentioned, whether it's fiber optics, data-center connectivity or solar?

Any specific segment providing a stronger pull?

Well, to answer that question I think it's all of the above, with the exception of solar. I think solar is slowing down. One other company which is really driving for the solar application has difficulties. So other segment, I would say the optoelectronic applications is really the driver now. I think the data-center connectivity is emerging applications which will potentially be a big driver, but it's not a main driver yet.

As we commented also, the mobile application actually is going to be a few years away, but you can start to see development requirements coming soon.

Great. Thanks for that breakout of the timing of how things come in. Do you see any stronger -- I noticed that you added Australia and New Zealand as demand markets also for network deployments for your indium phosphide. Are you seeing similar growth as you would see in China, or is it a little bit mind a little bit behind, a little bit further ahead? Just trying to get a color on the demand a little bit.

Let me turn this question to Hong. Hong is really an expert in understanding this driver for the optoelectronics application for indium phosphide. Hong, do you want to take that question?

Sure. For indium phosphide, right now the market driver is primarily fiber to the home. And for the US market, the [pong] deployment has largely completed for the telecom carriers a couple years ago. But a deployment in China was primarily for multi-dwelling units in the past. But now with the interest of the Internet speed and connectivity demand, so the upgrade for the network is going to each apartment unit. We talked to our customers and they all commented they could not make -- manufacture enough components to service their customer needs. And also the equipment manufacturers based in China, not only they service the Chinese market but also the global market.

We talked about Australia and New Zealand and Taiwan and Singapore, Indonesia. They not necessarily they have service providers out -- equipment manufacturers out there, but the equipment manufacturers based in China are servicing this market as well.

Early on you had a quick question about the China Mobile slowdown. We paid attention to that as well, but the rumored slowdown is on the infrastructure buildout, but in China the service has largely been 3G. And the migration on the [hand side], it's just starting. So they build the highway right now, and they need to build a car run the highway to comply with that standard. I think the demand for power amplifiers and a new generation for 4G LTE is going to be increasing.

But right now, as Morris commented, our market share in that segment is limited. That means we have potential to grow. So it should be good news for us rather than negative. Because as I said, the highway is built and now is the time to build the cars in this case with the hand side to run at a 4G LTE standard.

Got you, great. Then just one last question and I'll hop out of line. Last quarter you gave us some guidance on the target cost structure of reducing breakeven revenue down to, I think it was $21 million to $21.5 million. Do you think that's still a good assumption going forward to expect some GM improvements in the second half?

I guess you got me there. In a way, I think the fluctuation of the targeted -- the breakeven revenue target for us, it does depend upon several things. For one, we didn't expect the gallium price to keep on eroding. That will hurt us even if we sell all of the gallium we can produce, but the price decrease right now, it does hurt us.

But on the other hand, the reverse can be true if the gallium price were to increase.

Yet another very, very important factor is obviously indium phosphide. If we grow that segment, product mix does help us. Factor into the utilization, of course, we already said $21 million. It does depend upon whether it's coming from raw material or not. So I would say in general $21 million to $22 million could be a breakeven point revenue target for us. But I think it does still depend upon a few other loose ends we have to close.

Yes, the difficulty is predicting against those variables. So if we knew for sure, we would tell you for sure, but we have some uncertainty because we don't have full visibility on some of those variables.

Great. Well, thanks. That's all my questions.

(Operator Instructions). Dave Kang, B. Riley.

Thank you, good afternoon. Just a few questions regarding first Crystacomm. What was the purchase price? I'm assuming it was somewhat immaterial. Just trying to figure out where your cash will be at the end of this quarter?

Right, we didn't disclose it. And as we said, it was mainly a technological and know-how acquisition. Yes, we got a good deal.

Got it, got it. Then regarding your decline in gross margin in second quarter, you said product mix. So it sounds like maybe germanium and semiconducting gallium arsenide grew more than the other segments. Is that a fair assumption?

Are you saying projecting out into the third quarter?

No, no, no, I'm asking what happened in second quarter. I mean is it because the germanium and semiconducting gallium arsenide grew faster than the others?

No. Actually, we think it's a product mix mainly, and also the raw material price decline didn't help us that much either.

Got it, okay.

The leader was raw materials.

Sure. Then it sounds like your indium phosphide is doing well. Can you just give us a rough estimate where that is? Is that about 20% of sales, or just can you ballpark figures just so we can understand? I think it was -- before it was like 15%, maybe high teens. Is it 20% now or --?

Yes, Dave, I'm sorry, we decided not to break out the product mix almost a year ago, and we did give color that it grew year over year way over 50%. I think that's a good number to look, and you know how much we did last year first half.

Okay, okay. And then which is bigger between SI and SC gallium arsenide?

Semi-insulating is bigger.

Still bigger, huh? Okay, got it. Then lastly on Crystacomm again, what's their end market? I'm looking at their website; doesn't have a whole lot of information there. Is it still opcom or is it some different markets?

Well, you know, Crystacomm is a very interesting technology. George Antypas who is a very great technologist, he is actually a pioneer in the indium phosphide industry. He did all the 2-inch, 3-inch, 4-inch first and he was really good at LEC crystal growth. But on the other hand, it's not a secret that he tried to maintain the operation relatively small. So it's relatively a technology acquisition rather than business acquisition.

Because of his engineering background, he had a lot of interaction with universities. As a matter of fact, Hong, do you want to comment about your indium phosphide experience with George?

Yes. I graduated with the substrate supplied by George. It's a very specialized, special orientation and was very hard to grow. So I think his technology, LEC is certainly a complement to our VGF technology. And with a combined technology base, we will be able to address greater market applications for both opcom, its effect, and also potentially electronics and solar cell applications.

So Hong got his Ph.D. in material science at UC San Diego. And basically, the substrate that he used for the research was from Crystacomm. So that's the kind of places that Crystacomm had revenue to. It's not huge, and that's why we said in our introduction that we don't expect any near-term big swing in revenue, but we think it opens up a lot of doors.

I want to make one other clarifying comment because somebody asked earlier, I think Richard did, about operating expense. There really is not going to be any material change in the operating expense lines because of the acquisition. We are not adding any headcount.

Dr. Antypas will help us as a consultant, but we don't have a need to hire more employees because we have employees that can operate the equipment. So it's not going to have a noticeable impact right now on the OpEx.

Got it, thank you.

Greg Roeder, Adirondack Funds.

Good afternoon. I have a question on Crystacomm in terms of this technology, this LEC-based technology. I was just curious as to when you would think it could be put into commercial production. Is it something that's a year, two years out, three years out?

Well, Greg, I think you could say the benefit is this way. We used to say that AXT is using VGF only, but now we know even the enemy camp. There's only three indium phosphide providers in the world. We think we are either number 1 or number 2, and the second competitor is from Japan who uses LEC.

So I think we are competing with them very well with our VGF, but by having a very competent LEC technology will open up the doors for us. And I think to put it another way, I'm sure our competitor doesn't have to know how our VGF, so that does give us an advantage.

But there's another part of the acquisition which is, as I said in answering the other call, we can use his technology to synthesize polycrystalline material for indium phosphide, which happens to be not a [tribute] technology, and because it's an important part of our cost of goods material cost. So to turn this technology on to synthesize the material will enable us to lower our cost overall and increase our ability to improve our quality.

On the long-term I think with this acquisition, we can serve a broader customer. Whoever wants VGF, we can give it to them; and whoever wants a different application where LEC may have an advantage, we can turn that on as well. So I think that's the good thing for us.

So I think to answer your question in a short way, I think to turn this set of equipment on is a matter of few months.

Okay. In terms of -- do you have any guidance on CapEx for the remainder of the year?

We don't normally give CapEx in any hard guidance. We will continue to invest, but I don't think you're going to see any big swings up or down that would be a surprise.

Gary, I think we made a commitment in the past that we said this year's CapEx it's about $6 million, did we?

Right. We said $4 million to million.

Yes, so it's going to be in the budget.

Okay. For the future of gallium, you are in this situation, you and your competitors, where the industry is just kind of hovering at, I would imagine, a breakeven level. And I'm just curious as to how long that state can go on; how long you can basically hover around breakeven on gallium and there not be really any major action by any of your competitors to reduce capacity or --.

Yes. So I guess this is a very interesting question. We have openly said, because of the SOI it hurts the gallium arsenide wireless industry tremendously, but thank goodness it is over with. It has now stabilized. But I think the wireless still needs gallium arsenide for sure, but the plate is much smaller now for the three of us to enjoy. But I think, obviously, it's difficult for us to view into our competitor's head.

But I can only present AXT's case is that we think we are stabilizing because we have the diversification. We are into something which is exciting, indium phosphide, which is growing. We are investing very heavily there. We have the germanium. With Hong coming on board, it's going to be able to open up some more doors for us.

We have some niche market that we are serving. One of the advantages for AXT compared to our competitors -- I'm sure they are listening now -- is that we have a lot of customers which are smaller diameter. They have a low dislocation density requirement, and we are using those to break even.

I am not saying it's surviving, but we are getting through this very difficult time. And hopefully, it's also to demonstrate to the end customer that AXT is a reliable supplier they can count on in the future. Although they use less gallium arsenide, but in the future somebody is going to be supplying this wireless industry with 6-inch capacity.

So to be honest, we are less reliant on the revenue from the 6-inch wireless industry now, but we are knocking on doors and say don't forget us.

Yes, this is Gary. Let me add to that in terms of the cash balance. So I think there's two ways to answer your question. One is about the macroeconomic view of the market, and the other is about AXT.

So from an AXT standpoint, we are absolutely here for the long run. We have over $46 million in cash. We have a very diversified product line, and we are competently mapping out a roadmap and business strategy which we believe is going to help us be very successful.

As for the industry on a macro level, I think we would agree with you that some companies may be feeling the pain and may not have the resources and the diversification that we do, and we actually think that's okay. That might open up some doors and advantages for us if other people back off.

Thanks and good luck.

I know, but we are not adding capacity for sure.

This concludes today's question-and-answer session. I will now turn the call back to Dr. Morris Young for closing remarks.

Thank you for participating in our conference call. As always, please feel free to contact me, Gary Fischer or Leslie Green directly if you would like to meet with us, and we look forward to speaking with you in the near future.

This concludes today's conference call. Thank you again for your participation, and have a wonderful day.