Bruker Corp (BRKR) 2009 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Bruker Corporation quarterly earnings conference call. My name is Noelia, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions).

I would now like to turn the presentation over to your host for today's call, Ms. Stacey Desrochers, Treasurer and Director of Investor Relations. Please proceed.

Thank you. Good morning, and welcome to Bruker Corporation's third-quarter 2009 financial results conference call. I am Stacey Desrochers, Treasurer and Director of Investor Relations. With me on today's call are Frank Laukien, Bruker's President and Chief Executive Officer; Bill Knight, Bruker's Chief Financial Officer; and Brian Monahan, Bruker's Chief Accounting Officer.

Before we begin, I would like to read our Safe Harbor statement. This discussion will include forward-looking statements. These statements are based on current expectations, but are subject to risks and uncertainties that could cause actual results to differ materially from those projected, including, but not limited to, risks and uncertainties relating to adverse changes and conditions in the global economy and volatility in the capital markets; the integration of businesses we have acquired or may acquire in the future; changing technologies; product development and market acceptance of our products; the cost and pricing of our products; manufacturing; competition; dependence on collaborative partners and key suppliers; capital spending and government funding policies; changes in governmental regulations; realization of anticipated benefits from economic stimulus programs; intellectual property rights; litigation; exposure to foreign currency fluctuations; and other risk factors discussed from time to time in our filings with the Securities and Exchange Commission.

We expressly disclaim any intent or obligation to update these forward-looking statements other than as required by law.

Today, Frank will provide an overview of the business and some financial highlights. Bill will follow up with a more detailed discussion of our financial results for the third quarter and first nine months of 2009, and then we will open up the lines for questions. I will now turn the call over to our President and CEO, Frank Laukien.

Thank you, Stacey, and good morning, everyone. We appreciate you joining us today. We would like to welcome our new shareholders from our successful follow-on offering in September, as well as our two new sell-side analysts, Ross Muken from Deutsche Bank and Tycho Peterson from JPMorgan.

So starting with the financial highlights, I believe most of you have read our earnings press release issued earlier this morning, and you are now somewhat familiar with the key numbers in this earnings release.

In the third quarter of 2009, our revenue was $265.1 million, representing a currency-adjusted revenue increase of 11.4% compared to the third quarter of 2008 or year-over-year. GAAP net income for the third quarter of 2009 was $16.4 million, or $0.10 per diluted share, compared to GAAP net income of $17.8 million, or $0.11 per diluted share, in the third quarter of 2008.

Included in GAAP EPS in the third quarter of 2008 were $0.07 -- positive $0.07 per diluted share of one-time tax benefits and non-cash stock-based compensation expense of negative $0.01 per share per diluted share. For comparison, included in GAAP EPS in the third quarter of 2009, this third quarter, we had non-cash stock-based compensation expense of negative $0.01 per diluted share.

For the nine months ended September 30, 2009, revenue was $748.1 million compared to revenue of $791.9 million in the first nine months of 2008. Excluding the effects of foreign currency translation, revenue for the nine months ended September 30, 2009 increased by 0.5% year-over-year.

GAAP net income for the nine months ended September 30, 2009 was $37.7 million, or $0.23 per diluted share, compared to GAAP net income of $38.7 million, or also $0.23 per diluted share, during the nine months ended September 30, 2008.

Now, included in GAAP EPS for the nine months ended September 30, 2008 were, one, one-time tax benefits of positive $0.07 per diluted share; two, Bruker BioSpin acquisition-related expenses of negative $0.04 per diluted share; and three, non-cash stock-based compensation expense of negative $0.02 per diluted share. For comparison, included in GAAP EPS for the nine months ended September 30, 2009 was non-cash stock-based compensation expense of negative $0.02 per diluted share.

So we are pleased with our double-digit currency-adjusted third-quarter 2009 year-over-year revenue growth. But we are also pleased with our solid sequential improvements in revenue, operating margins and net income sequentially during the first three quarters of 2009. And we've made very good progress with our strong free cash flow year-to-date. For perspective, our third-quarter 2009 operating income increased more than 70% year-over-year, and sequentially, our operating margin improved sequentially by 180 basis points when compared to the second quarter of 2009.

In the third quarter of 2009, we had year-over-year revenue increases by all of our divisions, including also an increase in our Bruker AXS business, the division with the most industrial exposure. As expected, during the third quarter, we saw quite positive sequential trends in bookings throughout the Company. And in particular, we've begun to see robust bookings from our academic and government customers for high-end systems typically, who are -- and these customers are benefiting from various global government stimulus programs, both in the United States, as well as Asia and Europe.

While we do expect a strong fourth quarter of 2009, we believe that most of the anticipated positive revenue and margin effect from global stimulus orders will be reflected in Bruker's financial results in 2010 and 2011.

As you may recall, we have begun to receive orders from the global stimulus package from the US, Japan, Europe, China. One of the orders we announced in July was a $6 million order for our BEST division from the US Department of Energy's Thomas Jefferson National Accelerator Facility. Overall, we expect to see in excess of $50 million of orders and revenue specifically due to global stimulus programs.

In the second quarter of this year and continuing obviously now into the third quarter and into the future, we began breaking out the operating results of Bruker Energy & Supercon Technologies, or BEST, as we call this business, as a separate segment in our financial results and in our 10-Qs. This is -- the BEST business is a very different business from the scientific instrument side of Bruker, one that generally focuses on a different customer base and one that we are investing in heavily in anticipation of potentially very large and rapidly growing markets for its superconducting, alternative energy and smart grid products that exist today or that are under development.

Our BEST division will continue to require significant financial investment for several more years in order to capitalize on these potentially large opportunities. As a result, part of the strategy for this BEST business is to raise external funding; for example, via a future mezzanine financing or potential IPO. In anticipation of a strategic financing for BEST in 2010, we recently elected three highly-respected independent board members to the board of our BEST division.

Okay, so now here is our CFO, Bill Knight, with a more in-depth look at our overall Bruker Corporation financial results for the third quarter and for the first nine months of 2009.

Okay. Thank you, Frank. As a quick recap, during the third quarter of 2009, our revenues were $265.1 million compared to $242.1 million in the third quarter of 2008. Excluding the effects of foreign currency translation, third-quarter revenue increased by 11.4% year-over-year.

For the first nine months of 2009, our revenues were $748.1 million compared to $791.9 million for the first nine months of 2008. Excluding the effects of foreign currency translation, revenue for the nine months ended September 30, 2009 increased by 0.5% year-over-year.

Gross profit margins were 45% in the third quarter of 2009 compared to 45.9% in the third quarter of 2008. For the first nine months of 2009 and 2008, our gross profit margins remained relatively flat year-over-year at 44.5% and 44.8%, which we are reasonably satisfied with, given the recessionary pressures of 2009.

Our GAAP operating profit for the third quarter of 2009 was $26.0 million, or 9.8% of revenue, compared to $15.1 million, or 6.2% of revenue, in the third quarter of 2008. For the first nine months of 2009 and 2008, our GAAP operating profit was $60.5 million, or 8.1%, and $59.3 million, or 7.5%, respectively.

During the third quarter of 2009, we had a negative $0.8 million of net foreign exchange currency losses as compared to $3.2 million of currency gains in the third quarter of 2008. For the first nine months of 2009, we had foreign currency losses of $0.2 million compared with $5.8 million of foreign currency losses in the first nine months of 2008.

Our GAAP net income in the third quarter of 2009 was $16.4 million, with GAAP EPS of $0.10 per diluted share, corresponding to a net income margin of 6.2%, compared to the third quarter of 2008 with GAAP net income of $17.8 million, GAAP EPS of $0.11 per diluted share, corresponding to a net income margin of 7.4%.

Included in GAAP EPS in the third quarter of 2008 were one-time tax benefits of $0.07 per diluted share and non-cash stock-based compensation expense of $0.01 per diluted share. The Q3 2008 tax benefits were the result of legal entity reorganizations in Germany established to lower our long-term effective tax rate going forward, and a withholding tax reimbursement, against which we previously had been required to have a full valuation allowance. Included in GAAP EPS in the third quarter of 2009 was a non-cash stock-based compensation expense of $0.01 per diluted share.

Operating cash flow in the third quarter of 2009 was $16 million compared to $0.8 million in the third quarter of 2008. In the third quarter of 2009, free cash flow, which is defined as cash flow from operations less capital expenditures, was $14.2 million compared to free cash use of $11.9 million in the third quarter of 2008.

Operating cash flow for the first nine months of 2009 was $67.3 million compared to $18.9 million for the first nine months of 2008. For the first nine months of 2009, we generated free cash flow of $58.4 million compared to a free cash use of $20.9 million in the first nine months of 2008.

During the third quarter of 2009, we repaid $19.3 million of debt and ended the quarter with cash of $150.5 million and net debt of $0.8 million, compared to net debt of $126.6 million at the end of the third quarter of 2008.

In the first nine months of 2009, we repaid $72.5 million of debt, which saved approximately $0.9 million in interest expense.

As Frank discussed earlier, with the acquisition of ACCEL Research Instruments business on April 1, 2009, starting with the second quarter of 2009, Bruker established two new reportable segments. The Bruker Scientific Instruments, or BSI, segment consists of the four divisions, Bruker AXS, Bruker BioSpin, Bruker Daltonics and Bruker Optics. The new Bruker Energy & Supercon Technologies, or BEST, segment is the result of the combination of the acquired ACCEL business and the Superconductor and Supercon device business that was previously called Bruker Advanced Supercon, Inc.

Revenue in the BSI segment for the nine months ended September 30, 2009 was $716.5 million compared to BSI revenue of $767.3 million for the nine months ended September 30, 2008. Excluding the effects of foreign currency translation, BSI revenue in the first three quarters of 2009 decreased by 1% year-over-year.

BSI net income for the nine months ended September 30, 2009 was $41.7 million compared to $45.3 million for the nine months ended September 30, 2008. BSI earnings per diluted share for the nine months ended September 30, 2009 were $0.25 per share compared to $0.27 per share for the nine months ended September 30, 2008.

Revenue in the BEST segment for the nine months ended September 30, 2009 was $36 million compared to BEST revenue of $32.5 million for the nine months ended September 30, 2008. Excluding the effects of foreign currency translation, for the first nine months of 2009, BEST revenue increased by 23.4% year-over-year.

The BEST net loss for the nine months ended September 30, 2009 was $5.0 million compared to a net loss of $6.8 million for the nine months ended September 30, 2008. BEST loss per diluted share for the nine months ended September 30, 2009 was $0.03 per share compared to a $0.04 loss for the nine months ended September 30, 2008.

I will now turn the call back over to the operator for any questions you may have.

(Operator Instructions) Tycho Peterson, JPMorgan.

Congrats on the quarter. Maybe just kicking off with a question on stimulus, since you talked a little bit about it. Can you give us a sense as to what you are seeing from a mix perspective? How much is the interest in high-end NMR versus mass spec demand? And if you could just provide some color there, that would be helpful.

Sure, Tyco. This is Frank. We see, as predicted, the demand from stimulus, both in the US and overseas, primarily in the higher-end systems. And it really affects NMR, preclinical, MRI. Also some of the higher-end x-ray systems for crystallography are material for nanotechnology, XRD research, as well as mass spectrometry. And again, in mass spectrometry, it tends to benefit more the high-end instruments, the bigger -- the higher average selling price systems.

They really all are in demand, and no strong color that I could give you one way or the other. We are not surprised it is benefiting all of those product lines.

Could you maybe just on mass spec talk a little bit then about the competitive dynamic? Obviously, with some M&A activity, there's really been some disruption here that you can capitalize on. Can you just talk about how you view share shift?

Well, maybe more with a year-to-date perspective. I don't know how -- one quarter may not give us enough of a picture. But year-to-date, our life science mass spec business is sort of up -- is up almost 10% when you take out exchange rates. So revenue is up, but orders are up even more.

And I'm sorry -- I misspoke -- it was just pointed out to me -- that was for the entire Daltonics business, including the detection business. Detection, because of its lumpiness, was down a little bit. And the life science mass spec business was up in terms of revenue by almost -- in the high teens. And orders are up just as much or even more.

So we clearly -- I don't know that it has anything to do with M&A activity, but clearly, our high-end products, from the maXis introduced last year to the three brand-new platforms that we came out with at ASMS, I think are all being well-received and we are winning deals. Some of them are in revenue. A lot of them are simply in our backlog at this point, and will be revenue in the coming quarters.

And then on the industrials, it sounds like you're obviously talking a little more positively. How much of this is a function of anniversarying some of the comps, or are you really seeing a turnaround in demand from metals analysis and some of these other end markets?

A little of both. Clearly, the comps are getting a little easier now. But seriously, I wouldn't prepare to call it a trend maybe even a month or two ago, but now in our industrial -- or in our businesses that have more industrial exposure -- that is Bruker Optics and mostly -- more so than that even the most industrial exposure we have in our x-ray, Bruker AXS division -- and I can say we now have very clear positive trends in the last few months in order bookings.

Not necessarily reflected in the GAAP financials yet, but the new order bookings in the last few months in those industrial businesses have been quite a bit stronger than they were last winter or at the beginning of this year.

The last three or four months have been a very positive trend. It is very clear. It is not, oh, my god, this one good month, does it really make a trend. I'm quite confident that this is a positive trend now. It is not dramatic growth in these industrial businesses, but it is clear and significant growth compared to obviously relatively low order levels earlier in the year or last winter.

Okay. And then just one last one on margins. Obviously, a lot to focus on here on the top line. Can you comment on some of the initiatives you have in place on manufacturing to try to drive efficiencies going forward here? It has obviously been a focus for investors as well.

We are attacking it probably in three areas. Certainly one is pricing. We continue to work very hard, pushing new and improved applications, which generally gives better solutions for our customers and better pricing. We continue to work hard, and I think this year has been a very good example of the new product introductions, which we -- are really designed for high quality manufacturability, low cost, but still continuing on with the great technical specification leadership that Bruker has shown over the years.

And then continue to improve manufacturing processes. The existing product lines, we constantly are looking where we can pull cost out of components, where we can improve the quality of existing components. So those are all ongoing efforts, and we expect to -- those are the -- what we believe and expect will get us to our publicly announced margin targets.

That's helpful. Thank you very much.

Ross Muken, Deutsche Bank.

Good morning, gentlemen, and congratulations on a very strong quarter. Relative to the guidance that we got back in early September, this was quite a strong quarter. In terms of the way that you saw the world then versus today, now that you have kind of the full results from 3Q, what business units sort of surprised to the upside or product lines kind of snapped back more so than you potentially had thought? And relative to your thinking at that time, where are the end markets today versus then?

Probably the view has not changed a whole lot. We were optimistic at the time that we would obviously get a significant amount of orders and eventually revenue from various global stimulus packages. We had estimated that at greater than $50 million. We are more confident today, even than in September, that we are going to meet or beat that figure.

I think, delightfully, it is really all five divisions; all four instruments divisions plus BEST have seen good order -- very good order pickup and we have strong backlog really just about everywhere.

Q3 was good. Keep in mind that Q3 of 2008, it was a slightly easier comparison; that was one of our weaker quarters last year. We have a strong -- hopefully, I think we will have a strong Q4 ahead of us. We also had a strong Q4 last year; that's going to be a tougher comparison, if you like.

So we are comfortable with the outlook that we have given in early September. And if anything, we have more confidence today because more of the things that we had hoped for at the time have come in in terms of orders. Orders have really been quite strong, and therefore, backlog is strong. Not all of this, obviously, will go into Q4; as you know, a lot of our backlog goes two, three, sometimes more quarters out, especially for some of the big ticket items.

Great. Thanks, Frank. And I only have one more. On the BEST business, you've announced a number of sort of partnerships or collaborations. And it seems like the business development effort's really kicking up there.

What -- now that you are sort of splitting this out as a separate entity, what is sort of the reaction from the people internally? What is the key focus from the business development effort going forward? And in turn, as you are looking at other assets to bring in there, where has kind of the key focus been sort of directed?

Well, the key focus is, as you will not be surprised to hear, on we're interested in a lot of applications of superconducting technology, but we are particularly focusing whenever it goes into clean tech or alternative energy or smart grid application.

Our rather unique inductive superconducting fault current limiter -- sorry, that is quite a mouthful -- we are excited about that technology. We have demonstrator projects that are testing that. Hopefully, we will have some news on that in the future. Good news, hopefully.

And we are working on a number of other big projects that are out there. We hope there will be some positive news flow in the months to come on that.

And so the focus is on alternative energy applications in a very general sense of our supercon technology, but some supercon technology is also going to industrial, motors and medical devices. There, we typically are not the device or systems supplier, but there we work closely with partners. Whereas in energy applications, we have -- very much are interested in building the devices, not only the components. And then in many cases, looking for distribution and service partnerships with utilities or great companies and so on. So maybe that gives you a little bit of a flavor.

Great. Thank you very much.

Derik DeBruin, UBS.

Good morning. In early September, you put out pretty specific, I thought, revenue targets for the 1 billion 30 [1030] plus or minus 20 million in sales for the year, with a minus 2% organic revenue growth target. Given where the quarter is today, will you consistently update that number?

At this point, we would like to stick to those numbers. We probably have more confidence in -- I mean, we had confidence in early September. We have more confidence in these numbers today, but we are not going to update them. But we feel comfortable with those.

Okay. I guess what do you think is going to be, given current currency rates, is it fair to say about 4% to 5% currency positive impact in the fourth quarter?

Yes, Derik. This is Brian. That is correct, 4% to 5% is the right number.

Okay. And I guess looking at the gross margin, I guess expenses were overall controlled; the gross margin was a little bit lower sequentially than I was looking for. I guess could you talk a little bit about gross margin trends?

And also, as you start seeing a lot more equipment sales going out from some of the higher-end systems, particularly it sounds like in 4Q and out, I guess, how do you see the gross margin progression? Do you see it up sequentially, I guess, is the first question, from Q3 to Q4?

In this quarter, our BSI, the Scientific Instrument business, was down quarter -- year-over-year comparison. I think that is reflective of what is going on in the divisions that do have this large industrial exposure margins and are still tight there.

But as we move forward, as the economy moves, the stimulus funding, that instrumentation we expect to carry very good margins. And also, the activities that I talked about a few moments ago with [continue] to improve just the absolute margin of the products going out the door, we hope to, over a period, to significantly improve and get to this 50% margin.

Quarter-to-quarter, we can sometimes take a giant leaps. We can sometimes step sideways or take smaller steps forward. So on a particular sequential quarter-to-quarter, there can be some variability. But you string three, four quarters together, we do expect to see improvement.

Okay. Typically in Q4, your SG&A spikes up a bit, I guess as you pay out people. Is that similar to what we are going to see this year?

It can -- it certainly -- commission is impacted by bookings, and typically the fourth quarter is a strong bookings quarter. It could also be impacted, and there is some variability to that, depending upon the mix of where those orders came from. If they are direct salespeople, that is one thing. If they are distributors in certain countries, that can impact that line, as well. But we aren't expecting any unusual trends in the fourth quarter relative to prior years' experience.

Thanks.

Isaac Ro.

Good morning. Thank you for taking the questions. Just first off, I realize we are a long way off from seeing kind of full stimulus impact, but you have mentioned a couple quarters now how you expect the impact to kind of carry through 2010 into 2011.

So I am wondering if you could put some color around the visibility you have, either in your existing order book or your conversations with customers about the 2011 timeframe at this point. I think there is a little bit of concern out there with investors regarding the extent to which stimulus might really all show up in 2010 and create a cliff a little sooner than expected.

For us, that is less likely to be more spread out, because we have typically bigger ticket items, longer delivery times on average. And since these stimulus packages are primarily geared towards mid- to high-end to very high-end products, those within our product mix are the ones with the even longer delivery times. So there are some instruments on which we have good visibility where we expect revenue going into 2011.

Now, we expect more stimulus effect in 2010 than in 2011, although we are not in a position to estimate that yet; even internally, we cannot fully nail that down. You know, we don't have that detailed of a visibility. But we expect there to be more of a -- not a bolus of two or three quarters, but really over a longer time period in our case.

It may not be constant for six months; we do expect the effect to be stronger in 2010 than 2011. But we also have hopes that in 2011, the real economy will kick in more business than it has in 2009, obviously.

Great. Thanks. And just a second question. I think kind of Derik touched on this a little bit, in the near term for fourth quarter. But I'm wondering if maybe you can speak broadly to the 2010 timeframe on expense items. And understanding this year has been a difficult year to forecast with the broader economy, the extent to which you might have had larger corporate initiatives on spending projects that were delayed, and then might really get the green light for 2010.

Any sense of how that might flow through the numbers next year? Are there a couple projects that you guys have been sitting on that might ratchet up the run rate on an ongoing basis for either SG&A or R&D?

Isaac, as you know, we've published -- or we've talked about our internal operational targets, the 50% gross profit margin and the 15% op income that we want to get to over the next three years. Our investment priorities, we certainly are driving projects and operations trying to go towards this operational excellence over those three years to achieve, and we fully expect to achieve those targets.

We are not going to do anything out of the ordinary that would delay or disrupt those plans. We are obviously going to continue to develop new products. That is constantly ongoing. We'll obviously continue to invest in new products, markets, new distribution. But nothing that is going to delay or slow up those targets. The profitability targets are -- achieving those are very key to Bruker's future.

And maybe to answer specifically, we have done our share of cost-cutting in 2009 and beginning in -- yes, beginning in 2008 really already. A few of these effects are sort of one-time effects. Most of these effects are really longer-term positive effects that bring down our expense level, our cost basis, which should not only be a benefit in 2009, but also in -- for many years going forward. I think we are a somewhat leaner business in some areas, and that is a good thing.

We have no plans of ratcheting up those expenses as the economy picks up. There will be some expense growth, but hopefully rather modest. And we have not -- we have not really held back or on -- we have been able to do these cost cuts without really sacrificing any of our clear opportunities. We have not killed projects that we would have been excited about but just couldn't afford. So I think we have all the irons in the fire, and we have not delayed any major projects or capital expenditures to 2010. So we expect our capital expenditures to maybe be a little bit higher than in 2009, but still lower than historical averages in 2010.

So no special projects are planned in the Scientific Instruments business. Now the BEST business has a little bit -- has a different strategy. And if we are able to do a strategic financing, we may come to the conclusion that there, we accelerate some of the R&D and other investment projects that could affect, for instance, the second half of 2010. But that remains to be seen.

But for the Scientific Instruments business, we have not held back on anything significantly or walked away from any clear opportunities.

I want to just further add that while I had focused on profitability, that is a key focus, we still have significant resources within those goals to invest in the business, invest in new products, continue the top-line growth. I think historically, Bruker has been a strong revenue growth player. We expect those trends to continue. And that is all part of the -- achieving our profitability goals, as well. So we just expect to continue what we've done in the past, but continue to build and improve upon it in the future.

Great, thanks. One last question, on the long-term margin targets that you guys have put out there. Are they in any way contingent on the spinout or mezzanine financing that you are looking for on BEST? In other words, should the capital margins markets turn hostile to something like that, would you still be able to achieve those targets?

To clarify, those targets are for Bruker's Scientific Instruments business. These targets do not include BEST. So BEST is not going to have a 15% operating margin in the next three years. In fact, we will continue to invest quite a bit in BEST.

We will invest modestly if we cannot do a strategic financing, because we believe in the opportunity. We will accelerate our investment if we can do a strategic financing for BEST. And the targets that Bill had mentioned are for the core Scientific Instruments business.

Got it. Thank you very much.

(Operator Instructions) [Kenneth Hirschberg, Hirschberg Capital.]

Good morning. Congratulations on your excellent results and your success in bringing down the long-term debt in particular.

A couple questions about the MALDI Biotyper. How far along in the FDA process is the MALDI Biotyper for receiving diagnostic certification? And the second question is how does the MALDI Biotyper differ from the IBIS T6000? Thank you.

The MALDI Biotyper, at this point, has IVD-CE approval, or the IVD-CE mark, I should say, in Europe. And a US launch is being prepared. It is -- at this point in time, it is -- in the United States and outside of Europe, it is for research use only.

Has it (multiple speakers)?

I cannot comment on the Abbott Molecular IBIS system. I believe they also have a revised, newer system that they have brought to market or that they are about to introduce. It tends to, in practice, not really compete. We don't really go into any accounts where they are looking at one versus the other.

I think one is -- our Biotyper is more for small- to mid-volume, routine clinical microbiology, where people are used to traditional biochemical methods, and are now looking at whether they get the higher speed or, more importantly, faster time to result, much lower cost per measurement and the higher specificity of the molecular -- proteomics molecular methodology that is embedded in the MBT.

As you know, the Ibis is a genomic technology. I believe it has a number of promising applications in epidemiology and others. I am not privy to the target markets and business strategies of Abbott Molecular there. They are playing in the same greater area of infectious disease, but they tend to be pretty differentiated and are not strongly competitive at this point.

Thank you. That is very helpful.

At this moment, I am showing you have no further questions. I would like to turn the call back to management for closing remarks.

Okay. Thank you to all of you for joining us today. This concludes our earnings call. Goodbye, and thanks again for joining us. Have a good day. Bye-bye.

Thank you for your participation in today's conference. This concludes your presentation, and you may now disconnect. Have a great day.