China Yuchai International Ltd (CYD) 2011 Q3 法說會逐字稿

Ladies and gentlemen, I would now like to turn the conference over to Kevin Theiss.

Please go ahead, sir.

Thank you for joining us today and welcome to China Yuchai International Limited third-quarter 2011 financial results webcast.

My name is Kevin Theiss and I'm with Grayling, China Yuchai's US investor relations advisor.

Joining us today are Mr.

Benny H.

Goh and Mr.

Weng Ming Hoh, President and Chief Financial Officer of CYI, respectively; and Mr.

Qi Wei Wu, General Manager of Guangxi Yuchai Machinery Company Limited, GYMCL.

Mr.

Dixon Chen from Grayling is also joining us to assist with translation from English to Chinese and vice versa during the Q&A session.

Before we begin, I will remind all listeners that throughout this call we may make statements that may provide -- may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

The words believe, expect, anticipate, project, targets, optimistic, intend, aim, will, or similar expressions, are intended to identify forward-looking statements.

All statements, other than statements of historical fact, are statements that may be deemed forward-looking statements.

These forward-looking statements are based on current expectations or beliefs, including, but not limited to, statements concerning China Yuchai's operations, financial performance and financial condition.

China Yuchai cautions that these statements, by their nature, involve risks and uncertainties, and certain results may differ materially depending upon a variety of important factors, including those discussed in China Yuchai's reports filed with the Securities and Exchange Commission from time to time.

China Yuchai specifically disclaims any obligation to update the forward-looking information in the future.

Mr.

Goh will provide a brief overview and summary and then Mr.

Hoh will review the financial results for the third quarter 2011 and first nine months ended September 30, 2011.

Thereafter, we will conduct a question and answer session.

For the purposes of today's call, the financial results are unaudited and they will be presented in CNY and US dollars.

Mr.

Goh, please start your presentation.

Thank you, Kevin.

Let me first make a brief introduction.

I took over the helm of China Yuchai just over a month back.

During this short period, I have spent a considerable amount of time visiting our factory, speaking to the staff and customers and trying to understand the business.

Today, I am going to give you a quick assessment of the business in the face of global uncertainties and where in China we are seeing a slowing economy compared to the past and which is facing a capital crunch that's affecting a range of businesses.

Now, over the past two years, the commercial vehicle sector experienced robust growth due to the Chinese government's automotive-related stimulus policies to combat the 2008 global downturn.

Customers of commercial vehicles took advantage of this buying opportunity and purchased a record number of vehicles in 2009 and 2010.

However, these policies have expired and the high [build] momentum was not able to be sustained, resulting in a decline in the market for commercial vehicles.

Comparisons between the record sales of 2010 and 2011 results must therefore be viewed against this backdrop.

In late 2010, the Chinese government announced a shift in its monetary policy from a moderately loose stance to counter the effects of the global financial crisis in 2008 to a prudent monetary policy in 2011 to rein in liquidity, contain inflation and limit the risk of asset bubbles.

This has resulted in fewer investment in infrastructure and commerce and thus a corresponding reduced demand for commercial vehicles.

Commercial vehicle sales during the first quarter of 2011 totaled 380,000 units but were 7.5% below the same quarter a year ago.

However, it should be noted that overall commercial vehicle sales showed greater growth each month during the third quarter of 2011.

In the month of September 2011, approximately [327,000] commercial vehicles were sold.

Sales were higher than August numbers but lower than September 2010 figures.

Truck sales in the third quarter of 2011 were 755,000 vehicles, well below the levels of the third quarter of 2010.

Heavy truck sales fell by 23% and light truck sales dropped by [8%], whereas medium truck sales held its ground and increased moderately by about 3%.

Production and sales in Q3 of 2011 showed some growth each month between July and September but it is noted that summer months are typically the slower season of the year.

Sales of completed trucks of 218,000 vehicles were up 15.6% from August 2011 but were down 4.4%, year over year, during the month of September 2011.

Bus sales were the bright spot during the third quarter of 2011 within the commercial vehicle market.

Completed bus sales were up 11.3% to 103,000 units compared to the same quarter of 2010.

Bus sales recorded a positive trend each month during the third quarter of 2011.

We sell a large percentage of diesel engines [supplies] to some bus customers and provide advance diesel hybrid solutions as well.

Bus sales in 2011 rose over the previous month of August 2011 and also compared to the same month last year.

I'm sorry, it was higher compared to the same month last year.

Bus sales in September were 38,000 vehicles and roughly [then] almost 12.4% more units than in August 2011 and 12.6% more units sold than in September 2010.

For the first nine months of 2011, approximately 3.1m units of commercial vehicles were sold, down 4.8% compared to the same period in 2010.

For the first nine months of 2011, completed truck sales were 2.1m vehicles, down 2.4% from the nine months a year ago, whilst trailer sales of 177,000 units were down 28.1%.

Heavy-duty truck sales for the first nine months of 2011 were 712,999 units, a 9.7% drop compared to a year ago.

Our main operating subsidiary, GYMCL, sold a total of 106,358 diesel engines during the third quarter of 2011 compared to 109,023 units in the same quarter last year.

This decline in unit sales of 2.4% reflected lower light-duty and medium-duty sales offset by slightly higher heavy-duty engine sales and a solid growth of 12.2% in off-highway applications, namely engines used mainly in marine, industrial and agricultural applications.

Additionally, GYMCL introduced China's first prototype diesel engine compliant with the Euro 4 emission standard.

Our heavy-duty model, the YC6L-60 diesel engine, has set another milestone in our history of technological achievements.

The Euro 4 emission standard is a first -- is the most stringent emission standard in the world.

The European Union announced plans to implement the Euro 4 emission standard beginning in 2013.

The introduction of China's first Euro 4 compliant diesel engine by GYMCL demonstrates its world-class research and development capabilities.

Our strategy of providing advanced diesel engines targeting a number of end markets providing us the flexibility to quickly respond to changes in demand; we have demonstrated this through our increased sales into the off-highway sector.

We are maintaining our market leadership in this difficult market through meeting the evolving performance needs of our customers, combined with a strong brand name and extensive level of support centers.

I will now provide a brief update of our joint ventures and foundry operations.

Our long-term goal remains to expand the reach of our product line.

However, given the difficult near-term conditions in the truck market, our outlook remains cautious.

For the more profitable heavy-duty diesel engine sector, we have launched a reset of production capacity expansion for our 6L and 6M engines and now expect to increase to 120,000 units, annually, to be completed by the end of 2011.

Also, our joint venture with CIMC-Chery is experiencing less growth than originally expected in 2011.

We are working closely with our joint venture partners to improve the marketing of our new YC6K engine.

We believe that in the mid-term there are conditions that will enhance the outlook for the heavy-duty diesel engine market in the future.

There continues to be a need to move heavier loads farther at faster speeds to support the large and growing urban population, as well as the large construction and manufacturing industries in China.

Indications are that tight monetary policies may be easing with credit becoming more readily available to help the purchase of new vehicles and for new investment projects.

The recently implemented vehicle overloading regulations may create a need for more logistical capacity to be added, generating more truck demand.

We continue to invest in our new foundry as it has provided better quality parts with fewer pieces being rejected leading to raw material savings as well as productivity gains.

The foundry provides more control over the inventory of our essential diesel engine blocks and heads and we expect to become self-reliant in these engine parts.

Phase 2 of the foundry expansion is well underway with [full] production runs expected to begin in mid-2012.

Our Caterpillar Remanufacturing joint venture continues to build up its core part inventory as purchases for remanufactured engines and parts gradually gain traction in China.

The Geely joint venture prototype 4D20 two-liter diesel engine for passenger vehicles is progressing and crankshaft line [style] production is scheduled in November 2011 in Tiantai, Zhejiang Province.

And, with that, let me turn the call over to our CFO Weng Ming Hoh to provide more details on our financial results.

Thank you, Benny.

Let me first talk about our third-quarter 2011 financial results.

Net revenue was CNY3.4b, or $542.6m, compared with CNY3.3b, or $524.4m, in the third quarter of 2010.

With the slowdown in Chinese commercial vehicle market, especially the truck sector, the number of diesel engines sold by GYMCL during first quarter of 2011 was 106,358 units compared with 109,023 units in the same quarter of 2010.

Gross profit was CNY691m, or $108.7m, compared with CNY769.3m, or $121.1m, in the third quarter of 2010.

The gross margin was 20% in the third quarter of 2011 as compared with 23.1% a year ago.

The lower gross margin was mainly due to an increase in material costs and a shift to off-highway engines, mainly for marine, industrial and agricultural applications, compared to the same quarter a year ago.

Other expenses decreased to CNY25.9m, or $4.1m, from a gain of CNY36.5m, or $5.7m, in the third quarter of 2010, mainly due to foreign exchange revaluation losses.

Research and development, R&D, expenses were CNY83.5m, or $13.1m, compared with CNY95.7m, or $15.1m, in the third quarter of 2010.

As a percentage of our net revenue, R&D spending was 2.4% in the third quarter of 2011 compared with 2.9% in the same quarter last year.

Selling, general and administrative, SG&A, expenses in the third quarter of 2011 were CNY414.7m, or $65.2m, increasing from CNY355.5m, or $55.9m, in the third quarter of 2010.

These SG&A expenses represented 12% of third-quarter 2011 net revenue compared with 10.7% for the third quarter of 2010.

The increase in SG&A expenses compared to last year were mainly due to higher warranty expenses, a reduction in provision of doubtful debts in the prior year and some increases in sales incentives and rebate expenses.

Operating profit declined to CNY166.9m, or $23.3m (sic - see press release), from CNY354.7m, or $55.8m, in the third quarter of 2010, mainly due to lower gross profit and higher SG&A expenses.

The operating margin was 4.8% in the third quarter of 2011 compared with 10.6% in third quarter of 2010.

In the third quarter of 2011, net profit attributable to China Yuchai's shareholders was CNY63.6m, or $10m, or earnings per share of CNY1.71, or $0.27, compared with CNY217.5m, or $34.2m, or earnings per share of CNY5.84, or $0.92, in the third quarter of 2010.

Now I will discuss the results for the nine months ended September 30, 2011.

Net revenues were CNY11.7b, or $1.8b, compared with CNY12.4b, or $2b, in the first nine months of 2010.

The gross profit was CNY2.4b, or $378.6m, representing a 20.6% gross margin.

Selling, general and administrative expenses declined 5.1% from CNY1.4b, or $214.2m, in the first nine months of 2010 to CNY1.3b, or $203.3m, in the nine months ended September 30, 2011.

Operating profit declined to CNY885.7m, or $139.4m, from CNY1.154b, or $181.7m, in the first nine months of 2010.

This was due to lower sales volume and a shift in sales mix to off-highway applications as well as to light-duty engines.

Net profit attributable to China Yuchai's shareholders was CNY449.2m, or $70.7m.

Earnings per share of CNY12.05, or $1.90, versus CNY668.4m, or $105.2m, or earnings per share of CNY17.93, or $2.82, in the same quarter in 2010.

As of September 30, 2010 -- '11, sorry, we had cash and cash equivalents of CNY2.6b, or $406.5m, compared with total short-term and long-term interest-bearing loans and borrowings of CNY2.7b, or $429.7m.

The Company strategically relied on borrowings to finance its operations as the cost of discounting bills has increased substantially compared to last year.

Total equity attributable to China Yuchai's shareholders was CNY5.2b, or $813.7m, on September 30, 2011.

The total shares issued and outstanding as of September 30, 2011 were 37,267,673 shares.

With that, operator, we are ready to begin the Q&A session.

Thank you.

Ladies and gentlemen, we will now begin the question and answer session.

(Operator Instructions).

Your first questions come from the line of Mr.

Alex Potter from Piper Jaffray.

Please ask your question now.

Yes.

Hi, guys.

I was wondering if it would be possible to give a breakdown in the quarter in terms of volume between heavy-duty engines, medium-duty engines and light-duty engines.

(Interpreted).

In general, we still -- the breakdown's still -- we are more concentrating on medium-duty and heavy-duty but if you look at different category on the bus sector, we're more evenly distributed between those three displacement engines size.

On the truck side, we're mostly on the -- still on the medium-duty and light-duty; same with the construction equivalent.

Okay.

I had some --- I'll give you some percentage ratio of engines and you can work from that.

So in terms of the first quarter, I will break it down into the light-duty, medium-duty and heavy-duty for motor -- commercial vehicle applications and then the rest for the off-highway applications.

For this year, our off-highway -- this quarter our off-highway application has gone up to over [25%].

The light-duty accounted for about 40% of our business for this quarter; medium-duty about 22% and heavy-duty about 11%.

Okay, so that was medium-duty 22%, heavy-duty 11%, light duty was 40-something.

40.6%.

Yes, 40%.

Okay.

And how do you see that mix changing going into Q4 and then potentially here as we enter 2012 where do you think that mix -- how do think that will shift?

(Interpreted).

Okay.

The short answer is, in Q4, the breakdown in terms of heavy, medium and light-duty percentage, it will be very similar to the Q3.

There are many reasons, Q4 in general was still bearish even if better than Q3.

Mainly, we see inventory -- our level is still very high at both OEM and dealership level and that covers both light-duty, medium-duty and heavy-duty businesses and different from 2010.

End of 2010 it went OEM and dealership; they are stocking up and prepare for the next year.

This Q4, basically both OEM and dealership are saying 2012 will be a difficult year so, generally, we talk about 2012 outlook, we remain cautiously pessimistic.

Thank you.

Your next question comes from the line of [Bin Wen] from Merrill Lynch.

Please ask your question now.

(Spoken in Chinese) Actually, my question is -- I have two question.

First of all, on the downstream demand for the truck so how much came from the (inaudible) demand and how much came from the concession demand?

So do you have a breakdown on which type better, that's for the first question?

The second question is (inaudible) outperform in the third quarter because our peers are substantially decline year over year.

Let us know if you still can maintain the year-over-year flat.

So another company has (inaudible) on the overall sector so what about how you're focused about Yuchai itself in terms of overall sector.

Thank you.

(Interpreted).

So, during the Q2 and Q3 in 2012, as you have noticed, Yuchai has maintained our market position.

And in 2011 we maintained our volume sales when the market is -- actually came down.

It's mainly due to our product offering.

We have a wide product array.

Our product has been widely used in many different sectors.

We have strengthened different kind of product lines and customers.

And while the volume decline or the revenue decline is industry-wide, but we all -- the level of our decline is much lower than our competitors.

As a result, we increased our market share.

And that's mainly due to our product structural changes.

On the construction going into 2012, on the construction side, we see the volume will continue to decline.

On many infrastructure-related projects as you already know are on a slowdown mode.

For instance, the high-speed rail construction projects are not growing as fast in comparison with 2010.

There are also some favorable projects which is going to increase the construction business.

For instance, the low income housing project governments are promoting, and also the hydropower projects nationwide.

However, the scale is not going to be comparable as to what we saw in 2009, 2010.

On the logistics side we will see slightly improved market for 2012 in comparison with 2011.

And in summary, when the market continued to decline we -- our competitors strengths will continue to show because our product structure and our customer base.

(Spoken in Chinese).

Okay, my question is on the sequential improvements in the fourth quarter this year and their (inaudible) [arguments] in the market on -- and sequential improvements.

And number one is (inaudible) on completed and full restocking the fourth quarter.

The second is because of the macro recovery, the domestic, and the service came from the regulation change (inaudible) overloading as was on the reduced cost of (inaudible) system.

So I just wanted you to tell me to -- explain which one is the most important or which one is not important and you have the ranking for the three reasons.

Thank you.

(Interpreted).

To answer your question I think that the fact the most important contributing factor is seasonal, seasonality.

Q3 as we all know are usually are the weakest season.

Of course 2010 Q3 was an exceptionally strong season, but in general Q3 is weaker -- the weakest.

So Q4 is better always in that trend.

Then the other two reasons whether it's macro or overloading there is no order which one will come first, but they are -- both are contributing to a certain extent.

Thank you.

(Operator Instructions).

Your next question comes from the line of Sandy Mehta from Value Investment Principals.

Please ask your question now.

Yes, good evening.

I had a question on your -- the FX charge, the ForEx charge and there was a big swing there from positive last year to negative this quarter.

And I wanted to know with the revaluation you mentioned is that a cash or non-cash item?

Is that something that if you want to look at sort of cash earnings is something that we should add back?

Right, this is a translation loss, Sandy, so it's a non-cash item.

Non-cash item.

Yes.

Okay.

Can you give us some -- the highlights from your cash flow statement in terms of cash flow from operations, and also what was the working capital impact on your cash flow statement?

Do you have some of those numbers?

Yes.

Okay, then let me give some broad outline of that one.

Now, if you look at our balance sheet you will notice that our receivables have caught up significant because of FX compared to last year and even from the beginning of this year.

And also if you look at it our loan to borrowing has also gone up.

Now as stated in our announcement, we have [stopped] (inaudible), [sort of] changed our balance funding methods.

We are now relying more on [short-term bond] borrowings to finance operations as opposed to discounting of bank bill as we did last year.

The primary reason for that, as you know, Sandy, is that the interest rate in China has gone up significantly, now it's for discounting of bills they are looking at between 7%, 8%, 9% to discount for brand new.

Now, we were lucky in the sense that [we were able] early this year to lock in -- to issue a short-term bond by the issue of CNY1.7b of short-term bonds at the beginning of the year, early part of this year and at the rate of 4.5% and 5.0%.

So we were able to lock in the interest rate at a lower rate and save us on finance costs.

That is quite substantial if you look at it nearly 1% down or 0.5% down.

So if you look at cash flow, as a result, we have therefore a net cash used by the operating activities of close to CNY2.6b.

And then the investment cash flow -- sorry, used by investing activities of about CNY400,000 -- CNY400m sorry.

And then this is funded mostly buying -- participating in borrowings.

So -- all right.

And what is your expectation for the bills receivables, trade bills receivables?

Where do you see that -- how do you see that coming down over the next few quarters or where do you see that in December and going forward?

Well, I would see that going up, so, yes, (inaudible) going down, so I think if you would collect most of our receivables with the end of the financial year.

As for normal, you'll see a big drop in our accounts receivables but again as a result as the bills receivables will go up [30%] by the (inaudible).

So you go -- we expect the bad news the bills receivables go up rather than down towards the end of the year.

But bear in mind that these are issued by a bank, it's more or less guaranteed.

So the risk is very low.

Okay.

So now we are holding both of these bills to maturity as opposed to discounting them.

Okay, so you will see our bills receivables staying high for a while.

It's a structural change, Sandy.

Thank you for your questions.

You have a follow-up question from Mr.

Alex Potter from Piper Jaffray.

Please ask your question.

Yes, thanks for taking the following up guys (multiple speakers).

A question here on gross margin, I know that over the last couple of years you've had a pretty sizeable increase in gross margin in the fourth quarter.

Sir, sorry for the interruption there seems to be a delay from the feeder line, the conference will resume shortly.

You may ask your questions after this.

Please hold.

Ladies and gentlemen, I do apologize but there will be a slight delay on today's conference.

The line will remain on hold until the conference has been resumed.

Please stand by.

Excuse me ladies and gentlemen the conference is now being resumed.

Mr.

Potter, please ask your question again.

A question on gross margin, looking back over the last couple of years your Q4 has typically been a very strong gross margin quarter.

I am wondering if you can give a brief summary of why gross margin has spiked in Q4 in the last couple of years, and whether you think that the same reasons that led to high gross margins in Q4 in prior years will take place again this year.

Thank you.

Okay, Alex (inaudible) you are testing my memory here.

I think last year's fourth quarter we had some comparison to the previous so there was some sort of write back of the -- a reduction in the inventory provision that had an impact on the gross margin.

And also there was some what I call soft -- settlement of some what I call the sales rebates incentives that we did not needs as much as we initially thought -- provided for.

So however (inaudible) we would -- probably would have to relook at the performance of each of our customers and dealers before we can actually form an opinion as to whether or not it's going to have a big spike, and also a look, of course, at the sales mix as well.

At this point it's very hard to comment on it.

Okay.

So the -- to the extent that there is seasonality there it sounds like it has to do with sales rebates that basically gets trued up at the end of the year, but it's too early to say whether or not that will happen again this year.

Is that what you're saying?

Yes.

I [have not the occasion] to look at how our customers perform, just that there is some different performance of the customers in terms of payment.

Okay.

And then I just had one last other question here on tax rate, your tax rate jumped up a bit here in Q3.

Was wondering if you can give some tax rate guidance?

Is that going to fall back down in Q4 or is this the new run rate?

Well, I don't think it's going to be a new run rate, but I think again -- without knowing the actual results of Q4, it's hard to comment.

Okay, thank you.

All right.

Okay, now we are going to pick up questions from the webcast.

Also one of them is receivables I think I've answered this question partly earlier.

The question is will it be a lot closer to Q4 2010 level at the end of Q4 2011.

The expectation is yes, we normally would collect a lot our receivables in respect -- receivables at the end of the year.

That's for the accounts receivables.

But by collecting the receivables, account receivables issue which are stated in (inaudible) you will see an increase in the bills receivables.

Next question is, I think, it's probably answered as well.

Could somebody please explain the $9.8m swing in other income year over year?

As mentioned in our announcement this is largely due to the foreign currency valuation.

Now -- and another question what is the growth outlook for [UD] truck in 2012.

I presume you mean (technical difficulty).

Has Q3 reached the bottom?

(Interpreted).

So basically industry people they have been all talking about this 2012, there is no short answer; there is no clarity for the outlook for heavy duty trucks in 2012.

In general we feel it's going to come down from -- at the level we are at 2011, roughly will decline by 13% to 14%.

So what we see here in Q3 2011 and Q4 2011 will be a continuation going into Q1 and Q2 2012.

Reason being that there is a substantial level of inventory needs to be cleared out.

Until then we'll see that the demand comes back.

So most likely you will see some change in the second half of 2012.

The next question from the same person is what is the inventory level in the channel?

Any improvement compared with 200,000 reported in Q2.

(Interpreted).

The answer is there is no clear improvement from Q2, the number was published.

Basically there are some -- as you already know there are this new anti-overloading policy are basically -- are giving some pressure to the market.

There are inventory -- even we have so much inventory the new policy actually are not helping this inventory.

So as a result, we are still seeing more or less 200,000 units in the inventory.

On the light duty sector we don't have the clear data yet, because the channel data is not as transparent.

But we still see a -- our feeling is there is still a very high level of inventory.

Okay.

The third question from the same person is reason why SG&A expense increased much faster than revenue growth.

Will the SG&A ratio normalizes in Q4 levels in 2012?

Okay, well [I won't go into 2012] but if you look at our (technical difficulty) third quarter (technical difficulty) three reasons, one is the increase in the R&D costs.

That's (technical difficulty) due to the -- one of the reasons is that we sold more heavy duty within the last 18 months, so that does have an impact on the warranty costs.

And secondly, there is a reduction in receivables provision in the previous year.

So if you look at comparison of the impact on the numbers as well which is a one-off thing.

And there was some increase in -- some increase in the rebate and incentives.

Now if you look at -- this is for the third quarter, but if you look at -- take it on a year-to-date basis, the ratio for this year, year to date, is basically similar to last year.

So there is no change in the basics -- in the ratio; it's pretty much under control.

So Q4, going f forward to Q4 I would guess that we would be quite similar, but next year I would not comment next year for now.

Thank you.

There is the next question from the webcast basically this investor wants to know what's the strategy going forward, and this question is for our new President.

Okay, from what I see the headwinds that are facing this time is going to be in the short term, but what we are going to really improve upon are three things.

One is really looking at the international arena.

That is an area where we are still relatively untouched right now and that presents an opportunity for us, particularly in our power gen and also in marine sector.

And secondly to really strengthen our marketing and positioning of our heavy duty engines we supply now, we can prepare ourselves such that when the time comes when the downturn is over we can really capture the market when officially it comes.

And lastly is to exercise cost control within the company to help improve our margins.

I believe these are the three things that we want to do well, and have to prepare ourselves for the new year ahead.

Okay.

That's another question from webcast.

Why are the non-controlling interest earnings are higher than the 30% of the total earnings.

Okay, now, as you know, Yuchai owns [76%] of main operating company (inaudible) in Q1 and 24% is owned by minority interest.

However, at the head office level we also have expenses, and we also have cost -- losses incurred by HLGE.

Now if you add all those together, that's why the [pack] of the profits attributable to the parent or China Yuchai's shareholders would reduce, hence that impact on the earnings of the minority --- non-controlling operations.

We've got -- I guess we reached the end of the earnings conference call.

We are now handing back to the new president, Benny Goh, to provide his closing remarks.

I really then just need to thank all of you for participating in our third quarter call webcast this -- tonight, and we really look forward to speaking to you again.

Thank you very much, good bye.

Portions of this transcript that are noted "interpreted" were interpreted on the conference call by an Interpreter present on the live call.

The interpreter was provided by the Company sponsoring this Event.