Entegris Inc (ENTG) 2007 Q3 法說會逐字稿

Good day, everyone, and welcome to Entegris' third quarter 2007 earnings release conference call. Today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Steve Cantor, Vice President of Corporate Relations.

Thank you. Good morning, everyone. Thank you for joining our call today. Earlier we released our financial results for our third quarter ended September 29, 2007. You can access a copy of our press release on our Web site, www.Entegris.com.

Before we begin, I would like to remind listeners that our comments today will include some forward-looking statements. These statements involve a number of risks and uncertainties, and our actual results may differ materially. These risks and uncertainties are outlined in detail in this morning's press release and in our most recent 10-K report, as well as in our other reports and filings with the SEC. We encourage you to read carefully those reports and filings.

On this call we will also refer to non-GAAP financial measures as defined by the SEC and Regulation G. You can find a reconciliation of non-GAAP financial measures to the comparable reported results of operations under GAAP in today's press release, as well as on our Website. I should point out also that all numbers discussed on this call, unless otherwise noted, are based on results from continuing operations.

On the call today are Gideon Argov, President and CEO, Jean-Marc Pandraud, Chief Operating Officer, Greg Graves, Chief Financial Officer, and Peter Walcott, General Counsel. Greg Graves will now begin the call with the financial highlights of the quarter.

Thank you, Steve. Good morning, everyone. We are pleased with the results of the quarter, which were above the guidance we provided in August. Sales for the quarter were 151.8 million. Net income was 8.4 million, or $0.07 per diluted share.

On a non-GAAP basis, net income from continuing operations was 11.4 million, or $0.10 per diluted share. Reconciliation information between our GAAP and non-GAAP results may be found in today's press release, which can be accessed on our Website. Adjustments to our non-GAAP results include 4.8 million in merger-related and other restructuring charges. I will reference these as I discuss the income statement in detail and talk about non-GAAP results.

Gross margin for the third quarter on a modified basis improved 100 basis points from Q2 to 43.7%. The Q3 gross margin was impacted by approximately 700,000 of costs related to the transfer of the manufacturing of several product lines from the US to our facility in Kulim, Malaysia. I was in Malaysia last week and can say I am quite pleased with our progress in ramping that facility. As we discussed last quarter, we estimate the cost from these manufacturing transitions could reach 4 million in aggregate over the next several quarters. To date, we have incurred approximately 1.8 million related to these moves.

Operating expenses on a modified basis were 49.4 million, or 32.5% of sales, which was right in line with our expectations. We spent 9.4 million on new product development projects related to contamination control products for advanced semiconductor and microelectronics manufacturing processes, such as photolithography, wet etch and clean and CMP.

SG&A on a modified basis was 26.3% of sales. Our GAAP operating expenses included 3.7 million of merger-related amortization. Total stock-based compensation in Q3 amounted to 2.9 million, or $0.02 per diluted share. This included about 400,000 related specifically to restricted stock grants made in connection with the 2005 merger. You should expect these merger stock grants expenses to be negligible by the first quarter of 2008 as they continue to amortize. Adjusted for merger-related and other restructuring, our non-GAAP operating income was 16.9 million, or 11.1% of sales, a 5% improvement over Q2.

We reported income tax expense on a GAAP basis of 3.2 million in the quarter, or a 26% rate. The rate was favorably impacted by the final reconciliation of our 2006 tax return and our book tax accounts.

Shares outstanding on a fully diluted basis at the end of the second quarter were 116 million.

Cash flow remains strong, as we generated $25 million in cash from operations in the quarter. Through the first nine months of 2007, we have generated almost 100 million in cash from operations. A good portion of that has resulted from working capital improvements, particularly from reductions in inventories, which went from 93 million at the start of the year to 81 million in the current quarter.

Inventory turns were about 4.2 times. Accounts receivable in dollars were roughly flat compared to the second quarter, and DSOs were 62 days, versus 61 days in the second quarter and 70 days at the beginning of the year.

Depreciation and amortization totaled approximately 11 million, and capital expenditures for the quarter were 6.3 million. We expect 2007 CapEx to be approximately 30 million.

Cash, cash equivalents and short-term investments totaled 125.9 million at the end of Q3, or 10.6 million lower than at the end of Q2. The change in cash reflects strong operating cash flow, offset by the cash used in August to acquire the semiconductor assets of Surmet Corporation.

In addition, this month we initiated a series of transactions in the form of intercompany dividends and loans from our Japanese subsidiary that will allow approximately 100 million of cash to be used to support both our acquisition strategy and our commitment to ongoing share buybacks. About 70 million relates to cash on hand in Japan, and the balance, or 30 million, is funded by low-interest loans from Japanese banks. These transactions will occur in the current quarter, and we anticipate this will result in an estimated $10 million US tax benefit in Q4. These steps are part of our strategy to use our cash flow and our balance sheet to achieve superior long-term shareholder returns. Our acquisition of Surmet's semiconductor-related business is a good example of how we can build on our strong platform and enable next-generation electronics through advanced contamination control in the manufacturing process.

With that, I will turn it over to Gideon Argov.

Thanks, Greg. Before making some comments on sales trends and on some key operational projects underway, I'd like to say a few words about our long-term strategy and our focus.

Our mission is to create value for customers and shareholders by building on our strengths as the leader in providing products that purify, protect and transport critical materials used in the manufacture of semiconductors and other electronics. We have an excellent platform from which to achieve this in terms of our core filtration and microenvironments technologies, a leading share in most of our core markets, our long-term relationships with a very broad base of customers, and our strong balance sheet and cash flow.

Our strategy is to leverage this platform and grow our businesses in multiple ways, in three ways fundamentally.

First, by using our core technologies to develop truly innovative solutions to complex contamination issues that enable our customers to cost-effectively manufacture advanced technology. Secondly, to acquire strategic bolt-on growing businesses that leverage our core customer relationships. And third, to expand our share in some key ancillary market segments.

At the same time, parallel to these strategies, we intend to align our manufacturing closer to our customer base, as we have said previously, and to increase our flexibility and cost efficiency by the use of more outsourcing.

In the context of these strategies, we have several reasons to be pleased with the results for the third quarter.

Firstly, we achieved sales and earnings above our expectations. Secondly, we continued to generate strong operating cash flow. Third, we continued with steps previously disclosed underway to move manufacturing of certain key products to our Asian manufacturing sites, particularly in Malaysia. And fourth, we completed the purchase of a small but important coatings technology business that expands our market reach into a market that is new for us, the ion implant business, and gives us access at the same time to some unique technology that can further differentiate some of our existing products.

For the quarter, our sales reflected two distinctly different market trends. First, continued high chip production and fab utilization, and second, softening of capital spending and a slowing of capacity expansion -- those two trends working, obviously, in opposite directions.

Now, as a Company with a broad line of contamination control products which are sold to virtually every company in our industry, we have, as you know, exposure to both these trends. Within the semiconductor market, which represented about 80% of our sales, wafer start and semiconductor unit production levels at most IDMs, memory chip companies and foundries remained at relatively high levels, and this had a favorable impact on the unit-driven side of our business, such as filters and shipper products, which represented just about 61% of our sales in the third quarter, compared to about 60% in the second quarter.

The offsetting trend was a continued slowdown of capital spending. This impacted the capital-driven side of the business, which represented the other 39% of total third-quarter revenues. In our non-semiconductor markets, which represented about 20% of our overall Q3 revenues, sales of both data storage and our TFT-LCD products rebounded from the second quarter.

Sales of our liquid filtration products were about even with Q2, as growth in replacement filter sales, the wet etch and clean processes, and new CMP-related products, was balanced by softer sales in filters that are sold through OEM tool companies. Sales of our microenvironments products were also about even with Q2. 200 mm shipper sales softened as we expected as the industry transitions out of some 200 mm fabs. We are encouraged by the continued progress of the new 300 mm shipper product, the FOSB product, which continued to get traction at key target customers. And on the transport side of the wafer-handling business, sales of our FOUPs grew in the third quarter.

Our liquid systems and our gas microcontamination products declined in Q3. Since many of these products are sold to OEM tool providers, or to facilitize new fab capacity, these products were impacted by the slower industry capital spending environment that we witnessed. While the lower capital spending did have a dampening effect on sales of our systems overall, we continue to be pleased with the growth of several new systems products previously announced, such as our liquid lens for immersion lithography, as well as Clarilite solution for reducing reticle haze.

In terms of geography, sales to Asia, our largest region, represented 37% of third quarter sales, and they grew 4%, driven by sales to fab customers of liquid filters. For the remaining geographic regions, sales to Japan were 22%, North America was 26%, and Europe was 15% of the total, with both Japan and North America being somewhat negatively impacted by the slower OEM demand for liquid systems products.

As Greg alluded to in his remarks, during the quarter we completed the acquisition of the semiconductor portion of Surmet Corporation, a small but, for us, important coatings company based in the Boston area, which we have named Entegris Specialty Coatings, or ESC. This is profitable. It's a growing business. It has a largely consumable product line and fits very well with our microcontamination solutions.

ESC's proprietary low-temperature technology enables high-purity coatings to be placed on a range of surfaces and substrates, including, importantly for us, polymers. These coatings act as barriers, and as such, they protect the wafer from contamination, as well as protecting the surface that comes in contact with the wafer. ESC has used this technology historically to become a leading provider of electrostatic chucks, or e-chucks, that are used in the ion implant process. And we see potential beyond this application to use these coatings to enhance some of our existing polymer-based products. As you know, strategic bolt-on acquisitions like ESC are a key part of our future growth strategy.

Before turning to our outlook for Q4, I want to provide an update on a key initiative for us. As Greg indicated, we are on track with our strategy of moving manufacturing of some products to Malaysia. Of the four products slated to be moved, two are now in customer qual phase, and a third will begin that process in the current quarter. The move of some manufacturing to Malaysia is only one piece of a comprehensive, long-term plan to align our supply chain with our customers, improve manufacturing flexibility, and reduce our cost structure.

Turning to our outlook for the fourth quarter, we expect the capital equipment market to remain soft, even as wafer starts and unit production appear to be firm. And as such, we expect fourth-quarter revenue in the range of $144 to $152 million. Given our commitment to sustained strategic investments and new product development, and the key manufacturing initiatives, we expect EPS on a GAAP basis, excluding any tax impact from the intercompany dividend that was discussed by Greg, to range from $0.04 to $0.07. Adjusted for about $3.9 million in merger-related charges and expenses, we expect non-GAAP EPS for the fourth quarter in the range of $0.07 to $0.10.

And with that, we will be happy to take your questions. Operator?

(OPERATOR INSTRUCTIONS). Chris Blansett, JPMorgan.

A few things. One is, on the consumables related sales, Gideon, you indicated that you had a lot of things that picked up during the quarter. I'm kind of confused. What actually didn't pick up during the quarter? Because on a sequential basis, revenues are relatively flat for these unit-driven products.

We grew the consumable business by 1% plus for the past quarter, in quarter three. We did grow the FOSB business. We are taking market share there, and it's going very well. The rest was basically flat. So we had some growth from the FOSB business, but even on the liquid filtration business.

Kind of along those lines, trying to understand a trend here. If you go back to the end of last year, you guys were running more in the $100 million run rate for these products. And when the industry, semi industry, troughed, your revenues for these products came down. And they really haven't recovered yet, even though utilization rates are trending up. Is there something that's obvious here that we're missing?

No, you're right. This is clear that we are at the level for the unit-driven business which is about at the beginning of this year, and a bit slower than last year, even though when we started 2006, we had a number which was lower than that. So, we grew during 2006 and during and after the second and the third quarter. And now we are at the level which is starting to pick back up again.

The other comment that I would make with regard to the unit-driven business, it's different than some of the people -- companies that others would compare us to in that our unit-driven product -- it's not 1 to 1 per wafer start. A number -- a lot of our unit-driven products are also put on tools when they're shipped. So when the tool market is strong like it was 12 months ago, that has a favorable impact on our unit driven business as well.

So there's a portion of the units that actually go into the capital spending side?

This is true. We have seen that in the third quarter, where in Japan, specifically, we were a bit weak on the equipment side coming from the OEM. So we suffered on the equipment side, but we did also suffer in Japan in the third quarter on the consumable side, for the reason that Greg mentioned.

You guys mentioned earlier, I think, Gideon, that you had some new CMP-related products that you were selling. Could you expand on this?

Yes, weare selling filters, and we have developed a new family of filters based on our [capability] in Asia to address this very competitive business. We are also qualifying those PVA brushes used in post-CMP cleaning processes, and we are growing this business nicely right now.

Just to add to that, of the three major processes that we get involved with, about the smallest percentage of our revenue is CMP. Wet etch and clean is approximately 30% of our revenues. 40% of our revenues at the company, actually, is wet etch and clean and ancillary businesses there. Photolithography is approximately 20% of our revenue, everything we do in that related to that process. And CMP really is less than 10%. So we believe that -- we know that in the CMP arena there are multiple paths open to us in terms of filtration, in terms of PVA brushes, in terms of some other things we are involved with, that we think will grow that 10% -- less than 10% dramatically.

[Do you know] just generally where you are in the position of market share, and how big that market is for the PVA brushes?

We do. We're really just starting out of the gate. We have [differentiable], unique technology, which has been accepted as unique technology, I would say. And I would say that that's a product that is really just beginning to ship this year. The market overall is probably about a $50 million market, I would say.

Brett Hodess, Merrill Lynch.

Continuing along the lines of talking about Malaysia and the other moves you're making and whatnot, I wonder if you can talk a little bit about gross margins. Obviously, this quarter with the stronger revenues you had some upside there. What should the trend be in sort of a flattish revenue environment given where the guidance is? Should we continue to see expansion, or [we'll] stabilize for a while before more Malaysia output occurs? And then, the follow-on to the margin trend, the four products that you have announced to go over there -- as you mentioned, two are in qual, one going into qual -- after those four, will there be another round of products that move to Asia later next year?

First of all, with regard to the gross margins, I would think you could expect to see similar to slightly lower margins on the same level of revenue over the next quarter, I would say, for two reasons. One is, if anything, we'll have a downward bias with regard to inventory in the fourth quarter. And the second point is in the third quarter we had -- when we gave our guidance, we had suggested that we would spend about $1 million on the product transfers. We spent slightly less than that. And in Q4 I would expect this to go back to that kind of level of spending on the product transfers. So that's the answer on the margin question. Generally in line with -- perhaps (inaudible) a half-a-point decline, but kind of in the range that we're operating in today.

With regard to the product moves, there is another -- there will be another set of products that will follow the ones that we're working through right now. We would expect the products that are moving right now, that by the May/June timeframe we should be producing all of those. And at that point we'll start considering -- we're considering other moves now, but are likely to initiate other moves once we get the existing products up and stabilized.

I would add, first of all, there's four products that are in the process of being transferred. There's a microenvironments product called the Crystalpak. There's another reticle product as well, which is also microenvironments; a third one, which is the Spectra FOUP. It's a new FOUP. And then the fourth one is actually a gas filter product called the Welded Waferguard.

What's interesting is that there are multiple technologies in these products. In all cases we have this well underway, in two cases in customer qual. And so we are -- things are going very well in that regard. I would add that this is part of a long-term comprehensive manufacturing strategy. You've seen us reduce the actual footprint of this company by something like 25% since the merger. You're going to see us reduce that footprint additionally in the next couple of years and in the next 12 months. So it's not an isolated set of circumstances.

In fact I have one follow-on. You mentioned, I think, Gideon, that the filtration business was -- I think you said it was sort of flat because the unit-driven side ticked up but the OEM side sort of, obviously, dropped off some. Did I get that correct? And do you think that the filtration side -- the OEMs -- how do you see that balance going forward? Will the unit-driven side start to outweigh the CapEx side as that bottoms out or whatnot?

The reasons that our unit-driven sales don't -- they move directionally with wafer starts, but they don't move exactly, and for several reasons, as was mentioned. Just to recap.

Number one, we sell unit-driven products to other markets, which may have different trends. And an example of that would be the data storage market, the TFT-LCD market.

Number two, as was mentioned, because of the nature of their use, filters do not have a 1-to-1 usage correlation to wafer starts. Because some of them, a fair number of them, go into tools, which then generate a razor blade strategy, obviously, but they do go into tools as they start out their life.

And then number three, we have a very small share, for example, of certain markets like 300 mm wafer shippers. That's a consumable product. It's one of the key segments that is tied to wafer starts. So it's a mixed bag.

I would say the other thing that you need to understand and be aware of is we are rolling out a fair number of new filtration products as we speak. We've talked about Torrento 20 nanometer product. There are other products being rolled out and introduced. The key to understanding all of that is the move to 65 and 45 nanometers. That is going to be a significant tailwind for our filtration products, probably the most significant one. And the levels of stringent contamination control that are required are just an order of magnitude greater than at older technologies. We see that in our discussions with fab operators throughout the world, and that's why we pin a lot of hopes, and actually we are convinced that we will see some good growth in the filtration business the next couple of years.

Dan Leonard, First Analysis.

Versus the forecast you put forth for the third quarter last quarter, what specific areas of your business surprised you on the upside from a revenue standpoint?

We didn't get real, real surprised. When you look at the detail of the pluses and minuses in quarter three, the shippers and the data storage, you know data storage is a bit seasonal and we had somepositive feedback like $3 million plus. Liquid filters were about flat. Liquid systems were a bit down. The OEM, as we mentioned before, were a bit soft so we saw some kind of negative trend in the liquid system. And the gas micro business was a bit down as well a couple of million. So some good news on the shippers and the data storage, offset by some bad news on the equipment side.

Jean-Marc, I know there was some concern coming out of last quarter as to whether or not your customers were using your consumables longer. Did you gain any insight in this quarter on whether that is happening or not?

This is a permanent trend [in this industry]. Customers have two ways of reducing their costs. They can ask for a price discount, and they do. And also they're asking for reduced cost of ownership, which is extending the life of product. We have seen in some areas, for example, the airborne filters, where two years ago you would go for a filter lasting 16 weeks, and now we have some of these filters lasting a year. And this is part of the offer as well that we offer to customers. But they don't need necessarily to ask for price reduction, but we are also able to optimize the lifetime of those filters. And we stay in business, which is most important.

Okay. How much did the revenue from the Surmet acquisition help this quarter?

The Surmet acquisition you know, the run rate is about $3 million a quarter, so the acquisition happened during the quarter. Only a fraction of that was reflected into the third quarter.

The business has an annual run rate of $12 to $14 million.

Thank you. Greg, my final question. Your interest income seemed rather low in the quarter, given that you have more than 100 million in cash. What is the rate you're earning on that cash?

Today the rates we're earning on that are very low, and that's part of this dividend strategy. Because a big -- a significant portion of that cash today is in Japan and other locations in Asia. So the rates are probably less than 2% on average. As we go through this -- the dividend transaction that I discussed in the transcript will move that cash from Japan to the United States, and so we should make better returns on it here, to the extent we don't use it for other purposes.

Timothy Arcuri, Citi.

This is actually Brian Lee calling in for Tim. Just had a few things. First off, what is driving the revenue guide in December? Because I guess I would have thought it would be better, based on seasonality and wafer start trends. Maybe if you can elaborate on that. Is it all on the CapEx side of the business?

If we do a quick math for quarter four, we have 60% of our business that was growing 1% this quarter. I do expect some growth in the coming quarter, because there is no reason not to see that. We are taking market share in FOSB filters are well-accepted. But, if 40% of your capital business (inaudible) decreasing by 5% this last quarter, if it continues to drop a little bit in the same 5-6% in the coming quarter, you do the math and you are just flat. So, whether we get more of an impact coming from the capital equipment worse than 5% in the coming quarter, it's possible. This is the reason why we have this [discount] guidance. It's a blend of, I would say, slightly positive growth on the consumable side, and prepared for some possible negative growth on the equipment side.

That's helpful. And then, if I look at the midpoint of your guidance for December, it looks like your 2007 revenues will be down about 9, 10%, and that's in what's been a relatively decent unit year and up CapEx year. So, could you talk about what gives you the confidence that you guys can grow meaningfully in '08 in what looks to be a relatively down CapEx year and, let's just say, flattish unit start year?

I think this is the good story of this company. We are very happy today to have a blend of the 60/40 ratio, because nobody knows about 2008 in terms of solid upturn or whatever. In fact, we used to talk about solid upturn six months ago, and nobody knows what's going on to happen in 2008. So the good news for us, 60% capacity [driven] will increase during the course of the year in 2008. Market share will be taken in areas where we -- we took some time to take market share in the FOSB business. We launched some products for the filtration area in August that are not really impacting dramatically right now but that will impact in 2008. The PVA brushes, a couple of customers qualify. More customers will be qualified in 2008 -- will impact again consumable revenue. So our business model today, it's not total insurance, but it's a good insurance that will behave nicely in 2008 to come.

I would say on top of that, I can't think of a lot of companies that have better exposure to 65 and 45 nanometer trends going forward. I don't need to tell you, because you know very well, that something like 8% or less of all wafer starts now are 45 nanometers. That number in 2010 is going to be above 50%. So, between now and then, there's going to be a migration. That migration is very good news for us. It's good news in a number of fronts, but particularly our consumable products in terms of Liquid Microcontamination control, and Gas Microcontamination control, GMC as well. And we're going to ride that wave.

Great. Maybe just one last thing from me. I think, Gideon, you said that you guys were seeing traction on the 300 mm wafer shipment market. That's obviously been a big push for you guys here. Can you elaborate a bit more on exactly where you are with this product, and how good the customer uptake has been thus far?

I certainly can do that. The market growers, wafer growers, is a very [concentrated] market. You could take the first three suppliers; you have 80% of supply. So it's a very fundamental decision that those growers are taking when they are adopting a new shipper. So, we are starting slow. We are qualifying -- we have qualifying activities right now with key suppliers, [the first two], and also some followers. And when those customers will start kicking in, and we're also converting the IDMs, because they're on the receiving end [and we need] to have a willing IDM ready to accept your shippers [with their] wafers. And this is happening right now. So my goal of being [at 30%] market share by 2010 is still very valid, only a couple of percent this year, in the mid-teens next year, and in the 15% in 2009, in order to reach this 30% in 2010.

So you guys actually had some revenues in the September quarter?

Yes.

Yes. We had revenues -- yes. We're on our plan, and I would say you won't see that come to fruition really --

Until we have several significant percent of market share - it's only a starting point. In 2008 this should be much more significant.

(OPERATOR INSTRUCTIONS). Colin McArdle, Needham & Company.

I actually wanted to know -- at Semicon West you introduced the Clarilite product. I wondered if you could give us an update on how that's going, and how many customers maybe are looking at it, and whether or not that sales cycle or getting (inaudible) the learning curve is taking longer, or they're getting it faster than you thought.

Clarilite is firstly what I call one of the baby products, synergistic products, between the two companies, Entegris and Mykrolis. You have fundamentally a box and a filter playing to the chemical application for 45 nanometer. Reticle haze on reticle obviously, and haze on wafers are applications that we will see and what we are seeing to date at key IDMs repeatedly. So this is happening.

In terms of contribution to our result, year-to-date today is less than a couple of million dollars. This is steady. What we have seen in quarter three in terms of revenue is larger than we had seen in quarter two. So this is growing. We certainly have some competition, and customers are also looking at alternative solutions, Nitrogen versus XCDA which is eXtremely Clean Dry Air, because these are representing investments. So we're always in a competitive trend. But clearly, at the key IDMs in America, in Taiwan and elsewhere, we are well-positioned to a solution right now. And this will be a larger contributor again in 2008.

Just lastly, Greg, it sounds like the manufacturing transfers are going to be completed, at least in what's currently planned, by the middle of 2008. (A) is that a fair assumption? And is the target operating model intact? Post that, maybe, what does that look like?

I would say the target operating model is intact post that, and I think your assumption is correct. The moves are well underway, and I would hope that by the end -- by the middle of next year we'd be in a position where all four of the products are actively being produced and shipped from Kulim.

Tim Summers, Stanford Group.

Actually a multi-part question on the Japanese transaction issue. Greg, could you identify the income and balance sheet accounts that this will affect? Number two, is this going to be done by the end of the fourth quarter? And number three, is there any effect on cash taxes as a result of this? Thanks.

First, with regard to what accounts will it impact, on the balance sheet it will impact -- we'll have 30 million -- approximately $30 million in additional debt from our Japan -- within our Japan legal entity. So, if we don't pay down the small amount of debt we have today in the United States, you'll see some incremental debt and, obviously, some incremental cash.

On the income statement it will have about a $10 million positive impact on the taxes for the quarter. So, our guidance is based on sort of a normalized tax rate of somewhere in the 30% range. But our actual -- in the fourth quarter, what we'll actually post on our published financials is we'll show negative taxes somewhere probably in the $5 to $7 million range. And that is a positive cash impact as well, although I would note that today we're not paying -- we still have an NOL, and we're not paying -- we haven't paid cash taxes this year, and probably won't for a good portion of next year.

And with no further questions I would like to turn the conference back over to Mr. Gideon Argov for closing remarks.

Thank you very much for your questions and your time. We look forward to speaking with you in the future.

This does conclude today's presentation. Thank you for your participation. You may disconnect at this time.