Frequency Electronics Inc (FEIM) 2013 Q4 法說會逐字稿

Greetings and welcome to the Frequency Electronics, Inc. Q4 2013 earnings release conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded.

Any statements made by the Company during this conference call regarding the future constitute forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements inherently involve uncertainties that could cause actual results to differ materially from the forward-looking statements.

Factors that would cause or contribute to such differences are included in the Company's press releases and are further detailed in the Company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this conference call.

It is now my pleasure to introduce your host, Mr. Martin Bloch, President and CEO for Frequency Electronics. Thank you, Mr. Bloch, you may now begin.

Good morning, everyone. Sorry to be a little bit of a rush, but I have to leave tonight on a business trip to Europe, but we have the best team here for you. Without any further, please welcome to the FEI end year conference and I am going to turn you over to Alan Miller and at the end, I will summarize the future potential for FEI and have an open question-and-answer period. So Alan, please proceed.

Thank you, Martin and good afternoon, everyone. For fiscal year 2013, Frequency Electronics generated $68.9 million in revenues as compared to last year's $63.6 million. Revenues from satellite payloads increased by approximately 11% over the prior year and accounted for half of consolidated revenues.

Revenues from non-space US Government/DOD programs, including sales by FEI-Elcom and FEI-Zyfer, accounted for about one-fourth of consolidated revenues. Year-to-date, total revenues for US Government/DOD end use, both for space and non-space programs, account for approximately 60% of Frequency's consolidated revenues.

Network infrastructure revenues recorded in FEI-New York, FEI-Zyfer and Gillam-FEI were about 17% of consolidated revenues compared to 20% in fiscal 2012. As noted in the press release, during the fourth quarter, FEI-Zyfer experienced delays in orders and lowered anticipated revenues from both US government and commercial customers. We believe the US government business for FEI-Zyfer was impacted by the current budget situation in Washington.

Based on our current backlog and additional satellite bookings expected in the near term, we are anticipating continued revenue growth in fiscal year 2014. Gross margin for fiscal 2013 was $25.1 million compared to last year's $24.6 million. Higher revenues resulted in increased gross margin dollars, but the gross margin rate was impacted both by product mix in our non-New York subsidiaries and by a $1.4 million fourth-quarter charge to write off certain assets on Gillam-FEI.

To explain this one-time charge a little more, a few years ago, Gillam-FEI became engaged with the French electrical power utility to provide upgraded versions of one of its products, remote terminal units, or RTUs. These are used to monitor the power grid. This effort is tied in with the French government's plan to install smart meters throughout France and to create a smart grid. But the program has experienced delays and there is insufficient visibility for the timing of future orders for Gillam-FEI. However, Gillam-FEI believes that, in the long run, this project could generate a multimillion euro productline that can be marketed not only in France, but in other European and North African countries.

SG&A expenses for the year were $14.7 million, or 21% of revenues compared to $14.1 million and 22% of revenues last year. The higher fiscal year 2013 spending is due to a full year of SG&A expenses at FEI-Elcom. This level of SG&A expenses is aligned with our expectations and as revenues increase, we would expect to see the ratio of expenses to revenues to decrease.

Fiscal 2013 R&D spending was $5.7 million or about 8% of revenues compared to $3.9 million or 6% of fiscal 2012 revenues. This higher level of R&D reflects not only FEI-Elcom spending on its own productline, but also the additional FEI-Elcom resources that were applied to develop a new satellite payload up/down converters and receivers.

While fiscal 2013 revenues increased over fiscal year 2012, higher operating costs, the $900,000 first-quarter operating loss at FEI-Elcom, the fourth-quarter asset writedown at Gillam-FEI and unanticipated order delays at FEI-Zyfer is (inaudible) fiscal year 2013 operating profit of $4.7 million or 7% of revenues as compared to $6.7 million and 10% of revenues last year.

Other income, which consists of investment income offset by interest and other expenses, was a net income of $407,000 this year compared to income of $111,000 a year ago. So this yields pretax income in fiscal 2013 of $5.1 million compared to last year's $6.8 million. Now earlier this year, tax legislation was passed such that the Company would realize additional tax credits, as well as take advantage of previously suspended state tax NOL carryforwards. These have the effect of reducing fiscal 2013's effective tax rate to about 28% or a provision of $1.4 million.

Now with respect to net income, last year, Frequency reversed $3.1 million of a previously established preferred tax valuation allowance. This resulted in a net tax asset of $560,000 and increased net income by $3.1 million. That is equivalent to $0.36 per share. On an apples-to-apples basis, last year's net income would have been $4.3 million compared to this year's $3.7 million, effectively a $600,000 reduction from the prior year.

For the year, we generated positive operating cash flow of $3.1 million and cash and marketable securities are at $21.7 million. As we indicated in the press release, in June of 2013, we closed on a five-year $25 million revolving credit facility with J.P. Morgan Chase and that will be used for working capital and acquisitions. We used the initial proceeds to repay the $6 million outstanding balance under the previous line of credit and we reclassified short-term debt to long-term.

Backlog at the end of April was $51 million compared to $57 million at the end of last year. Over three-fourths of this backlog is for long-term satellite programs. And finally, stockholders' equity is now at $82.2 million, up from last year's $79.1 million and this is after the December payment of a special cash dividend of $0.20 per share, which totaled approximately $1.7 million. I will now turn the call back to Martin and look forward to your questions later.

Good afternoon, everyone. I would like to cover the business outlook for Frequency and the subsidiaries, and I just want to tell you that the highest shining star that Frequency is looking at is the opportunities in satellite business. We expect significant additional orders to receive shortly based on legacy products that we have -- that are flying in space and that are basically sole-source for FEI.

In addition, the new products, which is the up/down converter, have been shown to all of our customers and it was well-received and we promised to have qualification units available by the end of this calendar year and we are already proposing for new programs, up/down converters, which is the beginning of the opportunity to significant increasing our take for satellite at this point.

The new product suits very well the mission in the future, which is the demand for doing a lot more with less. (inaudible) existing satellite platforms. They want to put a lot more channels in order to get more revenue for the commercial side and a lot more bandwidth for the military side. (inaudible) you need a smaller size, lighter weight unit and that was our design objective. Units are considerably smaller than our competition in-house and out-of-house and they are considerably lighter in weight. So it's a very exciting product and it's very well-received.

A lot of this work is done in conjunction with the engineering expertise at Elcom and we are providing the space guidance and the control so the units can be manufactured immediately for space application on this. So this is not a new product for FEI because we have flown up/down converters on many programs, but they were ones and twosies. Now we are attacking the market where there is going to be 40 to 140 per satellite. So the revenue opportunity is considerably higher.

I want to also address the RTU opportunity on this. There's about 600,000 slots for this RTU-adjusted [fence] and this is to provide smart meter reading for the use and the government is supposedly committed to get that program installed as soon as possible. We made, in my opinion, the right decision to write off the software and hardware investment since we expected the production to be up by the end of this year and it's moving to the right, but the opportunity for us -- we have qualified products in the system and they are about $2000 a pop and there's 600,000 windows just in France. And also the same will be applicable to other European countries and North Africa. Obviously, we are going to get competition on that, but being first is a big advantage and I think that will result in an additional brand-new mission for Gillam.

As I emphasized in the past, FEI's business has really mushroomed during these strenuous times because our technologies are ideally suited for two major missions. One is the mantra that says you've got to do a lot more for less, which is -- our technology enables to get more bandwidth with the same existing platform. And the second, which is a mushrooming new area of opportunity and this is secure communication timing is becoming very critical and it's a market that we are exploring right now because all the spoofing that's going on worldwide is jeopardizing our secure facilities and much better timing will have to be installed in all of this in order to mitigate that threat.

The third item, which is equally important and we are really putting a lot of effort to make it happen, is to reduce the cycle time. Many of the programs that are now under consideration on the cycle time is going down from 36 months, went down to 28 and now we have quite a few programs that we need to deliver complete slide sets in 13 to 18 months.

In order to accomplish that, we have installed automated assembly equipment and get it qualified for space and we are now working on implementing an automatic test, computerized test to be able to really test 24/7 on the products and to take up the immediate demand that we are going to face at FEI-New York, we are setting up a night shift that will assist us in meeting our customer demands. I can see a significant increase in revenue and profitability for FEI corporate with, of course, the largest portion happening in the commercial and military space.

I'd like at this time to turn over for questions-and-answers. I would very much appreciate if you would address the question to either Alan Miller or Martin Bloch. That way we will be able to be more responsive to you. Go ahead.

(Operator Instructions). [Jim McClary], [Chardan].

Thank you, good afternoon. Alan, a couple of questions for you. The $1.4 million charge was all in cost of sales. Is that correct?

That is correct.

Okay. And then did you release what backlog was for the year?

I indicated in my verbal comments that backlog as of April 30 was $51 million.

$51 million. Was there any debooking or order cancellations that resulted in the backlog declining year-over-year?

Nothing out of the ordinary. We always get a few dollars worth, but nothing substantial.

Okay, great.

And that's as compared to $57 million last year's April 30.

This is Martin; I want to add to that. Like I said, we have significant sole-source opportunities for FEI in satellite and we are confident that that backlog will go up significantly within the very near future.

Right, and thanks, Martin. So I was going to ask you next, when you're looking at the up-and-down converter products, when do you think that you would start booking orders for those products? Is that a this calendar year event or is that --?

Yes, we are going to start on the year for sure in a small way on this [side] and then really put the hard press in next calendar year. We already are -- like I said, we are already flying up/down converters, so we have the legacy, we have the tickets to entry. So all we need to do is to do a delta qual (inaudible) because we have reduced the size, weight and power consumption of the new designs and then we can compete. Most of the competition will be against in-house like the Boeing, the Northrop Grumman, the Lockheed, the SS Larousse and we are offering a smaller unit, lighter weight, less cost and better performance. So we have a great opportunity in that product.

And finally I guess this is for either of you, the delays that you saw in fiscal Q4, has that continued in fiscal Q1?

We're talking mostly about Zyfer now in this case?

Well, I think you mentioned a few delays in a few different units, so (multiple speakers).

We are basically -- this is Martin. Also, most of the delay in the program was at FEI-Zyfer and they are all government-related, most of them are government-related and it's hard to predict on this point. If you want to listen to our customers, they said it's going to break soon, but it's very difficult for us to judge. So it isn't like the programs have gone away; they just moved to the right.

No, I understand, I understand.

But I want to indicate -- you are a good guy who asked a good question. We at FEI see the exact opposite. Technology has come of time where the objective of doing a lot more for less precision timing of (inaudible) low phase noise is an ideal insertion because it enables to get a lot, lot more performance on existing platforms at a much lower overall cost. So we have great opportunities.

Right, very good. Thank you so much and good luck.

[George Morima], a private investor.

Thank you and my question is for Martin. As someone new to your Company, could you give a little more maybe definition or clarity to the timing and magnitude of your opportunities over the next like 6 to 18, 24 months?

Well, we had publicly indicated that our legacy business has a positive flow and the introduction of the new productline has an opportunity of adding $40 million to $60 million a year in the near future.

Okay, and you mentioned something about the windows at $2000 a pop. Could you give a little more information on that?

The RTUs that Gillam is developing? Yes, that's to make an electric meter smarter so you don't have people to come and read the meters and France is the first one that signed up to get it installed. This is basically a remote terminal unit that does the job and reports it automatically to the main office and you don't have to come up and it also gives the user an instant type of data on how much he is using. So it's something that will be implemented and they estimate there are 600,000 slots just in France alone. And we are on the ground floor, so obviously the market is so large, it will attract competition, but we feel we have a golden opportunity to get a good share of that market.

And in terms of acquisitions, what type of acquisition would be attractive to you? More of a vertical integration or a certain technological advantage or what sort of things are interesting to you?

What is important for us and for our customers is acquisitions that help in the vertical integration of making a more complex, higher value product so we can -- and we can offer to the customers in that area. We are not interested in just acquisitions for increasing our revenue. That's not of any interest. We want to make sure that what we acquire will take one and one and make it five.

Okay. And on your incremental new business [ethics] back in the coming year or two, will the gross margin profile of the Company as a whole be about similar or go up or go down?

It's always going to be dependent on product mix. So it depends on which entity is going to be participating in some of that growth. So that's part of it. Where it comes into New York though in particular where we do a lot of longer-term programs, we would expect to see improved gross margins here, particularly on some of these satellite programs that we are bidding on currently.

Yes, this is Martin. I want to supplement this. We have the base of doing satellite businesses in place and the delta business will significantly improve our margins. And in New York is where we expect the maximum growth and therefore, it's a great opportunity to significantly improve our margins.

Yes, because I recall from the last conference call, you kind of talked about how a lot of your costs were sort of fixed and you needed a certain amount of cost to run a space business, but any incremental business will be highly leveraged. Is that correct?

Absolutely correct. I couldn't have said it better.

Okay, well, thank you for your time.

Sam Robotsky, SCR Asset Management.

Good afternoon, Martin and Alan. A little disappointment. Hopefully you could cure the problem. The night shift, how many people do we expect to have on the night shift and when will that be fully up and running?

We hope to have it running by the end of August. This is because we are going to a partial shutdown since people have to take some vacation and they will be working there buns off so to say. So we expect to have about 15 people on the night shift by the end of August and then build on that.

Okay. And as far as your $51 million backlog, how much does that relate to satellite?

About three-fourths.

Three-fourths, okay. And the extra business that we expect to get, could you sort of quantify? Is it that you expect to -- assuming it's in the next three months, because you talk shortly, is it $25 million, is it $10 million, is it a range?

Well, you put a limit. It's more than $10 million and probably less than $25 million.

Okay.

In the short term and this is -- and your timeframe is correct. It's going to be in the next -- well within the 90-day window.

Okay. And I think we spoke of getting -- the objective was to get $25 million per satellite. Are we doing $10 million per satellite and when do we expect to achieve the higher percentage per satellite?

Okay, when we can integrate our up/down converters because that's where the business is mushrooming, the newer satellites, instead of having 40 transponders on board, have as many as 140 and these transponders are about 100K per slice. So the opportunities as soon as we can qualify our new design transponders and then convince our customers that we are the best deal.

So at this point, we are doing how much per satellite?

About between $6 million and $10 million.

Okay and the objective is to get $25 million to $50 million or what is the objective?

You've got the right number.

Okay, okay. Let's see.

I have a question. Why are you disappointed in the performance? Frequency had a good year. We used smart business. We could have (inaudible) of that inventory. We are just being smart. Program moved to the right. We made a decision there to be on the ultra-conservative side.

Martin, I'm very happy that you are conservative and I'm very happy on your accomplishments. I'm disappointed that we had to take a writedown and I always like to beat the numbers from before. Unfortunately, this was not in the cards. Hopefully, your conservative writedown will produce significant profits as you previously have done and this is just a short-term little problem.

That's correct.

So that's why I'm a little disappointed because I always like to go up. The next thing appears -- the integration of the acquisitions, that fully integrated, everything is running smooth and everything is -- or do you have got more to go as far as the integration?

Say that again.

Integration of the new productline?

The acquisition where you merged the companies.

Elcom is working out very well. They are accelerating our ability to finish the development and qualification of the up/down converters at this point and the rest of the productline is being reviewed for integration and future satellite applications. So it's working out great. And they are not losing money.

Okay, okay. And now as far as the -- I mean it's difficult to predict what the government is doing with the procurements and everything. Hopefully, you have some visibility so that sales per quarter will be increasing significantly, whether it's not going to be the July quarter, but say hopefully in the October quarter. Do we have any visibility when we are able to sort of expect significant increases quarter-over-quarter of sales and then hopefully more proportioned improvement in profits?

I will answer like I have always answered for the past 50 years. We have visibility that we will have an increase in revenue and in profitability. No way can we predict on a quarter-over-quarter for two reasons. First is depending on when the order is placed and second is when we can build it and when it's fully funded. But for the year, I am very confident that we will have an increase in revenue and profitability in fiscal 2014.

Okay and one last question. Has there been any desire to tell more of the story with either investor relations or appearing at more conferences and what you thought about when you expect that to start happening?

It's on the table and we will implement it as soon as we can, but it's on the table.

Martin, have a very good trip and keep proving improved results. And, oh, one other thing. The product in France, I know they do stuff similar to that in the United States. Is there competition between the smart meters and all that or is your product better than the United States? Are you able to bring this to the United States? Is there any new -- any patent problems or anything else? Can it come into the United States?

Well, this is one of my secondary reasons on the trip to Europe. I will review it and take a look on the applicability. It was a product that was difficult to achieve because of the reliability and privacy requirements. A lot of software development on this and there's no issue with any patents that we know of in Europe. I haven't looked in the United States. One of it is to take a harder look and to get more definition on what we can do in Europe and at the same time to see if we can bring the product out for possible use in the United States and Canada.

Good luck, Martin. Have a good trip and hopefully we will see the fruits of your labor soon.

You definitely will.

Okay.

[Michael Eisner], a Private Investor.

Say next April, where do you see the night shift, how many people?

We want to build up this slowly because one of the key concerns of night shift is to make sure there's no deterioration in quality and performance. So we will probably be someplace around between 25 to 30 people. That's about the limit we want at the night shift. It's very cost-effective since we use the same facility and same equipment. But you want to keep it at a reasonable size in order to make sure there's no deterioration in quality and performance.

All right, excellent. And one final question. The RTU in France, you mentioned 600,000 units. Say in the yield, what percent of those units do you think your Company can get?

Well, we will shoot for the most on this point. As is typical for this type of business, the electric company in France will want two or three suppliers as they are modus operandi on this. However, we are on the ground floor and in the early part of the implementation, we are going to get a good percentage. As time goes on, I'm sure there's going to be additional competition, but it depends -- our unit is performing very well. Our customer is happy with it and this is one of the things that I will also ascertain on my trip both from Gillam and from the customer community.

Is any of it being used at this time?

Yes.

(multiple speakers) phases?

Yes, we have 60 units currently being field-tested by the electric company. That's a process that they have to go through to demonstrate that everything is working properly and I should point out that there's also another competitor who also has 60 units in the field. So as Martin was saying, we are not going to get 100% of that market, but we will get some good percentage at some point in time down the road.

We had previous experience with a much simpler RTU that we built for a French telecom. It wasn't $2000; it was $2. But we started with 60 and eventually ended supplying to them a couple of million.

Because even if you get one-third of the 600,000 --

I know that.

-- it's a couple hundred million dollars.

Done the math.

We did the math, Michael.

Thank you very much. Have a safe trip.

Jonathan Brolin, Edenbrook Capital.

Hello, Martin and Alan. It's Jon Brolin from Edenbrook. I had a question about the comment you made about the competition that you are seeing from in-house, particularly as you are going through the process of doing the delta qual. How much of a factor is a shift from cost plus to fixed-price contracting by US government customers a factor in your ability to perform better against in-house competition than it had been in the past?

Well, if I could (inaudible) in the audience with a better question. I couldn't think of any better one. That's a big factor in helping us. Both the program managers -- you put the nail right on the head. Because of the switch from cost plus to fixed cost, the program managers, which are incentivized for delivering costs, they don't really care if we build in-house or they buy out-house. They want the lowest cost and the lowest predictable cost.

When we take a job for $1 million, they know it's $1 million because it's a fixed price. If they contract in-house for $1 million, it could be $5 million. So there's a big incentive right now to really a good window of opportunity for us to break in and we use the word steal a lot of insight opportunity and help the cycle time. So we offer lower cost, smaller weight, lower size, fixed cost, which is a big factor, also considerable shorter cycle time.

And what do you think on average the relative cost difference is and how much more likely are you to win business now relative than you would've been a couple years ago before that shift that occurred towards fixed costs?

Well, the opportunity is enormous and the differential -- assuming that we are the same efficiency, which is never the case because a large organization is considerably less efficient than a small company of our size. You take a Boeing that has $5 billion to $10 billion worth of satellite business versus us doing approximately between $70 million and $100 million, there is a significant deficiency. So the cost and decision time is much lower. We typically did some calibration and our cost is about 60% of theirs. But we are about better than one-third less in cost and we are fixed price, which is very important for the new modus operandi. So I hope that will help (inaudible).

That's very helpful. Thank you very much and look forward to seeing all this backlog develop over the coming quarters.

[Marcel Herp], [Herp Capital Management].

Thank you so much for taking my call. You mentioned that you will be ready to ship qualification units off your Ku and Ka band receiver down converters by the end of this calendar year. What does that mean in terms of timeline to initial design wins and subsequently to revenue ramp?

After finishing qualification, understand it's a matter of competing on a satellite-to-satellite basis and there's going to be between 20 and 40 satellites a year that will be procured between commercial and military and all we have to hit is one or two to get what we are looking for. So we will be able to compete as soon as qualification is finished with our new units. We are qualified to build up/down converters, but the units that we built were special-purpose and size and weight and power wasn't a consideration, only performance. This redesign, so it's not basically new invention. It's basically repackaging with the newer technology in a smaller size, less power and less weight, so the delta qual is much easier.

Okay. So is there a typical time the qualification period takes? Is that like a six-month period or how do we think about that?

We are shooting to finish our qualification by the end of this calendar year.

Yes, that I understand, but then, of course -- oh, so that means that at that time you would get design wins?

Absolutely. We finished the qualification, we issue qualification, we post all of our customers and then that's the beginning of being able to compete on significant business opportunities.

Excellent, okay. And regarding the RTU opportunity, once the rollout of these -- you mentioned 600,000 units happens, over how many years do you think this will take place?

Do you know the French? I wish I could give you another answer at this point. They are scheduled -- their schedule of (inaudible) that they were going to start rolling it out in 2012. So they were going to be in full production by this year. So the reason why we took the conservative writedown is because it's moving to the right. We know it's there, we know there's a government commitment to get it done, but the timeframe is very unpredictable. I'm going to try to get a better calibration on my European trip. I made arrangement to make a special stop in France to see if I can get a better personal calibration.

Yes, I guess what I'm asking is not so much when they start rolling out, but more what you call full production. Is this going to be 10% of those 600,000 units a year or how fast can this progress over time once they finally start rolling it out?

I don't know the exact answer, but if you look at previous programs of similar nature, it starts at 10% the first year, 20% and then 20% to 30% a year. All right, that's very helpful. A couple housekeeping questions. What kind of gross margin OpEx and tax rate do you anticipate for 2014 ballpark?

A good measure for effective tax rate probably would be on the order of 30%. We did have some additional credits this year and some NOL carryforwards that were going to be absorbed, but that's usually a pretty good frame of reference is a 30% effective tax rate.

And do you think you will have a similar level of OpEx?

We would expect to see a better gross margin and expect a better operating margin. We did 7% I think this year, so we would target more like 10%.

Okay and what was your book to bill this quarter?

For the quarter, I don't have it in front of me. It's probably less than 1 though because we think we ended the quarter, the previous quarter at $60 million some.

Thank you so much.

This is Martin. I would like to add on that's a very good question on this. This program, satellite programs especially, they don't come in on a predicted schedule. They come in in large chunks on this. So the book to bill varies from under 1 to 2 to 1. So depending on the exact timing on when the satellites are procured because it's not on a $500,000 chunk. They come in between $5 million and $15 million chunks.

[Michael Imari], Americo.

I just switched from a speaker to a real phone. I don't know how good it is. But let me ask you, you are really becoming a very, very -- percentagewise, most of your business is satellite. I was wondering what percentage of that is military and what percentage of that is commercial.

On the satellite, it is about 50-50.

That's good. So you are getting some commercial work too?

Absolutely. Many of the commercial satellites -- the largest single contract we now have in-house is the (inaudible), which is $30 million plus and that's a strictly commercial satellite from Talus (inaudible) in Europe.

That's terrific. Now I have another question. When I look at your ownership, major holders, I see some really new people there. C.I. Global Investment owns more than 17% of your Company. It's amazing.

They have been in this for about a year I think or a year plus, but they are a mutual fund company basically.

Mutual fund? They are not looking for any -- they don't have any acquisition purposes or anything like that?

Not that we are aware of. I've never spoken to anyone over there, so I'm for sure that they're just a by a numbers type company and I'd looked not recently, but I think they have it spread over about five or six different funds that they manage.

We don't mind their sponsorship; there's nothing wrong with that. You have pretty good people and (inaudible) associated people. I want people like (inaudible) to see the value of Frequency. We just hope sooner or later to see above $20 stock. So keep the good work and thank you for being around. So you are going to be in Europe soon and just hopefully that everything is going to work out.

It will.

Okay, thank you very much. Nice to hear from you.

Thank you. There are no further questions at this time. I'd like to turn the floor back over to you, Mr. Bloch, for any closing comments you may have.

Okay, I just want to tell you we are looking forward to a good prosperous year. I want to express my personal thanks to our stockholders and most of all our hard-working employees that are working very hard to support our progress, growth and the need of this nation in this critical time on the hard work we are building. Thank you very much. We will see you -- we will talk to you in September. Bye.

Ladies and gentlemen, this does conclude today's conference. You may disconnect your lines at this time and we thank you all for your participation. Good day.