Fabrinet (FN) 2012 Q4 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. And welcome to the Fabrinet's fourth-quarter fiscal year 2012 financial results conference call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will be given at that time.

(Operator Instructions)

As a reminder, today's conference may be recorded. Now, my pleasure to turn the call over to Paul Kalivas.

Good afternoon, everyone. Thank you for joining us on today's conference call to discuss Fabrinet's financial and operating results for the fourth quarter and fiscal year 2012 which ended June 29, 2012. With us on the call today are Tom Mitchell, Chief Executive Officer and Chairman of the Board of Directors of Fabrinet; TS Ng, our Chief Financial Officer; and John Marchetti, our Chief Strategy Officer.

This call is being webcast and the replay will be available on the investor section of our website located at investor.fabrinet.com. Please refer to our website for important information including our earnings press release and our non-GAAP to GAAP reconciliation.

I would like to remind you that today's discussion may contain forward-looking statements about the future financial performance of the Company. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from Management's current expectations. These statements reflect our opinions only as of the date of this presentation and we undertake no obligation to revise them in light of new information or future events except as required by law.

For a description of the risk factors that may affect our results, please refer to our SEC filings. In particular, the section captioned Risk Factors in our Form 10-K filed on August 31, 2011, and our Form 10-Q filed on May 9, 2012. We will begin the call with brief remarks by Tom, John, and TS, followed by time for questions. I would now like to turn the call over to Fabrinet's CEO and Chairman, Tom Mitchell.

Thank you, Paul. Good afternoon, everyone. I'm pleased to report that through the continued hard work and dedication of our employees, our recovery from the flooding in Thailand in last fall is complete and operations are back to pre-flood capabilities. Fiscal 2012 was a record year for new customer activity. Despite the flood, we signed a significant number of new customers during the year. And while it will take time for the revenue associated with these wins to become material, we are excited about the opportunities they represent.

In summary, despite the challenges of the past fiscal year, we have reestablished our production capabilities to pre-flood levels, completed construction on our newest manufacturing facility, and won new business from both new and existing customers. As we enter fiscal 2013, we are well-positioned for a return to growth and remain confident in our ability to deliver profitable results. I will now turn the call over to John Marchetti, Chief Strategy Officer, for a further perspective of the markets we serve. John?

Thanks, Tom. And thanks, everyone, for joining us today. As Tom mentioned, fiscal 2012 was a challenging year for us. But despite the difficulties caused by the flood, we did see a number of positive developments. We're pleased to report that the recovery efforts from last year's flooding is essentially behind us. Production for most of our customers has been re-established at the Pinehurst campus, with the exception of a few lines that remain in the requalification process. Production for these customers is now back to our pre-flood capabilities.

In terms of production capacity, although we ceased production permanently at our Chokchai facilities. We completed the construction of Pinehurst Building 6 during the year, adding 300,000 square feet to our footprint. This facility, which has more than 180,000 square feet of manufacturing space, is more than sufficient to house production displaced from Chokchai while leaving us with additional capacity to ramp wins from new and existing customers as we enter fiscal 2013.

We also completed work on lengthening and strengthening the perimeter wall surrounding all of the buildings at the Pinehurst campus. While the Pinehurst buildings were never breached during last year's record floodings, these improvements, or The Dam as Tom has affectionately dubbed it, are designed to increase the protective measures around the campus to withstand potential flooding to a height nearly double that of last October's record high.

On a related note, we continue to explore locating new production capacity at an alternative site in order to provide diversification options for our customers. We continue to make progress on this important initiative and will announce the decision once we have reached a definitive conclusion.

In terms of demand terms, we continue to see a measure of stability in the orders from the majority of our customers, but have not yet seen a material increase relative to last quarter. In optical communications, demand levels remain relatively stable. But optimism for material pickup in the second half of the calendar year has yet to manifest itself into increased orders. That said, we believe we are well-positioned through our customers to benefit from the 100-gig upgrade cycle even as the timing of that cycle remains somewhat unclear.

Demand in our laser, sensor, and other segment remain solid with some variation by application. We continue to believe that the overall laser market is in the early stages of outsourcing, similar to where we were in optical four to five years ago. We remain confident that this segment will be a driver of our top-line growth for the next several years. With that, I would now like to turn the call over to TS, our CFO, for a report on our financial results. TS?

Thanks, John. I would like to start with an update on the insurance claim process, review the results for the fourth quarter and fiscal year 2012 and end with our outlook for September quarter. We continue to expect our financial results to be impacted for multiple quarters due to the timing of accruals and payments of insurance receipts. We have submitted claims for all losses, including equipment, inventory, property, and business interruption claims, for losses incurred through the quarters of fiscal 2012.

We are actively engaged with our [colage counsel], insurance brokers, loss adjustors, and our customers to pursue these claims. And we will disclose additional information on the timing and payment of our insurance claims as they become available. We continue to believe that fundamentals of our strong balance sheet and insurance coverage will be sufficient to fulfill our flood recovery efforts. Our customers (inaudible) production demand and stability of our business model and our continued profitability.

Now to review the results of the fourth quarter and fiscal 2012. Please note that all numbers are GAAP unless stated otherwise. Our revenues for the fourth quarter were $142.8 million, an increase of 3% compared to the March quarter, and a decrease of 25% from fourth quarter of fiscal 2011.

On an end-market basis, revenue from optical communications were $100.5 million, all [70%] of revenue for the quarter, while lasers, sensors and other revenue were $42.3 million, the remaining 30%. For the fiscal year, our total revenue was $564.7 million, a decrease of 24% compared to fiscal 2011, primarily as a result of the flooding and subsequent recovery efforts through the year.

For the fiscal year, revenue from optical communication was $399.3 million, or 71% of total revenue. While lasers, sensors and other revenue was $165.4 million, the remaining 29%. We are pleased with the continued diversifications of our revenue. Looking back less than four years ago, our revenue from optical communication was over 82% of our total revenue, while lasers, sensors and other revenue was less than 18%.

Our share-based compensation expenses for the quarter were $718,000, of which, $464,000 were included in SG&A. For fiscal 2012, our share based compensation expenses were $4.8 million, of which $3.1 million were included in SG&A. Our flood-related expenses for the quarter were $1.4 million, which mainly consisted of business interruption.

For the fiscal year, our flood-related expenses totaled $97.3 million, which consisted mainly of $48.5 million related to (inaudible) treatment, (inaudible) million for damage to customer and Company-owned inventory. $7 million for damage to buildings and Company-owned equipment. And $14.4 million for business interruption and other flood-related expenses. These amounts are included in our results, exclude losses without any regard for recovery under our insurance policy. We intend to recognize insurance profits in future periods as those amounts become reasonably certain.

Our effective tax rate for the quarter was a tax benefit of 1.4% and a tax benefit of 3.4% for the fiscal year. In the near term, [maimai] continues to become fluctuations in our effective tax rate due to the size and timing of losses and future payments related to the flood. Excluding both items, we expect our effective tax rate going forward to be between 5% to 6%.

On a non-GAAP basis, net income totaled $10.7 million for the quarter, or $0.31 per share, calculated on the base of 34.7 million fully diluted shares. On a GAAP basis, including flood-related expenses, share based compensation expenses and expenses related to the reduction in force, our net income was $7.5 million, up $0.22 per share.

For the fiscal year on a non-GAAP basis, net income totaled $43.4 million, or $1.25 per share, calculated from a base of 34.8 million fully diluted shares. Including flat and share-based compensation expenses, GAAP net loss for the fiscal year was $56.5 million, or $1.64 per share.

Moving on to the balance sheet. We ended the quarter with a cash balance of $115.5 million, a decrease of approximately $10 million from the previous quarter. During the quarter, major uses of cash were for PP&E and working capital.

Now, I would like to discuss guidance for next quarter. We expect revenues of between $145 million and $149 million. We anticipate non-GAAP net income of $0.30 per share to $0.32 per share, based on a fully diluted basis of 35.02 million shares. GAAP net income remains subjective to insurance recovery. That concludes our prepared remarks. At this point, I would like to turn the call over for questions.

Thank you, sir.

(Operator Instructions)

Subu Subrahmanyan; TheJudaGroup.

First question is just on the revenue trends. Last quarter you talked about the timing to requalify some of the products that were moving from Chokchai to Pinehurst. You saw some revenue uptick, but essentially guiding relatively flat into September. And revenues in optical com remain well below September levels, pre-flood levels. If you could talk about demand trends because some of your customers appear to have gotten back to June, September 2011 revenue levels, while you're well off of that. Also, some commentary on OpEx and gross margin. OpEx was below last quarter. Gross margin dipped a little below. If you could talk about the trend there?

Thanks. This is John. I'll take a stab at the revenue trends and maybe throw it over to Tom for a comment or two on our customers. And then we'll pass it over to TS for some of your questions on OpEx and gross margin. In terms of the revenue trends in the quarter, we did see obviously some of the business that was in the requalification phase came back a little bit in the quarter. We still have a little bit to go. We expect more of a continuation of that process as we get into the September quarter, and should be substantially done at that point. For the most part, as we sit here today, looking forward, the bulk of the lines and our customers are back to being fully qualified. There are a few lines that are still in that process but those are stragglers if you will. We are still working through some of those as we go forward.

In terms of the broader trends, we didn't see a big, big, pick-up as we came through the quarter. We were hoping that, again, as we got closer to quarter end, we would start to see some increase in orders suggesting that the second half of the calendar year would be a little bit stronger. We haven't really seen that to date. There's still a lot of optimism around that. But at least in the order flow that we're seeing from our customers, things still feel fairly flat to us as we're sitting here today. Tom, obviously you've been out speaking with customers. I don't know if you've got any comments you want to add to that.

I think that we defined the customers' backlog today and their demand as firm and not soft. But we do look at it as very firm and we think it's very stable.

Okay. This is TS, Subu. Let me answer the OpEx questions here. I think if you look at the Q4 a little bit lower. You also notice we took a reduction in force during the quarter. At the year end, we do a true-up in terms of the defined contribution plan, whatever required by 587. We did an external study and took down some of the provisions for seven liability in the long run due to a lower headcount. So that realized about $700,000 to $800,000 lower than normal trend. That's how we explain the OpEx.

Now gross margin, as you can see, is kind of flat at Q3, third quarter. So remember that we are coming out from two campuses into one, and a big one. One does not equal the old two ones. A lot of fixed costs, we had to turn it on, based on accounting rules, ready for use rather than based on the revenue. So I hope this answers the question.

Understood. If I could follow up. If you take the September 2011 optical com revenue of about $138 million, is that not the right comparison point to think of, John, or Tom, as we think of that, because as I said, some of your customers are getting back to June, September 2011 levels. Is there a right number to think of for Fabrinet as to kind of a base, given demand has been over the last three quarters flat to maybe only slightly down?

I think it's a fair question, Subu. What I can tell you, it's hard for us to necessarily say what we think the revenue run rate will be. I don't think getting back to those levels is unreasonable for us. It's just a question of how long it takes us to get all the way back there. I do think that there is certainly enough optimism on our side as we look at both new product introductions and things like that coming from the existing customers. I don't think getting back to those revenue levels is unreasonable. It's just hard for us to really predict exactly when we'll hit those numbers.

Ehud Gelblum; Morgan Stanley.

This is actually Stanley Kovler dialing in for Ehud. I wanted to ask you your view on some of your customer trends. There are some customers that are consolidating in your space and whether you have as part of the messaging that you won some new business from new and existing customers, whether they were included in that? Or that's more JSU or others as well? And how you view that combination going forward?

Sure, Stan. I think as it relates specifically to the Oclaro Opnext merger, a lot of that is still up in the air to some extent. We're obviously in discussions with them right now as to what business they're looking to transfer to a contract manufacturer. We are somewhat optimistic, only because they have talked about the fact that whether you're talking about Opnext Japan, or Oclaro Shenzhen, that those facilities will now be opened up to contract manufacturing. Where in the past, we really haven't even had an opportunity to bid on business from those locations. I think it's still probably a little too early to get overly optimistic about that combination. If we use the historical trends as any kind of a measuring stick, we've done pretty well in the past with a whole different lot of customer combinations. We've had combinations with two existing customers getting together, which this is. We've had a large acquirer who wasn't a customer of Fabrinet buy somebody. We've managed to keep and expand that business. So this isn't something that is completely new to us. I think it's still a little too early to tell. But I will say that we're somewhat optimistic that when the dust settles, we'll be just fine with that customer.

Got it. So you'll be also in the mix to potentially win new business it seems like. I wanted to also ask you about where you stand with additional facilities outside of Thailand; how that process is going. And also, if you can just discuss anything on the insurance front, where you stand with claims? And tie that in with cash flow, in terms of the decline this quarter, whether that was related to any final equipment that you were purchasing on behalf of customers? Or if that was just normal working capital there?

Sure thing, Stan. I'll take the first part of the question, then I'll turn it over to TS for some of the insurance and cash flow questions. In terms of evaluating a secondary site, that process is still ongoing. We are narrowing down that list, if you will. And we'll probably make a final determination over the next quarter or two. But as it stands right now, we're very fortunate as we migrated customers from Chokchai into Pinehurst, we were able to be much more efficient with the space that we used. So it's not on a like for like basis, and so we still had plenty of room for growth within Building 6. We're still taking our time and evaluating where it is we would like to go next. But we realize we've got to have an answer for customers in the not too distant future. I'm going to turn it over to TS just so he can answer some of your specific insurance and cash flow questions.

Thanks, John. Stanley, this is TS. On the insurance, as of today, we had pretty much filed most of the claims. One thing good is that we are engaged in a very active dialogue with the insurance company. Hopefully that not too far in the future we'll get some payment, so that's encouraging. The cash impact, I would say at this moment as we mentioned in the prepared speech, we try to use our balance sheet to help in terms of any downside profile. We have not seen any payment yet and you saw we booked $97.3 million losses in the accounting line. So far, the cash, the last quarter cash down by $10 million has very little to do with insurance.

Patrick Newton; Stifel Nicolaus.

I guess a question for either TS or John. When I look at the gross margin results, I would infer that there were some pricing concessions relative to prior to the flood. I guess is this a fair assumption that that played a role in the gross margin in the quarter? And then as we look at gross margin target long-term, I believe is 12% to 12.5%. Would these pricing concessions be the reason that you're not forecasting a return to the 12.5% to 14% range that was the norm from about fiscal 2007 through the flood? And if that's not the impact, could you walk us through what the variance is between the long-term target and kind of your historical margin levels?

Okay. This is TS again. You need to understand that we come off on two campuses into one campus with Building 6. The old two campuses without Building 6. So if you remember two quarters ago, we say when Building 6 comes fully ramp, we're looking at revenue north of $200 million. Right? I think we mentioned that about two quarters ago. So as you know today the building is not fully loaded. We have cost (inaudible) come off in the flood. Simply because there's a fixed cost, fixed it fixed is fixed. Whether you generate revenue or not, you turn those stations on based on certain criteria. Utility has to be on in the hallway, and so on, things like that. There's certain fixed costs. There's certain levels of fix costs. Today all the fixed costs are absorbed into the P&L with lower volume. Once the top line grows, it will take care of the gross margin. In the long run, we still believe that 12% to 12.5% is sustainable. The pricing pressure is always there. Customers always ask for price reduction and this one we just had to manage it on a case-by-case basis.

A follow-up to that, TS. Thanks for the detail on the utilization aspects of the cost. But is it fair to say that pricing erosion was more exacerbated in this most recent quarter relative to what would be a normal sequential trend?

You know, from where I see it, I think it's more cost structure. Because Building 6 is really a monster, as you know, 300 square feet and so on. We just need to get that fully loaded.

Thank you. I guess for Tom or John, your largest laser and sensor customer described a book-to-bill significantly above one in its most recent quarter. I guess given this dynamic should we expect better sequential growth out of that segment relative to optical communications?

You know, Patrick, I'll take a stab at that and then throw it over to Tom. I don't know if I would necessarily say it's going to do better than optical coms. We do expect it to grow. But with still us coming out of the flood aspects of this a little bit, and having that impact our optical coms business more so than the laser customers, that's still a dynamic that's probably going to be weighing on us a little bit. But I think in general, we still as we look out over a period of time expect that there will be more growth in that laser sensor and other segment than there necessarily will be in optical coms. Although obviously in any given quarter, you could see some variations there. Tom, I don't know if you have anything to add to that?

I agree, John. The thing is, as a percent, there will be a larger percent in lasers and sensors. But a strong area that continues to grow with us is op com. Op com is very strong. We continue to see it strong. And we see not only op com moving as far as its strength, but also as you say, John, the sensors and lasers. Their demand is moving right along.

Okay. Then I guess just one long-term question for you. With Casix as a percentage of revenue, was it materially different in your June quarter relative to March, or the prior June quarter? And then, if we think about Casix on a longer term view, I believe historically you've discussed it being the revenue about a third consumed internally and then two-thirds externally. Does that mix potentially change to more internal consumption as the laser and sensor business grows?

Sure. So to answer the last part of your question, Patrick, first, I think it's still unclear. We certainly hope it will become a commodity we can use more of internally. But that will also depend I think to a large extent on the success and the growth rates that we see in some of the customers that are consuming some of that. In terms of the change, if you will, I don't know that there were big, material changes in our Casix business over this period. Certainly not on a sequential basis. I think if you look back over the year-ago period, there's probably been some decrease in that along with our overall business. I wouldn't call it a drastic change from where we were a year ago in that business.

Alex Henderson; Needham.

Couple of questions. First, just going back to Casix as we were just on the subject, is there any reason that Casix would have seen a slowdown in their demand as a result of the lack of available components? Or would the Casix lenses essentially have been sold independent of the conditions that we saw over the last couple of quarters, because it's selling in different markets? Can you help me understand the dynamics there?

Sure, Alex. This is John. Let me take a stab at that. I think quite frankly, not to be shifty, but the answer is both. There's pieces of that business, in terms of who they sell to, that have nothing to do with what's going on at our manufacturing facility. While, similar to what Patrick just was asking about, we do consume about a third of their output internally. I would say it's a little bit of a mixed bag there. We do have some customers that are completely independent and are only customers of Casix. Their demand is obviously on their own schedule. Where the stuff that we consume internally does have obviously some ties to what we're seeing from an end market demand perspective.

Do you hold share versus Photop? Isn't that going into the ROADM market as well?

It depends on the customer. It's not something I really want to get into here on a customer-by-customer basis. I would say relative to Photop I do think we held share in the quarter.

On the laser side, I should probably know this, are you just in the fiber laser piece or are you also doing the solid state lasers?

No, we do all types of laser. It's not just fiber.

So it's both. Going back to the prior question, it seems pretty clear that segment, given the quote, significant backlog at one of your customers, should be up substantially. So is it reasonable to think that the demand conditions in your baseline business would be flatter?

I guess I'm trying to make sure I understand the question. I think I understand what you're saying. Relative to a specific laser customer, what else is going on in that segment? What I will say is there is a lot of stuff that's lumped into that laser sensor and other segment. Our automotive business is in there. Our sensor business is in there. So it is more than just the lasers, even though that's obviously the largest component of that. I think that we will see the laser business, in particular, have a pretty good quarter next quarter. We'll wait and see how all of that sort of factors out as we continue to work through.

So should that be growing faster than the corporation as a whole, is really the question?

I think when you add all the pieces together, depending on the demand levels for optical coms, all else being equal, we do expect that segment to grow faster. But again, we're still kind of playing a little bit of a catch-up game within our optical coms business. And to be fair, there have been periods over the last several quarters, not really including the flood, but if you go back last year where we had thought the laser business would grow even faster. But our optical coms business was stronger than we expected. I think in any given quarter --

I'm talking about the current quarter here. Your guidance of sequential guidance, is it reasonable to think that in the guidance that you gave, that the laser and other piece is going to grow faster? That's all I'm asking.

Faster than our overall business?

Yes.

We don't guide that way, Alex, and I'm not going to do that here now.

Okay. Can you talk about what percentage of the increase is product coming back online, as opposed to product that was fully online last quarter?

I'm trying to think. We haven't broken it down that way before, Alex.

You've never been flooded before either.

Well, we've been flooded for several quarters now. And we haven't tried to just guess what's real demand versus what is recovery demand from a product-by-product standpoint. I think that when we look at our September quarter guidance, there is a little bit of mix in most of our customers that were affected by the flood, of some of that still coming back. I don't know really how else to put that. Maybe offline we could talk around the issue a little bit and see if we can get you a better answer than that. At least right now that's kind of the best way that I can answer it.

It does seem like you've given guidance that's essentially flat sequentially, excluding these two items coming back on-stream. It may even be down a hair.

The best we can do right now, Alex, is give the guidance that we've given on a sequential basis. Hopefully, we'll see some upside as we continue to go through the quarter.

Just trying to make sure I understand the mechanics. Thank you.

Sherri Scribner; Deutsche Bank.

I just wanted to dig into the guidance, in terms of the SG&A and the gross margin. Should we expect SG&A to be relatively flat in the September quarter versus something like the March quarter and the sort of $6 million type of range? Or are we going to be at this lower level that we saw in the June quarter?

Yes. Sheri, this is TS. Earlier I talked about some adjustment in the fourth quarter. We do a true-up on the seven liability. So that realized about $700,000 to $800,000 gain. Discount for that, the SG&A should stay flat moving forward. Q4 is kind of a unique situation here.

So that true-up won't continue, that's not a reset of the level?

No, that's correct.

Okay. And then TS, you also had mentioned Building 6 being a drag on the gross margin. I'm just curious to get the gross margin back into the 12% to 12.5% range, do we need revenue to be $200 million, which I think is the number you talked about for Building 6 being fully ramped? Or is there another number for revenue where we could get gross margins back near the 12% range?

If you look at gross margin consists of price, revenues and cost, there are so many moving parts there. Earlier someone asked about pricing pressures and so on. To a certain extent some of the pricing pressure we're able to pass on to the third party and so on. We have a lot of internal improvement, efficiency improvements and so on. All these are functions of how well we do with cost reduction program and so on. Obviously the big part is loading. We have fixed costs which now with Building 6 come online, fixed cost is a different form. The two came first, and then add them together. So it's much higher fixed cost than what we have today. With all these things, we believe that 12% to 12.5% will be sustainable. When we can hit that point, very difficult to tell.

So at $200 million in revenue you're not sure would you be at 12% gross margins or I'm trying to understand?

As I say, there's too many moving parts here. We just very difficult for me to sit here and try to predict at $200 million whether I will be at that level.

Okay.

Cost reduction is one thing, pricing pressure is another thing.

On the balance sheet this quarter, it looks like you had a $61 million liability for third parties. Can you give us some detail on what that is?

Yes. That's a good question. That $61.2 million was carry-forward from last quarter. Last quarter when we [booked all the consigned] inventory equipment, we reserved $61.2 million in the case that we had to pay our customer. This other equipment is not on our books and is affected by the flood, damaged by the flood. So we have a claim into the insurance company. The amount might not be exactly $61 million. We have a claim into the insurance company. In the event the insurance company pays off, the liability will be distinguished.

Okay.

Is that clear?

Yes. Okay.

So the other fact, corresponding to the $61.2 million is $97.3 million loss we booked in the P&L.

Okay. That's helpful. My final question, just on the laser revenue, it looks like it declined about 8% sequentially in the June quarter. That's really sort of other than the flood, that's the first time that number has really declined that I can see. I'm just wondering why the laser business declined.

Yes. Sherri, this is John. I think, again, there's a few different other things in that line item as well. In general, it was a flattish quarter when you look at what we were seeing in that segment.

So what was the piece that was down?

Well, like I said, we got the sensor business in there. The automotive business is in there. There's a lot of different pieces that make up that segment.

So sensor and auto were down?

On a sequential basis.

Troy Jensen; Piper Jaffray.

Just want to go back to Subu's question. If you look at the midpoint of your guidance, you guys are down about 21% year-over-year. Compared to JDS, flat to down slightly. My question is it share shifts here? Oclaro announced a deal with Venture. mCore pulled some manufacturing back to some existing facilities. I think Opnext did the same with some Japanese facilities. Is the difference between your revenue guidance and some of these other guys on a year-over-year basis just share shift at the accounts?

It's certainly a possibility, Troy. I will say, we continue to work very hard to bring all this stuff back in that did -- especially that moved back to some of our customers' own capabilities. We still are optimistic that all of that is going to come back and we're working with those customers to re-establish all of that capacity for them. As I sit here today, I do think it's a bit of a timing issue. Until we have this all fully behind us, everybody's requalified, and we know exactly what the demand is, it's hard for us to say for sure whether or not we're really losing share.

All right. Fair. Just could you confirm that the laser sensor number was $42.3 million?

Yes. 42.3, that's right.

All right, guys, good luck in the second half.

And it does look like that concludes our time for questions. I'd now like to turn the program back over to Management for any additional remarks.

That's it. Thank you, very much, everybody, for joining us today.

Thank you.

Thank you.

Thank you, presenters. Again, ladies and gentlemen, this does conclude today's conference. Thank you for your participation and have a wonderful day. Attendees, you may disconnect at this time.