Gaia Inc (GAIA) 2005 Q4 法說會逐字稿

Good afternoon participants on line for today's fourth quarter fiscal year 2005 earnings results call. [OPERATOR INSTRUCTIONS] Once again, we do appreciate your patience and ask that you please continue to standby. Our fourth quarter fiscal year 2005 earnings results conference call will be getting underway momentarily. All sites please standby. Today's conference is ready to begin. Hello, and welcome to Gaiam's fourth quarter fiscal year 2005 earnings results teleconference. [OPERATOR INSTRUCTIONS] I would now like to turn the conference over to our host today, Mr. Jirka Rysavy, Chairman and Chief Executive Officer, Lynn Powers, President, and Janet Mathews, Chief Financial Officer. Our first speaker, Mr. John Mills. Sir, you may begin when ready.

Thank you. Good afternoon, everyone, and welcome to Gaiam's fourth quarter and year-end 2005 earnings conference call. The following constitutes a Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995. Except for the historical information contained herein, the matters discussed in this call are forward-looking statements that involve risks and uncertainties, including, but not limited to, general business conditions, the integration of acquisitions, the timely development of new businesses, the impact of competition, and other risks detailed from time to time in the company's SEC reports. The company does not undertake any obligation to update forward-looking statements. Now, I would like to turn the call over the company's Chairman and CEO, Mr. Jirka Rysavy. Jirka, go ahead.

Welcome, everybody to our quarterly update covering our results for the fourth quarter, which ended on December 31st, 2005. And the results were ahead of our expectations. For the fourth quarter, Gaiam reported revenue of $64.3 million, an 85% increase over the $34.8 million reported in the fourth quarter of last year. Gaiam's gross in the fourth quarter was due to a combination of the strong, controlled growth and the sales of media titles acquired from of GoodTime Entertainment in September. Internal revenue gross for the quarter was 16%. The gross rate is also encouraging by the fact that both our segments grew again in double digits, 14% in a business segment, and 17% in direct- to-consumer segment. The best news for the quarter is the gross margin story.

Gross margin in the fourth quarter increased 1270 basis points to 61.4%, compared to 48.7% in the same period of last year, and the 590 basis points up from -- [555.5]%, which we reported in the third quarter of this year. This increase was mainly do to our higher sales of media and elimination of the third party distributors by going direct through the GoodTimes vendor manage inventory system, and we also had the lower cost of the goods sold associated with doubling our DVD sales volume.

Operating income in the quarter was $3.2 million, compared to a loss of $4,000 in the last year. Net income for the quarter was $1.5 million, or $0.07 a share, as compared to the net loss of $0.5 million and $0.04 a share in fourth quarter '04. Included in fourth quarter results is a one-time, non-cash charge of $646,000, or $0.02 per share related to Gaiam's minor interest in LIME Media. [inaudible] expense if -- of approximately $2.5 million for redundant auto-fulfillment distribution system and management support for GoodTime transaction, which were largely eliminated as of today, but which will be gone totally by end of the second quarter. Until recently, we have operated both Gaiam and originally GoodTimes distribution facilities. Without these one-times costs, Gaiam's earning for the quarter were $0.17.

During the quarter, Gaiam generated $5.5 million cash from its operation, and increased its cash position at December 31st to [$15] million, up from $10.2 million at end of the third quarter. For the year, revenue increased 47% to $142.5 million, from $96.7 million in '04. Internal revenue gross for the year was 19%, which was 21% for business segment and [70%] in direct-to-consumer segment.

Gross margin for the year increased to 56.5%, from 49.7%, and which is improvement of 680 basis points, and operation expenses decreased to 54.3%, from 56.2%, and [190-basis-point] improvement even with all of the transition expenses from GoodTime -- GoodTime transactions. Gaiam delivered improvement of $9.4 million of 660 basis point in operating income for the year. Operating income was $3.1 million, compared to a loss of $6.3 million in the prior year. Net income was $1.3 million, or $0.08, as compared to a net loss of $4.6 million, of $0.32 per share in 2004. Results reflect the one-time, non-cash expense of $646,000 from our minor interest in LIME, and $2.8 million in transition and service expenses from GoodTime transaction.

Depreciation amortization for the fourth quarter following the acquisition of GoodTimes's media library was $1.8 million. For the -- 2006. Gaiam expects the depreciation amortization to be approximately $8 million. Gaiam expects to generate over $200 million in revenues in 2006, and it currently believes that the gross margin for the year will be approximately 60%, which is 400 basis point above our expectation after we completed the GoodTimes transaction, and 900 basis point above our 51% guidance from the beginning of the year.

In September of '05 we acquired substantially all of the assets of GoodTimes Entertainment for $34 million in cash. GoodTimes assets included mostly entertainment programming and home video products. In August, '05 Gaiam also invested $7.5 million in LIME Media, a TV radio network controlled by Revolution Living. Because of higher than originally planned losses at LIME, Gaiam sold approximately 75% of its stake in LIME back to Revolution Living in early January at its original purchase price. This reduction of shareholding eliminated accounting need for the flow through loss as recorded in the fourth quarter.

In our direct-to-consumer segment, we are focusing on the broadband deliveries and change in our approach from transactional to relationship marketing. Gaiam currently has over 7 million direct customers, and we do intend this year to invest to [harner] this asset. We allow -- we launch our media subscription clubs in the second quarter of last year and ended the year with over 50,000 subscribers.

In the business segment, our focus on media especially DVD market share is producing [inaudible] results. Gaiam's Home Media is now carried by more than 50,000 retail doors in the United States alone, which is double from the end of the year of 2004. For the year 2005, according to Nielsen VideoScan, Gaiam market share [inaudible] fifth overall U.S. non-theatrical DVD, ahead of Fox, Universal, MGM, and Lion's Gate, up from the number 13, of which we were at end of 2004. Gaiam market share in fitness and wellness DVD category increased,,and at the year-end, we were approximately 30% up from 15% last year. This is for Gaiam's standalone. Including the titles which we acquire from GoodTimes, Gaiam market share for the category for 2005 was over 40%. And now I'm going ask Janet to give you some more details on numbers and then Lynn will give you some business overview. Janet?

Thank you, Jirka. Now, let me provide some additional details. For the fourth quarter, sales were $64.3 million, an increase of $29.5 million, or 85% as compared to prior year sales of $34.8 million. Gaiam's business segment generated positive internal growth of 14.4% for the quarter, increasing the revenue generated by $1.8 million over 2004 levels to $14.4 million. The business segments' revenue growth rate, inclusive of acquisitions, was 107%, bringing total revenue generated by this segment to $33.5 million for the the fourth quarter. Gaiam's direct-to-consumer segment also continued to deliver solid growth. Revenue for this segment grew approximately 65.2% to $30.8 million for the fourth quarter of 2005. This includes revenues generated by an internal growth rate in this segment of 17.4%.

The gross profit margin for the fourth quarter of 2005 was 61.4%, a significant 1270-basis-point increase over 2004 results of 48.7%. This very positive improvement resulted from higher sales of media and kits containing media, which have significantly higher margins and accessories, lower cost of goods associated with greater purchasing power attendant to the doubling to our DVD volume, and better margins generated from the conversion of certain customers to a direct relationship rather than having them serviced by a third party distributor.

Total operating expense increased to $36.3 million, or 56.4% of revenue for the fourth quarter of 2005, as compared to $17 million, or 48.7% of revenue during the fourth quarter of 2004. Selling and operating expense increased to $32.3 million from $14.7 million in the fourth quarter of 2004 and, as a percentage of revenue, these expenses increased to 50.3% in 2005 from 42.1% in 2004. Our operating expenses, both selling and operating, and SG&A were negatively impacted by the cost of our transition services agreement with GoodTimes Entertainment, as it resulted in some redundant fulfillment, distribution, systems, and management costs during the quarter.

General and administrative expense increased to $4 million in 2005, as compared to $2.3 million in 2004. We were pleased, however, that as a percentage of revenue, G&A decreased from 6.6% in the fourth quarter of 2004, to 6.2% in the comparable 2005 period. As a result of positive internal and overall revenue growth, significant margin improvements, and the leveraging of our operating expense, Gaiam improved its financial performance, generating operating income of $3.2 million for the fourth quarter of 2005, as compared to an operating loss of $4,000 in the comparable 2004 period.

Net income increased to $0.07 per share, or $1.5 million for the fourth quarter of 2005, as compared to a loss per share of $0.04 or $0.5 million dollars in the fourth quarter of 2004. For 2005, sales were $142.5 million, an increase of $45.8 million or 47.4%, as compared to prior year's sales of $96.7 million. Gaiam's business segment generated positive internal growth of 21% for the year, and including revenue generated by acquisitions, increased the total revenue generated by this segment by 58.6% to $70.2 million in 2005, from $44.2 million in 2004.

Internal revenue growth in Gaiam's direct-to-consumer segment was solid for the year at 17.1%. Revenue for this segment including acquisitions, grew 38% to $72.3 million in 2005, from $52.4 million in 2004. The gross profit margin for 2005 was 56.5%, a 680-basis-point improvement over 2004 results of 49.7%. Total operating expense increased to $77.4 million, or 54.3% of revenue in 2005, as compared to $54.3 million or 56.2% of revenue during 2004.

We were pleased with the decline of our operating expenses in relation to the revenue generated, as we paid $3.8 million to GoodTimes Entertainment for transition service expenses in 2005, of which we consider approximately $2.5 million to be for duplicative personnel facilities and services. Gaiam's operating income for 2005 was $3.1 million, a $9.4 million improvement over the $6.3 million operating loss for 2004. Net income increased to $0.08 per share, or $1.3 million for 2005, as compared to a loss per share of $0.32, or $4.6 million in 2004.

EBITDA for the fourth quarter and year ended December 31, 2005 was $4.9 million and $7.8 million respectively. Non-cash expenses were $6.4 million and $5.1 million for 2005 and 2004, respectively. Gaiam generated $6.7 million in cash from operations for 2005, and increased its cash position to $15 million at the end of 2005, up from $10.4 million at the end of 2004. Working capital also improved to $37.2 million at the end of December 31, 2005, up from $31.5 million at December 31, 2004. DSO for the fourth quarter was 34 days up from 31 days for the comparable 2004 period, while inventory turns were 3.4 times, an improvement from 2.9 times in the fourth quarter of 2004. Depreciation and amortization was $1.8 million for the fourth quarter of 2005, and $4.7 million for the total year. Capital expenditures were $1.6 million in each of 2005 and 2004. I would now like to turn the call over to Lynn for the business overview. Lynn.

Thanks Janet. First of all, I would like to give you an update on our operations, then a recap of results by business segment, followed by a brief synopsis of our strategy going forward. Gaiam had an extremely busy fourth quarter and a great closing to 2005. We're pleased with the results, especially in light of the transition expenses and challenges with the integration of the GoodTimes assets. As Jirka indicated, our success as a direct result of our media-focused strategy as we're now beginning to see how the leverage from a media operating model can deliver significant results.

To begin with, we recently made a few exciting new [Lou Weisz] has joined us from GoodTimes, as President of the direct-to-consumer segment. He has many years of experience with subscription clubs, continuity programs, as well as DRTV, and will help us to build those areas. Jane Pemberton has joined us as President of our business segment. Jane brings to Gaiam a strong background in media and international from her time spent at 20th Century Fox and the Walt Disney Company. We're pleased to have them as part of the Gaiam team and expect that both of them will be instrumental in growing our future business.

For the fourth quarter, Gaiam revenue was $64.3 million, an 85% increase from $34.8 million recorded in the fourth quarter of 2004. Revenue for the year increased 47.4% to $142.5 million, compared to $96.6 million recorded in 2004. The growth is attributable to a combination of strong internal growth of 18.7% for the year, combined with sales of media titles acquired as part of the GoodTimes Entertainment acquisition. Operating income was $3.2 million for the fourth quarter, compared to a loss of $4,000 in the prior year. The fourth quarter results include approximately $2.5 million of additional redundant expenses which were the direct result of the GoodTimes integration.

During first quarter of 2006, we completed the transition of GoodTimes's inventory and fulfillment to our distribution center in Cincinnati. In addition, the sales and marketing operations were moved to a smaller office location in New York. We're in the process of cleaning up the balance of the integration and expect to be complete by the end of second quarter.

Our business segment, which produces and distributes media and other proprietary products to retailers, generated revenues of $33.5 million for the quarter and $70.2 million for the year. Our business segment revenue comps were 14% for the quarter and 21% for the year. Including growth from acquisitions, revenue for the business segment grew 107% in Q4 and 59% for the year. We're pleased with these results, especially in light of beginning a distribution center transition during the fourth quarter. In the business segment, our internal growth was driven by double-digit increases with Target in the sporting goods channel and in the book channel. Sales at Target continue to exceed our expectations and perform ahead of their plan. We've had Gaiam branded, expanded shelf space in Target since third quarter of 2004, and we continue to have strong comps with them, fourth quarter at over 20%, and the year at over 30%, on top of the load-in for the expansion in 2004.

Our store-within-store concept in the book channel is doing very well. We added 75 Borders store-within-store concepts in 2005, and we expect to continue to roll out this strategy to the balance of the Borders stores in 2006. Barnes&Noble added new store-within-store displays to all stores in 2005, and our sales more than doubled with this retailer in the fourth quarter. We ended the year with over 4800 store-within-store presentations and expect to add another 500 in first half of 2006. This format is an important part of our growth strategy, and we expect to leverage this strategy with GoodTimes fitness media products and into other specialty store venues.

Our continued focus on media sales is paying off in market share. We're very proud of our ranking on Nielsen's VideoScan. Gaiam grew its DVD market share in the wellness/fitness category from 15% in 2004, to over 30% in December of 2005, ending the year with over 23% share. Including fitness titles acquired from GoodTimes, our combined market share ended the year at over 40%. Our nearest competitor had less than 12%. Given our leading market share, we believe we now have the ability to become category managers for this genre. In the Nielsen rankings, we ended the year at number five in non-theatrical DVD market share ahead of Fox, Universal and Sony Pictures. With this positioning, we have a strong platform to build a new genre of media that we call "Movies That Matter. " We also ended the year in the top ten rankings for all DVD. With this ranking, and our direct relationship with most of our retailers, including vendor-managed inventory, we are well positioned to expand our media-focused strategy and operating model. We have begun acquiring new inspirational entertainment properties to fill the pipeline for Movies That Matter. The previous GoodTimes entity did not make any investments in acquiring new content for some time prior to our transaction.

Gaiam recently acquired a 300-plus hour library from the Faith and Values Hallmark Network and are launching docu-drama called "beyond Narnia" from that library in April. Our media products are now sold in over 50,000 doors. This unique retail distribution is bases on Gaiam's strength in the specialty and upscale market in high-end specialty stores such as Whole Foods, EQ Life and Discovery Channel, sporting goods stores, such as REI and Dick's, and media stores such as Best Buy and Blockbuster's, coupled with GoodTimes's strength in mass-market chains such as Wal-Mart and Kmart, as well as the traditional media outlets and Christian book stores.

On the international front, we are making good progress on our store-within-store rollout in the U.K., and are now up to 200 locations, including a ten-foot run in the top department store, Selfridges. Our Australian catalog continues to perform well, and our partners recently acquired two TV stations, TBSN shopping network and the Expo infomercial channel. We believe that there are a lot of possible synergies with them for the future.

In our direct-to-consumer business segment, total fourth quarter revenue was $30.8 million, up 65.2% from $18.7 million last year. Comps were 17% for fourth quarter, compared to last year. For the year, direct-to-consumer revenue increased 38% to $72.3 million up from $52.4 million in '04. Comp revenue in this segment was up 17.1% for the year. The growth in this segment was primarily driven by the gaiam.com website and GoodTimes direct business. Our catalog business was up slightly for the quarter and was flat for the year, as more of our customers transition to our Internet site to purchase Gaiam products and services. We believe our catalogs are a great way to market our brand, prospect for new customers, and help us build our subscription and download business models for the future. The gaiam.com Internet business was up 17% for the quarter, and 26% for the year, as more of our customers are choosing to shop online. We're experiencing strong results from our online marketing efforts, which are paying off with online marketing revenue up 50% for the year. This is another indication that consumers are searching for [low house] information online, and finding Gaiam as a trusted source.

Operationally we ended the year with an over 94% fill rate and 110 average order size. $110 average order size. In the direct-to-consumer segment, revenues from DRTV, e-commerce sales attributable to DRTV, continuity DVD sales, and paid subscription web clubs contributed $8.7 million in revenues in fourth Q at very high margins. We're excited about the brand-building opportunities of this channel for our Gaiam brands. We also believe this is a great channel to help build traffic for our retailers by pulling customers into their stores to buy the TV-branded media and products.

GoodTimes direct remains one of the top DRTV fitness marketers, which will continue to help us to dominate the fitness category in the mass market as well. In our direct-to-consumer consumer business segment in 2006, we will mail approximately 20 million catalogs. We have 7 million buyers, and over 50,000 web club and continuity subscribers. For the next 18 months, our direct team will be focused on transitioning to a customer-centric business model, as we try to build our community and strengthen our relationship with our customers. We're experiencing great margin improvements. Our gross margin improved 1270 basis points to 61.2%, from last year's fourth quarter margin of 48.7.

On a sequential basis, gross profit margin increased 590 basis points over third quarter. These increases are attributable to our focus on media that carries higher margins, our entrance into subscription and continuity club business that has extremely low cost of goods, and our ability to go direct to almost all of our retailers, including Wal-Mart and Kmart, now that we've acquired vendor-managed inventory systems and titles that support a direct relationship. We also expect to continue to gain additional cost savings with volume discounts of the combined businesses.

GoodTimes Entertainment assets have positively impacted our financial performance, even with the additional redundant expenses of approximately $2.5 million in the fourth quarter. We're excited about the opportunities we see ahead, as the leverage ability of our business model begins to take hold. We will continue to focus our strategy on growing our DVD market share, leveraging our market share positioning to drive more content through our retailers, expanding our store-within-store presence, launching a mass-market brand in the fitness/wellness category, continuing to grow our direct consumer base as we prepare for the shift to broadband content distribution. and expanding our online community and subscription club initiative.

We're committed to improving the quality of people's lives through our premier products and services. As we continue to acquire new customers and build the new media platform for the the future, we believe that we're well positioned to generate over $200 million in revenue in 2006. We expect to see continued margin improvements during the year through the integration of GoodTimes Entertainment as well as new vendor negotiations that should result in additional cost savings. I would now like to open the call up for questions.

Operator?

Thank you. [OPERATOR INSTRUCTIONS] Thank you, and we have our first question from Mark Argento of Craig-Hallum Capital.

Hi. Good afternoon. Couple of questions for you here. Could you talk a little bit about the investment you're going to make online, and in particular some of the business models and the margins related to the online affinity and some of the clubs, probably be my first question.

It's going on to be our big focus this year as we kind of obviously delivering pretty strong results. We'd like to use some of that earnings and capital to really build on our base -- we have 7 million customers. And the loyalties are very, very high, as we talked before, we don't really sell our mailing lists to anybody, which, at $0.10 to $0.12 or $0.15 a name, it's obviously [quite earnings] what we're leaving on the table, but it's really building the loyalties, so we want to focus this year to build a net for till this [inaudible] to materialize financially, so probably most of our kind of development spending will be in that category. We did already launch our subscription clubs in mid of last year, and [inaudible] said we have 50,000 subscribers end of the year. And this is something for -- especially for right now, it's extremely low cost acquisition of the customers because we pretty much doing it in our existing communication with the customer from upselling online to putting something in the boxes. So cost to the customers [inaudible] dollars more like right now less than five, and profitable of that customer is somewhere between $50 and $100 per year. As so long as the loyalty can stay there, it's obviously very good way to capitalize on the 7 million buyer base and because a lot of people try something like that, but because we have all of the credit cards, shipping addresses, and trust of these customers, it's obviously our main assets, and we plan to really focus on it over the years to come.

Is the model though, are you selling them content, or are you giving them access to special sales, or could you elaborate a little bit about what the value proposition is for the -- for the consumer?

Well, we would - we do both. We sell -- we have negative option pickup DVD clubs and we have online stuff and Lynn will talk --

There's really two models. The first is a continuity program, as Jirka said, it's a negative option program for DVD content, and the second is exclusive club memberships online, which gives -- gives access to exclusive content not available elsewhere.

And also in the negative option, this is pretty much original programming, so it's not, it's very different than something like Columbia House, because that's content is not available elsewhere, or a very limited basis. So there's a lot of -- we have a lot of content today as we're kind of planning to launch more. This is a good way for the future to tie our content directly to the customers. As our model going forward, that is, the content would be [inaudible] develop internally from scripting, shooting, post-producing, [ordering], encoding [phone] line, and downloading directly to end user, today, DVD's, probably more media yet, but we really want to use broadband in this category, but ultimately that's where you want to be. Today, we -- about half of our business is direct and half is through what do you call resellers? The business segment? But we believe that we want to drive more and more to selling content to end users directly, and that margin is well over 75%.

In terms of the mix of media versus the traditional consumer products, what mix are you assuming when you provide us guidance of 60% margins for the full year?

Well, we're assuming about 50/50 split between direct and the resell. [inaudible] those are the two segments, but it's more of the function how much on the resell is actually the media products and how much is accessories, and also how much -- if we increase the products what sold directly, either through the clubs or DRTV offerings or something would basically bypassing everybody when the -- the margin is more like 80%, gross profit, I'm talking about, so obviously that provides a big shift how this will happen, but as we focus on more and more media on years to come, we expect our gross profit to increase.

Last question for you. This -- the concept of Movies That Matter, is that something that you think you could get some traction with at retail, and roll that out at retail, if you already have haven't?

Well, that's certainly going to be our focus, Mark. We believe that there is -- that Gaiam has a trusted brand and is a -- has been a great filter for people who have been looking for [low tried] products. We think there's an opportunity to be that same kind of filter for the entertainment or edutainment of of the business, and we believe that we can set up stores-within-stores for that category.

Also for me to kind of add to what you asked before, as our goal is to clearly expanding our selling to direct. We -- clearly, we have some key partners like Target being one of, and we really want to [inaudible] and develop specific content for them and for different retailers who do store-in-store with us, and varies very much from the specialty stores like Whole Foods to sporting goods, to people like Target. So it's obviously also very important part for going forward.

Last question. On the acquisition side, it seems like for the most part you're -- you have have the GT Media asset mostly integrated, it sounds like. What's the landscape look like. Are there other -- other acquisition targets out there you've identified and/or I mean what's the -- your ability, do you think, to really bolster your content portfolio?

Well, obviously, we looking in initial acquisition similar to GoodTimes because obviously worked for us really well so far. And however, we just kind of close the distribution center, and there is lot of work was done because the total -- there was like 750 people in the company before we bought it today. It's like down to like 70. And so there's additional load on integration, so as we kind of just finish the process, receiving all this inventory from New Jersey facilities we closed to Cincinnati, we clearly have to make sure that it's a proper -- properly integrated, and then we also provide our people a break. So, but we definitely will look for additional acquisition and be in negotiations with several right now.

Great, thanks for your time.

Thank you. Our next question comes from Gordon Hodge of Thomas Weisel Partners.

Yes, good afternoon, couple questions. Just curious, Lynn, I think you mentioned that the GoodTimes business contributed positively to I assume operating profit even after taking into account the $2.5 million of redundant cost. Could you be a little -- give us a little more specifics on that, if you could, in terms of what the contribution was in the quarter, and then I'd be curious, just margins, on the gross margin front. If they differed significantly, or if you can just expand a little bit on the different margin structures by business line, direct-to-consumer and business, would be great?

Okay. For the direct-to-consumer and B-to-B portion that is attributable to the GoodTimes acquisition, it generated approximately $27 million in revenue for the fourth quarter, at a combined gross profit of approximately 77%. Obviously, there's a significant drop-through even with transition expenses. But we don't fully allocate our selling and operating and our G&A expenses to our business units other than by segments. So I don't have a bottom line number for you on the total contribution, but obviously this acquisition brought some additional profitability to the company.

Great,.

From the margin question, generally, our lines like Internet and catalogs, they operate in like 60s. New media, I mean like [inaudible] kind of ship our media. an average they operate somewhere where Janet mentioned like in the mid-70s, and so, as we obviously increased the media as a percentage, this will drive the difference, the increase. But, obviously, they have a one-time jump, which still going to continue as we used to go through several big accounts through middleman. Now because our direct relationship and volume, we can go direct, so that's one of the things that was drive the margin, and probably going forward, most contribution like two, three years from now, I mean, is a margin from gross profit margin it's going to be the clubs, because they probably at 80-85%. So as the clubs will continue increase, that's going to drive the margin up as well.

Great, thanks.

[OPERATOR INSTRUCTIONS] Thank you and currently, we're showing no questions registered. I would like to turn the conference back over.

Okay. If there's no other questions, John's going make sure there are no other questions. John? Okay. Well, if there are no other questions, we would like to thank everybody, and we would hopefully see you on our next quarterly update. Thank you very much.