Identiv Inc (INVE) 2010 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the first quarter 2010 Identive Group earnings conference call. My name is Esenia and I'll be your operator today. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions)

I now would like to hand the call over to your host for today, Ms. Darby Dye. Please proceed.

Thank you. Good day, and thank you for joining us. This is Darby Dye, Director of Investor Relations for Identive Group. Speaking on today's call are Ayman Ashour, Chairman and CEO, and Melvin Denton-Thompson, CFO. The purpose of today's call is to supplement the information provided in our press release issued earlier today, announcing the Company's financial results for the first quarter, ended March 31st, 2010.

Before we begin, I would like to remind you that various remarks we make on this call, including those about our projected future financial results, economic and market trends and our competitive position, constitute forward-looking statements. These forward-looking statements and all other statements made on this call that are not historical facts are subject to a number of risks and uncertainties that may cause actual results to differ materially. The forward-looking statements we make today speak as of today, and we do not undertake any obligation to update any such statements to reflect events or circumstances occurring after today. Please refer to today's press release, our annual report on Form 10-K for the year ended December 31st, 2009 and subsequent SEC filings for a description of factors that could cause forward-looking statements to differ materially from actual results. During this call, we will also be making reference to non-GAAP results or projections, including overhead costs and adjusted EBITDA. These non-GAAP measures exclude all or some of the following; acquisition, aborted acquisition, transition and integration costs, equity based compensation expense, impairments, gain on the sale of assets and amortization and depreciation.

Identive uses these non-GAAP measures internally and believe they provide a meaningful way for investors to evaluate our operating performance, but cautions investors to consider these measures, in addition to, not as a substitute for, nor superior to, Identive's consolidated financial results as presented in accordance with GAAP. A complete reconciliation between GAAP and non-GAAP financial measures is included in today's press release which is available in the Investor Relations section of Identive's website. I would now like to introduce Ayman Ashour.

Thank you, Darby and thanks to all of you joining us today. Good morning to those of you here in New York or the US on the East Coast, and for our investors and participants in Europe. Q1 was both an exciting and a critical quarter for Identive. In the months preceding the transaction between SCM and Bluehill, we worked hard to develop a plan to integrate our two Companies rapidly. We put in place a new management team, and took aggressive action to reduce our overhead costs significantly. We were, therefore, able to hit the ground running following the business combination with Bluehill on January 4th. I'm personally very pleased to see the progress during Q1. To unify the combined Company around our strategic mission and to reflect our focus on the secure ID market, we adopted the new name Identive Group in January and changed our ticker symbols both on the NASDAQ and the Frankfurt stock exchanges. We combined experienced professionals from both SCM Hirsch and Bluehill to make the management team of Identive. All key positions are now in place, and we have not lost any time moving forward to achieve our vision, which is to build the world number one or signature group in secure ID based technologies.

I will super quickly now give an overview of what is Identive is today as I'm aware many investors who still came from one side or the other don't have the full view of everything that is Identive today. Identive is comprised of a number of very well-known brands which we classify into two segments -- Identity Management Solutions and Services and Identification Products and Components. We centralize a lot of our back office functions but continue to address different market verticals and different parts of the value chains under different brand strategies. Identive focuses on secure ID right in the heart of the very large security market. It is -- we are straddling multiple segments and in particular the physical security and the logical or IT security in the security market. ID, as you can see, can further be sub-segmented into credentials or people ID, as well as food and animal and object ID, and we address multiples -- various parts of the market in these areas, with particular focus on the corporate ID, and the consumer ID.

I would like now to review what we said at our projections webcast . When we gave our first webcast as Identive, we identified three core elements for our strategy -- restructure, organic growth, and future acquisitions. I would like very rapidly to take you through these. On the cost side, significant work was completed during the quarter to consolidate facilities and to streamline operations. We have reduced our total headcount by over 15%. We have rapidly implemented and plan to reduce the cost of our business across the board and this is not just in one location, but pretty much in all of our locations. The integration restructuring has substantially taken place in Q1, and we expect to see significant improvement in the overheads going forward, starting from Q2 and more fully in Q1. On the slide that you see in front of you, pretty much most of the items that are listed are well over 90% complete in Q1, with the main remaining items being the lower items on the slide, which is assured services in the US, and the completion of the move of the consolidation from Switzerland to Germany. All together, we expect our cost-reduction action will reduce our costs by approximately $6 million on an annualized basis, with expectation of cost-reduction this year, remaining at the $4.5 million, which we indicated before. These actions were implemented at different times in Q1, and some of them are -- still have trailing costs into Q2 as well.

Moving on, on the organic growth side, we have some very important new product launches as well as a very significant expansion of our manufacturing capacity for inlays where we have brought online new manufacturing capacity starting in January and expanded our inlay total capacity to somewhere between 80 million to 100 million inlays -- RFID inlays per annum. We have had several important product launches at Hirsch, at SCM and at Multicard, and we've had a number of very important wins, and in many cases, first wins -- including wins in Brazil, first larger volume business in China, and also very good wins in Australia and the US. While we actually have not been able to quite ship it during Q1, but at our Hirsch operation in California, in April we shipped our largest-ever order from -- for one customer. Moving on, so on the organic growth we feel we're making some very, very good inroads, and usually it is -- when you are combining businesses, it is quite often organic growth suffers, but we think that this is not the case with us.

On the acquisition front, we have completed last month in April, our acquisition of RockWest Technology Group. The company was privately held and providing identity management solutions with strong regional presence in the Southwest of the US, headquartered in Denver, with significant operations in Los Angeles, Arizona, and New Mexico. RockWest has strong focus on ID issuance and personalization, ID systems integration, and provide an ideal base for us to launch and build our multi-card activity in the US. We also bring a highly experienced management team with a unique portfolio of ID security offerings at the ID management market, and some very important business alliances. We expect that RockWest will add approximate revenue in the range of $5 million to $6 million in 2010.

I would now like to comment briefly on our approach to reporting and earning calls going forward. In the days after the announcement of the combination of Bluehill ID, and SCM, we had a lot of negative feedback about SCM, and SCM's stock performance over the years. One key thing that we heard is that SCM produced lots of data, but a lot of investors had difficulty following the story and understanding exactly what was promised. So the message to us was very clear; tell us the important metrics that you follow and why, and tell us what you will do against them and keep updating us on this performance. So a very reasonable request. This is what we did in our initial projections call back in March, and this is what we will continue to do. I will comment on the key metrics that we use for running the business, and we will continue to communicate to our investors on quarterly basis. On gross margin, we track gross margin, exclusive of any amortization and any overhead allocations. We do that, it makes it easier for the people managing the business to be able to relate to historic numbers, because they didn't have amortization before an acquisition, and to also be consistent. Quite often, we see a requirement for US GAAP to take white collar overhead allocation and put into it cost of goods, and we think that that makes at it bit more difficult for us to actually have better visibility of overheads.

On the overhead side, we exclude acquisition, acquisition related costs, non-cash equity-type compensation, integration costs and we exclude amortization and depreciation. This, again, makes it very easy for us to see the actual overheads that we can control, and it makes it also very clear to be able to compare the business performance quarter-to-quarter and year to year. And the -- it also takes it very easy for us to see the actual cash cost, and the operating cash flow becomes much more related to the P&L performance directly. Now, another important thing for us is from a comparison standpoint, you'll always see us comparing ourselves to the combined Bluehill ID and SCM Group's results, in addition to the statutory requirement which would include just SCM growth. So on the P&L side, you'll always see us -- and when Melvin Denton-Thompson, our CFO goes through the numbers in a bit more detail, you'll see will be taking you through comparisons to the pro forma on the P&L side of what -- how we're doing overall. Again, that makes it very easy, a lot easier to see trends and movement.

I would like to give a quick summary of the results for Q1. The revenues increased year on year comparison to -- quarter on quarter, Q1 2009, Q1 2010 by over -- by nearly 200% -- and about 30%, again as Q4, but that obviously reflects -- does not reflect -- the full Bluehill ID, and the Hirsch, and Melvin will take you through more detailed numbers, but we had $15.3 million in Q1 2010, versus $5.3 million in 2009, and $11.3 million in 2009 Q4. The adjusted loss -- the adjusted EBITDA loss decreased from $2 -- to $2.5 million from $3.64 million. And the gross margin showed improvement back to the -- close to the levels of 50%, at 49%, which is what we expect our gross margin to be. We had significant trailing acquisition costs in Q1, approximately about $300,000, because remember the acquisition of Bluehill ID did not actually complete until January 4th, and the new shares were issued shortly after that, so there were banking costs, and registration costs in Germany in particular. We also had acquisition-related audit costs and different consents, et cetera, which actually are not in the $300,000, and right now sit in the general G&A. We had transition and integration costs of approximately $1.4 million during Q1, and reflecting a lot of the headcount reduction, facility consolidation, and also inclusive of approximately $450,000 of non-cash writedowns.

So the summary for the quarter -- it was a very important quarter for us because a lot of it had to do with a change of culture, particularly the SCM business unit, and rapid reorganization. We really hit the ground running, putting a new structure in place, and another very important thing for us is a new renewed commitment to communicate with our investors with forward projections, earnings call, and being very accessible to analysts, as well expanding our IR activity in the US, in Germany, UK, and actually doing some IR activity in the Middle East as well. So with this I would like to turn the call over to Melvin Denton-Thompson, our CFO for a review of Q1 financial performance. Melvin over to you.

Thank you very much Ayman. Identive Q1 2010 results obviously include the operating results of Hirsch Electronics, which was acquired on April 30th, 2009 and the operating results of Bluehill ID AG, which was acquired on January 4th, 2010. As Ayman mentioned, I shall be using the non-GAAP financials, and I will include a discussion of comparisons with pro forma financials for prior period.

Revenue in Q1 2010 was $15.3 million, and I will discuss the comparisons with prior periods in the following slides. By business segment, our Identity management services and solutions segment, which included our Hirsch and Multicard businesses, accounted for 53% of revenue in Q1. And our identification products and components segment, which includes our SCM Microsystems, textile, Arygon, ACiG and Syscan businesses accounted for 47% of revenue. By geographic regions, 56% of sales came from the Americas in Q1, 34% came from EMEA, and the remaining 10% from Asia-Pacific. If we look at the Q1 2010, versus Q1 2009 actual comparison, looking at these comparisons, we can see radically different business from SCM Microsystems a year ago. Revenue shows significant in -- the revenue shows a significant increase, principally due to acquisition of Hirsch and Bluehill. Margins are similar at 49%. Overhead increase is driven principally by the addition of Bluehill ID and Hirsch as well as by continued relatively high R&D spend in Hirsch, which is expected to reduce.

EBITDA loss was reduced from 36% to 16%. Q1 2010 includes Hirsch reorganization and acquisition costs of $1.8 million, including approximately $0.45 million of non-cash. Q1 2009 included $1.4 million of acquisition costs. Moving on to the comparison with the Q1 pro forma, Q1 pro forma 2009 includes Hirsch and Bluehill, and I think this will allow a clearer view of the trend and development of the businesses. Revenues Q1 2010, compared to Q1 2009, show only a small growth due particularly to the slippage of a large US Government project into April 2010, and due to shortages of chips at our inlay manufacturer. A small increase in overheads comes from increased R&D and selling and marketing, mostly offset by a reduction in G&A.

Comparing Q1 2010 versus Q4 2009 actuals, this shows an increase in revenues, due to the addition of Bluehill ID, there was significant acquisition costs to Q4, and as mentioned before, there were significant transition and post acquisition costs in Q1 2010. Q1 2010, versus the Q4 2009 pro forma, looking at this comparison, we see actually a reduction of revenues but this is due to the seasonality of some of the businesses, which are very weighted to the back end of the year. This can also be seen in the comparison of the Q1 2009 pro forma. Margins improved from 41% to 49%. However, the margin Q4 was adversely affected by an inventory writedown as previously reported. Of particular importance here I think is the reduction in overheads, particularly in G&A. As a result, the EBITDA loss reduced from $4.2 million to $2.5 million, so it's a 2% loss reducing to 16%.

We now turn to the balance sheet. Cash and cash equivalents were $6.8 million at the end of Q1 2010, up from $4.8 million at the end of the previous quarter, reflecting the addition of cash and short-term investments from the Bluehill ID business. Accounts receivable net was $9 million at March 31st compared to $6.7 million at December 31st, again reflecting the acquisition of Bluehill ID. Inventories net were $6.7 million, compared with $5.4 million at December 31st. Property plants and equipment increased from $0.7 million at December 31st, to $4.5 million at March 31st. And this is the result of an inclusion of property, plants and equipment from factories in Bluehill ID, including the new expansion of RFID inlay manufacture. March 31st, balance sheet also included additional goodwill and intangibles arising from the preliminary purchase price allocation for the Bluehill ID acquisition. As a result of this, goodwill increased from $21.9 million to $41.6 million, and intangibles increased from $22 million to $34.3 million. Accounts payable were $8.8 million, March 31st, up from $5.5 million December, again, reflecting acquisition of Bluehill ID.

I would like to now just provide a reminder of the projections that we gave in our March 11st, call. Given the Q1 performance, we're maintaining the guidance which we gave in our March call, excluding RockWest. In our March call, we gave the following guidance for 2010. Total revenues in the range of $78 million to $83 million. Gross profit $39.8 million to $41.5 million, which is a gross profit margin of 50% to 51%, overhead of $38.9 million to $40 million, reflecting the savings that Ayman has talked about, giving a positive adjusted EBITDA of $880,000 to $1.5 million. As Ayman has already indicated, the addition of RockWest is expected to add between $5 million to $6 million in revenues and be accretive to earnings. That concludes our prepared remarks and presentation. We will be now happy to take questions. So perhaps, operator, could you ask if there are any questions?

(Operator Instructions) And your first question comes from the line of Reik Read, with Robert W. Baird. Please proceed.

Hi, good morning. Could you maybe talk a little bit more about the government sector, and some of the opportunities there that are there, and how the budgets are holding up? And you talked about in your remarks a slippage of a program, can you give us some understanding of why that occurred.

Good morning, Reik, I think on the government business is a very important part of Identive, particularly US Government, but also several other foreign governments. A lot of the government business has really came about after 9/11, and after the launch of the HSPD-12 Homeland security prevention directive number 12 and FIPS 201, the Federal Information Processing Standard, and a lot of this really has to do with a requirement of making sure that the government employee or contractor or somebody who has access to a government facility is who they say they are, and actually that that person is still authorized to access this building. That this person may have been authorized, last week, but is he still authorized today? So a lot of it is -- really has to do with identity and identification.

So the US Government took a number of years, and really the utilization of smart cards, and micro controller RFID cards and the like in the US lead behind Europe for years, but with the launch of all of these programs whether it is TWIC cards, or CaC cards, or a lot of these things have really -- the US all of a sudden has leap frogged the rest of the world in terms of being very progressive and very innovative in applying very advanced technology to these critical security solutions. So the projects are being rolled out. There were different delays here and there along the way. The particular delay in -- from shipping this particular order that Melvin and I have alluded to from March to April it was just -- the order has shipped already. It was just a matter of getting the logistics in order. It's the largest order that Hirsch ever shipped. So it was not a delayed funding or anything.

We see now a lot of new RFQs or requests for quotation, or requests for bids from different parts of the US Government and other governments as well. So a lot of what the Europeans would call tendering activity is going on, and we believe we are very well positioned. We have a very large and a very substantial install base, and a lot of our products have been designed around identity. A lot of access-control systems on the physical security side had identity as an afterthought. In our case it was Hirsch company -- Hirsch Electronics -- actually started as an ID company. So we believe we are very well positioned. Obviously, a lot of our clients would not be necessarily be very happy if we start naming them in the security industry. It takes a long -- it's really up to the customer to decide whether we can go public with the information or not, and I hope you appreciate that. I hope that answers your question, Reik.

Yes, thank, and if I could just ask one follow-up too. Could you give us an update on the status of the semiconductor shortage. I guess the language in your press release suggests that it is perhaps behind you, but can you confirm that? And what is the overall demand in that TagStar business with the new capacity that you have?

Yes, it appears to be behind us. We're working with our -- with the various suppliers on improvement of supply, and we think it is behind us, but it is -- I cannot tell you that it is not going to happen again. We're taking measures in terms of safety stocks and the like, and especially that we actually have a very healthy order book on TagStar in particular, but we're -- so it seems to be behind us. We have taken a lot of measures, but cannot say it will never happen again.

Okay. Great. Thank you.

Thank you.

(Operator Instructions)

And while we're waiting for additional questions, to come through, I would like to read one question that we have received from our investors in Germany through email -- How realistic is the growth rate that you are projecting? Is this a conservative view or it more of an optimistic view?

We're projecting organic growth rates in the 12% to 15% per annum. And we feel that that is a realistic view. It is -- we've seen in the SCM business in particular, a history of very optimistic budgets that were never met, and as a result, the losses were always blamed on delays in projects. We are in a business that we believe we can operate profitably, and very profitably, even at our size. So the fact that we are pursuing an acquisitive growth strategy is -- we're not saying we have to grow to be able to afford our overhead. If we don't grow much beyond our current level, we can't operate profitably, so we are -- and this is why, when you see the organic growth happening, you see significant improvement in the profits.

Projections are projections. They are our best view of the situation. It is realistic. It obviously has a level of optimism in the current economies because if you look at what happened last week in Europe, any growth is optimistic. But we have actually been reviewing our numbers and our projections in detail just this last weekend, and we continue to feel reasonably comfortable with the projections we have now. They have some optimism here and there, but overall we feel comfortable about them. We have a question in German on the website, so perhaps if one of our German-speaking colleagues, [Christian Glenz] or Fabien Nestmann can translate that would be great.

Sure. The first question in German -- comes from Germany-- is regarding the electronic ID card in Germany -- and is asking when we expect the first revenues from the electronic ID card in Germany to come in.

Thank you. Again, I think we -- I think there was a habit with the days of SCM of always talking about the one or two big projects that are going to come from Germany and are going to make or break the Company, and these were being -- I remember actually even as a competitor of SCM, five years ago, hearing about the German health card projects.

I can tell you that we are very well positioned for these projects when they come. And when they come, as a German citizen, I'm sure you'll hear about them. And right now on the national ID in particular, we are optimistic that we will see some good business this year, but we are not counting on much. So our projections for our SCM business unit this year do not include a huge amount of business from either the German health card or the German [ausweisen], the German ID card either.

Thank you.

Operator, do we have any other questions?

And we do. And it comes from the line of Henning Cosman, with WestLB. Please proceed.

Yes, good afternoon, and good morning, gentlemen. First question on sales again, and whether you could put Q1 performance a bit into perspective as to what your full-year projections, maybe taking into account the delays and shortages in semi conductors. And also maybe quantify the US Government order, and give us a bit of an indication of how much of an improvement in terms of quantification of that we should expect in the second half -- second quarter -- as compared to the first quarter? That's my first question.

Thank you. I think we're -- Q1 on our plan was actually very close to sales, was a little bit off on sales. Again, it's our plans because of the semiconductor shortages that Melvin referred to and because of the slippage of the Hirsch order from March to April. We are expecting strong Q2 in several of our businesses, but at this point of time, we're not really ready to start giving quarterly forecasts. We have a lot of moving parts as you can imagine, and a lot of businesses that came together relatively soon -- relatively recently -- so we're not really willing to give quarterly projections yet. We can tell you that we feel good about Q2 right now.

In terms of quantification of size of orders, I can tell you that it was a very significant order. It was the largest order that Hirsch has actually shipped. Hirsch has been active in the US Government business, and in -- they are really security-conscious enterprise business, ranging from airports to museums, to oil companies, you name it, for a number of years. So I believe it is not confidential for us to say it was the largest order we shipped, but I think to quantify it will probably be a breech of confidentiality. So if you will forgive me, I will not answer that part.

Okay. Thanks. Maybe secondly, then, give us some projection of the adjusted cost base, and quantify that one going forward? Maybe also, elaborating a bit on the adjustments you make. I'm not entirely sure whether it makes sense to adjust for acquisition-related costs since I understand you are actually quite committed to continue acquisitive activity going forward.

So maybe just give us the level of savings again, or actually the level of base costs again you apply that cost savings too -- the $6 million annualized and $4.5 million this year -- and maybe the order of adjusted cost-base you calculate with going forward on a quarterly or annual basis as you like?

Well, let me try to answer first, and then Melvin can take a stab. I'm not 100% sure I understood the question fully, but we are an acquisitive Company, and within Identive Group there is what we call an acquisition and integration machine. So we have that cost. The cost for having this machine is part of our standard cost, and as part of our G&A is not reported separately. When we do an acquisition there is -- as you can imagine -- there is a number of advisory costs -- being legal costs or being banking costs, and being -- for us, being listed both on the Frankfort stock exchange as well as NASDAQ, the cost for registration of new shares, et cetera. These are all substantial costs. So these are the items that we exclude from our normal overhead, but we -- they are included in the reports, so they reported, and as the presentation will remain online and you will see when you scroll back that they are listed clearly. So we report these numbers. So, we report these numbers, we put them forward, but they really depend on the acquisition activity.

Now one very important point to note is even these items where there is a complete radical change in our approach and our culture from the days of the old SCM because we have always -- the coming together of Bluehill ID, and SCM -- Bluehill Id brought a lot of acquisition expertise. We tend to do a lot of the work internally, and we tend to work very collaboratively with our advisors and our acquisition targets quite often are future colleagues are buying into our story and our vision and coming together with us. So, our process is just much, much more cost effective. So I hope that answer the question. If it doesn't, Melvin will have to take a stab.

No, I think that's alright. Maybe just following up. Once you mentioned the listing on the Frankfort stock exchange, are there actually any plans to delist from the Frankfort stock exchange to avoid these additional costs going forward and just keep the nest egg listing?

Well, I think the German stock exchange has been very good for both SCM and Bluehill ID historically, and there is substantial volume right now that is traded. In fact I think probably our trading volume in Frankfort is probably on average three times higher than our trading volume in the US. So currently there are no plans to delist either from the US or from Germany, and we -- but what we're trying to do is actually trying to communicate to both our European shareholders as well as our US shareholders in a more -- in a closer way. To take advantage of being listed in two different areas, it is also important to know that in Germany, especially, there is some very good stories on the RFID side, and we believe that eventually we will benefit in valuation as people recognize what Identive is all about.

Okay. Maybe one question, then, on the actual operating business, could you give us an idea which of your group Companies contributed significantly to the result in the first quarter, and which didn't to that extent, and where there are in turn potentials going forward for those that didn't contribute that much this quarter?

I think the -- most of the Companies were fairly close in the performance to our expectations. The semiconductor shortage has hurt us. Germany has been weak. Switzerland has been weak. And our Brazil business had a big reorganization, so I think Germany, Brazil, Switzerland were relatively weak.

We had strong business in Australia, strong business in Holland. US was very strong. And Canada was also rather weak. So, one of the things that is promising is that, we're seeing improved performance in both Germany and Switzerland and Canada, actually, in Q2. And we believe that Brazil will do a good job for the year and we're beginning to see some really nice synergy effects of the different companies coming out -- coming through in Brazil in particular.

Thank you. Maybe one final follow-up on one of my earlier questions, whether you could quantify the clean costs on a quarterly basis maybe going forward -- like once these combination costs for SCM and Bluehill fade out? So what is an average quarterly level, which is realistic on a quarterly basis for operating costs going forward? Thank you.

I think we'll decline to do that for the time being. Hopefully, when -- starting from Q1 2011, we will be able to -- I'm not making that promise, but I'm hoping, and we'll certainly work towards that direction to be able to give closer quarterly guidance -- but we're not quite there yet. As you have heard, and as you are I'm sure aware, there's a lot of history of missing projections and targets, so for us it is really, really key now to win the credibility and the level of confidence that we had with the Bluehill ID shareholders, we want to get that transferred to Identive as well.

Sure. Thank you very much.

Thank you.

Ayman, we have couple more questions from the German-speaking audience. Fabien, do you want to give us those, please.

Correct. I can read one through. Recently Identive announced that the business units Hirsch and SCM has won an order in Abu Dhabi. There were several questions raised about the order size, and when this order would actually bring in revenue. Can you comment on this?

Again, I think any security order,we can only comment to the extent that our customers allow us to do so. So we were very happy with this order in Abu Dhabi because, a lot of people hear me talking about conversions and the excitement that we have in Identive being really right in the center of three important conversion strengths. This was an order that -- so coming together of conversions of physical and IT security, and we did with a very progressive company in Abu Dhabi called Native Systems. And the order was actually received quite a while back, but it took us two months or so, to get the permission to be able to do a press release about it. The significance of the order is in the conversions application, and I can tell you it's a multi-hundred thousand dollar order, but I cannot really give you any more comments than that.

And this concludes the question-and-answer session. I would like to hand the call back over to Darby Dye for closing marks.

Okay. Thank you. Thanks to all of you for joining us today. And we look forward to updating you on our progress in Q2 -- at the end of Q2. Thank you. Bye-bye.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect. Good day.