庫力索法 (KLIC) 2019 Q1 法說會逐字稿

Greetings, and welcome to the Kulicke & Soffa 2019 First Fiscal Quarter Results Call.

(Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Joseph Elgindy, Director of Investor Relations and Strategic Initiatives for Kulicke & Soffa.

Joseph, you may begin.

Thank you, Jeremy.

Welcome, everyone, to Kulicke Soffa's First Quarter Fiscal 2019 Conference Call.

Joining us on the call today are Fusen Chen, President and Chief Executive Officer; and Lester Wong, General Counsel and Chief Financial Officer.

For those of you who have not received a copy of today's results, the release as well as the latest investor presentation are both available in the Investor Relations section of our website at investor.kns.com.

In addition to historical statements, today's remarks will contain statements relating to future events and our future results.

These statements are forward-looking statements within the meaning of the Private Securities litigation Reform Act of 1995.

Our actual results and financial condition may differ materially from what is indicated in those forward-looking statements.

For a complete discussion of the risks associated with Kulicke & Soffa that could affect our future results and financial condition, please refer to our recent SEC filings, specifically the 10-K for the year ended September 29, 2018.

I would now like to turn the call over to Fusen Chen for the business overview.

Please go ahead, Fusen.

Thank you, Joe.

We were again able to achieve our quarterly revenue targets through this softer period of demand, despite the current market headwinds, which we believe are near-term in nature, Our entire organization remains extremely focused to drive long-term business enhancements and sustainable growth.

Specifically, we expect to benefit from three primary areas; execution of our fundamental optimization plan, ongoing semiconductor unit growth within our core offerings, and the higher volume adoption of advanced packaging.

We have made meaningful improvements to the business over the past 2 years, including a more aggressive approach to capital allocation and shareholder returns and also fundamental improvements supported through organizational change and a renewed set of priorities, which have already strengthened our positions and provided new vectors of growth.

Today, we also announced our fourth $100 million share repurchase authorization.

Lester will provide some additional detail on our repurchase activity shortly.

Despite the near-term environment, we are very excited about our current business prospect.

Our product portfolio and the development pipeline is extremely in line with LED, NAND and IoT capacity expansion, electric and autonomous vehicle adoption and the several technology inception, providing new advanced packaging opportunities.

Our development team continues to rapidly develop new tools to strengthen our competitive positions and expand our served markets.

The entire organization is committed to exiting this nearterm period as a stronger, more diversified and more profitable organization.

Looking back at the December quarters, we delivered revenue of $157.2 million, at the higher end of our guidance range, gross profit of $74.8 million, gross margin of 47.6%, and the non-GAAP EPS of $0.25.

Product mix combined with a prudent, but aggressive cost control helped to enable these levels of profitability.

Compared to the December quarter a year ago, we have reduced our global workforce by nearly 15%, while increasing the rate of our development efforts.

This added flexibility is facilitated through our mix of fixed and the temporary headcounts, which allows for consistent gross margin performance.

Over the December quarter many of our end markets, including advanced packaging, general semi and LED, as well as memory experienced a softness in demand, whereas automotive and industrial demand increased sequentially.

From a regional standpoint, the largest sequential reduction in sales, stemmed from demand of our Chinese Outsource Semiconductor and Assembly, OSAT customers and specifically our ball bonding business.

While our equipment shipment to China has increased over the years, It's very important to remind investors that our market share of semiconductor ball bonding equipment in China is similar to our market share in other parts of the world.

China has simply been absorbing the majority of incremental capacity over the past three years.

We believe that aggressive capacity additions over the past few years combined with the broader trade tensions are both contributing to this softness.

In addition to the emerging China dynamic, our ball bonding business has positively benefited by the long-term growth of our OSAT customer base, where we are overwhelmingly the tool of choice.

As many of you know, over the long-term, our OSAT customers have grown faster than the industry due to growth in the fab labs and the fab lab model, as well as a truly improved operational efficiency.

With that, OSATs also generally have the most variable ordering pattern as they generally provide the industry's flex capacity.

Our wedge bonding equipment demand, which is more aligned with longterm automotive and industrial trends, was effectively flat sequentially.

Overall, automotive and the industrial demand, including services, sequentially increased.

Moving on to APS, our aftermarket product and service segment represents 26% of total revenue and decreased only by 5% sequentially.

APS gross margin improved from 55.2% to 57.6% sequentially.

We continue to make a progress on our long-term APS strategy and are committed to growing this high quality recurring revenue base of business into the longterm.

I would now like to turn the call over to Lester Wong, who will cover this quarter's financial overview in greater detail.

Lester?

Thank you, Fusen.

My remarks today will refer to GAAP results, unless noted.

Net revenue for the quarter was $157.2 million.

Strong gross margin of 47.6%, generated $74.8 million of gross profit.

Gross margins of 47.6% exceeded our prior expectations due to product mix between capital equipment and APS.

We continue to target margins of roughly 45% over the near term.

Operating expenses came in lower than expected due to tight controls on discretionary spending and also headcount reductions, as Fusen mentioned.

In the long term, we plan on maintaining our existing operating expense target of $53 million of fixed quarterly expenses, plus 5% to 7% of variable quarterly expenses tied to revenues.

We booked a net tax expense of $10.6 million and continue to maintain our long-term effective tax rate target of around 15% going forward.

$7.7 million of this tax effect is related to an additional provision associated with the Tax Cuts and Jobs Act of 2017.

Specifically, this additional provision was related to new guidance issued by the U.S. Department of Treasury on November 28, 2018.

Turning to the balance sheet.

We ended the September quarter with a total cash and investment position of $632.9 million or $9.33 on a per share basis.

During the quarter, we have continued to return capital to investors.

We deployed $25.5 million and repurchased 1.1 million shares and also paid our second $0.12 dividend.

At the end of our December quarter, we had approximately $72 million remaining under the existing share repurchase authorization.

We were happy to announce the additional $100 million increase to our share repurchase authorization, asset growth in today's earlier press release.

Since our initial repurchase authorization in August 2014 through to recent December quarter, we have deployed $227.8 million and repurchased a total of 13.8 million shares at an average price of $16.51.

Our fundamental efforts to organically expand our served markets and increase share gains at the greatest potential towards sustainable value creation.

The ongoing share repurchase activity provides an additional lever and enhances our value delivery process.

We also want to remind investors that we continue to operate under many tax jurisdictions outside of the U.S. This global entity structure create nearterm constraints on the movement of our cash balances and the availability of U.S. cash.

We're currently reviewing some of short-term funding alternatives to allow us to continue to optimistically execute the existing repurchase authorizations in the most efficient way.

On a book value per share basis, we closed the December quarter with $12.65, a slight decrease of $0.17 from the September quarter.

Working capital defined as accounts receivable plus inventory less accounts payable decreased by $60.3 million to $250.5 million.

From a DSO perspective, our day sales outstanding decreased from 119 days to 107 days.

Our day sales inventory increased from 105 days to 120 days and days to accounts payable increased to 44 days to 51 days.

This concludes the financial review portion of our call.

I will now turn the discussion back to Fusen for the March quarter business outlook.

Thanks, Lester.

We continue to believe that soft demand environment is only a near-term headwind and that stems from a number of factors: a fairly aggressive rate of capacity addition over the past 2 years; a hesitation of new capacity additions due to the global trade tension and the seasonal companies; and reduced visibility ahead of Chinese New Year.

We do not believe this shortterm correction has any material effect on our competitive positions or any material effect on the longer-term market trends driving semiconductor content in automotive, the growth of more connected consumer electronics, the ongoing adoption solid state memory and the increasing value advanced packaging in rest of the product industry.

As mentioned in today's press release, we anticipate revenue to be $120 million plus or minus $10 million and are anticipating a general recovery in demand into the June quarter.

Although the Softer market environment creates a nearterm challenge, we will continue to benefit from 3 specific areas into the long-terms; execution of our fundamental optimization plan, semiconductor unit growth benefiting our core offering and a higher -volume adoption of advanced packaging.

First, our fundamental optimization strategy is to gain share in the recurring APS business and also improved profitability of our high volume core equipment offerings.

There continue to be sizable opportunities to grow our mix of service, spare parts and software in our core businesses and also those within advanced packaging.

This opportunity is being facilitated through a more rapid and parallel development effort, A dedicated APS business organization, more structured ownership and accountability and performance-based incentive compensation, very aligned with both shareholders and the corporate goals.

Secondly, the majority of semiconductor unit growth will continue to drive demand for our core and the market leading ball and wedge bonding businesses.

This businesses has and will continue to be central in enabling fundamental and significant trends, such as those in LED lighting, the global adoption of connected consumable electronics, gross and the share gains of solid state memory and the increase content of semiconductor in automotive.

These are all key areas where we already have strong leadership positions.

Finally, our investment in advanced packaging help provide access to a new and growing market, where we anticipated technological replacement and the share gains.

Over the past few months, we have seeing true advanced packaging being utilized in graphic processors, high-bandwidth memory and the most recently a major IDM announced utilizing advanced packaging technique in their future logic architecture.

Compared to the trillion semiconductors packages produced in 2019, advanced packaging are currently a niche applications, a lot of the future is promising.

We continue to view calendar 2019 a qualification year for several of our advanced packaging products and we continue to anticipate more material revenue contribution from our AP portfolio into 2020.

As a brief update, we are currently in 1 qualification and are preparing for 2 additional qualifications for our Katalyst, high accuracy, high throughput, flip-chip tool which targets several high-density memory and logic applications.

We are very happy with our industry-leading performance in both equipment accuracy and the productivity in this market.

We are also in production at a major OSAT with our APAMA Thermo-Compression tool supporting a logical application that previously utilized a traditional flip-chip package.

We anticipate several additional shipments over the coming years.

In addition to the advanced packaging opportunities supported the IC markets, we are also aggressively pursuing our micro and mini LED opportunities supporting the evolving display market.

This opportunity provides a wide array of potential end applications and the customers, and our development is progressing well.

In our view, the major obstacle limiting commercial adoption of this LED technology is that there is no existing solution that has the the necessary combination of speed and accuracy for efficient production.

We believe our tool directly addresses this challenge as it's up to 5 times faster than traditional pick and place tool and is currently being evaluated by a few potential customers.

We continue to anticipate several initial orders by the end of fiscal 2019, and the higher volume adoption into 2020.

We look forward to updating you on the progress and customer acceptance of this tool.

The entire organization remains extremely focused on executing toward this multi-faceted business strategy

. The strategic execution combined with a thoughtful capital allocation, can drive tremendous operating leverage through our business model and deliver significant value to investors over the coming years.

Considering our balance sheet, broadening portfolio, future development potential and our ongoing focus on profitability we are very confident our fundamentals and the growth prospects will continue to be further enhanced as we exit this period of nearterm softness.

As always, we appreciate your ongoing support.

This concludes our prepared remarks.

Operator, we will now be happy to take the questions.

(Operator Instructions) Our first question comes from line of Krish Sankar from Cowen.

Please proceed with your question.

Thanks for taking my question.

I have few of them.

First one is for Fusen or Lester.

If I look at your gross margin guidance and OpEx kind of color, are you guys going to be breakeven Or are you going to be like operating loss in the March quarter?

Well, Krish, we're very, very focused on cost and I think for the March quarter the breakeven would be around $130 million, so based on the midpoint of our guidance I think we would have a small loss.

Got it.

Okay.

That's helpful, Lester.

And then 2 other questions.

One is, in the past, typically, based on your customers, you kind of get visibility into the March quarter or beyond, right?

After Chinese New Year, when customers come back to place new orders based on demand.

Do you think there is a similar dynamic going on right now?

Or do you think because the end markets are so slow and have higher levels of inventory that you might not see the dynamic this time around?

Well, Krish, actually, this downturn actually have 2 force.

One is in our memory cycle as anybody experience, right?

So we are part of that, and the memories of our roughly 10% of our revenue.

And the other dynamic, IConn turner effect, actually has a more impact, more pronounced impact to us and because China has -- it's because of our revenue.

And so we believe the current softness can actually potentially translate into the revenue for next few quarters, and I understand I think visibility is a little bit less than before due to trade tension additional competent factors.

Got it, got it.

And then, just a final question, Fusen, for you.

Looks like, you guys are upping the buyback, you have been pretty aggressive about it.

I'm kind of curious, is that because you're not seeing any other interesting assets out there?

Or what we think about like capital allocation with regards to buyback over M&A?

Krish, why don't I answer that?

I don't think the increased and the authorization of the share buyback means we don't see interesting opportunities out there.

As you know, we have a very balanced capital allocation program between share buyback or/and dividend, as well as funding organic growth as well as looking for M&A opportunities.

Given the, I guess, softness in the market as well as lack of visibility, I think, right now, we're not really focused on M&A, but that does not mean that it's an interesting opportunity that is adjacent and also is a good return of investment comes up that we would not do that.

So Krish, maybe I can say a little bit.

So we believe that 2019 is a good year for our multiple products' penetration.

We introduced multiple products and we're going to make sure each order is successful.

So we were seriously in preparation.

And in terms of action, we believe it's going to be also in 2019.

So this year, we are going to focus actually in our market share gain and also penetration of the new products.

In terms of M&A, we believe the future target need to provide quality of the growth, right?

So it's going to be in adjacent or complementary industry and is a fit -- need to fit a few criteria.

Number one is need to have a comparable gross margin and internal culture, cost of synergy.

So these are few criteria.

And also, products need to have industry-leading position.

So there are a few criteria.

So I just want to assure you, we are not giving up, but we are very careful.

Number one, focusing on short term; make sure our new products will be successful.

And then number two, we want to make sure the target is going to have a quality of the growth to match our K&S culture and also gross margin portfolios.

Our next question comes from the line of Craig Ellis from B. Riley FBR.

Yes, and congratulations on the strong margin execution and the continuation of the capital return program.

Lester, I wanted to follow up on margins to start.

Gross margins were 260 basis points better than what we thought and operating expense was materially lower.

Can you just go into a little bit more detail in terms of what it was that drove those to positive variances?

And well, I know you're not changing some of the target, the longer-term target parameters, around either of those line items.

Is there a reason why those wouldn't persist as we look into the March quarter?

Well, Craig, I think the gross -- as you know, our gross margin depends a lot on product mix, right?

So the product mix for the quarter in capital equipment actually was less LED and more on the IC market, which has higher margins.

In addition, the wedge bonder and the APM are segments of our businesses, actually did very well in the December quarter.

And they're also high-margin, I guess, businesses.

So that accounts for the, I guess, gross margin variance.

As far as the OpEx variance, as Fusen said, we're very, very careful on cost control, so both in discretionary spending as well as we have a very flexible manufacturing model.

So based on those 2 items, the OpEx came in lower than we anticipated.

As far as going into the March quarter, I think we'll continue to look at cost.

And as far as the mix is concerned, obviously, that depends on the customers.

I think we're speaking to the $53 million, plus 5% to 7%, as -- because I think that's -- we think that will probably be where it's going to end up.

That's helpful.

Fusen, the next question is for you, and it's more of an intermediate-term question.

So clearly, I think we're hearing from companies that there's a lack of very near-term visibility potentially for back-end companies.

Some of that starts to clear after Lunar New Year [if you're in another] couple of weeks.

But as we think about the typical profile of the business, typically, I think we would see a strong second half, half-on-half.

The question is this, as you talk to your customers and how they're thinking about their capacity needs and their technology needs, you see potential for that half-on-half increase to occur for some reason.

Is the capacity situation such that we wouldn't see something similar to the typical seasonal profile where the business has a nice gain in the second half?

Okay.

Craig, thank you for your questions.

So if we look at it, I think we are still in the middle of a slowdown.

So if you look at the previous slowdown in 2015, it will last about 3 quarters, right?

And I believe, right now, the supply chain efficiency is much, much higher.

So if we look back, we saw -- started to see the softness in second half calendar year of 2018.

So including the March quarter, it's already 3 quarters, right?

So there's a possibility the current weakness, part of current weakness, can become some revenue in the next couple of quarters.

And also, if you look at the annual -- the forecast annual semiconductor unit growth rate still positive.

So that means whatever weakness right now will view a better revenue profile for everyone for these industries.

So for the June quarters, beyond March quarter, we feel like (technical difficulty) in LED can also offset -- can be better.

And I also mentioned in our AP portfolio and the mini-LED, a lot in the initial stage can also contribute to the growth.

So in short summary, I think we are more confident in second half than in first half.

I think that most of our industry feel this way.

I wish I answered your questions.

That's helpful.

And then the final question I have, and then I'll get back into the queue, is regarding the capital return program.

It's a little bit different than the former one.

And it's this, the -- clearly, the industry is going through, in large part, a macro-driven correction and that's had significant pressure on industry stock prices over the last 4 to 6 months.

As we think about the pacing of the new $100 million program, is there any color you can provide in terms of how we might think about the timing with which it would be executed and the degree to which you would tend to be more opportunistic at lower levels versus just choosing a more ratable approach over a certain period of time?

So Craig, we certainly believe our stock is undervalued and which is why -- and we have very -- a lot of confidence in our future growth initiatives, which is why the board has authorized an additional $100 million in the share repurchase program.

As far as the cadence is concerned, we will continue to be optimistic.

I mean, there are some restrictions in terms of U.S. cash based on our overall tax structure, but we believe that we have sufficient funds to -- both for the dividend as well as the share buyback.

So I think the cadence will depend a lot on the macroeconomic factors.

Our next question comes from line of David Dooley from Steelhead Securities.

Yes.

A couple questions for me.

Could you talk about what you think your utilization rate of your wire bonders' fleet is now?

Sure, David.

Based on what we're seeing, I think for the ball bonder, it's probably around 70%.

Okay.

And is wedge bonder and other equipment similar -- in the similar range?

I think wedge bond is probably a little bit higher

as well as the APMR.

Then I think -- I was -- I have trouble hearing some of the prepared comments.

And so I was just wondering if you could repeat.

You talked about China being weak.

Could you just review which end markets were the weakest during the quarter, or the outlook, I guess?

Just as a clarification.

Okay.

So David, I think in my script preparation, I mentioned -- actually, the weakness actually is in OSAT customers in China.

And as you would know, the OSAT in China in the past few years, they really provide additional capacity for the whole.

So that's really the weakness we are seeing right now, it's in OSAT customers.

And the end markets that those OSAT customers serve, if it's in China, then I imagine there's a cryptocurrency impact.

But is there any other end markets that stand out as weaker than others?

Everybody know already smartphone is not very strong.

But actually, this will actually have -- a lot of this is still fastest growing segment.

We anticipate memory should be better in the -- probably beyond second half of this year.

And 5G actually now is initial stage, can be better.

So I think that weakness -- but I think there are also some strong segments.

Okay.

And then could you just help us understand, as far as 2018 goes, how big do you think the overall wire bonder market was?

And if you could take a stab at what you think it would be for the whole year in '19, that would be great.

Okay.

David, we don't actually provide the guidance beyond one quarter.

But you see, I think this market, as I mentioned, has 2 acting force.

One is that we are going through a cycle in the semiconductor we call memory cycle.

The other one I think is macro.

It's probably a little bit difficult to forecast.

But if you can see that from 2016 to 2017, we grow 30%.

So things can change quickly, right?

So overall, we feel positive to move forward.

But the recovery I think depends a lot on the macro, on the trade talk.

But I am a firm believer that this industry fundamental is very strong, including memory, and that including our technology that provide a better life for us in the futures.

And we cannot control [all of them], but actually we forecast what we can do.

In a new product production, make the product better and have a right cost structure for the company.

Okay.

Final observation or question for me is, I think you talked about growing unit volumes.

I think I've seen forecasts in the 5% to 6% range this year down from, let's say, 10% or 11%, that combined with utilization rates of your wire bonder fleet being in the 70% range.

If you think you have growth in units, wouldn't it stand to be that you'd have some snapback in your wire bonder business sometime in the June or September quarter for -- if units grow overall?

So David, as I mentioned, we feel like the current level is quite low for us already, and we believe moving forward in ball bonder there are 2 areas I think that can benefit us in terms of growth.

One is in LED and also the other one is in our OSAT customers.

Just to mention, the utilization rates are 70%, but I think that still vary in our customers.

So some customer is stronger.

And I want to remind you that internal capacity, our revenue actually is additional capacity, just talking about capacity of our customers.

And there are some customers still very positive.

So overall, we believe this is a quite low volume for us and moving forward, the business situation for the ball bonder should start to come back.

And also, as you know, we have multiple new product introductions, so we feel good about the direction and path and the strategy for our company.

Our next question comes from the line of Tom Diffely from D.A. Davidson.

So I guess getting back to the utilization rate of 70%.

When you look at the normal utilization rate for this time of year, kind of the weak part of the year, how does that compare to, say, 70%?

Tom, I think everyone knows that as we indicated, as Fusen indicated, that it's a little bit lower.

I mean, utilization rate goes down a little bit, obviously, in this quarter, because of the Chinese New Year, but again, China and the rest of Southeast Asia.

But I think 70% is low, again, due to the softness in the market and a little bit of overcapacity.

Yes.

And Tom, as we discussed, the weakness actually we've seen in OSAT, particularly in China, the ordering pattern can change quickly, right?

So they can quickly turn this off, they can quickly turn this up.

I think at this moment, also depends on the macro issue.

And we strongly believe this will be results sooner or later, and hopefully, this will be sooner than later.

Okay.

I know in the past when utilization rates got up into the 80% range, that's when customers started to order for capacity buys again.

Is it still the same dynamic on an average basis?

Yes, yes, we believe so.

But again, as Fusen indicated earlier, right, 70% is an average across all the customers.

So there are pockets of customers that are probably above 80%.

There are some frankly that are very low.

So I think definitely, as it reaches above 80%, they will start buying.

But it doesn't have to be 80% for all customers.

But also, Tom, I think as we mentioned, the China effect right now also has a lot do with the trade talk.

So hopefully with the results, things can turn quickly.

A lot of this, no assurance.

Yes, that makes a lot of sense.

So I guess the next question leading to that is, what are your lead times right now?

So business wants to pick up, how long would it take you to grab the order, build and ship to get the revenue?

Well, Tom, we've kind of changed our sort of production strategy a while back and we actually do hold more inventory now.

So in the event that there is a ramp, we believe we can react to it very, very quickly.

Okay, great.

And then finally, when you look at the -- well, I guess 2 more questions.

So first of all, you talked about the LED market potentially being a nice -- a near-term driver to some of the other things like memory.

How big is the LED market for you today?

Is it still around that 10% range?

And what if LED was to ramp significantly, would that have a material impact on the margin structure?

So Tom, actually, I am sorry.

I think we hear you break up a little bit.

So your question is the LED?

Yes.

So I think LED for the March quarter, basically, we feel is a little below.

And beyond that, I think LED can pick up a little bit.

In addition, I think in my script, we mentioned about the mini-LED and micro-LED.

And we are more -- we are quite positive on the prospect of our mini-LED and micro-LED.

There are several discussions and we believe this year can be initial qualification and we can see a better result, probably 2020.

Okay.

I know we've talked a lot in the past about the micro-LED, what you would do there.

How was the mini-LED different?

What is the set-up there?

So the LED actually -- going to mini-LED and micro-LED, there are 2 parts.

One is general lighting, and actually we are in backlighting.

And this provides alternatives to the OLED and -- which can actually save the battery life a greater deal, right?

So this is another alternative to have better technology for the spread, rather than OLED, and we probably will see -- can see initial adoption in 2020.

(Operator Instructions) Our next question comes from the line of Christian Schwab from Craig-Hallum Capital Group.

Fusen, in your slide on the website, I was kind of surprised that you left out your long-term target model for fiscal year '21.

For the business to recover to roughly 300 -- or get to $300 million a quarter from where we're going to start here in March of 2019.

Can you walk us through how that could be remotely in the right zip code, please?

Okay.

So Christian, I think when we have the model actually in the semicon -- actually July last year, and I think our industry is in an up end.

And in 2016, we grew 30%.

2018 actually grew about 10%.

So with our product portfolio, including the AP, TCB and the flip chip, and also we have PIXALUX.

And our APS I think is also in a growth streak.

We believe 10% is sustainable.

But at least the macro economy is really -- not everybody is in control.

But in long term, we are still very positive.

If this China weakness can actually resolve quickly, I think that 2021 is achievable for us.

At what point would we need to see clarity and growth return to the Chinese market to begin that type of trajectory?

Is that something that needs to get resolved in the next quarter or 2 in order to get there?

Could you give us a generic baseline to keep track of?

I think we see the positive momentum in the second half calendar year.

And I think that we should have a good chance to achieve that.

We have reached the end of the question-and-answer session and I will now turn the call back over to management for closing remarks.

Thank you, Jeremy.

Before closing, we wanted to inform investors that we will be participating in several upcoming road shows as well as the Susquehanna Technology Conference in New York City in March 12.

Thank you all for the time today.

As always, please feel free to follow up directly with any additional questions.

Jeremy, this concludes our call.

Good day.

This concludes today's conference, and you may disconnect your lines at this time.

Thank you for your participation.