Lifecore Biomedical Inc (LFCR) 2005 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Landec Corporation second quarter 2005 earnings conference call.

At this time all participants are in a listen-only mode.

Later we will conduct a question and answer session and instruction will follow at that time.

If anyone should require assistance during the conference you may press star then zero on your touch-tone telephone and as a reminder this conference is being recorded.

I would now like to introduce your host for today's conference, Mr. Gary Steele, President and CEO of Landec.

Mr. Steele, you may begin.

Good morning and thank you for joining Landec's second quarter fiscal year 2005 earnings conference call and webcast.

I have with me today Greg Skinner, the Company's Chief Financial Officer, who will discuss our financial results in just a moment.

During today's call we may make forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially.

These risks are outlined in yesterday's news release as well as in our filings with the Securities and Exchange Commission including the Company's Form 10(K) for the fiscal year 2004.

I also want to mention that a replay of this call will be available through next Wednesday, January 12th, and can be accessed by calling (888) 266-2081 or (703) 925-2533.

The access code is 607578 and the webcast will be available for 30 days via the Internet at www.landec.com The results for the second quarter and the first 6 months of fiscal year 2005 are in line with achieving our goals of continuing to grow revenues and improve our bottom line results.

Consistent with the seasonality in our business and with the results from fiscal year 2004 the we expected that the first half of fiscal year 2005 would show losses and the second half and the full year are expected to be profitable.

Our food business excluding the domestic commodity portion which we sold in June, 2003, grew 17 percent for both the quarter and the first 6 months of fiscal 2005 compared to the same periods a year ago.

We are working closely with Chiquita to develop new, innovative packaging formats using our proprietary banana packaging technology for Chiquita Brand banana.

We reduced our net loss by 49 percent or $775,000 during the second quarter compared to the same period last year.

As a reminder seasonality is inherent in our 2 core businesses, Apio, our food business, and Landec Ag, our agricultural seed business.

Apio is subject to produce sourcing issues during the late fall and winter months and Landec Ag recognizes nearly all of its revenues and profits during our third and fourth fiscal quarters while realizing essentially no revenues during our first and second fiscal quarters.

Before I elaborate more on our year-to-date operating milestones let me turn the call over to Greg Skinner who will comment on the financial results.

Thank you, Gary, and good morning, everyone.

As outlined in yesterday's news release Landec reported total revenues for the second quarter of fiscal year 2005 of 50.7 million versus revenues of 43.3 million for the same period a year ago.

The increase in total revenues during the second quarter was due to revenue growth in Apio's value-added vegetable produce business which increased 23 percent to $28 million compared to $22.8 million in the same period last year and a 16 percent increase in revenues from Apio's export trading business which increased to $18.5 million during the quarter from 15.9 million in the same period a year ago.

For the second quarter of fiscal year 2005 the Company reported a net loss of $808,000 or 3 cents per diluted share compared to a net loss of 1.6 million or 8 cents per diluted share in the same period last year.

The significant decrease in our net loss during the second quarter compared to the same period last year is due to several factors.

Items decreasing the net loss include, first, a $671,000 increase in gross profits from Apio's value-added business.

Second, a $217,000 increase in gross profits from Apio's export business.

Third, a $312,000 decrease in research and development expenses primarily due to lower research and development requirements in Apio's non-banana related programs and, lastly, a $172,000 reduction in interest expenses.

These decreases in the net loss were partially offset by planned increases in sales and marketing costs for Apio and Landec Ag of $713,000 reflecting a greater emphasis on sales and marketing initiatives.

Notably Apio's overall net income grew by $610,000 during our second quarter, an increase of 71 percent compared to the second quarter of last year.

Turning to the balance sheet, during the first 6 months of fiscal year 2005 our consolidated cash balance decreased by $243,000 to a cash balance of 6.2 million.

This slight decrease was primarily due to, first, net cash used in operations of 1.6 million, primarily from the purchase of seed corn which was down from $4.8 million used in operations in the first 6 months in the prior year, second, the purchase of $2.1 million of property, plant and equipment and, third, a decrease in net borrowings under the Company's lines of credit of $1.1 million.

These decreases were offset by the issuance of $1.2 million of long-term debt for the financing of certain processing equipment at Apio to further automate our value-added processing facility and the sale of $4.4 million of common stock, 3.5 of which was purchased by Chiquita and the remainder purchased through the exercise of stock options.

As of November 28, 2004 we had availability on our lines of credit of 13.3 million, up from 10.3 million at the end of the prior quarter.

Additionally on the balance sheet during the first 6 months and consistent with the seasonal nature of our businesses inventories increased 53 percent to 17.3 million, primarily due to the purchase of seed corn, and deferred revenues increased to 3.2 million from 807,000 at the end of fiscal year 2004 due to deposits for future seed corn shipments for the 2005 planting season.

That concludes my formal presentation.

Let me turn the call back to Gary.

Thanks, Greg.

A very important milestone thus far in the fiscal year 2005 is our joint technology and licensing agreement with Chiquita announced in September, 2004.

We have formed a joint development collaboration with Chiquita that is focused on applying Landec's innovative packaging technology initially targeted for new retail channels that traditionally haven't sold bananas but would like to.

Examples of such channels are convenience stores, retail coffee chains and drug stores.

We expect that Chiquita's market testing of new packaging formats using our technology will begin within the next few months.

Consistent with our comments last quarter we do not expect material revenues or material gross profits from our banana program in this fiscal year 2005.

The first 6 months of fiscal year 2005 have set the ground work for the rest of fiscal year 2005.

In addition to entering into an agreement with Chiquita, we have numerous achievements thus far this fiscal year.

First, value-added revenues for our food subsidiary, Apio, have increased 18 percent.

Notably sales of the value-added vegetable tray products increased by 97 percent and sales of the value-added 12 ounce product line increased by 14 percent compared to the first 6 months of last year.

In fact according to A.C.

Nielsen, for the 3 months ended September 30, 2004, Apio's market share of sales of vegetable trays to retail grocery stores in the United States is 44 percent, up from 29 percent for the 3 months ended September 30, 2003.

Second, Apio grew its produce export revenues by 27 percent and export gross profits by 33 percent compared to the first 6 months of fiscal year 2004.

Our export business, Calex, is currently one of the largest U.S. exports of broccoli to Asia.

Third, Landec Ag has introduced 26 new corn hybrids for 2005, bringing the product lineup to 116 hybrid seed varieties, 55 of which are hybrid offerings that will be using Intellicoat Early Plant seed coating technology up from 32 hybrids from last year.

And fourth, we reduced Company-wide interest expense by $328,000 or 62 percent compared to the first 6 months of last year.

Overall we have reduced our year-to-date net loss by $707,000 or 32 percent compared to the first 6 months of fiscal year 2004 and have reduced our loss per share from 11 cents to 6 cents.

Looking to the future we have 5 primary objectives for fiscal year 2005.

First, grow our value-added specialty packaging food business.

Second, grow our ag seed customer base and corresponding revenues for all of our seed products.

Third, commercially launch our banana packaging technology with Chiquita.

Fourth, continue to add strategic partner relationships in each of our businesses.

And, fifth, increase revenues to over $200 million and meet or possibly exceed our financial plan to double net income over fiscal year 2004 net income of $2.9 million.

Through the first 6 months of fiscal year 2005 we are on plan.

As we mentioned during the last conference call we have several challenges this fiscal year including increases in our raw material produce and packaging costs for our food business which are factored into our plans.

As for the growth drivers in our specialty packaging produce business we will focus primarily on branded products for the retail grocery market where we see substantial opportunity to expand our store presence.

In addition, steps that have been taken to reduce our risk in produce sourcing during the late fall and winter months are working and to date there has been no significant financial impact from produce shortages.

In our seed business we are currently behind our plan for fiscal year 2005.

As explained in yesterday's press release, this was a particularly late harvest year in much of the corn belt, especially in the northern corn belt.

While farmers are focusing on harvesting their crops they don't concern themselves with ordering seed for the next growing year.

We currently have a good pipeline of prospective customers for our sales organization to focus on but time is of the essence since spring is fast approaching.

We are hopeful that by the time the selling season ends for Landec Ag we will meet our internal sales goals for fiscal year 2005.

We continue our efforts to validate and sell our early plant corn seed products directly to the farmer through our Fielder's Choice Direct sales organization.

In addition, Intellicoat Early Plant coated corn is currently marketed through 10 seed partners up from 6 seed partners for last year.

We are focusing our Early Plant coated corn program on small and medium size seed companies that seek new, differentiable products where Intellicoat coatings can help the farmer increase yield and profits.

The measurable benefits to our customers in 2004 and in prior years strengthen our already positive outlook for the continued growth in the use of Intellicoat Early Plant coated corn.

Turning to our banana program, we continue to work closely with Chiquita to achieve the goal of commercializing products using our technology with Chiquita Brand bananas.

We see no reason at this time to change our original estimate of a $1 million loss in our banana program in fiscal year 2005 to cover R&D and start up costs which is substantially down from the $2.4 million loss in our banana program in the fiscal year 2004.

We are actively pursuing partners in all aspects of our businesses and we are hopeful that we will be entering into one additional partnership arrangement that utilizes our polymer technology before the end of this fiscal year.

In summary, for fiscal year 2005 we plan to increase revenues to exceed $200 million in sales and to meet or possibly exceed the doubling of fiscal year 2004s net income of $2.9 million.

We continue our commitment to grow profitably and deliver highly differentiable branded products that provide increasing value to our customers in order to enhance shareholder value.

We appreciate your ongoing support and we are now open for questions.

(Operator Instructions) Our first question comes from Bill Gibson.

Good morning.

Good morning.

Gross margins on value-add where they were down slightly sequentially and you talked about raw material costs, is that on buying the produce or is that on packaging and is that what's causing that or what's behind that?

Hi, Bill, it's Greg.

It's a little bit more associated with product mix at this point.

If you recall what we disclosed either earlier this year or last quarter was that there was some reshuffling within one of our club store customers and that happens to be some of our higher margin products.

And until we start gaining that lost volume back it will somewhat depress our margins as a result.

Where do we stand, is it potentially get that customer back in those districts?

Potentially, yes.

And we are working it, trust me.

And on the value-add side -- so it sounds like the big upside potentially to meeting your forecast would be if you were to land a large supermarket chain on the Dole Brand.

Is that correct?

That's one of -- Bill, this is Gary.

That's one of many ways we can do it but I would add to the Eat Smart brand as well.

We've got quite a bit of upside here on both the Eat Smart and the Dole brand side in terms of large customers that we could add.

Potentially in other words Eat Smart into a large retail supermarket?

Yes.

But, you know, it's dole or Eat Smart.

We are happy to add either.

And the club -- there is still upside on the club store front.

I think you gave the reason but I'm scratching my head not living in the farm belt on seeds, why that's not growing more, specifically looking at the balance sheet and seeing deferred revenue down year-over-year.

First of all as opposed to the food business which is a category that is growing and customers are eating more nutritious and fresh products, et cetera, et cetera, it's a zero sum game in the seed business.

New acreage is not being planted.

You did catch the point about the late plantings, right?

So that points well -- okay.

Right.

We are scratching it out like everybody else and we've got to take share from folks.

And we are having to struggle and figure that one out but we are late in the year here but we have a strong lead pipeline which is encouraging.

January is going to be a critical month for us.

And we hope to have our 15 percent annual growth which would be beating industry averages by quite a lot.

The industry is not growing that rapidly.

It's very modest industry growth.

You're talking about 2 to 3 percent industry growth.

Right.

I was kind of hoping for disruptive technology to --

And you're talking about the coated seed technology.

Let's talk about that for a moment.

We are finding that the really big players, and this was in our press release, are very distracted with the GMO traits.

That's where they are putting their money and their time and energy.

And frankly adding polymer coating technology is not a high priority for them.

And that's why our focus has turned to the small and medium size seed companies as well as using our own direct selling sales force to sell directly to the farmer and that's why it's taking longer, Bill.

Okay.

And just one last banana question, when will I be able to walk into a San Francisco Starbucks and get a fresh banana?

Okay, I'm not going to comment on Starbucks.

But there's a reasonably good probability that you will be able to walk into someplace on the West Coast in the next 90 to 100 days and see our technology in the western United States.

Good, thanks, Gary.

Uh huh.

Our next question comes from Jeremy Hillman.

Good morning, guys, just wanted to followup on a couple of things that Bill talked about.

Saw this morning Monsanto had an earnings release and they said that they were seeing strong seed sales and was wondering if you had any comments on that.

I know they mentioned they saw particular strength in Europe which I was wondering if the Incotech arrangement was going to lend anything going forward of significance for the rest of the year.

Jeremy, Incotech is in its infancy and it's not going to be a material player for us for several years.

Monsanto's play in Europe and here in the U.S. is in its licensing business.

You may know that its stock piling about $1 billion in licensing fees by licensing its Roundup Ready and corn root worm GMO Genetics.

And so that its play in Europe and here in the U.S.

We happen to be a licensee and our Fielder's Choice Direct sells 50 percent of our sales this year will be under license to Monsanto.

So our bags of seed, 50 percent of them have those genetics in the bag of seeds.

So Monsanto is doing quite well with that technology.

But in terms of Incotech, it's a small play for us at this point but they are making some headway with the coated seed technology but it's not a big factor for us at this point.

Okay, thanks.

One other question just getting back to modeling, looking at gross margins for the next couple of quarters going forward should those expand a little bit just as they did last year where the second half of the year saw you guys running better margins than the first half?

Yeah.

And the reason being, it's Greg, is that our seed business kicks in in the second half.

Right.

Begins in February, so you get one month in the third quarter, you get 2, 2.5 months -- well, a full 3 months if you'd like for the fourth quarter and our seed margins on average are around 40 percent.

Okay.

Obviously the more it contributes the more the overall margins for the Company will increase.

Right.

So it just basically comes down to if you guys really can get good traction with everyone you've got in the pipeline then you stand to do pretty well, then, it looks like?

Agreed.

Okay, great.

Appreciate it.

Thank you, Jeremy.

Our next question comes from Jim Schwartz.

Good morning, guys.

With Asian rust doing a lot of damage to the soy crop I'm just reading more and more about how corn is going to replace pretty much all that lost acreage, I'm just curious what you guys are seeing, because, I mean, we are not seeing it in deferred revenue but since it's a late harvest is that where the pipeline is coming from do you think, is it the incremental soy farmer who is switching over to corn or is it the same group of customers that you guys have sort of always had?

No, we -- if your question is, is our customer base built on the same customers year after year or are we growing new customers, is that your question, Jim?

Yeah, there's been articles about how Asian rust is killing the soy crop and these farmers are switching over to corn.

So I'm just curious if you are seeing this increase in the pipeline from soy -- farmers who are planting soy who now are switching over to corn.

We are seeing some of that Jimmy but we are in the middle of our sales year and there are so many chips on the table that are still moving around you don't know where they settle out until about the middle February.

So I would be at fault at telling you that I really know where this stuff is all settling out but we are certainly picking up new customers along the way here and I could have a better answer for you around mid-February.

Certainly there are more chips moving around the table here than we've seen in a number of years but some of that has to do also with some acquisitions that have been made recently where some of the traditional loyalties may be loosening up here a little bit.

Okay, thanks.

Thank you.

Our next question comes from Hank Finestein.

Good morning, Hank.

Good morning, how are we doing, guys.

Good.

First, I wanted to compliment you on the thoroughness of your financial reports it's quite impressive some of the Q&As that you included in the material I say.

Thank you, Hank.

We've been doing that for a few years now.

It is very helpful.

I had one question on one of the questions that was in here, you did indicated that you were in the process of pursuing other partners and I wondered if you would put a little more color on the type of companies you are talking to and the areas of technology that they might be interested in licensing.

We have 3 businesses.

We talked primarily today about our 2 core businesses that involve our food packaging technology and the things that we do in the fresh produce world and we also talked about our seed business.

We didn't talk as much about our third business which involves -- really, it's kind of our licensing and supply business where our polymer technology can be used very broadly in things that range from personal care cosmetics.

We have a program with L'Oreal the world's largest personal care company.

We have a couple of license agreements with a medical company and a dental company where our materials can be used in medical devices and one is with a dental company.

We also have some applications that can go into industrial uses, et cetera.

So we are in conversations with companies right now where our materials could be used from things ranging from floor coatings to different types of fabric applications to additives.

So it's companies that are Fortune 1000 companies that are looking for new types of materials that have unique properties.

Our materials are temperature activated.

We can turn on and off their properties.

They can become extremely tacky, we can turn off their tackiness just buy changing their temperature, they can change from solid to fluid.

They can change their flow rates.

We are change their volume by just changing temperature.

So we are in conversation with what I'd call well known Fortune 1000 companies and they are frankly tedious, long conversations because these companies are often reluctant to engage in outside R&D funded collaborations when they are having a hard time funding their own internal R&D efforts.

So especially in the last few years.

But now people are starting to realize they have to -- they have to go outside to seek new technologies and to find new ideas.

So those are the types of things that we are referring to in terms of new partnerships and new collaborations.

And in this third business, this licensing business, the heavy lifting will be done by the corporate partner we work with.

We have no intension of being the marketer or the commercial developer of those products.

We will license that technology to them.

We will supply them with the polymers and collect license fees, royalties and supply margin.

So that's what we meant when we talked about future partners.

Are any of these entities now testing these polymers on any applications so that they can determine the effectiveness of the polymer with respect to their individual needs?

Yes.

And about how many entities are doing that?

I'm guessing but it's about 3, 3 or 4.

Great.

And their pace is somewhat faster than a snail and -- but that's why you have 3 or 4 of these in the works and not one.

Great.

Well, keep up the good work, gentlemen.

Thank you.

(Operator Instructions) Our next question comes from Richard Hayden.

Good morning.

I'm very new to the story as my question will indicate but what are the benefits to Chiquita from using this packaging and does this lend itself to fresh-cut fruit?

Richard, those are 2 excellent questions.

In general the short answer to your question for the benefits to Chiquita is that once bananas have been ripened they have very short shelf life.

They are highly perishable and it's believed that about 4 out of 10 bananas that are presented to a consumer for purchase are never eaten.

And what we want to do is change that paradigm so that we -- what we do is we present an atmosphere for the banana to thrive and last longer.

So instead of the banana turning into a state that looks unappetizing and not eatable we will keep it fresh and appealing longer.

So we will extend the shelf life.

By how long do you think?

Well, it's going to depend on the circumstances but most of the testing we see is somewhere between 2 to 5 days which allows it to get through certain distribution channels and really makes a huge difference.

What is the incremental cost to Chiquita to achieve that shelf life?

In terms of what we are charging them?

Uh huh.

That would be information we are not going to disclose, I'm sorry to hold that one back, but it's not a lot, it's not significant, that's why we are in this deal together.

But what we do is extend the shelf life and I think you may have had a second question in there.

Does this lend itself to fresh-cut fruit?

Well,.

The first time you asked me you said fruit and the second time you said fresh-cut.

I am going to take those as 2 separate questions.

Yes it does less than itself to fruit.

If we had a choice we would rather apply the technology to whole fruit and there's a reason.

When you start slicing up fruit you are getting into a real tricky proposition here.

Fruit has a lot of sugar and it's going to get attacked by bacteria in the atmosphere if and if you ever made a fresh-cut fruit salad, boy, I tell you, it doesn't last very long.

Yes, our technology does work for certain types of fresh fruit.

Fresh-cut fruit is a very difficult proposition.

We haven't worked much on it.

Don't know is the answer to your question on fresh-cut fruit.

We think we have a pretty good fighting chance to apply our technology to whole fruit, at least certain targets of whole fruit.

Don't know on fresh-cut fruit.

One final question , in striking the deal with Chiquita which not only involves, I guess, licensing but an equity investment by them, does that preclude you from dealing with any other banana importer?

Again, another terrific question.

It turns out that they have in certain applications which are well defined, extremely well defined, they have exclusive rights in those well defined application areas on a worldwide basis as long as they are meeting annual minimum purchases of our packaging technology and that has to be met annually.

But the short answer is there are so many broad areas that are not in those exclusives that we could work with other people but to be honest with you we are so excited about working with them and there are so many things that we can do with them our focus for the foreseeable future is to exploit our technology with Chiquita.

So we are putting all of our energy into our relationship with Chiquita.

But, yes, technically we can work with others.

Okay.

All right, thank you and look forward to your future conference calls.

Thank you for being on the call.

Thank you.

Our next question come from Tony Brenner.

Thank you.

Gary, with respect to Landec Ag, at the moment behind plan due to the late harvest is it reasonable to think that as farmers were so late in focusing on the 2005 crop that your shipments this fiscal year would be unusually back-end loaded in the fourth quarter and that third quarter seed shipments, for example, could possibly be down with the make up at the end of the year?

Possibly, but -- this is Greg, Tony.

Right now we don't know but historically when people get their seeds usually it happens at the same time.

So if you're in southern part of the U.S. and in Texas you are going to want to get your seeds in February.

If you are further north you are probably going to get them later.

So, time will tell but at this point in time I wouldn't think it would vary too much from historical shipping date.

Okay.

Thank you.

Our next question comes from Wes Cummins.

Good morning, a couple of questions back on Apio.

Just to clarify on the market share numbers, does that imply that the available market left for Landec in vegetable trade here in the U.S. is 56 percent of the market or is this just pertaining to, I guess, what I would call the merchant market and how many of the stores still do this internally?

Of the stores participating in the A C Nielsen survey, it means 56 percent is remaining.

But there's also a number of chains that don't participate in the A. C. Nielsen survey.

And also it does not include, Greg, club stores.

Yeah, it does not include club stores.

It doesn't include club stores.

So, that's number one.

Number 2 is the category is also expanding and we are helping expand it.

Hope I'm not overstating this but we feel like we are helping this whole area grow and expand by changing this paradigm.

This used to be more of an event oriented type of a product line.

It was around events such as Easter and Fourth of July weekend and Thanksgiving and we used to call these things party trays.

We took away the name party.

We don't want it to be just around events.

We want this to be in sizes and formats where when you come home from work instead of going to the potato chip closet you are going to pull out one of these small trays and have this before dinner to kind of tied you over.

So we are trying to change the whole concept of the use of these trays.

So we see plenty of growth ahead if that's the question you're getting to.

That's the question.

The question is that and 44 percent is -- I mean, it's a fairly high market share for any industry, the question is how much market share is there left to gain for Landec in this market?

And we are constantly asking ourselves that question because it's -- it is a rather stunning number and it looks to us as though there's a fair amount of growth still ahead.

Okay.

And the other question I had related to sourcing, you some comments in the call about it but the recent weather here in southern California, a lot of rain and fairly cold, do you foresee any issues with sourcing broccoli?

Well, I'll tell you what, we happen to be in northern California and we are sourcing primarily out of Imperial Valley and the Arizona area and I start my mornings by making calls to ask that same question and the weather has just been God-awful.

Our folks tell us we are okay right now but we are hoping something starts to clear here pretty soon.

We are okay for right now but we sure hope this doesn't continue for the next several weeks.

It's just been terrible.

Okay.

We are fine for now.

But something's got to break here.

What measures did you put in place last year, you talked a little bit about maybe putting some kind of cold storage in place for a 2 week supply of broccoli, what kind of measures do you have in place right now to try to mitigate some of the sourcing issues?

Well, the main things that we've put in place is we've diversified our growing regions from -- we used to be in 2 or 3 regions and now 9.

We have some things that we do that's proprietary that I cannot disclose that allow us to extend our inventory.

That only deals with short-term needs.

That's not going to help you long-term.

And just extremely better planning in terms of knowing exactly what our needs are.

So it's those types of things.

And also diversifying our product mix.

We used to have too much reliance on broccoli and now we have more reliance on other types of products that go into our various product lines.

So, it's a combination of things.

Okay.

Last question I have related to sourcing, what's the situation with tomatoes right now and did that hurt your results in any way in the most recent quarter?

It really could have.

Your question relates to -- we were a substantial buyer of grape tomatoes and they were coming all from Florida.

Florida got hit with, count them, 4 hurricanes, wiped out grape tomatoes.

Our team did just a magnificent job of swapping out grape tomatoes and substituting grape tomatoes for other types of things that we did have in supply, worked with our customer base who understood the circumstances.

Obviously the industry had the same problem and it was a temporary substitution.

So we had to relabel products, we had to explain it to our customers.

We went into the temporary substitution mode and we are back into grape tomatoes.

Fortunately the impact was extremely minimal and our team just did a Herculean job and our customers were understanding.

Okay.

Great.

Thanks.

Thank you.

You have a followup question from Bill Gibson.

Just one quick one on the cosmetic personal care area.

I know you are in sort of a niche product that doesn't use a lot of polymer.

Any progress in getting into any products that would be using more polymer?

Yes.

Okay.

Can we elaborate on that or that's just we wait and see?

Could you wait?

Okay.

Let us do it and then let us tell you about it.

Good, thank, Gary.

Thanks, Bill.

(Operator Instructions) I am not showing any questions at this time.

Thank you all for joining our conference call.

We appreciate your support.

Ladies and gentlemen, that does conclude today's conference.

You may now disconnect and have a wonderful day.