Lifecore Biomedical Inc (LFCR) 2010 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Landec fourth quarter fiscal year 2010 earnings conference call.

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

Later, we will conduct a question-and-answer session and instructions will follow at that time.

(Operator Instructions).

As a reminder, this program is being recorded.

I would now like to introduce your host for today's program, Mr.

Gary Steele, Chairman and CEO of Landec Corporation.

Good morning and welcome to Landec's year-end and fourth quarter of fiscal year 2010 earnings call.

I have with me today Greg Skinner, Landec's Chief Financial Officer.

This call is being webcast by Thomson CCBN and can be accessed at Landec's website at www.landec.com on our Investor Relations page.

The webcast will be available for 30 days through September 3, 2010.

A replay of the teleconference will be available for one week by calling 888-266-2081 or 703-925-2533.

The access code for the replay is 1468225.

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 our filings with the Securities and Exchange Commission, including the Company's Form 10-K for fiscal year 2009.

As reported in yesterday's press release, for fiscal year 2010, Landec's revenues increased 1% to $238 million compared to revenues of $236 million in fiscal year 2009.

Overall revenues increased slightly in spite of the difficult economic climate.

Net income for fiscal year 2010 decreased to $4 million or $0.15 per diluted share compared to net income of $7.7 million or $0.29 per diluted share last year.

Reducing net income for fiscal year 2010 were $3.7 million in non-recurring charges, which are not tax deductible.

The $3.7 million reduction includes $2.7 million of acquisition-related charges from the Lifecore acquisition, which closed on April 30, 2010, and $1 million from a non-cash partial impairment charge on our minority equity investment in Aesthetic Sciences.

Excluding the $3.7 million in non-recurring charges, net income and earnings per share in fiscal year 2010 would have been the same as last fiscal year at $7.7 million or $0.29 per share, consistent with our guidance.

Under new accounting rules, acquisition-related expenses such as investment banking, legal and accounting fees are no longer capitalized but expensed in the quarter the transaction closes.

We spent $2.7 million in Lifecore acquisition-related expenses in our fourth quarter.

Also during the fourth quarter, we determined that our $1.8 million minority preferred equity investment in Aesthetic Sciences is unlikely to be fully recovered and therefore, we recorded a $1 million non-cash partial impairment charge.

This decision was driven by our review of the contractual terms of an asset sale and royalty agreement which Aesthetic Science entered into on July 16, 2010.

As we discussed in previous quarters, Aesthetic Sciences has been in negotiations with multiple potential suitors over the past year pursuing opportunities to either license or sell their Smartfil Injector System technology.

While management previously felt that these opportunities held sufficient upside to support the value of Landec's entire $1.8 million investment, it became clearer during the fourth quarter, in connection with Aesthetic Sciences' sale of its technology, that significant uncertainty on the timing and magnitude of royalties from this agreement were in question and we may have difficulty fully recovering our investment.

The non-cash impairment charge represents Landec's best estimate of the net realizable value of its investment in Aesthetic Sciences, in light of the expected royalty stream associated with the technology sale.

This does not affect Landec's cash in any way.

Our remaining $800,000 investment in Aesthetic Sciences will be periodically reviewed for possible additional impairment.

Turning to our fourth quarter fiscal year 2010 results, revenues increased over 10% compared to the year-ago quarter.

And relative to the prior three quarters in fiscal year 2010, we improved our overall gross profit and gross margin.

We're starting to see improvements in the fresh-cut produce industry volume sales, but victory should not yet be declared.

Pricing pressures continue as retailers continue to struggle with consumers' tight budgets.

Also during the fourth quarter, we completed our acquisition of Lifecore.

We also shipped large numbers of BreatheWay membranes for Chiquita's avocado rollout.

We advanced our technical work with Monsanto on seed coatings.

We launched new products with Air Products in the personal care field, including adding several new customers and we advanced our technology licensing discussions with several strategic partners, as well as concluding and announcing a recent agreement with Windset Farms.

Let me turn it over to Greg Skinner to discuss the specifics of our results.

Thank you, Gary, and good morning, everyone.

As outlined in yesterday's news release, Landec reported total revenues for fiscal year 2010 of $238 million versus revenues of $236 million for the same period a year ago.

The increase in total revenues during fiscal year 2010 was due to a $6.8 million or 4% increase in revenues from Apio's value-added vegetable business and from $1.5 million of revenues generated by Lifecore in the month of May.

These increases were partially offset by a $5.5 million or 9% decrease in revenues from Apio's commodity trading business.

For fiscal year 2010, the Company reported net income of $4 million or $0.15 per share compared to $7.7 million or $0.29 per share for last fiscal year.

The decrease in net income in fiscal year 2010 compared to the same period last year was due to several factors.

In addition to the $3.7 million of non-reoccurring charges associated with the acquisition of Lifecore and the impairment charge on our investment in Aesthetic Sciences, gross profit in Apio's value-added vegetable business decreased $759,000, primarily due to increased cost associated with weather-related produce sourcing issues during the fourth quarter, as well as a shift in product mix.

And the Company's research and development expenses increased $696,000, primarily due to the hiring of additional scientific staff.

These decreases in net income are partially offset by a decrease in income tax expense of $1.3 million due to a decrease in taxable income.

It should be noted that only $400,000 or 10% of the $4.3 million book income tax expense recorded in fiscal year 2010 is expected to be paid in cash because of the cash tax benefit from the repurchase of subsidiary options and from R&D tax credits.

For the fourth quarter of fiscal year 2010, Landec reported revenues of $58.2 million versus revenues of $52.2 million for the fourth quarter of last year.

The increase in total revenues during this year's fourth quarter compared to last year's fourth quarter was primarily due to, first, a $3.5 million increase in revenues from Apio's commodity trading business due to an increase in trading sales volumes; second, $1.5 million of revenues generated by Lifecore in the month of May; and third, a $515,000 increase in revenues from Apio's value-added vegetable business due to increased sales volume.

For the fourth quarter of fiscal year 2010, the Company reported a net loss of $1.5 million compared to net income of $1.9 million during the fourth quarter of fiscal year 2009.

This decrease of $3.4 million is due to several factors.

In addition to the $3.7 million of non-reoccurring charges associated with the acquisition of Lifecore and the impairment charge on our investment in Aesthetic Sciences, there was a $1 million decrease in gross profit in Apio's value-added vegetable business primarily due to increased cost associated with weather-related produce sourcing issues during the fourth quarter as well as a shift in product mix.

These decreases in net income were partially offset by decrease in income tax expense of $508,000 due to a decrease in taxable income.

Turning to Landec's financial position, during fiscal year 2010, the Company generated $7.5 million in net cash flow from operation.

The Company ended the year with $48 million in cash and marketable securities.

Our fiscal year 2010 capital expenditures were $5.2 million, and depreciation and amortization was $3.4 million.

Gary?

Thanks, Greg.

Let me address the question, where is Landec heading and why should an investor want to own Landec stock?

As background, Landec began launching its initial products in the mid-to-late '90s, and we became profitable in 2003.

We've remained profitable ever since.

From fiscal year 1999 to fiscal year 2008, revenues grew from $21 million to $238 million, and we significantly improved our balance sheet during that time by accumulating considerable cash balances and paying off all of our debt.

Beginning in the second half of fiscal year 2008, a severe economic recession affected our food business, challenged our existing licensing partners such as Monsanto, Chiquita and Air Products, and essentially shut down new licensing activities with prospective corporate partners.

Fiscal years 2009 and 2010 have been relatively flat years from both a revenue and net income perspective.

During these past two years, we have continued to invest in R&D, we have continued to take market share in our fresh-cut vegetable packaging business, and we have continued to work with Chiquita and others to identify new target applications.

Over the past year, we've also continued to identify additional growth opportunities, and based on our strong balance sheet, we were able to make the strategic acquisition of Lifecore Biomedical on April 30, 2010.

The acquisition of Lifecore included $40 million in cash, the assumption of $4 million of low-interest debt and a potential future payment of $10 million in earn-outs to the seller based on Lifecore achieving certain revenue targets in calendar years 2011 and 2012.

Lifecore expands Landec's polymer technology platform to include the area of hyaluronan materials, also referred to as HA materials, which are used in ophthalmic, orthopedics, veterinary markets worldwide.

Additionally, the acquisition is accretive with projected incremental EBITDA in fiscal years 2011 of $7 million to $8 million.

Lifecore also has attractive margins with an expectation that Lifecore is projected to help Landec increase its overall gross margins.

As Landec develops new medical applications, Lifecore is already established to make and sell pharmaceutical-grade products, and has an experienced staff in quality and regulatory affairs.

Lastly, Landec and Lifecore technical teams will work together to find synergistic applications for our polymer materials.

As we turn to fiscal year 2011, which began by the way in June, we look for a return to double-digit growth in sales and earnings this year and beyond.

So why own Landec stock?

First, we believe we are a growth stock story once again as we implement our fiscal year 2011 plan.

We estimate that during fiscal year 2011, we will grow revenues 15% or more, and grow earnings 25% to 40%.

We see additional licensing partnerships that are strategic and more narrowly focused, allowing us to capitalize on our partners' commercial capabilities, while leveraging our technology investment.

With Chiquita, we see good progress in the avocado program as they begin their nationwide rollout using four processing centers, plus the availability now of year-round avocado sourcing, along with the use of their well-known Chiquita brand and their unique product positioning, all combined to accelerate the sales of ripe and ready-to-eat avocados.

There are over 1.6 billion pounds of avocados consumed each year within the US.

In addition to Chiquita taking market share in avocados, there is an opportunity for expanding the market as consumer and food service providers begin to have access to avocados that are ripe and ready to eat.

We are working on other potential applications for our BreatheWay Packaging technology with Chiquita and other partners such as the application we've recently announced with Windset Farms, where we will use our membrane technology to package and ship greenhouse-grown cucumbers, peppers and tomatoes.

With Monsanto, we're making good technical progress in our seed-coating program.

It is a tough scientific challenge from a chemistry and a biology point of view to coat seeds with active insecticides and fungicides to be released at the right time to accomplish the dual benefit of maximizing yields and substantially lowering the environmental adverse effects associated with the traditional application of insecticides and fungicides.

The real test will be in greenhouse and field trials in the next 12 months.

The problem we are jointly attacking with Monsanto represents a big commercial opportunity, but the solution require considerable effort as we scale to field trials.

Think of this as sizeable upside for Landec, but too early to factor into financial models.

Last but not -- definitely not least, during fiscal year 2011, we plan to invest over $9 million in R&D and over $6 million in capital expenditures in order to continue to drive future growth based on developing new materials and new applications.

We have the team in place, a clear plan and the balance sheet to support our growth in fiscal year 2011 and beyond.

We are now ready for your questions.

Certainly.

(Operator Instructions).

Our first question comes from the line of Tony Brenner from Roth Capital Partners.

Your question, please.

Well, good morning, Tony.

Good morning.

A couple of questions.

First of all, Gary, you said that early in your comments that you are seeing an acceleration in Apio's volume and yet, in your guidance, you're implying a significant decline in volume versus last year.

And I'm wondering what that is.

We've seen some improvements in the last couple of quarters in terms of volumes and -- but what we're seeing is more a price compression.

And so on a dollar basis, we're a little bit concerned.

And so we want to be conservative in terms of projecting what growth we'll get.

We are going to see year-over-year dollar improvements, but we're just concerned about this price compression.

And we also continue to see mix changes, Tony, in the sense that we're selling more bags and less trays, and the trays seem to be pretty sensitive to the recession.

Anything you want to add, Greg?

No.

And if you're referring to the industry itself, Tony, recall '09 was a pretty bad year for the industry.

So the 9% growth from -- in '10 to '09 is coming off a very low base here.

So by growing 5% or projected 5% in '11, we're growing off a higher base here.

So if that was part of your question, I just want to clarify that.

In other words, you're not assuming any improvement in the macro trends that you're encountering, Greg.

Is that right?

Slight improvement.

Very slight.

And we may be off on that.

We'd love to be wrong on that.

It's just the consumer is still very skittish and the retailers are -- we feel more pressure than ever on pricing.

Okay.

Second question.

They're bringing in-house some of the costs for Landec Ag, is there no revenue or income offset to those expenses being projected?

There is some.

We have this product called Pollinator Plus, which is a little bit less than $1 million in sales.

It's a high-margin program for us.

But right now, we're eating some of the internal R&D costs that we brought in-house, and that's why we're in an active mode of finding one or more new partners in the ag field.

It's going to take us a little while, but we've got a couple of partners identified.

And recall that these rights came back to us in a renegotiated agreement with Monsanto.

So we're on it, Tony.

It's just that we haven't consummated a new partnership yet.

Not sure when and if that will happen, but we've got to deal with this issue of sustaining some losses in the Landec Ag area outside of the Monsanto agreement.

So we want to deal with that in the next 12 months.

And that number that is in the guidance, they seem a little lot high, but remember this is a change from '10 to '11.

In the first half of fiscal year '10, Monsanto was picking up all our operating costs, and recall for years ago when we own the seed business, all of the revenues in this business happened in the second half of the year.

So we got the benefit of only a half a year of operating cost, but all of the profits from the sale of the products in the fourth --

Last year.

Last year.

This year, we're going to have 12 months of operating cost, and yet we'll still have the same degree of profits in the fourth quarter.

Okay.

Last question, you projected over $9 million in R&D.

Obviously a big part of that increase is Lifecore, but it would seem that you're still racheting up R&D in Apio packaging and tech licensing as well.

And I'm wondering if you can quantify that increase, and also quantify what benefits you've been seeing from the last four years of a pretty strong increase in that particular R&D spending.

What's coming back from that?

Yes.

Let's answer your first question.

The increase year-over-year that we are adding here at Landec, not counting Lifecore, is about a 30% increase, or about $1 million.

And what we've seen over the last couple of years is that we've -- the investment in R&D has allowed us to roll out over now up to about 15 products in our personal care products program with their products.

It's allowed us to get Monsanto from a rather passive and different state in terms of our license agreement to very excited about what we're doing in the control release area.

It's allowed us to expand our Apio product line to about a dozen new products per year.

It's allowed us to move beyond bananas with Chiquita to other areas of tropical fruit, including this avocado program that we're pretty excited about because that required a new membrane development effort.

It's allowed us to enter into an area where we're looking at how we can release various types of small and large molecules under a control release system with using our side chain crystallizable polymers in the drug delivery area, which could also benefit the Monsanto relationship.

And it's also allowed us to come up with some new investigative programs that we're working on that include smart coatings.

So it's a variety of different advances that this R&D has allowed us to have, and we're expecting more from the R&D team over the next 24 months.

Thank you very much.

Thank you.

Our next question comes from the line of Morris Ajzenman from Griffin.

Your question, please.

Hi, guys.

Good morning, Morris.

Hi.

Just on -- the question on -- two questions, one on the cash flow, you talk about the projections of your cash flow from operations to double from fiscal 2010 which brings you to about $15 million and I presume that's before CapEx, and then is the DME added back in there?

And maybe another way of going at that question is, again, on your release right above that, you show as a projection of $0.36 to $0.41 EPS, how much of that is non-cash compensation we add back and if we kind of want to work through those numbers, the information you gave, just what would be the -- either the per share or the gross cash flow from operations, free cash flow after CapEx, depreciation and amortization, et cetera, et cetera.

Okay.

Well, I will take it from just the high points.

You're, right.

The guidance was doubling our year-over-year.

So our projection is around $15 million in operating cash that does include the add-back of non-cash items like depreciation and amortization, stock-based compensation, deferred taxes, so on and so forth.

Very similar to what we've had this last year in each quarter and which you'll see in our 10-K.

Our projected CapEx is about $6 million.

So you're talking about free cash flow around $9 million.

And then, there is two components that need to be either added back or subtracted and that is, we now have debt that we're going to be paying, which is going to approximate about $4 million, $4.5 million next year.

But as I mentioned in the script, we're only going to paying 10% of our tax expense, so that is actually a benefit.

So when you add all that up, if you want a round figure, we expect cash to increase about $10 million year-over-year.

And you also asked, Morris, what -- how much can you attribute to stock-based non-cash expense.

So --

It's about $1.8 million.

$1.8 million, okay.

And can you just give us a little more color on Chiquita with the avocados?

I know the rollouts, it's just kind of commencing [here contrarily].

I know you and Chiquita are very excited about it.

But what can you tell us about how this plays out the next couple of quarters, in the next fiscal year, can you just give us a little more color on what you see happening?

Well, as best as we can, Morris.

I mean, we're relying on Chiquita to launch and implement and expand and market and promote.

What we can tell you is what we have said is that, they've established four processing centers.

They now have year-round sourcing which took them awhile to line up since they were not a year-around sourcer of avocados in the past.

I know that they have several, which I cannot name.

They have several large retail chains that have agreed to launch the product.

I believe those mostly are east of the Rockies initially, but they'll also be expanding here in the West Coast.

They have certainly ordered a lot of BreatheWay membrane product from us, I don't want to disclose that exact number, but it's very substantial.

So it looks to us that the stars and the moon are aligning for a fairly broad launch.

And I think it would most likely be that they will penetrate those store sites that are initially closest to the four processing centers, two of which are on the East Coast, one I think is in the Midwest and one in the West.

So that's what I know.

They plan to do quite a bit of promotional efforts so that people know when they buy the product that it is truly ripe and you can take it home and immediately eat it as opposed to what consumers have today, which is something that has to be ripened at home over several days.

So that's what we know.

And the best window we have is their order patterns on the BreatheWay membranes.

Thank you.

Thank you.

Thank you.

Our next question comes from the line of Chris Krueger from Northland Capital.

Your question, please.

Hi, good morning.

Good morning, Chris.

Hi.

Good morning.

Hey, you mentioned that sourcing in the quarter, weather-related sourcing issues can have an impact on margins in the fourth quarter.

How have those conditions been in the first couple of months of the first quarter and should we look for a gross margin in that segment to be similar to the fourth or maybe little up or down?

Yes.

We're -- knock on wood, first quarter weather is fine and for those non-Californians, we typically have little to absolutely no rain from late April to late October.

And then, we go into our rainy season, November through mid-April.

And so in our fourth quarter, we -- to recall from my last earnings call, we were building arcs out here.

It was just one major storm after another.

And it was very difficult to get products and so it affected our fourth quarter.

But so far so good on the first quarter and we always build in some conservatism in terms of weather-related challenges that we face in the produce industry.

But this last year, this fourth quarter was just unbelievably bad.

So it did affect our fourth quarter results.

But the first quarter looks good.

Okay.

Another thing you guys have mentioned your efforts on the East Coast to add another facility.

Can you give us an update on that?

Thanks, Chris, for reminding us.

We did not mention that.

We are up and running in the Southeast.

For those who may not recall this issue, we do all of our shipping from California where the produce is grown and we have a very large, substantial, over 100,000 square foot processing plant in the Central Coast of California, right near the growing area.

We're able to take fresh produce and package it and get it to customers very expeditiously.

But it still takes four or five days by refrigerated trucking to get product to the East Coast.

There is some market on the East Coast that we have not been able to address because of that strategy, which we call the next-day delivery market.

We think it's substantial, and so we felt that we needed to access that market.

And beginning in September, we will be up and running in the Southeast and we will be able to ship product to, first, established customers and then some new customers starting in September.

So the equipment is being put in place, the team is being put in place.

We're working with a partner.

We're not -- this is not a greenfield building project.

It doesn't require much CapEx and so we'll be up and running starting in September.

Okay.

The Windset Farms, can you give us any idea on the timing of maybe the initial cucumber rollout?

They're a significant player and market leader in greenhouse-grown cucumbers, peppers and tomatoes, and they're initially planning to launch cucumbers.

They're a significant player in cucumbers and their initial plans to launch are in November for cucumbers.

And then, within six months following that, they'll launch with peppers, and then within the next year, they'll launch with tomatoes.

So it's a sequenced approach.

They have the exclusive right for greenhouse-grown cucumbers, peppers and tomatoes, not regularly grown, but greenhouse grown.

They have the right to use our BreatheWay technology as long as they're achieving certain minimums and this involves the sale of our membrane product as well as it's royalty-bearing as well.

So they're good folks we've known for a while.

They're market leaders in what they do.

And so it's stage, cucumbers, peppers and then tomatoes.

Okay.

Last question on the Lifecore acquisition.

I know there is a lot of talk about new business and new contracts and expanded customer relationships and things like that, that were boosting their growth outlook.

Any update on if some of those are -- some of that new business has begun to produce sales in the last couple of months or if they're starting to roll out or the timing on that as well?

Yes.

There is a rollout of some new products that are taking place now.

The customers, the new customers, I cannot name for a number of reasons, but some of this requires what I call FDA-light submissions and so some of these are in FDA submission right now.

Everything we hear is that those submissions have been on track.

They're being reviewed by the FDA.

They should be relatively straightforward [your] showing equivalents, so to speak, and Lifecore is geared up for expanding here in the next couple of quarters.

So it looks like it's all on track, Chris.

And as we can be more specific about customer names and things like that, we will.

We just can't do it right now.

But everything we see says that our plans and forecasts for the first year of owning Lifecore are right on track.

All right.

Thanks a lot.

That's all I've got.

Thank you, Chris.

Thank you.

(Operator Instructions).

Our next question comes from [Walter Schnecker] from [Vance Partners].

Your question, please.

Thanks.

Good morning, Walter.

Good morning, guys.

A couple of things.

First, I'm not sure I understand exactly what you're trying to tell us in respect to margin pressure.

That is the premium you can get for your package products is under pressure or just generally fresh vegetables are being sold into end customers at tighter margins?

Yes, it's -- it was both actually.

But it's generally what's happening in the food industry, and it's not just produce, is that the consumer as you know is fighting for survival, and we sell fresh-cut produce products at a premium.

I mean it's -- there is no question about it and we have a bigger premium with products that are in a tray format.

I don't know if you've seen our product that have very --

No, no, I've seen it all.

Yes, so those are higher-margin premium priced, there is a lot of pressure on those because people are entertaining less and they are more hesitant to pay a premium for those types of products.

And if you have someone unemployed in your household, make him chop and wash and slice and die.

So in general, the food industry, not just produce, is under this margin pressure and the industry -- the produce industry really consolidated on the customer side over the last ten years.

So you've got very gigantic buyers, Wal-Marts and super centers and Safeways and SUPERVALUs and folks like that.

So all we're saying is we're always -- by the way, we've done a very good job of holding our margins the last few years even in these recessions.

We just want to signal that we are somewhat concerned that the margin pressures still are high and that we'll have to deal with those and we'll have to get more efficient in our plan and we have to deal with the reality that our product mix has gone more towards -- we see more growth in the bag business this year than we do in the trade business.

And so we have to deal with the mix issues as well.

So we are saying, hey, there is a lot of pressure out there and we're happy to live with it.

And we're hoping we can hold the line with our margins.

Okay.

Second question, can you spend a little bit more time while avocados are fine, we spent years talking about bananas, just sort of bring us up-to-date on what's going on, a little bit more on bananas?

It's not much.

The Chiquita To Go program is -- continues to roll out, you are promising more and more of it in Starbucks.

McDonald's did not pick up the program.

They launched their Banana Smoothie program with frozen pure bananas because you don't -- the consumer never sees the bananas.

So they are more concerned about the appearance.

In my mind, they chose an inferior quality for this rollout.

So McDonald's is somewhere between non-existing or we'll hope that when the recession is over and people start sharing about nutrition again that we'll resume our conversations with them on what we really care about which is a banana breakfast program.

There are some other large chains that are evaluating the technology with Chiquita.

But I'm frankly a little tired of telling you about it because I would like to see the results.

But it's kind of in a slow-growth mode and it's become a very profitable program for Chiquita and it's, from a margin point of view, highly profitable for us but it's just still rather niche.

Okay, and just a couple of last questions.

First, I -- which you've heard before.

I got to commend you.

I can't think of any other company I follow, which not only talks about the coming year but breaks it down with the specificity you do.

So I think that's great.

So -- but then by doing that, you create more questions.

So--

That's okay.

You give specificity -- I have more questions on the specificity.

Just in respect to the item, increase in operating expenses for corporate R&D and compensation including stock-based compensation, which is $0.03 to $0.04.

That is more stock-based to more corporate R&D.

I'm not asking for just sort of equally.

Yes, it's about equal.

Okay.

And we've gone -- just so you know, we've gone quite a few years without making some stock awards.

We also brought in a couple of Vice President level people, and so we wanted to make sure that we had a team that was going to be incentivized and stick around here.

So it was about equal R&D and stock-based comp.

Okay.

And the $0.01 or $0.02 for new corporate licensing and R&D collaborations, that is largely on things like cosmetics, which you also have or sort of the expectation of each year, you can expand it a little bit.

New deals.

Okay.

So that is things that have not been announced?

Right.

Okay.

Okay.

Thanks a lot.

Thank you, Walter.

Thank you.

(Operator Instructions).

I'm not showing any further questions at this time.

I'd like to turn the program back to you.

Okay.

Well, we just want to thank everybody for joining us in our year-end earnings call, and we look forward to keeping you apprised of our progress.

Thank you very much.

Thank you, ladies and gentlemen, for your participation in today's conference.

This does conclude the program.

You may now disconnect.

Good day.