Manhattan Associates Inc (MANH) 2008 Q3 法說會逐字稿

Good afternoon. My name is Anita, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Manhattan Associates third quarter 2008 earnings conference call. (OPERATOR INSTRUCTIONS)

As a reminder, ladies and gentlemen, this call is being recorded today, Tuesday, October 21st, 2008. I would like to introduce Mr. Dennis Story, Chief Financial Officer of Manhattan Associates. Mr. Story, you may begin your conference.

Thank you, and good afternoon, everyone. Welcome to Manhattan Associates 2008 Q3 earnings call. Before we launch into the results discussion, I will review our cautionary language and then turn the call over to Pete Sinisgalli, our CEO. During this call, including the question and answer session, we may make forward-looking statements regarding future events, or future financial performance of Manhattan Associates. You are cautioned that these forward-looking statements involve risk and uncertainties are not guarantees of future performance, and that actual results may differ materially from those in our forward-looking statements. I refer you to the reports that Manhattan Associates files with the SEC for important factors that could cause actual results to differ materially from those in our projections, particularly our annual report on form 10k for fiscal 2007 and the risk factor discussion in that report. We are under no obligation to update these statements.

In addition, our comments will cover certain non-GAAP financial measures, these measures are not in accordance with or an alternative for GAAP and may be different from non-GAAP measures used by other companies. We believe that this presentation of certain non-GAAP measures facilitates investors understanding of our historical operating trends with useful insight into our profitability, exclusive of unusual adjustments. Our form 8k, filed today with the SEC, and available from our web site, www.manh.com, contains important disclosure about our use of non-GAAP measures. In addition, our earnings release filed with the form 8k, reconciles our non-GAAP measures to the most directly comparable GAAP measures.

Now I will turn the call over the Pete.

Thanks, and welcome to our Q3 earnings call. I will start by reviewing highlights from the quarter. Dennis will get in to details of the financial results. I will follow with additional details about our business and provide a view of the Q4 of 2008, and then we will move to questions. Despite entering the Q3 with a strong pipeline, toward the end of the quarter we saw a significant number of deals slip into the Q4 and perhaps beyond that, given the global economic crisis and tightened capital markets. As a result, we posted license revenue of $13.8 million, down 20% from the prior Q3. While we are disappointed with this result, the silver lining to this cloud is that our competitive win rate remains quite strong.

We expect that as capital markets and the global economy return to healthier levels, our license revenue performance will improve substantially. Overall, Q3 revenue was $82.7 million. Down 2% versus last year. We were able to offset the revenue decline by a combination of expense management, tax planning and a lower share count aided by our share repurchase program which allowed us to post adjusted earnings per share of $0.34. Flat with last year, and at the low end of our Q3 guidance range of $0.34 to $0.42.

While our Q4 pipeline, which includes opportunities we expected to close in Q3, is very strong. Our current market outlook assumes that market pressures similar to those we experienced in Q3 will continue through Q4, and we have prepared for them to continue into 2009 as well. Therefore, the expectations for new software and services revenue that we built into our original 2008 plans, are no longer aligned with our current market outlook.

Because we staffed our business based on those higher expectations, particularly in areas such as professional services which must be staffed and trained in advance, we created capacity beyond our current view of market demand. To more appropriately align our staff size with our revised outlook, earlier today, we eliminated 150 positions across Manhattan. In doing so, we have taken a careful and studied approach to preserve our ability to meet current customer expectations and to protect investments central to our strategic short and long-term goals. I will provide details about our right sizing plan and cover our Q4 outlook following Dennis' remarks.

Let me turn it back over to Dennis.

Thanks Pete. I will cover adjusted financial results first and then summarize our GAAP earnings. We delivered $0.34 in adjusted EPS for the Q3, which was at the low end of our guidance range and represented flat performance over the prior year quarter. Adjusted net income of $8.4 million in the quarter decreased 10%, over Q3 2007, on lower revenues. As Pete mentioned, a significant number of license deals slipped in the quarter. The resulting lower revenues and operating earnings accounted for about $0.05 of EPS decline year-over-year, which was offset by $0.05 of EPS benefit gained through a lower overall affective tax rate and a lower share count due to our stock repurchases.

Year to date adjusted EPS of $1.12 is up 19% over the prior year on adjusted net income of $27.6 million, which is a 6% increase over 2007 year to date. Our 19% growth, or $0.18 increase in EPS, also benefited from share repurchases, a lower overall effective tax rate and FX gains, while operating EPS contribution was break even year-over-year on flat operating profit.

Diluted shares for the quarter were 24.6 million shares down 9% over Q3 2007, and down 1% sequentially. In the quarter we repurchased 511,404 common shares, totaling $12.6 million, at an average price of $24.73, there by completing our $50 million buyback program, approved in October 2007. Year to date we have repurchased about 1.1 million shares at an average price of $23.72.

In addition, this month our board approved a new repurchase authority, up to a total of $25 million, of Manhattan Associates stock. For Q4 2008, we expect diluted shares of approximately 24.5 million, and for the full year we expect diluted shares of approximately 24.75 million shares. These estimates depends on a number of variables such as stock price obviously, option exercises, forfeitures and share repurchases that can significantly impact our estimates. The current forecast estimate does not assume any common stock repurchases for the remainder of 2008. Now I will move to revenue and operating results. Total Q3 revenues of $82.7 million decreased 2% compared to last year. Currency did not have a material impact on our Q3 growth rate. Year to date, total revenues of $261.6 million are up 4% over the comparable period a year ago with a favorable currency impact of 1%. The America segment reported total revenues of $68 million declining 3% over Q3 2007, on lower license revenues and slowing services revenue growth. Year to date, America's total revenue of $213.6 million is flat with the prior year.

Over all, our international operations continue to post a very solid year despite a modest Q3 decline of 4% in AMIA revenues overall. Stemming from lower license revenues versus a tough comp in 2007. APAC delivered 10% year-over-year growth. On a combined basis international operations were flat in Q3 with total revenue of $14.8 million, versus $14.7 million in Q3 2007.

Year to date, AMIA revenues are up 30% and APAC revenues are up 12% over 2007, and both theaters continue to deliver solid operating profits and margins. License revenues in Q3 were $13.8 million down 20% or $3.5 million dollars compared to $17.3 million in Q3 2007. On a year to date basis, license revenue is down 5%. In the Americas Q3 license revenue was $10.8 million, down 25% over Q3 2007. While significant deals push from the Q3 to the Q4, we did close four deals with license revenue exceeding $1 million each. We are encouraged by the fact that our ratio of licenses sold to new and existing customers remain strong at about 60/40 for the year. In AMIA, license revenue totaled $1.4 million in Q3, which was down about $900,000 compared to Q3 2007.

Our APAC region delivered its third best license revenue quarter on record, totaling $1.6 million, and up about $1 million year-over-year. This marks the third consecutive quarter of $1 million plus, and license revenues delivered in APAC showing positive momentum in the region. While we are planning for macroeconomic challenges to persist, our Q4 2008 deal pipeline is very solid across all geographies including the Americas.

Now transitioning to services revenue. Total Q3 services revenue of $60 million increased 3% over Q3 2007. Year to date services revenue growth is 8%, on solid first half growth of 10% largely driven by our double digit growth in maintenance revenues. In our Q2 earnings call, I noted the following. We expect to see some moderate downward pressure on services revenue growth as a result of lumpy America's license revenue growth combined with potential slowing and upgrade activity given the global economic climate.

In Q3, the services demand slow slow down was larger than expected. Lower license revenues combined with slower upgrade activity, and our Heritage iSeries Solution in the Americas as customers preserve capital due to market liquidity concerns, which in turn increased the downward pressure on professional services revenue performance.

Exiting the first half, the Americas segment posted services revenue growth of 7%, where as in Q3, Americas services revenue growth was 2%. AMIA delivered solid Q3 services revenue growth of 11%, and APAC services revenue continues to be down year-over-year 11% in Q3. As we completed our work through the (inaudible) of a large client in the region, which is driving the downward momentum in APAC.

Looking at our services revenue components, our professional services revenues in Q3 of $40.7 million declined 2% compared to Q3 2007. Year to date professional services revenue of $125.3 million grew 4%. Maintenance revenue for the quarter increased 14% over Q3 2007 to $19.3 million, and on a year to date basis our maintenance revenues up 16%. Our double digit growth and maintenance revenue stems from new license revenue and strong maintenance retention rates, which continue to track at a healthy 90% plus.

On to services margins. For the quarter consolidated services margins for 51.3%, down about 40 basis points compared to 51.7% in Q3 2007, and down about 100 basis points sequentially from Q2 2008 driven by the decline in professional services revenue. Year to date services margins 50.5%, compared to 51.9%, in the first nine months of 2007, down about 140 basis points. Prior to today's staff adjustments, our head count was up 8% over Q3 2007.

For Q4, in addition to our normal seasonal decline due to Holidays, we expect continued downward pressure on services revenue growth, stemming from a combination of lower Americas license revenues and a less active upgrade climate given global economic conditions. Despite these intermediate term challenges, we are pleased with our continued ability to deliver healthy services margins, and expect to continue to strengthen this area of our business as a driver of customer satisfaction and strategic market advantage.

On to adjusted operating income. With lower revenues in the quarter, Q3 adjusted operating income of $10.6 million declined $2.1 million, or 17% over Q3 2007. Operating margin for the quarter was 12.8% versus 15% in Q3 2007. Year to date adjusted operating income was $37.1 million, almost flat compared to $37.3 million in 2007, with operating margins of 14.2% versus the 14.8% we delivered in 2007.

Our adjusted operating expenses, which include sales and marketing, R&D, SG&A and depreciation, were $34.3 million for Q3 2008, down 1% over the prior year quarter, and down 6% sequentially. The decrease year-over-year was due to lower variable comp expenses, associated with revenue and earnings performance. A favorable currency impact of about $700,000 in the quarter, based on INR depreciation, partially offset by a 2.6% increase in head count primarily in R&D. Sequentially the decline is driven by the same aforementioned factors in addition to lower program marketing expenses. That covers the operating results, now for a few below the line items and GAAP earning summery.

For Q3 we reported other income of about $927,000, down nearly $700,000 over the prior year quarter on lower interest income and FX gains. For your reference, as part of our supplemental disclosure, we have added a breakout detailing the other income components under item number six. Our adjusted affective income tax rate for the quarter was 27.47% versus 34.75% in the first half, as we realized nearly $1 million or $0.03 of EPS, associated with our provision to tax return adjustments with the filing of our 2007 federal income tax return in September. The primary benefits realized for additional R&D and state job training tax credits, which resulted in a nice cash benefit.

Also in October, Congress reinstated the R&D tax credit legislation, retroactive to January 2008. As a result, we expect our full year 2008 adjusted affective tax rate to be approximately 32.5%. We have added item number nine to the supplemental schedule as part of today's earnings release, reconciling from our affective rate of 34.75% for adjusted and GAAP to the Q3 reported affective rates. Now I will cover the GAAP earnings summary. On a GAAP basis, we reported GAAP EPS of $0.18 in Q3 compared to $0.29 in Q3 2007. Included in our Q3 GAAP EPS, our impairment charges of $5.2 million pretax, totaling $0.22 of EPS for the write off of two investments, partially offset by reversals of tax reserves primarily associated with the expiration of tax audit statutes in the quarter.

During the quarter, we recorded an impairment charge of $1.7 million for the remaining amount of an investment we made in a technology company originally in 2003, as a result of a down round of financing in the quarter, which our preferred share ownership was converted into common stock, eliminating our preference rights associated with any liquidation, thus substantially impairing our ability to recoup our investment. We also recorded an impairment charge of $3.5 million on an investment in an auction rate security, reducing the carrying value to zero due to credit downgrades of the underlying issuer and bond insurer, as well as publicly reported increased risk of bankruptcy.

For both of these write offs we did not recognize an income tax benefit as both investments are treated as capital losses for tax reporting purposes and can only be used to offset capital gains. A detailed description of these adjustments, including the tax reserves, can be found in the supplemental schedule reconciling selected GAAP to non-GAAP measures in our earnings release today.

The net impact was about an $0.11 reduction to GAAP EPS. Excluding the charges on an apples to apples basis, GAAP EPS was $0.28, down 3% over Q3 2007, due to year-over-year lower pretax income. Year to date, 2008 GAAP EPS, increased 5% to $0.84 compared to $0.80 in 2007. On an apples to apples basis, excluding the Q3 unusual item, year to date GAAP EPS increased 19%.

Now let's move on to cash flow. For the quarter we delivered record Q3 cash flow from operations of $18.4 million, increasing 190% over Q3 2007. Basically, we tripled Q3 operating cash flows over the prior year. Year to date we have doubled our operating cash flow to nearly $46 million over 2007, all driven by a strong collections focus. Our DSO's for the quarter were 79 days, compared to 78 days in Q2 2008. This was driven by higher DSO's in our Asia Pacific region.

Our capital expenditures for the quarter totaled $1.3 million, down from our Q3 2000 spend - Q3 2007 spend of $1.5 million dollars. We continue to estimate capital expenditures to be in the range of $8 million to $9 million for the full year 2008. Our cash and investments at September 30, 2008, is $82.8 million, compared to $83.5 million at June 30, 2008. Excluding the impact of the auction rate security write down, cash is up nearly $3 million in the quarter after self-funding $12.6 million in share repurchases from our record cash flow from operations performance.

Deferred revenue, which consists mainly of maintenance revenue build in advance of performing the maintenance services, was approximately $34 million at September 30, 2008. This was up 3% from $33 million at September 30, 2007. The increase is driven by our business growth and our continued 90% plus maintenance retention rate. With all that said, we continue to carry a very strong and healthy balance sheet with 70% of our net operating assets in cash and investments and zero debt complimenting our strong earnings in cash flow.

That covers the financial results now I will turn the call back to Pete for the business update and outlook for the remainder of 2008.

Thank you, Dennis.

While our revenue results for Q3 were disappointing, there were some important highlights. We added new customers such as Cherry Automobile Company, Creek Carrier Corp., Lennox International, Republic National Distributing Company, San Trade, Select Carrier Group and the Men's Warehouse.

In addition, we expanded partnerships with existing customers such as AmerisourceBergen, Anvil Knitwear, Belk, David's Bridal, DHL, Essays Express, Giant Eagle, GoldToe, Humanetics, Jones Apparel, Lesaint Logistics, Natasha, Olympus America, Osbourne Hessey Logistics, Ralph Lauren, the Apparel Group and Walgreens.

As Dennis mentioned, we had four $1 million plus deals close in the quarter. All four were with new customers, and all in the Americas. All included our Warehouse Management solution for Open Systems, plus one included transportation management, and extended enterprise management. The retail, consumer goods, and logistic server provider verticals were once again strong contributors to the license fees,and together, these sectors represented more than half of license revenue in the quarter.

About 60% of the quarter's license revenue was from new customers and about 40% from existing customers. About half of the quarter's license revenue was for Warehouse Management Solutions, and the other half for our other Supply Chain Solutions. Importantly, our Q4 active pipeline is quite large. I'm confident our sales teams are doing all possible to help customers complete deals, but I'm not sure how much of the pipeline will close during the quarter. In any case, the potential is tremendous. And with our strong competitive win rate, when this pipeline of activity does close, we should post impressive results.

In the last two weeks we hosted customer conferences in the United Kingdom, France and Holland. All three were well attended, and it was very clear that customer satisfaction with Manhattan Associates is quite good in each market. We'll be hosting similar meetings in the next few weeks in Japan, China and Australia and anticipate similar results. While the global economy is quite difficult, we performed reasonably well outside the US and are optimistic this will continue. The US still represents about 75% of our total revenue, but our international markets continue to grow in importance.

During Q3, we delivered two important product releases. Both of the new releases were on our Supply Chain Process platform and fully leverage our go-forward technology strategy. We introduced Extended Enterprise Management and total cost to serve as products this quarter. Extended Enterprise Management is the next generation of Trading Partner Management. This solution includes functionality for Supply Chain Visibility, Supply Chain Event Management, Supplier Enablement and Customer Collaboration, all leveraging the common business objects in web services capability of our Supply Chain Process platform.

The second release was Total Cost to Serve, which is an entirely new product for Manhattan. It is a Platform application that provides supply chain executives with detailed cost data from the time a product is ordered until the time it is delivered to our customer or retail store shelf. This enables companies to assess product, customer and channel profitability to make better sourcing, routing and fulfillment decisions. We are quite enthusiastic about the potential for this new solution to significantly extend our value proposition to customers, and we are quite excited about adding two new solutions to our SCOPE sweet.

Making solid progress on our product and technology road maps and believe we are creating very real differentiation from all other supply chain solution providers with our investments in research and development. We continue to expand our market share and extend our lead in supply chain solutions markets, and we look forward to the time when our markets return to normal buying patterns, but we are also realistic and recognize the need to adjust our plans to today's realities.

As I mentioned in my opening comments, earlier today we eliminated about 150 people from Manhattan Associates . All were existing employees and not open positions. All but about a dozen were in the United States. More than half of the eliminated positions were in our professional services organization. We have staffed our professional services teams for our higher level of demand, and so with this action have right-sized our organization to match our current forecast. The other cuts were spread over our remaining functions.

The one time cost of the reduction is about $7 million, and includes severance, employee benefits, out placement services, and some other costs. The savings will amount to about $14 million annually, or about two times the cost for a six month pay back. I believe that after these reductions, we retain the appropriate staff to meet all customer needs from our professional services organization. More over, while some cuts were made to research and development, we have the capacity to deliver on our strategic product and technology goals.

We did eliminate eight quota-carrying sales reps from our global sales team, with seven of the eight in the United States. In the current environment, we expect the remaining teams to be fully capable of delivering on the market potential. We anticipate adding sales talent at a future date once the market shows signs of growth. At the end of September we had about 2,300 employees around the world, with 70 quota-carrying sales reps. With its action we now have about 2,150 employees, and 62 sales reps. We are quite confident about our Company's ability to deliver strong financial results once the market regains confidence. However, we don't expect that to happen in Q4. We anticipate market conditions in Q4 to be similar to the difficult conditions of Q3.

As a result, we are lowering our annual EPS guidance for the full year. Our previous guidance called for adjusted EPS of $1.54 cents to $1.60. We are lowering that to a range of $1.36 to $1.46.

Our 2007 adjusted EPS result was $1.30, so the new guidance range represents growth of between 5% and 12%. The revised annual guidance translates into Q4 adjusted EPS of between $0.24 and $0.34 per share. Included in our Q4 guidance is about $0.04 of benefits from two months of savings from our right-sizing program. Our Q4 2007 adjusted EPS was $0.37, so our guidance range represents a decline of 35% to 8% for the quarter.

So to summarize, we were disappointed with the number of software deals that did not close in Q3 and now expect a similarly difficult environment for Q4. We believe we've taken appropriate actions to rebalance our capacity for the new outlook. At the same time, we retained sufficient capacity to meet customer demand and continue to make the important investments that will enable us to continue to beat the competition. We remain very confident in our long-term future.

Operator, we will now take

Yes, sir. (OPERATOR INSTRUCTIONS) Your first question comes from the line of Michael Wong of ThinkPanmure. Sir, your line is open.

Thank you very much. Couple of questions for you guys. First one, of the four large deals that you guys closed were these ones that had pushed out of Q2, and how did the size and the number of large deals fair versus your expectations. It certainly was relatively consistent with what you have done in the past.

Yes, it's a fair question, Michael. Of the four deals that did close $1 million plus in Q3, one was a deal that we thought we might close in Q2. The other three were deals that were slated for Q3 closure.

The number of deals is comparable to the number that we've closed in previous quarters, we generally close somewhere between $3 million and $5 million or $6 million plus deals per quarter. The number was comparable in this quarter as it has been to past quarters.

Okay. Would you say that going into Q3 that you thought maybe you would be doing more, or did you think that these large deals might be bigger?

Yes, a combination of both, frankly. Going into the quarter we had a substantial pipeline, which had multiple $1 million deals and several deals greater than the number we would normally have in the pipeline going into the quarter. So we felt quite bullish going into the quarter that the pipeline was substantial and we would have impressive - results. We felt pretty good about the quarter until early part of September - latter part of September, when it became clear that it was going to be difficult for our customers to be able to pull the trigger on business they wish to do.

Okay. In terms of the type of deal that was pushed out, is there anything you can add to help us understand whether it was tied to a particular vertical or whether or not it was tied to new customer versus or existing or any particular product area.

Yes, it was more-or-less across the board. I would tell you the one area where we didn't see much a delay in deal-closure with logistic service providers, those customers tend to have a timeline for meeting their end-customers expectations, so they tend to close more in line with their original goals and objectives to meet the end-customers expectations.

Other than that, in the retail vertical, the consumer goods vertical, in each of the markets which we serve, deals did get delayed. Also true across the product portfolio. In the quarter we had our typical 50/50 deals close, warehouse management, non-warehouse management. Basically, the type of deals that closed also reflect that basic 50/50 kind of perspective. For the most part, as I said, we felt pretty good about the quarter. Certainly in July when we spoke with you, and as late as the latter part of August, as we moved into September, some of the credit markets seemed to tighten up, there was more confusion in the market, and more than a few customers started to express concerns about their ability to get business closed in the market - and in the quarter. We continue to work with them to try to provide compelling reasons for them to move forward as quickly as possible. But the last week of September didn't provide the opportunity to actually close much of that business.

Okay. So, with respect to Q4 guidance and some assumptions around product performance, it's probably fair to say that you guys are being pretty conservative with respect to assumptions. If there was a product area that could out-perform your assumptions, may it be TMS or labor, can you talk about which product you think probably fairs better through the end of the year? Is there any particular view on that?

Sure, be happy to. We'd love in hindsight to, come January, to mention that our guidance for Q4 for license revenue was quite conservative. As I mentioned, we do have a very strong pipeline going into the quarter, but we're also optimistic going into Q3. We're assuming, at the moment,that our close rates and Q4 will be comparable to our close rates in Q3. As I mentioned, we're expecting difficulties in Q3 to carry through the Q4, so we are expecting a close rate well below our historic close rates.

Having said that, the pipeline does have active deals across all the product areas, Warehouse Management, Transportation Management, Order Management, Extended Enterprise Management, we have a very nice pipeline and think we could see substantial DL activity in all of those areas, but probably like everyone else coming out of Q3 with the amount of deal slippage, we're not quite sure what in the active Q4 pipeline will actually close.

Okay, great. Thank you very much.

Thanks Michael.

Your next question comes from the line of Mark Chapell of Benchmark. Sir, your line is open.

Hi, thanks. Pete, you mentioned that the -- you had a very favorable impact of your assessment of your pipeline going forward despite deals not closing - or deal rates probably not closing. How does the large deal pipeline look with respect to the broader pipeline?

Yes, the large deal pipeline is quite attractive. It's quite large -- the overall pipeline is quite large as well, but we do have many $1 million plus opportunities in the pipeline. We continue to be optimistic about those deals choosing Manhattan, ultimately. Not sure the number that will choose us in Q4, but ultimately, we believe we're well positioned in the vast majority of the deals we are working. We are quite optimistic about those headed in our direction.

Again, timing is a critical issue for us. But large deal pipeline activity is quite good. One of the things that gives us some optimism is the deals that are in our pipeline, as I said, are active, meaning that customers are investing time and resources to evaluate their go forward strategies. So it's not as if people are doing a fly-by or just kicking some tires. We got very good activity, our sales teams around the world are quite engaged, and we believe we're making very good progress and convincing customers and prospects that we are the right choice for their supply chain solutions.

So, we continue to be guardedly optimistic about the long-term selection of Manhattan and those deals. The question of when, most cases not if.

Do you have any sales initiatives or sales efforts underway to try to break those deals out to make it easier for them to close?

Not sure what you mean by that, by break those deals out. But we certainly are working very closely with our customers, working hard to make sure that we help them quantify the near term return on investment from solutions like ours that lead to meaningful cost savings, working with them to make sure they understand the benefits to customer satisfaction, getting the right product to the right place at the right time to help Q4 and 2009 sales activities. So, our sales team, with the support of marketing teams, are quite active and aggressive trying to help customers finalize those decisions and put ink to paper.

So I'm not sure there is a lot more we can do. I think our teams are quite good at this, and in normal environments I think we would be posting impressive results, but in this environment I think it's a little bit more challenging.

And then finally, just any indication that customers might be waiting and seeing how the JDA I2 acquisition plays out before they decide to pull the trigger, any indication there?

Actually we don't, Mark. We really don't compete with JDA very much. We do in some of our newer products -- Supply Chain Planning area, which includes our demand forecasting, inventory optimization, and planning applications, but I think the vast majority of our revenue comes from our Supply Chain Execution Solutions, Warehouse Management, Labor Management, Slotting, Extended Enterprise Management, the Visibility Tools and so forth. Order Management, so we don't compete with them very often. I don't this there are many folks waiting to see what becomes of that pending transaction.

Thanks.

Very good, thank you Mark.

At this time, there are no further questions in cue.

Very good, thank you operator. Thank you all for attending our Q3 conference call. We look forward to updating you all in 90 days. Thanks, good night.

Thank you everyone, this has concluded today's conference call. You may now disconnect your lines.