Mercury Systems Inc (MRCY) 2009 Q2 法說會逐字稿

Good day and welcome, everyone, to the Mercury Computer Systems Inc.

second-quarter fiscal 2009 earnings conference call.

Today's call is being recorded.

And at this time, for opening remarks and introductions, I would like to turn the program over to the Senior Vice President and Chief Financial Officer, Mr.

Bob Hult.

Please go ahead, sir.

Good afternoon and thank you for joining us.

With me today are own President and Chief Executive Officer, Mark Aslett; and our Vice President and Controller, Karl Noone.

If you have not received a copy of the earnings release, you can find it on our website, www.MC.com.

We would like to remind you that remarks that we make during this call about future expectations, trends and plans for the Company and its business constitute forward-looking statements, which involves risks and uncertainties that could cause actual results to differ materially from those projected or anticipated.

Additional information regarding forward-looking statements and risk factors is included in the press release we issued this afternoon reporting the Company's second quarter results and in the Company's periodic reports filed with the SEC.

We caution listeners of today's conference call not to place undue reliance upon any forward-looking statements which speak only as of the date of this call.

We undertake no obligation to update any forward-looking statements.

In addition to reporting financial results in accordance with Generally Accepted Accounting Principles or GAAP, we will also be discussing non-GAAP financial measures adjusted to exclude certain charges which we will specifically identify.

Management believes these non-GAAP financial measures assist in providing a more complete understanding of the Company's underlying operational results and trends, and management uses these measures along with their corresponding GAAP financial measures to manage the Company's business, to evaluate its performance compared to prior periods and the marketplace and to establish operational goals.

However, they are not meant to be considered in isolation or as a substitute for financial information provided in accordance with GAAP.

A reconciliation of GAAP to non-GAAP financial results discussed in today's conference call is contained in the press release we issued this afternoon.

I'm now pleased to turn the call over to Mercury's CEO, Mark Aslett.

Thanks, Bob.

Good afternoon, everyone, and thank you for joining us.

I will begin with an update on the business.

Bob will then review the financials and discuss our guidance for the third quarter, and at that point we will open it up for your questions.

Mercury performed well in the second quarter.

We continued to execute on a plan to focus the business, improve our profitability, increase our cash flow and position ourselves for renewed growth.

Overall, the business produced solid financial results.

Mercury's total revenue and non-GAAP earnings exceeded the high end of our guidance range.

Reflecting both our settlement with UBS as well as strong cash flow, we ended the quarter with a cash balance of $198 million compared with $167 million at the end of Q1.

This obviously puts us in a good position to meet the put on our convertible debenture that we expect to occur in May of '09.

We also continued to improve the underlying operations of the business.

Inventory was down, we reduced our receivables, lowered our DSO sequentially and year over year, and we were able to increase our cash flow.

Overall, I think these results are indicative of the operational improvements we have made in the business over the last 12 months, and these areas will remain a focus for us going forward.

This is a design win led business, and winning new designs to grow revenues requires new products.

Consequently, the progress we have made in operations is timely because we are in the midst of a significant new product development cycle.

We are literally seeing a [bow] wave of new products move through engineering as we speak.

Although it's critically important for us to be launching new products, it's equally important for us to improve our R&D leverage at the same time.

The changes we've made in our engineering methodology are enabling us to bring our new technology to market much more quickly, more cost effectively and with higher quality than ever before.

[Turning] operations is one facet of our strategy to become a more focused and profitable business.

Another facet is to rationalize and optimize the return for Mercury's portfolio of unprofitable and non-core businesses, and we have been working hard to divest these businesses by the end of fiscal '09.

Last year we shut down AUSG, our commercial Avionics & Unmanned Aerial Systems Group, and completed the sale of ES/PS, a small legacy professional services unit within VI, which allowed us to consolidate VI's German facilities.

In the first quarter of '09 we sold the assets and IP of SolMap Pharmaceuticals, our biotechnology venture.

And now, following a very vigorous process, I am pleased to announce further progress on this strategy.

Today we signed and closed a deal to sell the VI business to Pro Medicus, an Australian company in the health care and life sciences space for a total gross purchase price prior to transaction costs of $3 million US.

Pro Medicus has acquired all of VI's customer commitments and 48 of VI's 64 employees.

This sale removes the business that has been generating our most significant operating losses, which on a non-GAAP basis totaled $2.1 million in the second quarter and $13.2 million for our last fiscal year.

Today's M&A environment is clearly challenging, and the sale to Pro Medicus enables us to forego what could have been a very costly and protracted severance and shutdown scenario.

So this is a very important milestone for Mercury in its turnaround.

Selling VI leaves us with VSG as our last remaining non-core business.

Although VSG is profitable and growing, we remain focused on our goal of divesting VSG and completing our portfolio rationalization efforts by the end of this fiscal year.

With that, let's now take a look at how we have performed in our ACS business for the first half.

Defense bookings were down because of the way in which fiscal '09 originally set up, but also due to program timing.

We currently expect stronger ACS defense bookings in the second half of the fiscal year, as planned.

Mercury Federal turned in an excellent first half, and if you combine Merc Fed with ACS defense, bookings for H1 '09 were down only 2% from H1 of '08.

Commercial bookings, on the other hand, are worse than originally anticipated and are down 33% in the first half compared with last year, mainly due to the overall economy.

Looking at the top line, revenue in ACS defense was up 14% from the first half last year, and adding Merc Fed, defense revenues increased 16% overall.

However, for ACS as a whole, total revenue in the first half was roughly flat year over year.

If you step back and look at the bigger picture, the solid growth we've seen in the core defense business has been more than offset by weaker than expected results in commercial.

Moving to the second quarter, total revenue in ACS was down 1% from the sequential first quarter and down 6% from the second quarter last year.

Revenue in ACS defense was up by $1.7 million or more than 5% from the second quarter last year and down 1.2% sequentially.

Defense revenues represented 75% of ACS total revenue in the second quarter, up from 67% last year.

In ACS commercial, revenue was down by $4.4 million or 28% from the second quarter last year and by $200,000 sequentially.

Our book to bill in ACS as a whole was 0.9 times, down from 1.13 in Q2 last year and from 0.98 in the sequential first quarter.

ACS defense bookings were down 13% year on year, but up 2% sequentially.

Commercial bookings in ACS were down 53% year on year and 40% sequentially, mainly reflecting the strong headwinds we faced from the macroeconomic environment in the December quarter.

As we've previously discussed, revenue from our legacy medical products continues on its long-term downward trend as we approach the end of life in that business.

Our commercial telecoms business remained very soft in the quarter, largely driven by the slowdown in the satellite communications space.

Our long-term target is for the relationship between the ACS and commercial businesses to stabilize around the 80/20 level.

However, this split is likely to continue fluctuating from quarter to quarter, primarily driven by conditions in the overall economy and their impact on commercial bookings.

Our semiconductor business was also down significantly year on year as well as quarter over quarter, given the severity of the industry downturn.

In the long-term we expect that renewed growth in ACS commercial will be driven by customers in the semiconductor space.

To that end, we are pleased to announce that we received three related design wins in the second quarter with a major semiconductor company in Europe with a total five-year potential of $25 million to $40 million.

This is on top of a first-quarter design win with the same customer with a five-year potential in excess of $30 million.

If you also consider the fact that we designed into the next generation of technology at our major existing customer, KLA-Tencor, we should be well-positioned when the semiconductor industry starts to recover.

Long-term, we believe that we can grow this part of our business.

Short-term, however, the semiconductor industry is hurting and the timing of any rebound is nearly impossible to predict.

In both commercial and defense, the key driver is design wins and the new products that produce those wins.

The current product development cycle that I mentioned earlier is probably the most intensive in Mercury's history.

The goal is to refresh important elements in both our signal processing and multicomputer product lines, and we are starting to see promising results.

We received a total of 10 design wins in the second quarter.

Five of them, including the semiconductor awards I mentioned, were commercial, and five were in defense.

The five-year probable value of all 10 wins is approximately $66 million, which represents a 61% increase over the design wins we reported for the second quarter of fiscal '08.

Let's turn now to the ACS defense business and the core of enterprise and the key driver of sustainable profitable growth for Mercury going forward.

We see ACS defense and commercial as complementary businesses where our commercial experience and products can be leveraged into defense applications.

If you look at ACS today, the total addressable market in COTS defense electronics is roughly $3 billion annually, while the broader military electronics market at $30 billion is 10 times larger.

Our goal over the longer term is to capture a greater share of this larger market.

Strategically, our plan is to transition from the hardware-centric model we currently have in our COTS board business to a complementary software and services model focused on the intelligence, surveillance and reconnaissance, or ISR, market.

As a segment of the overall defense electronics market, we believe ISR provides good potential where the funding priorities are being driven by wars or the ongoing threat of terrorism.

Ultimately, we want to position Mercury as the government's trusted partner for next-generation ISR platform signal processing and computing, targeting both upgrades as well as new platforms.

We have been evolving our technology and product roadmap capabilities to make this happen.

We're creating a next-generation Converged Sensor Network or CSN platform architecture that we believe will position Mercury as a leader in this space over time.

We have also been evolving our business development capabilities, primarily focused on the formation of our Mercury Federal business in fiscal '07.

Mercury Federal performed well this quarter with total bookings of $1.2 million and $1.1 million in revenue.

Together, Mercury Federal and ACS defense create a hybrid business model.

This model positions Mercury close to the government end customer, enabling us to track funding flows and gain much greater insight into DoD priorities, largely in the ISR space.

Again, we have said that we want to position ourselves as the government's trusted partner for next-generation ISR smart processing solutions, and Mercury Federal has begun to advise the DoD ISR task force in this area.

Because Merc Fed's business model includes funded product development, our R&D expenses and product development risks should decrease over time.

In addition, as a services-based business we expect Mercury Federal to scale more rapidly and improve our time to revenue as compared with the hardware-centric business model that we have in ACS.

One of our five design wins this quarter was actually our first true CSN award in onboard image exploitation.

In addition, an order we have just recently received in Q3 was driven by Merc Fed working in conjunction with ACS, meaning it's the leading edge in what may well be our defense growth model going forward.

This is our first design win to encompass all of the smart processing for a next-generation ISR platform, one that will likely leverage the new Stream computing product announced in Q2, which incorporates graphics processing units, GPUs.

In effect, we are taking GPUs, the processes that are driving the video game industry, and applying them to image exploitation in defense to create a truly next-generation platform architecture for airborne persistence surveillance.

Merc Fed was critical to our winning this contract.

Clearly, ACS is going to provide the hardware, but Merc Fed positioned us as the key consultant on the systems architecture, which opened the door for us initially.

That said, it's important to remember what has enabled us to pursue these strategic opportunities in the first place, the fact that we have a strong installed base in ACS defense that encompasses a wide range of military platforms and programs.

We are not banking solely on new programs and new platforms to drive growth, and we believe that this creates a lower potential risk profile for us in defense going forward.

Looking specifically at Q3 and the remainder of fiscal '09, we feel good about our defense business in terms of the opportunities that we are working on and the impact that they could have in terms of bookings and revenue.

Although we expect to see continued economic headwinds in our commercial markets, overall our financial results should continue to improve and we are confident that Mercury will exit the fiscal year as a more focused and profitable enterprise with a strong and growing defense business.

With that, I'll hand it over to Bob for the financial review.

Bob?

Thank you, Mark.

I will review Mercury's financial results for the second quarter of fiscal 2009, discussing Company operating performance, balance sheet and cash flow results, and then finish with a discussion regarding the outlook for the third quarter of fiscal 2009.

I will discuss numbers on both a GAAP and non-GAAP basis.

As Mark mentioned earlier today, we closed on the sale of our Visage Imaging business.

The results of the Visage Imaging business are included in the operating results for the second quarter that we're discussing today.

However, when we announced the results for the third quarter, Visage Imaging through the data sale will be reported as discontinued operations.

Second quarter revenues were $50.7 million, above the top end of our guidance range of approximately $47 million to $49 million.

The GAAP net loss for the second quarter was $17.1 million, resulting in a loss per share of $0.77.

Included in this GAAP loss per share were goodwill and long-lived asset impairment charges related to our Visage Imaging business totaling $14.6 million or $0.66 per share.

The GAAP operating loss of $16.6 million includes goodwill and other long-lived asset impairment charges of $14.6 million associated with our Visage Imaging business, stock-based compensation expense of $2.6 million, amortization of acquired intangibles of $0.8 million, and a $0.3 million restructuring charge.

On a non-GAAP basis for the second quarter, operating income was $1.5 million.

This compares with $2 million in the first quarter of this fiscal year and $0.1 million for the second quarter of last year.

Non-GAAP operating income excludes goodwill and long-lived asset impairment, stock-based compensation expense, amortization of acquired intangible assets and restructuring charges.

We used a non-GAAP tax rate of 34%.

The non-GAAP diluted earnings per share for the second quarter were $0.03.

This was above the high end of our guidance, which ranged from a loss of $0.05 to breakeven.

The non-GAAP gross margin for the quarter was 59.9%, slightly above our guidance range, due to a favorable product mix.

Our non-GAAP operating expenses for the quarter were $28.9 million.

The book-to-bill ratio for the quarter was 0.9.

Backlog, including deferred revenue, was $82.6 million, a decrease of $7 million from the same quarter last year as reported and a $5.2 million decrease sequentially in the first quarter of this fiscal year.

Of the ending backlog, $71.8 million or approximately 87% relates to shipments expected within the next 12 months.

Turning to the balance sheet and cash flow statement, cash, cash equivalents and marketable securities at the end of the second quarter totaled $198 million, representing a $31 million increase from the first quarter of this fiscal year.

We continued to do well from an operations perspective during the second quarter, generating $1.6 million of free cash flow.

In addition, we reached a settlement with UBS to provide partial liquidity for our frozen auction rate securities portfolio.

As part of this settlement, UBS provided us with a line of credit at no net cost to Mercury.

We were advanced approximately $31.4 million under the line of credit in December.

As a result primarily of the $31.4 million borrowings, the $1.6 million of free cash flow that we generated in the second quarter and a $4 million unfavorable mark-to-market adjustment on our auction rate securities, we ended the quarter with cash, cash equivalents and marketable securities totaling $198 million compared with the $167 million at the end of the first quarter.

This puts us in a good position to meet the put on our convertible debenture that we expect to occur in May of 2009 as well as run the business.

Our settlement with UBS also entitles us to full repayment of our auction rate securities portfolio at par on June 30, 2010.

In terms of the underlying operations of Mercury's business, we continued to drive inventory down.

As we have noted on previous calls, this is a journey to improve our overall supply chain capabilities, creating competitive advantage for Mercury and our customers.

At the same time, we continued to do well in cash collections from customers.

Second-quarter days sales outstanding were 46 days.

Accounts receivable declined from $27 million to $25.8 million, driven by collections within the quarter.

Inventory turns were 3.8.

Inventory decreased $0.2 million during the quarter from $21.5 million to $21.3 million.

At the end of the quarter the total employee population excluding contractors was 634 employees versus 623 at the end of Q1.

Guidance -- as previously mentioned, we no longer provide full-year guidance.

Accordingly, I would now like to move to third quarter fiscal 2009 guidance.

These guidance amounts do not include our Visage Imaging business, which was sold today and will be reported as a discontinued operation when we report the March quarter results.

For the third quarter of fiscal 2009 we currently expect a revenue range of between $48 million and $50 million.

Again, this revenue guidance and excludes Visage Imaging revenues.

We anticipate the Q3 gross margin to be approximately 57%.

Operating expenses are currently anticipated to be approximately $26 million on a non-GAAP basis.

The GAAP earnings per share are currently expected to be in a range of a loss of $0.02 per share to earnings of $0.03 per share for the third quarter of fiscal 2009.

GAAP shares are projected to be approximately 22.2 million in the event of a loss, or 22.7 million in the event of earnings due to dilutive common stock equivalents.

The impact of the stock-based compensation cost for the third quarter will be approximately $1.7 million.

The amortization of acquired intangibles will be approximately $0.7 million.

The non-GAAP tax rate is 34%.

The non-GAAP diluted shares are projected to be approximately 22.7 million.

As a result, third quarter fiscal 2009 non-GAAP earnings are currently expected to be in a range of $0.05 to $0.09 per share.

CapEx for the third quarter is projected to be approximately $2.5 million; depreciation, approximately $1.5 million.

With that, we will be happy to take your questions.

Operator, you can proceed to the Q&A session now.

(Operator instructions) Mark Jordan, Noble Financial.

Good afternoon, gentlemen.

I have three questions, if I may.

First, what was operating loss at Visage in the second quarter?

On a non-GAAP basis, Mark, we noted that to be $2.1 million.

Secondly, looking at Merc Fed, obviously you've seen some very attractive growth, and you had decent bookings there.

Could you give us an idea of what might be a reasonable ramp in terms of revenues at Merc Fed moving forward?

And where would you place the revenue breakeven threshold for Merc Fed on a quarterly basis?

Mark, we haven't broken down specifically revenues and bookings by business unit from a guidance perspective.

We do expect that both bookings and revenues will grow from this point forward.

In terms of the breakeven, again?

Where the breakeven is on revenue?

Yes.

The range?

Yes.

3 to 4, per quarter -- that was your question, Mark?

Yes.

On a quarterly run rate, where you would assume that Merc Fed could be breakeven.

Yes; I think that's probably where it is, somewhere around there, 3 to 4, without trying to be too exact.

I think it's dependent upon how much work we subcontract out versus the mix of resources that we have internally.

But, as Bob said, that's not a bad number.

Okay, a final question.

You had a press release a couple of days ago on your PowerStream 7000 that you had delivered to Lockheed Martin, and apparently it has seen some significant success.

Could you contrast the performance enhancement that the 7000 has versus the prior VME product that's used by Lockheed in the SPY Aegis radars?

And is this significant enough that it could be a catalyst for a major refresh cycle?

Okay, so the PowerStream 7100 product is the next generation of the previous generation that Lockheed was using.

The 7100 product is the product that would likely be deployed as part of the Aegis Ballistic Missile Defense program when it hits production, probably likely sometime in our financial year '10.

In terms of the performance upgrades, it gives increased digital signal processing capability.

And given the sensitivity, we are not really in a position to be able to expand too much upon -- in terms of the performance improvements.

Do you believe, though, that this gives a potential for a significant upgrade market to the installed base in, say, the Aegis radars that are deployed?

Yes.

So I think, if you look at it, Mark, we are expecting that the Aegis BMD systems will -- upgrades will likely start in FY '10.

That's where we are expecting production revenues to occur.

And the product that we just announced the other day will be the product that forms the basis of those upgrades.

So clearly, I think, as we've said historically, Aegis is a pretty important program for us in terms of driving growth in radar as well as in the naval sector.

So it is clearly a good opportunity for us.

Stephen Levenson, Stifel.

Good to see progress that you are making.

Thank you.

Back to that Lockheed radar -- that's the S4-R radar that right now, I guess, is supposed to be for DDG 1000 destroyers?

Yes.

And I guess that's a program that is certainly questionable.

Do you think, if the DDG 1000 isn't made, that this will be an upgrade for DDG 51's, or is that not necessarily a possibility?

I think our expectation at this point is, based on all indications that we've got, is that the Aegis upgrades are likely to occur as planned, starting in FY 2010, and I think the scheduling of those ships are taking place as we speak.

So I think we feel at this point that the programs and revenues associated with those seem to be in pretty good shape.

Okay, thank you.

There are a number of airborne intelligence platforms and ground-based intelligence platforms that are coming up, including things like the project Liberty Plain's aerial common sensor and ground [PROPHET].

Do you see opportunities there for your boards, or is that something that uses something not as sophisticated?

Yes, I think so.

I think we were -- when ACS came around the first time, we were certainly bidding on that opportunity and felt that we were very well-positioned.

We also feel good this time around and, given our position in certain of the large, wide-bodied airborne [SIGINT] platforms.

So we think that EW SIGINT platforms going forward in the airborne space is certainly an area of growth and certainly things that we are going to be pursuing.

Thanks.

Your headcount, the headcount that Bob just gave of 631, does that include Visage people?

Yes, it does.

So this will grow down by the 60-odd that you mentioned?

64, correct.

Okay, thanks.

Have you received any royalties from Honeywell on the synthetic vision arrangement?

When we sold AUSG?

No, since.

Yes, but I mean since we have sold AUSG?

Yes.

No, nothing of significance.

Okay.

And last item you talked about capturing share, and I mean, it's a sizable market.

How high are you aiming here?

Well, we haven't been specific in terms of the longer-term growth target.

But I think if you look at kind of big picture, what has driven Mercury's growth historically has really been in the radar space.

I think, over the last couple of years or so, and specifically in '08, I think we have made great progress in the EW side of things.

And then, going forward, we believe that the EO market and sort of a thrust around persistent surveillance that looks at both video and common are areas where we see significant opportunity.

So I think there's huge potential growth opportunities for us, and we are going to go after it.

And is that one or two specific partners, or across the board?

I think it's across the board.

We're going to continue to work with the large primes, like we do today.

Clearly, Merc Fed takes us into a direct prime contractor model from a services perspective.

So that is also an area of good potential growth, and I think we've seen that in the first half of 2009.

Jonathan Ho, William Blair.

On the Converged Sensor Network platform, can you talk a little bit about some of the examples or some of the potential opportunities there are for this application that you guys are seeing right now?

Yes.

So I think the applications fall into a couple of different scenarios.

Clearly, there's an opportunity of upgrades to existing Sensor platforms, where we are looking to upgrade the on-board processing and provide -- from a digital signal perspective, but then also provide more capabilities around image exploitation on-board the platform.

In addition, from a new-platform perspective, we are seeing more opportunities around unmanned platforms and specifically around the persistent surveillance space.

So the two examples that I mentioned in the prepared comments -- one was to provide the on-board processing, the entire on-board processing and storage subsystems for an image exploitation platform for one of the large primes over in the UK.

And then the other one, which we think is going to be the driver of the growth model going forward, which was where Merc Fed won a prime contract position to work on providing the entire signal processing, we kind of see that being the model going forward.

And again, that's in the airborne persistent surveillance space.

So the good thing is, I think opportunities that we're seeing in the ISR market kind of play to where Mercury's historic strengths are from an installed base perspective.

And clearly, the new capabilities that we are bringing to market provides us opportunities for continued growth.

Just taking a look a bit at your book-to-bill ratio, can you talk a little bit about why we saw the drop-off this quarter?

Is this something that's more of, I guess, a timing issue?

And should we look for a strengthening like you guys have said in your comments?

Yes.

So I think, if I take the two businesses in ACS separately, I think overall we expected that the first half of the year was going to be slightly slower than the back half.

And that's the way in which things played out in the first half of '09.

Defense -- it's largely a timing issue.

As we said on the call -- in the prepared remarks, we are expecting, or we are pursuing some good growth opportunities in the back half of the year from a bookings and from a revenue perspective.

Commercial was slightly weaker than we anticipated, largely due to the macroeconomic environment that we find ourselves in, along with everyone else.

And we expect those headwinds to continue going forward in the second half.

So overall I think it's -- from a first-half perspective, it's kind of lining up the way in which we thought, other than in commercial, which is weaker than anticipated.

My last question is on this new product cycle that you guys had referenced in your comments.

Can you talk a little bit more, give us a little bit more color on the timing of when these products are going to come out, what the potential maybe impact to the top line would be, and what you sort of expect as these things start to roll out?

Yes.

So we've got a lot of new boards and products in both the multicomputing and the signal processing domain, coming out really over the next 12 months.

That has already started.

As an example, we have delivered early deliverables of the PowerStream 7100 product, as we had previously mentioned, as part of the Aegis program, and we've got a whole range of other products that will continue to be delivered throughout the next 12-month period.

Those products we expect to drive growth not only in terms of upgrades to existing programs and platforms, but as well as allowing us to go after new markets that Mercury has not participated in historically, such as the EO market around video persistence surveillance.

(Operator instructions) Jim McIlree, Neuburger Berman.

Just one quick question, and I apologize if you already covered it.

I saw that -- we know the sales run rate for the first six months at Visage looked like $4.5 million.

Did you indicate what the loss at the EBIT line had been?

In the operating income, non-GAAP operating loss, Jim, in Q2 was $2.1 million.

And, it was around about the same in Q1.

Right, thank you.

Great work on that, keep it up.

Thank you, yes, it was a good result for us, we think.

Mark Jordan, Noble Financial.

Just a quick question -- VSG had a strong quarter.

Could you just talk about why that seemed to pop up from the revenue standpoint and what, given the movement in oil prices, do you see that as sustainable or declining back to where we were a couple of quarters ago?

I think it's largely just due to the timing of some larger customer contracts.

I think, overall, that business has been growing, and we expect it to continue growing going forward.

So there's nothing really out of the ordinary going on there, Mark, it's just the way in which the quarter unfolded.

From an oil price perspective, at this point, we haven't seen any major impact in terms of the fluctuations in the oil price in terms of the way in which our customers are purchasing from us.

At this time, we have no other question standing by.

I'd like to turn the program back to our speakers for any additional or closing comments.

Well, thanks very much to everyone for listening.

We look forward to speaking with you again next quarter.

Operator, this concludes our call.

Thank you, everyone, for your participation in today's conference, and you may disconnect at this time.