National Instruments Corp (NATI) 2011 Q4 法說會逐字稿

Good day and welcome to the National Instruments Fourth Quarter 2011 Earnings Conference Call. Today's call is being recorded. You may refer to your press packet for the replay dial-in number and passcode. With us today are David Hugley, Vice President, General Counsel and Secretary; Alex Davern, Chief Operating Officer; Dr. James Truchard, President, CEO and Co-Founder; Eric Starkloff, Vice President of Marketing. For openings remarks I would now like to turn the call over to Mr. David Hugley, Vice President, [Corporate] Counsel and Secretary. Please go ahead, sir.

Good afternoon. During the course of this conference call we shall make forward-looking statements including statements regarding future revenue growth opportunities, guidance for our Q1 revenue and earnings per share and success in large accounts. We wish to caution you that such statements are just predictions and that actual events or results may differ materially. We refer you to the documents the Company files regularly filed with the Securities and Exchange Commission, including the Company's most recent Annual Report on Form 10-K filed February 18, 2011 and our most recent quarterly report on Form 10-Q filed October 27, 2011. These documents contain and identify important factors that could cause our actual results to differ materially from those contained in our forward-looking statements. With that I will now turn it over to the Chief Executive Officer of National Instruments Corporation, Dr. James Truchard.

Thank you, David. Good afternoon and thank you for joining us. Our key points for 2011 are record annual revenue of $1 billion, record non-GAAP annual profit and record annual revenue for LabVIEW, PXI and CompactRIO products.

Despite recent economic challenges we executed well this quarter as we set a new record for quarterly and annual revenue and passed a $1 billion annual revenue mark for the first time in our Company history. In 2011 we stayed through to our long-term vision, improved our capacity to deliver new technologies to our customers and balanced our long-term investments with strong annual revenue growth. Despite the slowing global economy I continue to be optimistic about our ability to stay at the forefront of innovation and drive long-term growth.

In our call today Alex Davern our Chief Operating Officer will review our results, Eric Starkloff our Vice President of Marketing will discuss our business and I will close with a few comments before we open up for your questions. Alex.

Good afternoon. Today before I start into the quarterly numbers I would just like to take a moment to celebrate 2011 as the year that NI crossed the $1 billion mark in revenue. Very few companies ever get to this point and we are proud of the hard work of all of our employees, past and present, which has allowed us to not only pass this milestone, but to do it in a way that positions us for continued sustained growth.

Now back to numbers. Revenue for Q4 was a new quarterly record of $278 million, up 11% year-over-year. Non-GAAP revenue was $280 million, up $30 million or 12 percent year-over-year. Acquisitions contributed $11 million of non-GAAP revenue in the quarter and our organic revenue growth rate was 8% year-over-year. During the quarter deferred revenue was up by $7 million. Today we also reported a new annual revenue record with non-GAAP revenue for 2011 of $1.042 billion, up $169 million or 19% year-over-year.

Acquisitions contributed non-GAAP revenue of $22 million for the year and our year-over-year organic revenue growth rate was 17%. The strong organic revenue growth is all the more impressive as it comes on top of a 29% year-over-year organic revenue growth we generated in the recovery year of 2010.

Deferred revenue was up $18 million for the full year. Non-GAAP gross margin in Q4 was 77%, flat with Q3. From a year-over-year perspective non-GAAP gross margin was down 1% due to a drop in the proportion of revenue coming from Europe and a reduction in our inventory days during the quarter.

For the full year our non-GAAP gross margin was a new post IPO high at 77.7%. This is a real tribute to the focused investments we have made in sustainable differentiation.

Total non-GAAP operating expenses were $171 million, up 20% year-over-year in Q4. As we adjusted to lower unexpected revenues, our year over year growth in non-GAAP operating expenses moderated from 30% in Q3 to 20% in Q4.

For the full year non-GAAP operating income also set a new record at $164 million, up 9% year-over-year. This represents the non-GAAP operating margin of 16%, down from 17% in 2010. While our investments in 2011 have put some pressure on short-term margins we feel confident they have positioned us well for long-term growth.

Net income for Q4 was $24.3 million with fully diluted earnings per share of $0.20 and non-GAAP net income was $32.5 million with non-GAAP fully diluted earnings per share of $0.27. Our reconciliation of our GAAP and non-GAAP results is included in our earnings press release.

Despite the economic challenges 2011 was a very successful year for National Instruments. There are some clear positives to take away. On a non-GAAP basis we had record revenue, record gross margins, record operating income and record net income.

Now turning to cash management. We paid $12 million in dividends during the quarter and while cash and short-term investments increased by $30 million. Cash flow from operating activities continued to be strong at $170 million for the year, up from $145 million in 2010. As of December 31, the Company had $366 million of cash in short-term investments.

We also announced today that the Board of Directors approved a 40% increase in the quarterly dividend to $0.14 per share payable on March 5 to shareholders of record on February 13. This increase in the dividend reflects the progress we have made since the 2009 recession and strengthening our business model and investing in growth.

As we close out 2011 I would like to take a moment to reflect on our execution through the last five years. Despite the worst recession in recent history, National Instruments has delivered strong results over the last five years, increasing our non-GAAP revenue by 58% and increasing our non-GAAP operating income by 56%. Much of this increased investment came in 2011, and while we must manage these costs carefully in 2012, I believe that these investments when fully leveraged will be critical to achieving our goal of $2 billion in annual revenue by 2016.

Key to enabling this performance has been our expanded gross margins. Over the last five years we have expanded our non-GAAP gross margins by approximately 350 basis points which has allowed us to make the strategic investments necessary to sustain the long-term growth of the Company.

Now I would like to make some forward-looking statements. The weakness of the Global PMI in Q4 combined with the significant weakness that we saw in our business in Europe during Q4 makes us cautious in planning for 2012. In addition, an early Chinese New Year also makes forecasting Q1 more difficult than usual. As a result we are taking a cautious approach to guidance for Q1.

We currently expect non-GAAP revenue for Q1 to be up year-over-year and to be in the range of $250 million to $270 million. We currently expect the GAAP fully diluted earnings per share will be in the range of $0.09 to $0.17 for Q1 with non-GAAP fully diluted earnings per share expected to be in the range of $0.16 to $0.24. These are forward-looking statements. I must caution you that actual revenues and earnings could be negatively affected by numerous factors such as any further weakness in the global economy, rescheduling of customer orders, expense overruns, manufacturing inefficiencies, adjustments to acquisition earn out accruals, effective tax rates and foreign exchange fluctuations.

In summary, despite the weakened economy we are very pleased with our execution in 2011. Our goals for 2012 are to leverage the investments we have made in 2011, to drive sustained revenue growth and to continue to drive towards our long-term non-GAAP operating margin target of 18%. Now I will turn it every to Eric Starkloff, Vice President of Marketing.

Thank you, Alex. We were pleased with our ability to achieve a new all-time high for annual revenue despite the challenging economic environment we faced in Q4. We believe the diversity of our business and the evolution of or field sales force and product portfolio contributed to our sustained growth. In the past decade a growth driver for our business has been our systems use in high performance tests and embedded applications.

While our orders over $20,000 showed strong growth at approximately 30% for the first nine months of the year through September, due to a weakened economy this growth slowed to 10% in Q4 and comprised 47% of our business during the quarter. For the full year our orders over $20,000 grew approximately 25% over 2010 and have grown 132% since 2006. These large orders accounted for 45% of our business in 2011 compared with only 31% in 2006. We believe the success inour large orders reflects the enhancements we have made in our product and service offerings, our excellent network and system integrators and the performance of our outstanding sales teams.

Our software products delivered record revenue in 2011 as more customers realized the value that NI software brings their applications. LabVIEW software is the heart of graphical system design and has been used by hundreds of thousands of engineers and scientists to develop sophisticated measurement tests and control systems. LabVIEW is unique in its ability to graphically program a system while harnessing the performance benefits of the underlying hardware architecture such as multi core processors and FPGAs which results in a significant productivity improvement to our users over traditional tech based approaches.

When customers use LabVIEW they are plugging into a vast ecosystem of developers who share code and best practices, a marketplace of add-ons in the LabVIEW tools networks and access to support for more than 10,000 different types of hardware devices. This widespread adoption of National Instrument software and hardware has resulted in strong long-term growth for our Company.

In 2011 sales of our PXI modular instruments reached record revenue levels. Helping to drive this growth were our [RF] and FlexRio products whose growth rates outpaced the Company average. Earlier this month National Instruments became the first company to deliver support for testing the new 802.11ac WLAN standard, illustrating our continued investment in RF and the ability of our software based platform to quickly evolve to meet the requirements of new standards. In addition, a critical part of our RF strategy has been adding AWR and Phase Matrix to the NI family. We are very pleased with the initial success of these two acquisitions. Six months in, both organizations are performing ahead of our plan, and I would like to personally thank the employees of these companies for their contributions to this success.

We believe the success of our PXI modular instruments and our more than 14 years of investment in PXI has created a shift in automated test applications away from traditional rack and stack instruments. The traditional instrumentation solutions can't offer the same level of synchronization, system level software integration and reduced factory footprint and power consumption, and are therefore no longer viable in many automated test applications.

Over the last few years some traditional instrument vendors have introduced new PXI products to market, further demonstrating their support for PXI. We welcome their endorsement of the PXI standard and we feel this will more rapidly accelerate the shift in industry towards a software defined modular instrumentation approach.

A customer example that demonstrates the software based test approach with LabVIEW and PXI is from Benetel. who recently developed a manufacturing test system for tablet devices that incorporates complex touch screen accelerometer, camera, audio and Wi-Fi requirements. The modular approach with PXI helps the future proof to test and design, so additional functionality or capacity can be easily added without requiring a costly redesign of the overall system which is very important given the fast moving pace of development in the wireless industry. By using a common software platform based on NI technology, Benetel was able to successfully cut development time on each now project by up to 75%.

NI PXI modular instruments were also successful in many other application areas. For example, Embraer, the Brazilian aircraft manufacturer, used 21 PXI systems and the NI real-time testing platform to create a full aircraft simulator. This system allows Embraer to perform electronic system integration testing by connecting the complete electrical system of the aircraft to a assimilation of the rest of the plane. The PXI based system reduced development and testing time from 42 months to 30 months when compared to their previous airplane simulation approach.

Sales of our distributed I/O products have also been a growth driver. They reached record revenue for 2011 and have increased annual revenue three fold over the past five years. Instrumental in this growth are our CompactRIO products which continue to grow significantly faster than the Company average. The CompactRIO platform has been a key investment area and we are pleased to see success in many diverse industries including energy, bio medical and transportation.

For example, LIME Instruments, an NI alliance partner, has used LabVIEW and CompactRIO to develop and deploy a measurement and control system for hydraulic fracturing, a rapidly growing technique for extracting natural gas to meet our growing energy needs. The NI system is used to capture critical data in the oil field environment which requires a mobile and rugged platform that can meet the physical demands of the operation. LIME chose LabVIEW and CompactRio because it met their application requirements while reducing their development time. Using a single developer, LIME was able to develop the entire system architecture including real-time controls, FPGA processing and a user interface of the application. Where a traditional development environment using tech based languages would have taken three to four times the engineering resources.

Our Data Acquisition products also experienced record annual revenue in 2011 which was driven by its strong growth in our CompactDAQ products. The seamless LabVIEW integration with our data acquisition product continues to lower the barrier of entry for customers to use NI hardware and software while delivering quick and easy plug and play measurements for a wide breadth of measurement types.

To close, we have built a world class product portfolio, an outstanding sales force and service offering and a strong alliance partner network. The strategic R&D investments we have made produced highly differentiated products in areas such as RF modular instrumentation and CompactRIO, and have enabled us to grow rapidly in large application areas. We were pleased to see our continued investments lead to a solid performance in 2011, and we look forward to future growth for this continued commitment to innovation. With that I will turn it back to Dr. T.

Thank you, Eric. Despite the weakened economy in Europe we executed well in Q4 in delivering record revenue for the quarter. It gives me great pride to see our Company reach the $1 billion annual revenue mark, representing a key milestone in our Company's history. I believe we have reached a watershed moment in the test and measurement industry's movement away from rack and stack instrumentation towards software based instrumentation. This achievement is a testament to both our talented employees around the globe and to a company culture that inspires innovative product development to meet the demanding needs of our customers.

To that end, I would like to take a moment to reflect on our hundred year plan which is our framework to balancing our short-term and long-term goals for the Company. Starting with the long-term horizon I am confident that our relentless commitment in building a culture of innovation will deliver increased value over time to our customers, suppliers, partners, employees and shareholders.

Earlier this month National Instruments was named one of Fortune Magazine's 100 best companies to work for, for the 13th consecutive year. This is becoming a worldwide standard across NI with numerous branches also receiving this award from the great place to work institute, including France, Germany, Italy, Japan, the UK and Mexico.

In addition to this honor we were extremely pleased to be named one of the top 25 multinational companies to work for in the world by Fortune at the New York Stock Exchange in October. To have sustained placement on these lists requires a growing business with strong product differentiation and career path opportunity. Our solid business plan and long-term focus helps us attract and retain top talent, creating sustained value for all the stakeholders.

But it's not just our Company culture and people that allow NI to stand out amongst our peers in the industry. Another key element is our visionary approach to delivering value to our customers through graphical system design. Through our ongoing investments in the strategic platforms of LabVIEW, PXI, CompactRIO and Data Acquisitions, graphical system design offers our customers a highly differentiated approach combining graphical programming with modular hardware resulting in significant cost savings and shortened design cycles.

One customer who benefited from graphical system design was Alsea, the leading quick service restaurant operator in Latin America operating brands such as Domino's Pizza, Starbucks, P.F. Chang. Their challenge was to monitor and manage basic utility services at their restaurants while reducing the consumption. Using the flexibility of LabVIEW combined with CompactRIO, Alsea was able to successfully deploy an innovative energy monitoring system resulting in the reduction of energy consumption by 25%. They are now deploying the same system in hundreds of restaurants throughout Mexico.

Our opportunity has never been greater to help customers address the engineering challenges in emerging areas such as alternative energy, smart mobile, semiconductor, big physics and life sciences. World-renowned experts in various disciplines have adopted our products because they saw problems that weren't possible with traditional approaches.

One such expert is Dr. JayLee, Director of the Center for Intelligent Maintenance System or IMS. Dr. Lee's team is leading cutting-edge research in the area of machine condition monitoring. IMS recently released a set of predictive maintenance algorithms as a tool kit for lab use called Watchdog Agent Library, representing a breakthrough in research that will help engineers increase their reliability of their machines and sustain near zero breakdown performance.

In closing we recognize the importance in delivering on both our long-term and short-term goals for the Company. While the economy may prove to be difficult in 2012, I am confident in our ability to execute on our vision and to meet the immense diversity and scale of applications that we serve in the short-term. NI has become a technology pioneer by not only investing in products, but also the people who make them. I would like to thank our employees for their tremendous efforts in maintaining our open and innovative corporate culture.

I believe the future is software based instrumentation and NI is in the forefront of the movement away from the rack and stack era of instrumentation. I am optimistic that we are well positioned with our strong foundation to support future growth and profitability. And I would like to thank our employees for their commitment to innovation, prudent expense management and their unwavering focus to serving our customers.

I will be presenting at the Stifel Nicholas Conference in California on February 8, and I hope to see you there. We will now take your questions.

Thank you. Today's Q&A session will be conducted electronically. (Operator Instructions). And we will go first to Mark Doulgass with Longbow Research.

Good afternoon, everyone.

Hey Mark. How are you?

Good. How are you?

Excellent.

Good. Alex, your comment on getting back to an 18% non-GAAP run rate over the long-term, it's hard to look out in 2012, but you think you will have enough leverage to be near that run rate? Your guidance is implying at this point roughly 12% non-GAAP operating margin. Is that correct? Can you give a little --

Honestly Mark, good question. We're only obviously giving guidance here for Q1. And as I said coming into the call, we're going to be somewhat cautious having missed the low end of the range in Q4 and seeing some improving economic information, but still things a little shaky out there. We're choosing the cautious approach as we give guidance for the first quarter. We talked about this in the call earlier in January and late in October. For us to be able to drive an improvement in our operating leverage in 2012 we will have to cover the cost that's implied by the investments that we made in 2011.

Right.

So we did see a drop in our operating margin from 17% in 2010 to 16% in the non-GAAP level in 2011. For us to be able to drive that number north of 16% in 2012 we're going to need to see revenue growth that's in the high single-digits. So that's the hill that's before us to drive leverage. We're certainly going to do everything we can to achieve that goal, but at this stage in the year it's a little early to predict that.

Okay. And then follow-up. So would the US PMI actually looked pretty good there in November, December. You think there's going to be a lag? Are you starting to see that in 1Q, or you're just being really prudent?

Well, we're certainly choosing to be pretty cautious in this time frame. Like you said, the US PMI has shown a significant degree of strength in really October, November, December and we saw our large order growth in the Americas continue strongly in Q4. We saw our actual year-over-year growth rate increase in Q4, so we definitely did see a response to that in the fourth quarter.

As we look out here at Q1 we expect to see another decent good quarter from the Americas, so that's certainly baked into our expectation, and while I'm being cautious I do certainly see some signs of hope. It does look from the preliminary PMIs both for China and for the Eurozone in January it does look like we've formed a clear bottom and are moving back up towards the breakeven point in those two data points. We will learn more about that tomorrow. So I think there's room for some cautious optimism that things have stopped getting worse and may have turned the corner, but like I said, having missed earnings in Q4 we're taking a pretty cautious approach here to guidance in the first quarter.

Okay. Thanks.

Thank you.

And we'll go next to Anthony Luscri with JPMorgan.

Hi. Thanks for taking the question.

Hi Anthony.

How should we view the puts and takes to your gross margin profile heading into the first quarter and into 2012, and along those lines how should we view the impact of the Malaysian production ramp in the back half if that's still planned?

Sure. As we look into Q1 we would expect to see improvement in gross margins sequentially from Q4. That's my expectation at this point in time.

For the full year, we had a very strong start to last year. We were in the process of also ramping up on the inventory side which helped us and then we had a tougher second half on the margin profile. So I would like to see probably for a full year I think it will be relatively flat, but I do think sequentially from Q4 to Q1 we will definitely see improvement.

On the Malaysian expansion and as we said before, that's really targeted as a capacity expansion and the timing of turning on the full production facility will be dependent upon our need to expand capacity. So our intent would be to start that operation fully into production at a time when we will be able to essentially absorb that incremental impact, and so I think it will have a very diminimis impact at the gross margin percentage level in 2012.

Okay. Thanks. And then as a follow-up on your preannouncement call you mentioned the business trends had picked up in the December time frame. Beyond just PMI showing better numbers there. Is your business seeing that similar trend through January?

Through January it's built into our guidance that we gave today, but certainly commenting on the distinct trends we saw in the Q3 -- in Q4 -- excuse me, where we saw a significant weakness in the month of November and then some improvement in December. January is more like December than November, and so that's obviously built in our guidance as we are giving -- I think at the mid point it's 9% year-over-year growth.

Thank you.

Thank you, Anthony.

We'll go next to Ajit Pai with Stifel Nicolaus.

Yes. Good afternoon.

Hi Ajit. How are you?

Just a couple of quick questions. I think the first one is just looking at -- your increasing your dividend by 40%. So just trying to figure out the implications of that. I think in your prepared remarks you say it's about confidence in your business and prospects.

But is that an indication that you actually expect growth rate for the Company -- the 20 plus% target that you have -- that to change imminently and you are now expecting the Company to be much more of a cash cow than investing in working capital and the growth? And then the second would be the -- when you have -- maybe you can get the answer to the first one, and I can ask a follow-up.

I think there's three questions in the first one, so let's tackle that one first, and then certainly welcome to your second. Fundamentally when we look at the business it's always been pretty lean working capital business, so it doesn't require a lot of capital to scale the business. That's the number one thing.

Secondly, I don't think anybody could accuse us of not investing enough in driving long-term growth, so I think we've checked the box on being able to drive that element as well. When we look at the uses of cash we really have had three priorities. Number one being dividends because we view them as an efficient, effective method from a tax point of view, particularly to return cash to shareholders. Number two is the opportunistic stock repurchase and number three has been strategic acquisitions, and we have leveraged and all three in different time frames.

Obviously as we came through the 2008, 2009 recession we were a little reluctant to scale dividends in line with our opportunity just because maybe we suffered a little bit of concern from that particular time frame. Now as we look at our cash balance near an all-time high with $170 million in cash flow from operations in 2011, we believe that we will over time be able to drive the long-term growth of the Company and generate a significant amount of free cash flow. With that perspective as the fundamental decision behind the decision to raise the dividend here to about 40% of our cash flow from operations last year, and Dr. Truchardmight care to comment on the dividend cut.

Yes. Sure. In the end dividend is much of what a company should be about, especially in this time frame when we turn from various investments of relatively low, we see it as an opportunity to shareholders to share in the growth of the Company. Obviously, we plan to maintain our long-term perspective as well as investing. As Alex mentioned, we invested relatively aggressively in 2011, so we feel that's well on the way. Obviously, we have come through the severe economic downturn with enough cash and we were able to weather that quite well. Looking forward to -- this just looks like a good way to return value to the shareholders.

Ajit, your second question?

Yes. So the second question was just looking at the percentage of revenue between the different geographies. I think when you set up your plant in Debrecen, Hungary back in the -- about a decade ago, we expected greater growth in Europe as did other parts of the world. But you've had Asia grow really rapidly since then, and a percentage of revenue Europe has stayed somewhat static. So right now when you're setting up this plant in Malaysia, is there an expectation that you could actually see accelerated growth over there, or is it more like risk management?

It's fundamentally a reflection of our expectation that Asia will grow to become the largest portion of National Instrument's revenue. When I joined NI 15, 18 years ago it was about 10% of revenue. Today it's at 30% of revenue. There's a tremendous opportunity for us in Asia.

Most TM companies have a longer life than NI or longer history than NI, typically have their largest portion of their revenue coming from Asia. So we have got a little bit of catch-up to do there. We anticipate significant growth from the Asia region. The number of engineers that are graduating in Asia, the number and amount of production that's being done in Asia. We have a very strong team executing over there.

So it's a foundation element for what we believe will be the largest portion of our revenue probably by the time we get to 2016. We need to be certain that we can offer all of the services and capability, efficiency, timeliness and responsiveness in the Asian market that we're able to provide to our customers in the Americas and in Europe.

Got it. Thank you.

(Operator Instructions). And we'll go next to Rick Eastman with Robert W. Baird.

Yes. Good afternoon.

Hey Robert. How are you?

Very good. Thank you. Could you just repeat, I think you said earlier you were willing to give a growth rate on the Data Acquisition products and also on the industrial control in the quarter. Did I miss that, or did you not give that?

No. We talked about instrument control perhaps and -- well I'll let Eric.

Yes. I can comment, Rick. So we did have an all time record for our Data Acquisition products in the quarter. We did not comment on the growth rate. I did comment on both the instrument control growth rate which was significantly less in the Company. It was at minus 16% for the quarter in instrument control. That indicates an overall weakness in test and measurement.

And then you may have also been referring to our distributed I/O which grew faster than the Company average, reached an all time record, and in particular, our growth of CompactRio was very strong for the year and to the quarter.

Okay. And then just, Alex, as we look at that average order size, I think the thing that steps out in the fourth quarter here when you look at average order size year-over-year it's up about 17%. It's up quite significantly. And do you feel that going forward that National Instruments' revenue sensitivity will be greater to business cycles, and to your point earlier about the PMI?Does that sensitivity correlate tighter, and is the variance greater?

Well, the way I put it this way, Rick, is we have seen is so far through the last two cycles let's say the '08, '09 down turn and just current slow down. I'm not sure if we've quite got to the negative numbers yet, but we're seeing certainly that the larger portion of the business does respond to the change in that PMI, but it typically has stayed at a higher level than the orders under $20,000.

In Q4 for example, while we did see a significant deceleration in the growth of large orders, it was still about 10%, Whereas the smaller orders were down in the low single-digit range. So I do think while it does have some clear correlation with the overall PMI, it is a source for accelerating our overall growth in good times I think and in bad.

Okay. So the transaction business in this quarter was plus low single-digits?

Correct.

Yes.

Okay. And then just does the larger order size, again I just want to stick with this theme for a second. Does it give us any suggestion or hints as to which end markets you are penetrating at a faster rate? In other words, is the solution or a larger order are there early adopters there in certain markets or --

I think it's very -- with that simple data point, Rick, I think it's very difficult to answer that question. From an external point of view. Obviously our average order size is still only $4,600, so it's still a very low number actually. We have a lot of large orders. We have a ton of small orders. I think it would be very difficult for you to interpret that into a market vertical penetrating in any meaningful way I'm afraid.

Okay.

If you look at most of the verticals that we're specifically targeting dedicated resources to from a sales point of view, each of them has a pretty heft proportion of their revenue coming from orders over $20,000.

Okay. And can you just tell us what those three might be?

Well, we've dedicated resources towards a number of key areas, and then we've have talked about this before, but mobile devices and semiconductor and big physics and life sciences and in energy. We do have dedicated groups going after those particular market areas.

Okay. Very good. Thank you.

Thank you very much, Rick.

It appears there are no further questions at this time. I would like to turn the call over to Mr. Alex Davern for any additional or closing remarks.

Thank you very much for your time today. As a reminder, Dr. Truchard will be presenting at the Stifel Nicolaus Conference next week in California. We hope to see you there. Thank you very much.

This does conclude today's conference. We appreciate your participation. You may now disconnect.