Universal Display Corp (OLED) 2014 Q3 法說會逐字稿

Good day, ladies and gentlemen and welcome to Universal Display's third quarter 2014 Earnings Conference Call. My name is Gwen and I will be your conference moderator for today's call. As a reminder this conference is big recorded for replay purposes. I would now like to turn the call over to Darice Liu director of Investor Relations. Please proceed.

Thank you, Gwen and good afternoon everyone. Welcome to Universal Display's Third Quarter Earnings Conference Call. Joining me on the call today are Steve Abramson, President and Chief Executive Officer and Sid Rosenblatt, Executive Vice President, and Chief Financial Officer. Before Steve begins let me remind you that today's call is the property of Universal Display.

Any re-distribution, retransmission or rebroadcast of any portion of this call in any form without the express written consents of Universal Display is strictly prohibited. Further, this call is being webcast live and will be made available for a period of time on Universal Display's website. This call contains time-sensitive information that is accurate only as of the date of the live webcast of this call, November 6, 2014.

All statements in this conference call that are not historical are forward-looking statements within the meaning of the Private Securities and Litigation Reform Act of 1995. Such as those relating to Universal Display Corporation's technology and potential application of their technology, the Company's expected results as well as the growth of the OLED market and the Company's opportunities in that market. These include but are not limited to statements regarding Universal Display's beliefs, expectations, hopes or intentions regarding the future.

It is important to note that these statements are subject to risks and uncertainties that could cause Universal Display's actual results to differ from those projected due to risks and uncertainties or expressed in the Company's periodic reports filed with the SEC and should be referenced by anyone considering making any investments in the Company's securities. Universal Display disclaims any obligation to update any of these statements. Now, I would like to turn the call over to Steve Abramson.

Thanks, Darice, and welcome to everyone on today's call. For the third quarter of 2014 we delivered solid results of $32.9 million in revenue, operating profit of $6.1 million and EPS of $0.09 per share. Third quarter results reflect the continued diversification of our customer base and the strength of our business model. While emitter and wholesales were lower than anticipated what's currently our largest end product target segment IM mobile phones we did see growth for materials used in large area displays and flexible product offer.

Notwithstanding the quarter's softness we still achieved strong operating profit. We believe this quarter also illustrated the breadth of the OLED market opportunity even in its early stages of technology adoption. As one market cycles through temporary product offering gyration we have the opportunity to benefit from other aspects of the OLED market. More specifically, if one market experiences softness as a result of the inherent cycling of cross introduction in consumer demand such as high-end Smartphones, other markets can create positive opportunity such as OLED TVs and flexible wearable devices. Broadly speaking, OLED activity in the market continues to evolve and progress and we are uniquely positioned to benefit from the full spectrum of OLED market opportunities.

The number of new OLED products being launched into the marketplace and in the pipeline appear to be setting the stage for new OLED capacity in 2015 and beyond. It has been reported that Samsung displays initial line of its A3 gen 6 fab displays that produce flexible OLED product with a capacity start of 15,000 plates per month. This line is anticipated to start operations next year. LG Display recently noted on its Earnings Conference Call that it is ramping up its gen 8 OLED TV production line. It currently has capacity of 8,000 plates per month and is adding an additional 6,000 plates per month by the end of this year.

Next year LGV plans to add 20,000 more plates per month bringing their total TV capacity to 34,000 plates per month by the end of 2015. LGV is also expected to add capacity to its gen 4.5 line of flexible displays for wearables and for conformable displays. BOE's OLED activity continues to advance. According to reports the Chinese panel maker is progressing with its general 5.5 fab (inaudible) and plans to build a general 8.5 OLED TV fab in (inaudible). In just the other week the Chinese news report stated that BOE intends to start building a gen 6 LTPS AM OLED manufacturing line in Chendu in 2015.

As you can see, OLED capacity plans are expanding. As are the OLED product road maps. To highlight just a few of the recent OLED launches and introductions since our last earnings call, LG launched its 65 inch 4 K OLED TV into the marketplace, Dell announced the venue 87,000 tablet dubbed the world's biggest tablet at just 6 millimeters thin, on the wearable front the Samsung Gear S LG G watch R and assets (inaudible) entered the market.

And we saw additional product launches in the handset market in both the mid-end and high-end including the (inaudible) R 5, Nokia Lumia 730, Motorola Droid turbo and (inaudible) nexus (inaudible). Consumers are coming to understand and appreciate and adopt OLED products. Just take Sid and I for example. Every morning I need to decide which smart watch to wear. My LG G smart watch R or my Samsung Gear fit. On the larger end of the product spectrum Sid just purchased a 55 inch OLED TV. And is loving how vivid and crystal clear the Eagle games are, especially when they're winning. The proliferation of OLEDs in the marketplace is happening and it is just beginning.

On the OLED solid state lighting front according to reports our customers LG Chem and Kaneka have developed new OLED panels with longer lifetime, Konica Minolta is expected to start flexible OLED lighting production and Phillips has transitioned OLED lighting from the prototype stage to the product stage. We are encouraged and excited about the level of commercial and development activity in the OLED display and lighting pipeline.

Of course, the evolution of the OLED industry is not immune to the usual technology product cycling but as a whole it is advancing as are we. We are creating new material for emitters a new red and green emitters that were launched in the beginning of this year have further leveraged our leadership in the market. Parallel with our design discovery of next-generation emitters we are developing new host material. While our first green host was successfully designed into selective 2013 and 2014 products, there are new product offerings that do not include our green host. Our development teams are working closely with customers as we invent and commercialize higher performing cost-effective next-generation emitter and host (inaudible).

Another important component to our growth strategy is developing groundbreaking technology that solves significant industry challenges that help advance the OLED market. Let me take a moment to highlight two of our long-term projects OVJP and single layer barrier encapsulation. Today OLEDs are manufactured using a vacuum deposition method.

We have been working on a novel manufacturing printing process called OVJP or organic vapor jet printing which allows manufacturers to use a gas stream to print the same materials that are currently being used in existing vacuum deposition systems. This system is being designed for large area applications and to lower manufacturing costs.

Additionally, we are working on a single layer barrier encapsulation solution a plastic substrate. Plastic unlike glass is a porous material that needs a barrier to prevent oxygen and moisture from penetrating the display and degrading the OLED. Our single layer PE CD encapsulation system is being designed to provide panel makers a cost-effective high throughput tool superior to current encapsulation processes. We believe that these R&D innovations allow us to bolster our global OLED intellectual property framework while increasing our value position in the ecosystem.

These ongoing efforts to reinforce our strategic priorities to widen our reach, expand our business and drive profitable long-term growth. Now for a review of our financial results I will turn the call over to Sid.

Thank you, Steve and again thank you everyone for joining our call today. Let me review our results in more details before commenting on our 2014 guidance. Revenues for the third quarter of 2014 were $32.9 million flat compared to third quarter 2013. Revenues for the nine months ended September 30th, 2014 were $134.9 million, up 39% over a comparable period in 2013 of $97.2 million. Revenues this year are still on track for strong double-digit year-over-year growth. Total material sales were $27.5 million in the third quarter of which commercial was $24.8 million.

The breakdown of commercial material sales by color were the third quarter 2014 the prior quarter and the comparable year-ago quarters are green emitters sales were $13 million in the third quarter, down 13% sequentially from the second quarter 2014 $15 million, and slightly down year-over-year from the comparable quarter $13.6 million. Green host sales were $5.9 million in the third quarter compared to last quarter's $10.2 million. Both of which exclude the Japanese consumption tax and down year-over-year from the comparable quarter's $11.2 million.

The reduction in our green host sales is due to our largest customer introducing new product offerings that did not include our host materials. Red emitter sales were $5.1 million in the third quarter, up 16% sequentially from the second quarter's $4.4 million, and up year-over-year from the comparable quarter of $3.4 million. Our third quarter 2014 royalty and license fees were $5.4 million. This does not include any Samsung license fee which is $50 million for 2014. Half of which is recognized in the second and fourth quarter of the year respectively.

During the quarter we saw the continuation of our customer diversification trend. Direct and indirect sales of our top customers accounted for 55% of our sales in the quarter while the second largest customer made up 31% of our sales. For the first nine months of the year sales to our top customer indirect and direct accounted for 70% of our sales while our second largest customer made up 22% of our sales. Moving along to material costs, material costs for the third quarter were $7.4 million, down year-over-year from third quarter 2013's $9.8 million.

Third quarter 2014's material gross margins were approximately 73% compared to third quarter 2013's material gross margin of approximately 68%. The improvement in margins is due to product mix and our ongoing cost down strategy of diligently working to reduce our material costs and boost our competitive position. Third quarter operating expenses excluding cost of materials were $19.4 million which was up year-over-year from the comparable quarter's $18.8 million.

Operating income was a solid $6.1 million for the third quarter of 2014 compared to $4.2 million for the third quarter of 2013. This quarter demonstrates the progress and strength the of the operating model we have built through our cost down strategy and ability to manage expenses. Even though sales were flat year-over-year, our operating income was up an impressive 43%. During the quarter we incurred income tax expense of $2 million for a tax rate of 31% compared to the recognition of an income tax benefit of $1.1 million in the third quarter of 2013. As a result in the third quarter 2014 we reported net income of $4.3 million or $0.09 per share to the comparable quarter in 2013's $5.5 million or $0.12 per share respectively.

Shifting to the balance sheet, we ended Q3 with $268 million in cash and short-term investments. This is down from last quarter's $291 million mainly due to the (inaudible) share repurchasing and increasing inventory. Moving to guidance, due to the nature of the OLED market and given the current challenges in the high-end Smartphone industry and expected volume of host material sales, we now expect 2014 revenue to be approximately $183 million to $185 million.

We continue to be excited about the growing number of OLED products in the marketplace, new OLED display capacity is expected to ramp next year. OLED lighting efforts are accelerating and our customer pipeline is growing. The UDC team continues to do an incredible job of creating and delivering the most innovative technology in the industry. Bottom-line we have a highly competitive and growing product portfolio to position ourselves for growth well into the future. Now, with that I will turn the call back to Steve.

Thanks, Sid. At UDC we are extremely well-positioned to compete in markets around the world based on our leadership as an innovator and an infrastructure that is designed to drive an effective cost structure and the ability to leverage 20 years of know-how and experience into new materials and technology. We are scaling our business, targeting new opportunities and driving innovation at the molecular level. These efforts allow us to provide continued value to our customers while keeping the Company at the forefront of the OLED industries. OLEDs are the next display in lighting revolution. OLED technology allows display and lighting makers the capability to radically alter the consumer and illumination landscape to create differentiated high-performing energy efficient innovative products. While our near-term results may be subject to certain emerging industry-specific fluctuations it is by no means indicative of the growing momentum in the OLED ecosystem and our long-term opportunities.

Like most growing markets it will take time for OLED industry to fully develop and mature. In summary, we are building a business that can sustain attractive growth rates over the long-term consisting of new materials, new technology, new customer agreements and new commercial OLED products. On that note, Gwen let's begin the Q&A session.

Thank you. (Operator Instructions). We'll take our first question from Jim Ricchiuti with Needham & Company.

Hi. Thank you. Good afternoon.

Hi Jim.

Sid, I wonder if you can just comment a little bit more about the issue around the host business and perhaps what the implications are regarding either other devices from that customer or perhaps how you see that business going forward with other customers. How should we think about the host revenue business?

Well, you know, as we have talked in the past the host business is a highly competitive commoditized market. We do not expect every recipe or product model to include our host. We are committed to aggressively pursue high performance cost-effective host solution. We are implementing cost down strategies while maintaining our lead in the phosphorescent OLED technologies. While we do make the best possible materials to match our emitters customers have a choice of hosts. Our development teams are working on and with customers to deliver next-generation hosts that are higher performing and lower cost and we are continuing to work diligently to move forward and grow our host business.

Do you guys have a sense of what the designing cycle looks like in terms of as you work on some of these newer materials and what's the window like in terms of the next design?

The window varies. I mean to be honest it really depend on the customer how quick they intend to get the next product into the marketplace. It is multiple months. I mean it's three months, four months or more.

If I can ask one other question I will jump back in the queue. It looks look your materials business overall with your second largest customer grew fairly nicely sequentially. Any color on that in terms of is this? Do you think this is inventory build or is this just a function of their coating needs for these larger area displays?

I can't specifically say whether it's inventory build or whether it's production, but we do believe that it is going into product, they are selling products, they're selling them in the marketplace and as Steve stated, they're going to add capacity the end of this year. And then next year they're adding additional capacity so they're going to grow from 8,000 plates per month up to 34,000 by the end of next year. So that's a significant growth and we're very pleased. Obviously large area displays use more material.

Okay. Thanks very much.

We'll take our next question from Osten Bernardez with Cross Research.

Hi. Good afternoon. Thanks for taking my questions. I just had a question with respect to the timing in the quarter as to when it became apparent that you would not be able to achieve the 2014 sales outlook that you had previously discussed and (inaudible) for the quarter? What's your thinking around that?

As a number of others in this ecosystem and supply chain we saw this last quarter get worse and intensify as time went on so we in the beginning we said on our last call we expected it to be soft and I think Samsung even said that. Their conference call in Q2 and then in Q3 it was much worse and we were always working with the customer and diligent about working and trying to understand what the future would look like, but it did intensify during the quarter and the magnitude of it was greater than anybody would have anticipated this quarter.

Okay. And so given with a you're seeing from a demand standpoint even for the emitters which should be, well, even for the emitters and what we're seeing from the high end mobile phone standpoint and recent estimates for TVs sort of being pared back at least in the near future I guess how do you shall it how are you thinking about the longer-term growth perspective? I know it's still a little early but when you're thinking about 2015 from a sales growth perspective, should we be assuming that sales growth could be from a material standpoint be similar to or better than OLEDs in 2014?

Well, we will give guidance for 2015 on our Q4 earnings call, but in 2015 we're going to continue to focus on expanding our customer diversification. We expect the momentum in the OLED market to continue to drive new OLED products and launches, and there are new capacity plans. And so our guidance for this quarter obviously we've given and it is based upon where we see the market over the next couple of months. In terms of the current market dynamics I mean we're confident that the Smartphone manufacturers will overcome these temporary fluctuations. We believe that our top customer is leader in the market and in products and commercialization and we are excited to work with them to continue to do this and we expect them to be successful.

And then going forward do you you anticipate your host materials being designed in at any point with that largest customer or do you foresee that business sort of no longer returning?

No. We intend to work diligently to get our host business growing. We intend to be in the host business and they're ongoing and we are looking at other customers for our host business, but we are not giving up on host business at all.

Thank you.

We'll take our next question from Rob Stone with Cowen and Company.

Hi, guys. I wanted to ask about the inventory build and in particular since you were not included in the stack recipe as you said for some new products, is there ongoing demand at all for green host and do you see the possibility that you will have excess inventory?

Well, I mean we built our inventory to meet our customers' specifications and needs and in this case it did not materialize when we had anticipated. We are adjusting time supplier for our emitters and our host, and we always want to ensure that we can meet all of our customers' needs. We don't want to be a bottleneck and these materials do have long lead times and they have long shelf life and we are going to continue. Obviously, we need to manage our inventory as anybody else does, but in the early stages of a new industry there are fluctuations that there's just to some extent difficult to manage particularly when you've got a supply chain that has long lead items in it.

Okay. But to be specific there are certain products which you were in the stack recipe that are still shipping, yes?

That is correct. We are we still sell host materials. We did sell host materials in Q3 and we will sell host materials in Q4.

Okay. My follow-up question is on the operating expense trend. It looks like you made a fair size adjustment sequentially in R&D expense at least. How should we think about your spending plans against this lower revenue trend?

Well, we still will continue on what we talked about a 10% to 15% increase. This is, we believe, a temporary blip and we are building this business for the long haul and we think that R&D and developing new and better and higher performing materials is something that we have to do because we intend to be the leader in this industry for the foreseeable future.

So that speaks to the long-term trends, but it looks like you scaled back expenses at least sequentially in Q3. Is that accurate or what caused the expense?

There are some fluctuations in R&D expenses based upon materials that we scale-up. We included within that are scale-up of new materials within PPG and developmental materials within PPG and that number does fluctuate from quarter to quarter.

So is it likely to then bounce back up in the fourth quarter?

I would think it will probably be up over the Q3, yes.

Okay. Thank you.

We'll go next to Brian Lee with Goldman Sachs.

Hey guys. Thanks for taking the questions. I had a couple of them. I guess first off if I think about the sequence of events from last quarter so over the past three months and then I try to decompose, where the shortfall on guidance is coming from, has there been any incremental price concessions or incremental weakness even off the August report you had in emitters due to Samsung and the Smartphone issues that they're having when you reiterated the guidance with that in mind because I'm just trying to figure out if this short fall is all due to hosts or if there was also some incremental weakness elsewhere in the portfolio.

The weakness that we saw was in host materials and we have seen some overall weakness obviously with Samsung. It's not pricing issues. There was no significant price declines in the quarter. There's always negotiations and small price declines, but there was nothing significant.

Okay. So all volume nothing pricing relative to your outlook from three months ago?

That's correct.

And then if I think about your commentary around the next-gen green host material development that you're currently under way in, are you looking at a new gross margin target range for this material segment and is there a margin level that you still view as being sufficient at the low end if you think about returns? And, on R&D and investment just trying to gauge whether or not the higher competitive dynamic here that seems to be emerging is going to shift the range of margin targets you have thought about on this segment.

Our margin profile and ranges that we have talked about and that we have used historically we do not see any change in that. We are working to develop new hosts that have lower manufacturing costs with higher performance. So we're constantly doing that. So we still think that there is a margin on materials that is one that is something that fits our model and that makes sense in this industry.

And just so you can remind us was that the 40% to 50% range on host specifically?

That's correct.

Gross margin.

That is correct.

Okay. And then last question from me and I will pass it on. On green hosts again it sounds like you guys clearly have some amount of Intel on which products are using your green host as opposing to not using your green host hence being able to attribute the shortfall in guidance specifically to that. Based on what you know can you give us some sense of, if you look at the Q3 run-rate, what your green host represents as a percent of overall Samsung purchases for that type of material? And then, what you might think is reasonable going forward and looking into 2015 if you think is this going to back a multi sourced material for those guys specifically?

As you're well aware, Brian, I can't speak pore Samsung or talk about what they're buying or what they are not buying. I mean we are in to designs into products in 2013 and 2014 and already some new products that they do not have our host material in them, but we can't specifically talk product-by-product. We do believe that they will continue to make some of the other products that we have so we continue expect to sell host however clearly not at the same level. Until we then get designed into the next new product cycle where we would expect it to then start to pick up again.

Okay. Thanks a lot, guys.

And we'll take our next question from Jed Dorsheimer with Canaccord.

Hi. Thanks for taking my questions. I guess, Sid, maybe just as a follow-up the green emitter business being down 13% to $13 million this quarter, you had mentioned that wasn't pricing related at all. I'm curious, though, how much of that decline do you attribute to your customer being more efficient at using the materials?

It's difficult for us to predict or talk about their efficiency.

Yes.

Clearly, across-the-board, though, because of the industry itself and what has been reported by Samsung themselves they had inventory at the end of June at the end of their quarter and they clearly were not building as much product in Q3. So I would have to say that it is based upon the headwinds in the industry.

Okay. And then I know you're not giving 2015 guidance. At a higher level, though, do you think that 2015 will be the majority of any growth that you should expect would be coming from the display industry or how important do you see lighting becoming in terms of your business?

As we mentioned earlier, we will give 2015 guidance in our year-end call. The lighting industry is growing, the lighting industry only made up approximately 5% of our revenues and it is still going to be in early stages, I believe, in 2015. I think you will see some growth. There are a number of players that have pilot lines and introducing pilot products as Steve had said, but I don't see any real capacity in 2015.

Thanks. And then last question. Just with respect to the FUJI FILM patent portfolio that you purchased, have you been leveraging that at all? Is that monetizing? Any licensing or royalty dollars at this point? Is that incremental to the portfolio that you had at the time?

Specifically to pick one patent in it that we say is incremental it has helped us in developing new materials or new next-gen materials are using some of that IP and there is IP in there that is very young and we believe we will be able to use that to extend our IP franchise.

Great. Thank you.

Thank you.

And we'll go next to Hendi Susanto with Gabelli.

Good evening, Steve and Sid. And thank you for taking my questions. In the green host material business is the nature of design adoption either winning all or nothing. If I interpret that correctly the lower grid host sale is due to customer choosing another vendor. Should we expect your customers to (inaudible) of sourcing in host materials and not multi sourcing?

I'm not sure whether I can speak for Samsung whether they're multi sourcing or not. I mean clearly there is other companies host material was selected for certain products. We believe that our host material that is selected that they keep our recipes once they start it, but I really can't speak for whether they can or will or are multi sourcing.

Okay and then in lights of the green host situation in Q3 do you anticipate that Samsung will have excess inventory or inventory build?

They have been buying it. They bought it during the quarter at regular intervals and I would expect them to continue to buy it at regular intervals. We have been a just in time supplier and the inventory purchases are pretty consistent.

Got it. And if I may squeeze one more, your second largest customer generated about $10 (inaudible) in Q3 and it is ramping up its OLED TV production. It is reasonable to think that the $10 million run rate can be the run rate for the next two to three quarters?

It's difficult for us to predict at this time. I mean assuming that there aren't going to be making the same quantity of product it should be in that ballpark, but I can't predict. We have given our guidance what we think it will be for this quarter and beyond that we will talk about that when we give our 2015 guidance.

Okay. Thank you.

And we'll go next to Andrew Abrams with SCMR.

Hi, guys. I don't want to beat a dead horse, but one question on green host. If you had to characterize what you would expect the difference between your host material and the other host material that's being used, would it be a matter of your being hard on price relative to the other manufacturer? Meaning, if they get 90% of what they get from your material in terms of performance but a considerably lower price from that vendor, would you see that as the difference in what gets designed in and if that's the case or if it's not the case, would you expect the lower end products to be using that green host in certain circumstances because of the cost of your material relative to someone else's? I know that's a lot.

Well, as we have said, it's a price and performance material and the customer obviously has to make its own decisions. We don't know what the characteristics or the performance or actually the price of the competitor's materials are. We don't get their material so I can't really compare it. Clearly, we hear from our customer and they tell us different things about it. So I honestly can't answer your question. We know that we have target of where we want to be and they give us targets and we're doing our best to develop the best material at the best price to win the business.

Got it. Okay. To red you did better on red. Was it a mix issue with more red 2 than in the previous quarter or was just general demand higher than it was in the previous quarter?

It is twofold. It is the new red emitters have a higher ASP and we have increased our customers who use our red emitters.

Got it. Okay. If f you go through the numbers you gave, there was less than a million in commercial non-red, green or green host material. Am I correct in that first, because the numbers aren't always exact?

(inaudible) materials you mean?

Commercial blue or yellow, I guess.

There's miscellaneous materials.

Okay. So, it's a general number not specific to yellow or blue. And have you gotten to a point where you have qualified other host materials with customers and they're now able to be designed in at some point or are you still at the kind of show stage with other host materials?

Yes. We are sampling with other customers and we are continuing to sample with multiple customers at this time.

Got it. Okay. Thanks.

Thanks, Andy.

(Operator Instructions). We'll go back to Jim Ricchiuti with Needham and Company.

The royalty and license fees in the quarter of $5.4 million kind of stand out. Just if we go back to previous quarters it's roughly 15%, 16% of revenues without Samsung and I'm wondering if you could talk a little bit about that. Was it an aberration or might we anticipate quarters like this going forward? I don't know if you can give any sense with concentration of that with customers.

Well, I mean clearly you can see our second largest customer bought a lot more material during this quarter compared to others and that customer we report part of the sale of the material as a license fee. So that is a pretty big piece of it.

Okay.

There are some other licenses, amortization upfront fees and stuff like that.

Okay. So excluding that second largest customer it's not as if there was another. Was there a high concentration from another customer or was it fairly well dispersed?

It's not a high concentration from another customer.

Okay, thank you.

And we'll take a follow-up question from Hendi Susanto with Gabelli.

If I look at your OpEx R&D you are seeing some decline in Q3. How should we expect R&D in the near-term relative to the levels we are seeing in Q2 and Q3?

I think it will be more like Q2. Q3 as I said a little earlier included in that our scale-up costs from PPG Industries on commercializing new materials and R&D and in this quarter it was lower than in prior quarters.

And then would you be able to give some insight on how firm the Chinese OLED display manufacturers is planning to proceed? Like I think we have been hearing that for quite a while. I'm wondering if you have some data point on how firm their plan is.

Well, Hendi, we obviously cannot speak for our customers but we are seeing increased interest in activity in China.

Okay. Thank you.

Thank you. Thank you again everyone.

This concludes our question-and-answer session. I would like to turn the program back over to Sid Rosenblatt for any additional or closing remarks.

Thank you for your time again today and we appreciate your interest and support and good night, everyone.

Thank you, everyone. That does conclude today's conference. We thank you for your participation.