PCTEL Inc (PCTI) 2009 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the PCTEL fourth quarter 2009 conference call. (Operator Instructions). I will now turn the call over to Mr. Jack Seller, Director of Marketing.

Thank you for joining us today, March 4, 2010, for the PCTEL financial results conference call for the fourth quarter 2009. On today's call will be Marty Singer, Chairman and CEO, and John Schoen, Chief Financial Officer. Today's call will contain forward-looking statements within the meaning of the Federal Securities laws. Comments concerning our future financial performance, new products and product development and expectations regarding the future growth of our wireless RF business are forward-looking statements within the meaning of the Safe Harbor. Actual results may differ materially from those projected as a result of risks and uncertainties, including the ability to successfully grow our wireless products business, implement new technologies and obtain protection for the related IP. Additional discussion of these and other factors affecting the Company's business and prospects is contained in our periodic SEC filings. These statements are made only as of today, and we disclaim any obligation to update information to reflect the subsequent events. I would now like to turn the conference call over to Marty Singer.

Thank you, Jack, and good afternoon to everybody. For those of you who have not had a chance to read our press release, I would like to recap some of the non-GAAP highlights from the quarter on a continuing operations basis. First, we achieved revenue of $14.8 million. Our non-GAAP gross profit margin was 48%. Our non-GAAP operating margin was 4%, and our non-GAAP net income was $664,000, or $0.04 per diluted share.

Cash and investments were $75.6 million after our acquisition of Ascom Scanning Receiver business and the purchase of intellectual property and distribution rights from Wider Networks and the repurchase of PCTEL's stock. This does not reflect the acquisition costs related to Sparco, as that transaction occurred just in this quarter. So with that summary overview, I would like to turn the call over to John Schoen, our CFO, who will discuss our financial performance in far greater detail. Later, I will comment on our progress over the past quarter and what we see in the future. John?

Thank you, Marty, and good afternoon, or evening, to everyone. Our investors will note that the Company presents non-GAAP financial information in its earnings releases. The Company believes that the presentation of gross profit, operating profit, and net income excluding restructuring charges and noncash-based expense, including stock and stock option based compensation, amortization and impairment of intangible assets and goodwill related to the Company's acquisitions, gains or losses on the sale of product lines and related notes receivable, and noncash-based income tax expense, provide meaningful supplemental information to both management and investors. The non-GAAP financial analysis reflects the Company's core results and facilitates comparisons across reporting periods. For more information on our non-GAAP financial results and reconciliation to GAAP measures, please refer to our earnings release that has been filed under Form 8-K with the SEC.

The release can also be found on our website, at pctel.com under Investor Relations. My discussions of results will be based on our non-GAAP financial results. As a reminder, the Company sold its mobility solutions software group, or MSG, to Smith Micro in January 2008. The Company's financial statements have been revised to reflect MSG as a discontinued operation. My discussion of financial results will address continuing operations. Let's start with revenue. Fourth quarter 2009 revenue from continuing ops was 14.8 million.

This compares to 18.3 million in the fourth quarter of 2008, a decrease of 19%; but importantly, an increase from the 13.7 million in revenue reported in the third quarter of 2009. For both scanning receiver and antenna products, revenue was lower on a year-over-year basis, but higher sequentially. We believe that reduced scanning receiver revenue on a year-over-year basis reflected several factors. As carriers prepare for the transition from EVDO to LTE, network engineers are protecting their reduced capital budgets and waiting for new technology rollouts before consuming their budgets. And two, while test tools enable network engineers to realize greater capacity from existing infrastructure, capital budgets are lower worldwide. Antenna revenue declined on a year-over-year basis in both the OEM and distribution channels, reflecting particular softness in public safety plan mobile radio systems, continued delays in mobile WiMAX rollout, and defense related to antenna sales.

Now let's turn to gross margin. Non-GAAP gross profit margin from continuing ops for the fourth quarter was 48% compared to 47% in both the third quarter 2009 and the fourth quarter 2008. The higher gross profit margin reflects a favorable product mix shift from the prior quarters and improved antenna gross margins. Now let's turn to operating expenses. They were 6.4 million in the quarter. The reduction of SG&A expenses resulted in an overall decline in operating expenses by $200,000 as compared to the fourth quarter 2008. Our R&D expense was about 100,000 higher. We continue to invest in our future through R&D spending, even as we align our cost structure with current revenue levels.

The reduction in SG&A was achieved through the closure of several unproductive sales offices, the restructuring of our antenna manufacturer's representative sales channel, and corporate cost efficiencies. The Conexant royalty agreement was fully paid up in the second quarter 2009 and is therefore at zero this quarter. It was $200,000 in the fourth quarter of 2008. Non-GAAP operating income from continuing ops in the fourth quarter was 629,000, or 4% of revenue compared to 2.1 million, or 12% of revenue in the same period in 2008. The results reflect lower gross profit dollars on lower revenue, partially offset by lower operating costs. Other income was 181,000 versus a net loss of 1.5 million in the fourth quarter of 2008. The fourth quarter 2008 results included a realized mark to market loss of 1.7 million on our Columbia fund investment.

The liquidation of our investment in Bank of America's Columbia fund was completed during the fourth quarter this year and we have no further exposure related to that investment. The non-GAAP income tax rate in the quarter was 18%. Non-GAAP net income from continuing ops for the fourth quarter 2009 was 662,000, or $0.04 per diluted share compared to non-GAAP net income of 568,000, or $0.03 per diluted share in the fourth quarter of 2008. To summarize the differences, net income from continuing ops was lower from decreased gross profit on lower revenue, partially offset by lower operating costs, and the absence of any mark to market losses on our investments. Now let us turn to the balance sheet.

Cash and investments ended the quarter at approximately 76 million, 3 million lower than last quarter. Approximately 10 million of those investments are classified as long-term investment securities. As discussed in the earnings press release, the Company paid out cash of approximately 6 million in aggregate for its Ascom Scanning Receiver acquisition, the purchase of technology and distribution rights related to its IP litigation settlement with Wider Networks, and the repurchase of approximately 167,000 shares of our common stock. The Company generated approximately 3 million in cash and investments from all our other activities during the quarter. Of the roughly 76 million in cash and investments on hand at the end of the fourth quarter, the Company had approximately 1 million in operating bank accounts, 54 million in US Federal Government agency securities -- either directly owned or some AAA money market funds invested exclusively in them -- and 16 million in tax exempt pre-refunded municipal notes, which are backed by US Treasury securities held in escrow, and 5 million in AA or better corporate notes.

As stated earlier, the Company's investment in Bank of America's Columbia strategic cash portfolio fund and enhanced cash money market fund was completely liquidated in the fourth quarter. In the quarter, cash flow from operations was approximately 3.8 million, with capital expenditures of 586,000. Now I would like to discuss guidance for the first quarter 2010. We anticipate revenue for the first quarter to be in a range of 14.9 to 15.1 million as compared to 14.1 million in 2009's first quarter. The increase is primarily attributed to revenue associated with the three recent transactions -- Wider and Ascom in December, and Sparco in January, as well as modest organic growth in antenna products. Non-GAAP gross profit percent for the first quarter is to be expected in a range of 46% to 47%, about a point lower than the fourth quarter 2009 due to the product mix we are seeing.

Non-GAAP R&D and SG&A in the first quarter are expected to be about $500,000 higher than the fourth quarter, or approximately $6.9 million. The sequential increase is related to approximately $200,000 of new R&D costs associated with the Ascom acquisition, and $300,000 of sales and marketing costs, of which half is related to the Sparco acquisition and half for annual trade shows, which are scheduled predominantly in the first quarter each year. Other income is expected to range between $100,000 and $200,000 in the first quarter. The non-GAAP effective income tax rate is expected to remain unchanged going forward at 18%. The diluted share count in the first quarter is expected to be about 17.9 million shares.

That concludes the financial review. I would like to turn the call over to Marty for his summary comments.

Thank you, John, and again, welcome to all of you on the call. I can see on our internet connection that we've been joined by some investors that were previously associated with us, and I am glad to see you listening in on our call. As John has indicated, our business environment appears to be improving, although modestly. In addition to some revenue growth, we've seen some indication that state and local governments have resumed deployment of critical public safety projects. I'll discuss a couple of those as we go through my remarks today.

And there's an increased interest in broadband cellular deployment. If you were at the Mobile World Congress, you probably know that not only LTE, but WiMAX and a whole issue of offloading got a great deal of coverage. And we spent a lot of time developing and seeing some results from our focus on enterprise networks. In our scanning receiver business, as an example, we've had renewed interest and CLARIFY Interference Management products in a few regions. We attracted new customers in Peru, Ecuador, and China, and we also developed a new OEM vendor for our scanning receiver products in China. We also had our first LTE scanning receiver sales into Japan, and we continue to make LTE sales into the US to the major operator promoting that standard.

On the antenna side of the business, the investment in a highly focused salesforce with vertical marketing capabilities and inside sales support appears to be making a difference. We expanded our relationships with Ratheon, Motorola, Cisco, NEC, Alcatel-Lucent and John Deere, providing GPS antenna products, best in class canopy and WiMAX antennas, and Wi-Fi products to all of those customers. We were awarded two new and exciting public safety and public transportation projects by New York City and the State of Utah. Importantly, our restructured salesforce in antenna products group, led by Bob Suastegui, has led to improved North American sales into our distributors. We have maintained our high level of investment in antenna and scanning receiver product development. Just as a side note, throughout this entire recessionary period, we have not reduced at all our R&D investment.

As already announced in our press release preceding the Mobile World Congress in Barcelona, we developed new functionality and frequency bands for our LTE scanners, as well as a crucial code domain functionality for our established CDMA EVDO SeeGull EX scanning receivers. We remain the technology and product leaders in this important space. Our antenna product group successfully delivered the most versatile inbuilding multiband antenna in the market. It serves applications from 700 megahertz to six gigahertz, and as inbuilding applications gain in importance, this antenna will be critical to several different vertical markets. We also launched our new Medallion GPS antenna with an integrated GPS receiver.

This product is vital to fleet management applications and enables direct digital signaling and eliminates a requirement for costly RF connectors. Astro Communications in the state of Utah have become early customers for this product. As you also know from earlier press releases, we have been extremely active on acquisition and IP front, intellectual property. We acquired Ascom's Scanning Receiver operation in Lake Forest, California, as well as Sparco, which is in San Antonio, a supplier and distributor of RF peripheral and antenna products. In fact, just earlier this week, I was visiting our new team in Lake Forest. Sparco reaches specific vertical markets that are of strategic interest to us. Finally, you may have also read that we resolved the lawsuit by cost effectively acquiring the patents and distribution rights for Wider Network products. We believe that all of these transactions serve important strategic and growth goals.

We're very excited about 2010 and beyond. We do anticipate a temporary spike in our operating expenses because of these three transactions during the fourth and the first quarters. In addition to those operating expenses, as John always points out, we have our Mobile World Congress expenses. We have expenses related to IWC and other shows that are very active in the first quarter. And while those expenses will certainly dampen bottom line performance during the first two quarters, we anticipate revenue growth and territorial expansion that will manifest in the second half of the year, both on the top and the bottom line. We sense an easing of the economic crisis in our investments in operational efficiency. New products, and new businesses should serve us well as we move forward in a more favorable business climate.

We appreciate the support of our investors as we navigate through a very challenging environment, and we continue to work hard to reward your patience. On the acquisition front, we are actively looking at various opportunities that would expand our market prospects in both of our business areas. However, as we have in the past, we will only announce acquisitions as they occur. With that, we have concluded our formal remarks, and we have set aside thirty minutes for your questions. Operator?

(Operator Instructions). Our first question comes from the line of James Falkoff with Robert Baird.

Thanks.

Hey, James. Good to hear from you. I didn't know if we would be hearing from you.

Yes, well, you're hearing from me now, I suppose.

Great.

I guess first thing I wanted to ask about, I think you had outlined a preliminary full year 2010 outlook in prior calls. After the Ascom acquisition, I think the expectation was you were saying either in Q2 or Q3 that you would hit toward the high end, the 10 to 15% growth range. I guess now you've got to add Sparco in, but would you -- I guess what is -- are you still offering a full-year outlook? I mean, if we adjusted that previous outlook for Sparco, would that still be in effect or -- ?

Yes, we haven't adjusted it beyond our earlier comments there.

Okay, so I guess is it then that we should say on the high end of that 10% to 15% range -- ?

With Sparco at the high end of the 10% to 15% range, that's absolutely right.

Got it, got it. Okay. And I guess I wanted to get a sense for just what you thought were kind of the biggest variables then in -- sort of in that expectation if you were to envision scenarios where you come in above that or below that. I guess what are the --

It's really easy. The single biggest variable on the antenna products group side is public safety.

Yes.

If you look at last year, although our revenues were down approximately 30%, 29%, the revenues from public safety were down well over 50%. I mean, it was like -- I think I used this phrase before -- It was as if somebody turned off the faucet. State and local governments had no money. Distributors had no credit. They weren't stocking, and public safety really just collapsed. And what we're seeing now is public safety coming back. There's no question that the Arrow funds are helping a bit, and there's just simply quite a few projects that they can't delay. I mean, they still have to turn over police car vehicles and so on, and outfit them with antennas, and there's other expansion.

And then also, the variable in public safety is the move to so many surveillance points where now you need broadband to transmit a video. So the single biggest variable is public safety sales; and we'll know a lot more about that by mid-year, and it's going to be dependent of on the release of additional stimulus money, it will be dependent on the restoration of some tax receipts, and particular authorization for this program. But I'll tell you what I feel very good about in APG are the vertical markets. We spent a lot of time last year cultivating those markets, and we're seeing real growth in those markets. Again, you have an enterprise environment, an awful lot of emphasis on transmitting video. You see quite a bit being done with Smart Grid. I think we'll see an expansion of that business, and a change -- you weren't at Mobile World Congress, were you?

I wasn't, no.

Yes. One of the big stories at Mobile World Congress that's very helpful from the antenna side of the business is this whole theme of offloading. So we've all heard of femtocells when you go into a residential environment and your cellular phone connects to that, and it's backhauled and off over the IP network. But this issue of offloading traffic is just enormous. You've got the statistic out there that for every four iPhones that are added to AT&T's network, they need another T 1 of backhaul. Well, it's not just backhaul that's being impacted. It's the basic link budget between the subscriber and the cell site. And you have interesting companies like Bel Air, which is a great customer for us, with these strand-mounted devices that go on cable facilities that offload cellular traffic onto these metropolitan or rural Wi-Fi networks, and we should see a little bit of a surge in our Wi-Fi sales into OEM vendors like that, or municipalities that are doing that.

So number one, public safety. Number two, the emphasis on offloading on the antenna side. On the scanners, I would say there are three variables; our continued success in getting into China, our ability to grab a major share of the LTE scanning receiver business, and, third, quite frankly, is going to be our ability to satisfy the needs of our large OEMs with a combination of our existing products and the products that we've acquired through Wider and Comarco. They have got some needs and they are expecting us to deliver a coherent product line to them out of those assets. Does that answer your question?

Sure, yes, I think that's clear. I guess the only other one for me would be, just was curious, an area I haven't really heard you talk a lot about is the rural broadband stimulus here in the US.

Well, that's very good for WiMAX.

Right. I guess I was just wondering what activity you're starting to see with some of these awards being given out now.

I think I did say earlier that we have seen some strengthening in our WiMAX sales -- not just WiMAX, but I mentioned specifically Canopy, and Canopy and WiMAX are both vehicles for doing rural internet. It's a very good point to multipoint or point to point type of connection, and so I think that could favorably impact us.

Okay, great. Thank you.

Thanks.

Our next question will come from the line of Mike Crawford with B. Riley.

Hey, Michael, how are you?

Hi, good.

Thank you for the note that you put out.

You're welcome. Just to follow-up on a couple of points, so one, with the Federal stimulus funds, so some companies are talking about actually seeing the first earmarked dollars finally released for these programs, even though they have been earmarked for close to a year. Is that the same experience you're seeing?

Yes, for example, when I talked about some of the resurgence in public safety, a very good example is the [do-it] network in New York, which is the systems integrator for that is Northrop Grumman. And specifically in the fourth quarter, we saw sales of antennas that had been designed and ready to go actually ship, and we're anticipating more into that network, as well as to similar networks, and that's all because of some of the stimulus money being released for previously approved programs.

Okay, and I mean, in this regard, it was nice to see inventory down again. Is that -- should we expect continued declines in inventory, or do we--

I'll let John comment on that, but I think we've made some more progress this quarter.

Yeah, on both -- just in general on working capital, we have continued to make progress. If you track our -- where we started the year, as the steepness of the recession hit our revenues, we couldn't turn off our supply chain as fast as revenue dropped. And so we've seen a -- we've seen an improvement in inventories in each of the quarters. I'm not so sure there is a lot more to get out of working capital -- maybe a couple hundred K here and there. But we finally have our receivables and our inventory back to manageable levels.

Pre-recession levels.

Right. To go with the volumes that we're doing now.

Right.

And actually, if you go back, cash flow from operations on the year was just under $8 million and it was roughly half from the income statement and half of it was from getting the balance sheet in order.

Okay, thanks. Now with the new acquisitions, have you made the manufacturing transition yet?

Well, a couple things. Sparco is really final test and assembly, not really manufacturing; and they do a lot of service-oriented systems integration, and most of that operation will stay down in San Antonio, although there are some things that we will move up, but it's not a crisis-urgent matter. In the case of Comarco for the first four to six months, John?

Four to six months.

We have a TSA -- a transition services agreement -- where they are assembling the scanners that we need to fulfill Ascom's requirement. There are really two customers there, Ascom, who delivers into carriers, and then a company called [ZK Test]. And so to ensure that there's continuity or that there was continuity, they are doing it for four to six months. After that time, the manufacturing will be moved to Germantown. And with Wider, there's no question that we can integrate that, but we didn't buy the company there. We just bought the distribution rights and the IP, so we'll continue to let Wider manufacture that for us, as long as they meet our price points. So the biggest integration here, Michael, is on the ERP side, the systems side, the SOX side, to make sure we're in compliance with everything, and that's going along very well.

Okay, and then if you could also comment on Wi-Sys, I'd appreciate it. It's been a year, so --

Yes, Wi-Sys has been great. I think that's turned into a pretty nice EBITDA engine for us. 100% of that is manufactured here, has been since last June. We've completely integrated the Wi-Sys GPS antennas into our product line. They are not called Wi-Sys, they are called PCTEL; and GPS is an area that we want to expand, both organically and through acquisition. That was a very nice acquisition for us.

Okay. So final question is on the acquisition front. So you made a few small ones. I think you've talked or alluded to some potential bigger deals. You've kicked around, have you backed away from some of those, or where -- ?

No, we're just very cautious. Are -- as I have told everybody, we we're 12 for 13 in transactions, and that 13th one was a problem for us, and we don't want to repeat any mistakes that we've made in the past, and we're just cautious. So we are very active. We're looking at a number of possibilities, and we hope to be able to take advantage of this market to close on some attractive opportunities.

Okay. Thank you.

Thank you, Mike.

Our next question will come from the line of Ted Morrow with Cardinal Research.

Hi, Ted, how are you?

Good.

I think Wisconsin won last night, didn't they?

Yes, they are looking pretty tough, as a matter of fact. But they got their guy back, so we shall see.

Okay.

My question is kind of a perspective one on the growth markets that could be emerging for you, and in two areas. One, in LTE, which you've touched on, wouldn't the inflection point for this be as initial deployments are completed and network optimization comes a more important element in the network operators' systems -- and I know LTE is, is beginning in 2010, but my sense is that 2011, 2012, there could be a major uptick in spend on this, and isn't that a major opportunity for you?

LTE is really a strong opportunity, and I think you can see how strong it is when you look at companies like JDSU, deciding to go ahead and acquire the test and measurement division of [Adjulant], and one reason they gave is they want to get a hold of an LTE scanner. So you see some people hopping into this because of the opportunity, and we think we're very well positioned. There are really three stages, right? There's very early deployment, where the scanning receiver sits in the shoes of the [foam]. You don't have any hand sets, so you need to put a scanning receiver to look at the network, to look at the cell sites and see what the coverage is like.

And we're already seeing some opportunities for that. The second is in the rapid deployment. Once you really go forward, as you're building out the network and expanding it -- and you said it exactly right. This is going to be a bigger deal in 2011 than it will be in 2010. And then finally, the benchmarking and optimization of those networks; and that's when you really see a big rollout where many engineers need these tools, and I think 2012 will be the big market for that. But along the way, remember, we continue to sell a lot of GSM, CDMA, EVDO, and scanners of all other technologies. So while this will be an inflection point, we see continued growth for our core business in this area.

Right. Well, that's what I thought, that there's a big -- there's couple big years of this, but it might be beyond this year to really get a real critical mass. The same question I might ask on -- you mentioned about China, and I'll throw India in there too, because I guess they're finally going to get their licenses moving forward. And what do you see there? Is that also a post-2010 sort of inflection point like LTE, or do you expect China and India to be strong for you this year?

I think we'll see them be strong for us this year both, particularly China. We have lined up a different distribution arrangement in China for this year. We had some nice sales into Huawei, and as Huawei gets larger, we think we could expand our relationship with them, obviously outside of China. And then India, I have been disappointed in India to date. We've certainly wrestled with that market, and we do have sales in India today through (Inaudible), Ascom and [SwissCall-. Those are our conduits. We sell our scanners to them. They sell their final test equipment to the carrier.

But I think that actually our acquisitions are going to help us in these areas. Wider had some success in India with their interference management system. We hope to build upon that and see if we can move other products into India. And then as I have pointed out on these calls before, India's really tailor-made for optimization and interference management, because they add a base station every 30 minutes or less. So I guess the summary comment I would make to you, Ted, is this; when you think about our sales -- on the scanning side, remember that we're represented here by Ascom and (Inaudible) and SwissCall. They are using our scanning receivers. And all three of those organizations are experiencing sales in those regions today -- and you add that -- add Huawei to that mix, and you see a pretty good platform for us to expand our revenue.

Right. Well, it will be interesting in India, because as I say, the 3G licenses continue to be delayed. But I think they are finally -- it's got to the point where they stretch rubber bands so tight, so I think they are going to be moving ahead so that can be an opportunity.

Right. Thank you, Ted.

(Operator Instructions). Our next question will come from the line of [Brian] (Inaudible) with (Inaudible).

(Inaudible), right?

That's right. Thanks, Marty.

Hey, Brian, how are you?

I'm well. Just a few questions, if I might. Can you give us any color as to the kind of pace of improvement in the public safety area? Obviously, you had a couple of deals; but just in terms of kind of orders or RFPs or activity earlier in the sales funnel to just give us a sense of the velocity there?

Well, we would really expect to see this year a 5 to 8% growth in public safety, which is going to be welcome after the rapid decline. Even with the Arrow money, what people have to understand in public safety is that the bulk of that is going to pay for salaries in the groups that build those networks, and how much actually goes into infrastructure is real unknown. But I do think that we're going to see some modest growth in public safety. And quite frankly, that's all we need to see in order to realize our growth goals for the year, because most of our growth is going to come out of these vertical markets that we've focused on over the last 12 to 18 months. In other words, the machine to machine, the SCATA supervisory control and data acquisition, the Smart Grid, water,/waste water management, and a variety of other vertical areas -- precision agriculture, fleet navigation, asset tracking. All of those markets have growth rates greater than that of public safety.

Can you give us kind of a ballpark number as to what you think all of those enterprise markets roll up to in terms of growth?

It's hard to say. All of them are really quite different. But we would hope that antennas as a group would be up in the neighborhood of 15%, the high end of our range, and with Sparco a little bit more.

Okay. And when you say this year, are you referring to calendar '10, fiscal '11?

Well, calendar and fiscal are the same for us -- 2010.

Yes, okay. Okay, great.

A little more -- question about the scanning receiver side, you can really see the growth starting to percolate up in the antenna space in specific markets. We're still seeing a little bit of sluggishness in carrier CapEx budgets, and so while we have really good drivers -- churn, new deployments, new technology, and so on -- there's still a little bit of uncertainty in the people that control the purse strings for CapEx at the carriers.

Okay. There was an announcement by one of the Federal agencies, I think last week, about a new program to fund public safety broadband, for lack of a better word.

You're exactly right, yes.

And I'm just -- obviously that's still a long way from being translated into dollars and distributed and all of that kind of stuff, but can you put some bounds around how big you think that market might be for the antenna world?

Well, I think you figure that antennas are about 3% to 4% of a network cost on the public safety side. So whatever the budget is that actually gets deployed on infrastructure, which is something you don't know from most press releases, right?

Right.

Because a big portion of that goes to salaries. So the first thing you need to figure out is what the infrastructure allocation is and then you can estimate the antennas. But 3 to 4% in antennas and related connectors and wires. And I would add there, Brian, that we are already seeing some of the benefit of broadband public safety. The do-it network in New York is a great example, where they added all of these surveillance capabilities, and that's heavy duty broadband -- and those are our antennas being used in the network.

Yes, okay.

Okay?

Yes --

I don't want to rush you, so whatever questions you have.

No, okay. No, I think that covers it. Thanks very much.

Okay, and operator, are there any other people in the queue?

There are no further questions at this time. Do you have any closing remarks?

Yes, I again want to thank all of you for joining us on this call and the webcast. For those of you in New York, we are planning to attend the Wedbush Securities Management Access conference in New York on Thursday, March 11. I'll be presenting at 8:00 a.m. We look forward to seeing many of you at the event in the coming months. If you have a particular need or interest in meeting with me while I'm in New York, please contact our offices. Thank you.

This does conclude today's conference call. You may now disconnect.