PCTEL Inc (PCTI) 2010 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the PCTEL third quarter 2010 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will open up the call for questions. Instructions for queuing up will be provided at that time. As a reminder, this conference call is being recorded for replay purposes.

I would now turn the call over to Jack Seller, Director of Marketing. You may begin.

Thank you for joining us today, October 28, 2010, for the PCTEL financial results conference call for the third quarter 2010. 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 product 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 subsequent events.

I would now like to turn the conference call over to Marty Singer.

Thank you, Jack, and good afternoon to all of you. For those of you who have not had a chance to read our press release, I'd like to recap some of the non-GAAP highlights from the quarter. We achieved revenue of $17.3 million, an increase of 26% over the third quarter 2009. Non-GAAP gross profit margin was 41%. The decline in gross margin reflected a higher mix of antenna revenues to total revenues than we have had in the past, sluggish scanning receiver sales related to LTE demand, and pricing pressure in a few key markets.

Non-GAAP operating margin was 2%. Non-GAAP net income was $315,000 or $0.02 per diluted share. And cash and investments were $71.7 million. We generated $1.2 million of cash and investments before buying back approximately 376,000 shares for $2.3 million during the quarter.

With that, I'd like to turn the call over to John Schoen, our CFO, who will discuss our financial performance in some detail. Later, I will comment on some of our business development, engineering, and marketing efforts over the past quarter, as well as some of our current activities.

John?

Thank you, Marty, and good afternoon 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 non-cash-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 note receivable, and non-cash based income tax expense provide meaningful supplemental info 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. My discussion of results will be based on our non-GAAP financial results.

So let's turn to revenue. Third quarter 2010 revenue was $17.3 million. This compares to $13.7 million in the third quarter of 2009, an increase of 26%. The improved sales reflected significantly stronger volume in our targeted vertical markets for antenna products. Antenna sales improved to both our large distributors and to OEM resellers of our antennas. Scanning receiver revenue saw a modest decline in sales through its OEM test and measurement resellers, such as Ascom, Anite, and SwissQual, primarily related to the delay in commercial deployment of LTE.

Now, let's turn to gross profit margin. Non-GAAP gross profit margin for the third quarter was 41%, versus 47% in the same period last year. Approximately 4% of the decrease related to the stronger revenue performance of our lower-margin antenna products relative to our higher-margin scanning products, with the remaining 2% as a result of pricing pressure experienced in the OEM scanning receiver channel. Marty will comment further on the scanning receiver outlook in his remarks.

Now, let's turn to operating expenses. They were $6.8 million in the quarter, an increase of $730,000 from the same period last year. R&D increased approximately $260,000, related to investments in scanning receiver development, approximately a third of which is related to integration of the acquisition of the Ascom scanning receiver business, which was completed in the quarter just ended. In addition to the integration expense, we have continued to invest very heavily in our scanning receiver platform that is now in beta stage and being evaluated by key customers. We anticipate that this investment will moderate over the next three quarters.

The $470,000 increase in SG&A expense reflected the investment in ongoing Sparco sales operations, our investments in reaching specific markets, and an increase in sales commissions related to higher revenue. This investment has been extremely worthwhile. Although the increased antenna sales carry with them a lower gross margin than scanning receivers, the investment in our vertical market strategy has resulted in significantly higher antenna revenue than we experienced last year. We will continue to invest in these markets, most likely elaborating upon initial investments in China and specific verticals where we have enjoyed some success.

Non-GAAP operating income in the third quarter was $307,000 or 2% of revenue, compared to $442,000 or 3% of revenue in the same period in 2009. The results reflect a net decrease of $135,000 from higher gross profit on higher revenue, but netted with a larger increase in operating costs.

Other income was $77,000 versus $375,000 in the same period last year. Last year's results included a one-time $230,000 gain on the liquidation of our position in the Columbia Strategic Asset Fund. The non-GAAP income tax rate in the quarter was 18%.

Non-GAAP net income for the third quarter was $315,000 or $0.02 per diluted share, compared to non-GAAP net income of $671,000 or $0.04 per diluted share in the third quarter of 2009, the difference coming from the change in operating profit and other income previously discussed.

Now, let's turn to the balance sheet. Cash and investments ended the quarter at approximately $72 million. Approximately $7 million is classified as long-term investment securities. Of the roughly $72 million in cash and investments on hand at the end of quarter, the Company had approximately $1 million in operating bank accounts; $42 million in U.S. Federal Government Agency securities, either directly owned or through AAA money market funds invested exclusively in them; $19 million in tax-exempt pre-refunded municipal notes, which are backed by U.S. Treasury securities held in escrow; and $10 million in AA corporate bonds or A-1/P-1 corporate notes.

In the quarter, the Company generated approximately $1.4 million of cash flow from operations, with capital expenditures of approximately $500,000. The Company also repurchased approximately 376,000 of its common shares for $2.3 million at an average price of $6.09. The Company has approximately $3.9 million available under its current share repurchase authorization.

Now, I would like to discuss guidance for the fourth quarter 2010. We anticipate fourth quarter revenue to be in a range of $16.7 million to $17.3 million. We do, however, see a mix shift between the scanning and antenna revenue that indicates gross profit margins in the 43% to 46% range, an increase from the quarter just ended.

Non-GAAP R&D and SG&A in the fourth quarter are expected to be about the same as the quarter just ended, or about $6.8 million. Other income is expected to be about $75,000 in the fourth quarter. The non-GAAP effective income tax rate is expected to remain unchanged going forward, at 18%. The fully diluted share count in the fourth quarter is expected to be about 17.5 million shares.

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

Thanks a lot, John. We were generally pleased with the quarter and our progress in several areas, despite a temporary delay in the growth of our scanning receiver business, and some challenges in that area. I'm going to spend some time reviewing that progress, as well as providing our investors with some idea of how we intend to convert some of these current challenges into sustainable opportunities.

Before that, however, I wanted to spend a few moments summarizing my recent trip to China. I just returned last Friday. We've established a design center in Beijing to support our production operations, expand our development capacity, and support our local business development efforts in China. We have made significant progress in our supply chain operations in China, including the ramping up of our production capabilities in our antenna products factory in Tianjin. We expect this to contribute to gross margin improvements in the future.

On the scanning receiver side of the business, we have gained significant traction with Huawei and ZTE. We expect them to fully integrate our LTE scanning receiver by the end of this year. We're going to concentrate on the timely delivery of TD-LTE into this market and attempt to capture additional OEMs and help our existing OEMs secure new business. The temporary delay in pricing pressure associated with this business has not dampened our enthusiasm at all for the scanning receiver opportunities, and the new opportunities that we can secure.

With respect to antennas, we are delivering high-performance GPS antennas for network timing to Alcatel-Lucent and others in the region. We see more opportunity for our antenna and scanning receivers in the region and we are committed to increasing our use of the region's lower-cost supply chain capabilities in order to drive improvements in gross margin. We fulfill requirements for both Cisco and Motorola, as an example, out of our Tianjin manufacturing facility. We expect Tianjin to quadruple in output from 2009 to 2011.

Up until this point, our antenna manufacturing and engineering resources have been devoted to the support of customer opportunities outside of China. With this past visit, it is clear that we have significant opportunities within China and investors should anticipate that we will be increasing our investment in China to pursue those antenna markets. We also anticipate increased success with China-based service and systems integration companies that require our scanning receivers and test equipment for their operation. We'll be expanding our focus on these groups and distribute our scanning receiver business across a larger base of resellers.

We are extremely pleased with our antenna revenue growth. Despite the 2009 collapse in public safety spending and almost no growth in that sector in 2010, our antenna sales are up approximately 32% on a year-to-date basis, year-over-year. Our investment in vertical market development has resulted in the identification of new antenna opportunities and strong growth in existing market segments. We continue to grow our military and defense business. This past quarter, as an example, we delivered additional antenna products to Raytheon for GPS-guided munitions, and shipped GPS antennas to the U.K. Ministry of Defense and to Germany's Defense and Security Systems.

Our Sparco acquisition continues to pay dividends in our development of our healthcare markets. We secured the first purchase order from Kaiser Permanente for wireless, mobile medical and pharmacy cart applications. We now have the opportunity to deploy PCTEL antennas in 35 medical centers and 430 other Kaiser locations.

We have also seen progress in other key vertical markets, including fleet management, rail communications, agriculture, smart grid and offloading. That progress has been in the form of new business with Thermo King TracKing, Wabtec Railway Electronics Systems, John Deere, GE MDS and BelAir.

We also secured our first purchase order for our Wide Area Augmentation System or WAAS antennas for the European Geostationary Navigation Overlay Service. You may recall that we sold quite a few WAAS systems in the past about two years ago for an upgrade to the United States commercial navigation system. And we hope that this opportunity could match our earlier success with the sale of this product, which was about $1.5 million in higher-margin antenna sales. Finally, we expanded our existing relationship with Motorola and Cisco by providing new, high-performance customized antennas.

As I've already mentioned, we've made great progress with both Huawei and ZTE in China. This success will be reflected in their sales of our scanning receivers outside of China. For example, we expect to secure a significant scanning receiver sale in India through our relationship with Huawei, some of it occurring in the fourth quarter. These successes aside, we made progress in Africa, the Middle East, and Eastern Europe during the third quarter through our existing OEM relationships. We also successfully passed technical LTE trial requirements with a major U.S. operator. LTE and TD-LTE will be supported on both our existing EX platform and our new platform that we will introduce in the first quarter of 2011.

We continue to drive the efficiency of the organization. As John already mentioned, we anticipate that fourth quarter OpEx will be unchanged from Q3, and this is despite the seasonal expense increases related to such expenses as audit fees, sales commissions, our annual sales meeting and other seasonal events. This means that we have eliminated additional positions related to our transition from a business unit structure to a functional organization, and the incremental cost of securing additional sales revenue has been less than the run rate cost of generating new sales. Specifically, we believe that 2010 annual revenues will be up 20% year-over-year, while OpEx will be up 11%. That's a good trend.

We have four challenges as we complete the year and move into 2011. Those challenges are, number one, moderating R&D spending as we complete the design cycle of our new scanning receiver platform. Over the next three quarters, we expect that program will run about $1 million less than it did in the last three quarters.

Number two, ensuring that we have an adequate share of the emerging LTE and China markets. We believe that our existing EX platform and our new platform will fully take advantage of these opportunities.

Number three, expansion of our product portfolio and market access through organic activities and acquisition. We will be announcing new products at the Barcelona GSMA conference and we continue to evaluate a variety of acquisition targets.

Four, but certainly not last on our minds, improving gross margins and productivity. We believe that the downward pressure on scanning receiver gross margins should abate and that we should realize an improvement in the antenna gross margins in 2011.

There is no question that the third quarter earnings pressure reflected the delay of LTE sales in the U.S., and the pricing pressure from our OEM resellers. To address this, we have established new volume-sensitive discount schedules with our OEM resellers and we are actively developing a new channel for our scanning receivers into the defense industry. We expect to realize some benefit to both of these actions in 2011. Our sales and marketing organization has done an exceptional job in developing vertical markets for our antenna products and I am confident that they will apply the same energy and careful execution to developing unique markets for our scanning receiver products.

In the second quarter, the Company reorganized from a business unit organization structure to a functional structure. The reorganization initially yielded obvious cost savings for which we recorded restructuring charges. Recently, we eliminated additional positions related to that transition that did not become apparent until we began operating in the new structure. These are fourth quarter actions. There will be further reductions as we transfer additional products to Tianjin. The latter, however, only impacts COGS and not OpEx.

As John already mentioned, our sales in Q4 should be approximately $17 million with an unusually broad range of $16.7 million to $17.3 million, depending in large measure on LTE scanning receiver sales. In any event, we anticipate that scanning receiver sales will represent a greater proportion of overall sales than in the third quarter and that should benefit gross margins and our bottom line performance. At $17 million, the Company would have achieved over $67 million in revenue for the year, an increase of 20%. Without further acquisitions, our early revenue guidance for 2011 would be $73 million to $77 million.

In summary, our vertical markets program is yielding results in significant antenna revenue growth, we expect LTE deployment delays for scanning receivers will abate in the next several quarters, and we have programs in place to leverage our operating costs and keep their growth to a rate far lower than revenue growth. These are all reasons to be optimistic about our prospects going forward.

Last week was a busy week for us. We exhibited at the 4G Industry Trade Show in Chicago, and had speaking engagements at the Antenna Systems Conference and Remote conferences, both in Dallas. We exhibited at Cisco Live and at the ION GNSS Show earlier in the quarter. The Company will be demonstrating its antenna and scanning receiver products and speaking at the Military Communications Conference known as MILCOM 2010 next week in San Jose.

With that, we have concluded our formal remarks and we have set aside 30 minutes for your questions.

(Operator Instructions) Your first question comes from the line of Matt Robison with Wunderlich Securities.

Hi, guys. John, first some housekeeping questions for you. How much of the $1.2 million you generated was from operations?

Yes, $1.4 million was cash flow from operations and a $500,000 CapEx.

Okay, all right. And --

And the rest was in the financing session.

Got you. And what was depreciation?

I want to say it was about $525,000, pretty close to that number.

Okay. And what's headcount?

335 total.

Thanks. Marty, how come you think revenue goes down sequentially this quarter?

Well, I think that we had an unusually strong quarter in antennas. We don't break those out, but the growth in antennas was really terrific. I think that will moderate a little bit. And quite frankly, Matt, we're uncertain about scanning receivers. We could do better than we're forecasting, but we don't want to have a repeat of what happened in the last quarter, and so we're giving modest guidance here.

Have you been able to -- it seems like there may have been some channel conflicts in recent months with some -- another vendor poaching some of your business. Have you been able to address that?

We think so. We think we've addressed some, I wouldn't call them channel conflicts, I'd just say they were competitive situations. And then I do think that some of our OEMs who deliver very high-quality test and measurement equipment and do a good job representing it all over the world, have faced some very competitive situations, where they've gone back to us, as well as other vendors and said, you know, we need to get a little better price here on -- particularly with respect to situations where they're selling to some service organizations that might be involved in early testing of LTE, and there's a grab for market share. So, there is some pressure there. We think that that's going to abate a bit though going forward.

What -- how does that -- there's not a lot of folks doing the scanning receivers. I mean -- so what's -- are you talking about the old style using of cell phone contraption to do this?

No, no, no. We're talking about the straight-up scanning receivers.

Okay. And what -- has there been a change in the way the operators are prioritizing their spend?

Yes. I think the biggest thing that we've run into this year is that, and you read about the big capital spend from some of the operators, and what's happening is that you're seeing a reallocation of capital by the carriers to solving their backhaul problem, and their offloading problem. So, you've had some of the leaders of these companies publicly state that they have defined alternatives to T1 backhaul, and so they are putting in the infrastructure to take advantage of Internet backhaul, and then you see others investing in offloading.

So it's interesting, while we've seen a little bit of a delay in our scanning receivers, one of the reasons that our antenna business is up is that there are companies like BelAir that make Wi-Fi base stations that have benefited from the offloading trend, and then we sell antennas into them. So, the short answer to your question is yes, there definitely has been a shift in how capital is being allocated, and you see a fairly large chunk of capital being allocated to backhaul and offloading.

As you know, I was involved in another company here in Illinois, Westell, and you've seen them do well in large measure because of the rapid growth in their enclosure business and those enclosures are all related to backhaul.

It sounds like the -- your antenna verticals are pretty diversified, were there any that were especially strong in the third quarter that drove the unusually high revenue?

I would say the backhaul and offloading were terrific. And then as we reported, we also had some nice results with healthcare, two major wins. And we had limited success up until this last quarter when we got some nice business associated with railway communications. And I think you'll see more growth in that area as well. And others are moving along.

I mean, we're seeing some of these verticals, Matt, grow at 30% to 35% year-over-year. And we've had to aggressively develop them because public safety has really eroded by 60% last year and this year, zero is sort of a good number, just not seeing erosion. So, we've done, I think -- in particular, Jeff, as you know, has done a really fine job on the vertical marketing here and I've got a -- now I've got to task him with finding some niche markets to go after with our scanning receiver.

There are different markets for the scanning receiver. A long time ago, we sort of let go of some of the military opportunities and we're gearing up to go after those, and those are quite profitable, and they're available to us.

Okay. Well, thanks for the update.

And thank you.

Your next question comes from the line of Mike Crawford with B. Riley & Company.

Hey, Mike. How are you?

Hi, good, Marty. Thank you. In India, obviously it's a huge market. Is it primarily just Huawei that's taking into India or do you have people there, and what have you done there in the past, and then what do you see you can do from that going forward?

It's a good question and let me answer them how you asked them. Yes, Huawei is an important reseller of our scanning receivers. It's part of their complete infrastructure solution. This is really new territory for us, Mike. In the past, 95% of our OEM reselling was through OEM providers of test equipment where they only do test equipment. As you know, Huawei looks more like Ericsson or Motorola, and so they're designing test equipment, as well as selling their infrastructure into these opportunities.

And it is a good opportunity for us to be included as part of that broader package. It's sort of like back in the day when TEMS was part of Ericsson and you were part of a very broad package of infrastructure and test equipment. So, Huawei is important. They will be helping us go into India. However, we should point out that there are competitors to Huawei obviously on the infrastructure side and Anite, SwissQual, and Ascom are all really independent players selling their test equipment to operators and other infrastructure vendors. And we will continue to support these valued resellers in India. So, that will continue.

And then your third question, do we have people in India? The answer is absolutely not. Our sales model with respect to scanning receivers, just maybe one or two exceptions worldwide has been to always sell the scanning receivers as part of somebody else's solution. So, we rely upon the sales and marketing organizations of Ascom, Anite, and SwissQual and now more recently AccuWare and Huawei and ZTE.

Okay. Thank you. And so you've -- you're just a little bit cloudy of when or not this, what's called LTE delay might lift, but from what you know, how would you characterize the technical difficulties that people are having with the technology, and when you might see these networks start to deploy more volumes?

Yes. I would say just as in my experience with GSM, there are two primary difficulties. The first is that, no matter how a standard is defined, and you'll remember in the old days the GSM, when they designed an open interface, the A interface between the base stations, and the switches, no matter how clearly people thought that was defined, there were always some nuances from different manufacturers, and when you try to put these systems together, you found glitches. And so very similar to that, when we go out early on with our scanning receivers and often helping one of our customers, we find some problems in the implementation of the standard with particular infrastructure vendors.

So that's the first problem and those are being sorted out and I would say that they're being sorted out very aggressively at this point. And I expect that business is going to be much stronger starting in the first and second quarter of next year, and you'll see that no longer being a barrier to deployment.

But again, just as in GSM, you know what the major impediment is to full-scale deployment, handset availability. And so while that is good news for us because in lieu of handsets to test network, they use scanners, so that's positive in terms of the number of sales of scanners. It's still not as good as having a deployed network with lots of handsets where you get congestion and you need a lot of engineering and you need a lot of support.

So, LTE is not going to hum until there are a ton of handsets available at reasonable prices where you start to get complex networks that need the value of our type of equipment. And I really think it's that simple, I think it's early implementation of standard, that's barrier one; and barrier two is handset availability.

Okay. Thanks. And then just maybe turning to some thoughts regarding valuation. If you take your preliminary guidance for next year of $73 million to $77 million in revenue, gross margin up a little bit, it sounds like operating expenses should be pretty flat. I mean, it puts you, PCTEL, trading with about a $30 million enterprise value on the whole business, probably four times EBITDA, which I think even in this situation is probably -- you think even still a suboptimal EBITDA. So, what do you do about that, and then maybe part of that's what can you tell us about the 10b5-1 plan you put in place?

Couple things. One, we do have a 10b5-1 to buy back stock when it falls below a certain value, and we think that that should give our investors some comfort, as well as creating a smaller stock to share base over, which we can spread our earnings.

But I'd be a lot wealthier, Mike, if I could really predict valuation on stock prices. And so I won't comment on that valuation. I will say this. Our current enterprise value screams out to us to be more aggressive with the cash that we have and acquiring assets or investing in new technology and new opportunities.

And as I've said before, we're very active in that area. We walk away from quite a bit because of valuation and fit, but we do hope to be able to say something about this over the next six to eight months. We're working this area hard, and there's just no question that we have to be more aggressive about investing our funds.

Okay, thank you.

Thank you.

(Operator Instructions) We do have a question from the line of Andrew Flis with Robert W. Baird.

Hey, guys.

Hi, Andrew.

Hi, Marty, how are you?

Great.

Great. Maybe a housekeeping, it seems like inventory over the last couple of quarters has sort of nudged its way up to the $10 million range, is that just a normal buildup, or is there something happening there? Is there a plan for Q4?

Well, there were a couple things related to scanning receivers. As you know, we bought Comarco -- the Comarco asset, and we invested about $500,000 related to the inventory there against a forecast that has not materialized. We do expect something to happen there. And, we also have some inventory related to some LTE scanning receivers. But everything else is related to our inventory is entirely normal and cyclical.

Okay. Had a couple other manufacturers mention things around, they're starting to see broadband stimulus sort of trickle in here and maybe some more in the upcoming year? Have you guys seen anything with that as far as public spending goes, is there an option there still, or is that just pretty much written off?

I'm not sure that I totally understand your question, but I think what I heard you asking was, do we see investments in broadband?

As far as the broadband stimulus from public spending?

Oh, oh, oh, oh. The answer to that has been absolutely nothing.

Okay.

So if we look at stimulus funds going into public safety, I would suggest that almost all of those funds have gone into job protection, very little has gone into fleet refreshment of police cars, ambulances, and so on. And I think that the money that's gone into broadband characteristics like surveillance was already planned and in place.

So we have not seen much of a stimulus there. The one exception, the place where we are starting to see greater demand for wireless infrastructure has been in the area of smart grid. There clearly has been some spending there and we've been beneficiaries of that spending through our relationship with GE MDS.

Okay, great.

Anything else?

No, that's it. Thank you.

Thank you very much. Operator, are there other questions?

There are no further questions at this time.

Well, we just saw Robert Katz come up on our own screen. Is he in queue for a question?

He is and we do have a question from him. Robert, your line is open.

Thank you. Hi, Marty. Thanks for pointing that out.

We're always looking out for your interests.

Thanks. I have a question about the mil/aero business and you mentioned railways is another new space for you, can you elaborate on the size of that?

Mil/aero?

The military stuff, the --

Yes.

And the railway opportunity, how big of a market are both of those for you, and what percentage of revenues do they represent now?

I think right now, military in total has grown to about 8%.

About 8%.

8% of antenna revenue. Railway is still less than a percent. The military market could be significant for us, quite significant. It could be if we develop this right, $10 million, or $12 million a year.

That's pretty healthy.

Well, think of what we have. If you -- I'd suggest that you go online and look at some of our recent application notes. We've got Homeland Security applications, munition guidance, asset tracking, individual troop location, SATCOM and Wi-Fi mesh networking on mobile units and drones.

So we really have quite a bit going on now, and Jeff and a couple guys that he's hired have done a really good job of not just finding new business, but setting up an ITARS-compliant shop and getting a much better sense of how to build the funnel. And one thing we've learned is some of the larger opportunities take a little time to develop, and so we've had to have some patience about this.

And on the railway side, when do you see that ramping up for you, and how big an opportunity is that?

Well, in railway there is actually two broad opportunities. There is the supply of the communication systems to allow people to communicate data, voice, and so on, and then there's positive train control. And communications on railway could be a strong Wi-Fi type opportunity and in the neighborhood of $2 million a year and I think that positive train control for the foreseeable future will be between $1 million and $2 million a year.

Okay, okay. Thank you very much, Marty and John.

Okay, Robert, see you later.

Okay.

Operator, is that it?

There are no further questions at this time.

Okay. I'm going to turn this over to Jack Seller for closing remarks. Jack, anything you want to say about our conference at -- in San Jose?

Thank you. We'll be at the MILCOM conference in San Jose Booth 314, Monday, Tuesday and Wednesday of next week. And thank you, all for joining us today. Look forward to next quarter's conference call. Thank you.

This concludes today's conference call. You may now disconnect at this time.