Photronics Inc (PLAB) 2013 Q1 法說會逐字稿

Ladies and gentlemen thank you for standing by. Welcome to the Photronics first quarter earnings conference call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session.

(Operator Instructions)

As a reminder, this conference is being recorded on Thursday, February 14, 2013. I would now like to turn the conference over to Pete Broadbent, Vice President, Investor Relations and Marketing. Please go ahead Mr. Broadbent.

Thank you and good morning everyone. My name is Pete Broadbent, Vice President, Investor Relations and Marketing of Photronics. We would like to thank you for joining our first quarter 2013 conference call. Before we begin, I'd like to remind all participants about the Safe Harbor Provision under the Private Securities Litigation Reform Act of 1995.

Thus any statement we make during this call, except for historical events, may be considered forward-looking and may be subject to certain risks and uncertainties that could cause actual events to differ materially from those projected. Including uncertainties that may affect the Company's operations, market, pricing, competition, procurement and manufacturing efficiencies and other risks detailed from time to time in the Company's SEC reports. These statements will contain words such as believe, anticipate, expect or similar expressions. The call will be archived on our website until we report our second quarter 2013 results.

Joining us on the call today are Constantine Deno Macricostas, Chairman and Chief Executive Officer; Sean T Smith, Senior Vice President and Chief Financial Officer; Dr. Christopher Progler, Vice President, Chief Technology Officer and Strategic Planning; and, Dr. Peter Kirlin, Senior Vice President, US and Europe. Deno will first provide a brief overview of market conditions and our strategic direction. Sean will then provide a comprehensive review of Photronics first-quarter performance. During Deno's and Sean's remarks, they will be referring to slides posted on our website under the Investor Relations link. Before I turn the call over to Deno I'd like to inform everyone that we will be hosting an Analyst Investor Day on Wednesday, April 3rd, in New York City. Now, I'll turn the call over to Deno. Deno?

Thank you, Pete. Good morning everyone. Please turn to slide 3 in our slide presentation. As anticipated, holiday shutdowns and soft market conditions impacted revenue in the first quarter. Given the softer environment, we were pleased to achieve sales of $99.8 million. This was at the high end of our guidance. On the bottom line we delivered earnings of $0.04 per share, which exceeded our guidance.

High-end IC sales declined sequentially on soft demand. Offsetting this high-end flat panel display orders was especially strong at the end of the quarter. In total, our high-end sales were flat sequentially. Momentum for the high-end FPD orders built through the quarter, the high-end IC became stronger as we exited the quarter. Management remained diligent on cost. We delivered gross and operating margins of 21.1%, and 5.2%, respectively. EBITDA was $26 million and net cash improved to $43 million.

Looking forward, we are optimistic about the short-term and confident about the long-term. Based on our customer sentiment, and because general market conditions are improving we expect sequential growth through the fiscal year. Long-term, we see significant opportunities to grow our high-end business and gain market share. Many of our customers have aggressive road maps and are accelerating node transitions. We have an opportunity to capitalize on the high-end demand, which is building in the marketplace. As a result, we are accelerating delivery of two advanced photography tools. As Sean will explain in greater detail, these orders were secured last year for delivery later in 2013.

These high-end tools will now be delivered in the next two to three months. They will be strategically located in the US and Asia to support our high-end customers. We pulled the e-beams in because we believe high-end demand will exceed supply. For this investment, we expect to have the strongest and most advanced high-end global merchant manufacturing footprint. Our results demonstrate that the high-end strategy we implemented a few years ago is paying off. Prior to 2006, we were a first follower in terms of technology development.

As a result of our sizing we are now in position to be the technology leader, a high-end merchant for the mask production. Today 35% of our top line comes from sales of high-end photomasks. Long-term, we believe our technology plan aligned close to our customer road maps will lead to accelerated high-end growth and continued market share. Before I turn the call over to Sean, I would like to thank the entire Photronics global organization for their efforts at the start of this year. Our team continues to build on our high-end sizing, cost management, and customer service. Now, I will turn the call over to Sean. Sean?

Thanks Deno, and good morning everyone. I'll provide a brief analysis of our financial results for the first quarter of fiscal year 2013, review our balance sheet and cash flows, and then provide our outlook. These refer to slide 4 for our GAAP to non-GAAP net income and EPS reconciliation as we review the first quarter. Slides 5 and 6 show our sequential IC and FPD performance. First-quarter revenue decreased by 4.2% sequentially to $99.8 million as a result of the soft demand for IC photomasks including leading-edge. This soft demand for IC photomasks was offset by increasing demand for high-end FPD applications. Revenues for IC and FPD photomasks (technical difficulty) respectively for the first quarter.

Breaking out sales geographically, 63% of total sales were from Asia, 28% from North America, and 9% from Europe. High-end global IC sales were $17.9 million, or 24% of total IC sales for the quarter. This represents a sequential decrease of $5.7 million. Advanced FPD sales were $17.4 million, a sequential increase of $5.7 million or 49%. Total high-end sales for the quarter were $35.3 million, which equaled Q4 2012 total high-end. As a reminder, high-end IC revenues consist of revenue derived from semi designed at and below 45-nanometers. And high-end FPD revenues consist of revenue at and above G8 as well as AMOLED-based products.

Let's continue through the income statement. Gross margin for the first quarter was 21.1%, down 220 basis points sequentially as a result of the decreased sales. Selling, general and administrative expenses for the first quarter were $11.1 million, down sequentially by $300,000 or 3%. R&D expenses, which consist principally of continued development for our global advanced profits technologies and qualifications at advanced nodes were $4.8 million, down approximately $400,000 sequentially. During the quarter, we generated operating income of 5.2%, I'm sorry, $5.2 million or 5.2% of sales. Non-cash stock compensation for the quarter was approximately $800,000. As Deno mentioned, EBITDA as defined in our credit agreement for the quarter was $26 million or $128 million on a trailing 12-month basis.

Other income and expense for the first quarter was expense of $600,000, down approximately $1 million sequentially, due principally to favorable foreign exchange gains. During the first quarter, we recorded tax provision of $1.7 million. As Deno mentioned, GAAP net income was $2.3 million or $0.04 per diluted share which exceeded our guided range. At the end of the first-quarter we had 1,300 full-time employees which represents approximately 307,000 per employee on an annualized basis.

Now, turning to the balance sheet. Cash and cash equivalents at quarter end amounted to $218 million and our net cash, which is cash less debt was $43 million or up $2 million sequentially. Our working capital at the end of the quarter was $226 million, down slightly from $233 million for Q4. Accounts payable and accrued liabilities at quarter end amounted to $89 million, and at the end of the quarter, we had approximately $19 million of accrued CapEx.

Please turn to slide 9 as we review our capitalization. Total debt at quarter end was $175 million, the principal components of outstanding debt include $22 million of 5.5% senior unsecured convertible notes due in October of 2014; $115 million, 3.75% senior convertible and secured notes due in April 2016; approximately $14 million for a capital lease obligation; and $23 million, 2.5% five-year term loan related to the nanoFab building; and approximately $1 million related to an obligation with a customer who co-funded a tool purchase. At the end of the quarter, we did not have any outstanding borrowings on our $30 million revolving credit agreement which matures in April 2015.

Taking a look at our cash flows, cash provided by operations for the quarter was approximately $19 million, and depreciation and amortization was $19.2 million for the quarter. Cash flow used in investing activities during Q1 amounted to approximately $17 million. Q1 cash used in investing activities includes $16 million of cash CapEx. And net cash used by financing activities during the quarter amounted to $6 million, and includes $4 million related to the repurchase of PSMC shares.

Now, taking a look ahead, please turn to slide 10. We expect our non-financed cash CapEx in 2013 to be in the range of $70 million to $90 million, and as we've consistently mentioned in the past, we have maintained the flexibility to accelerate or decelerate our capital spend depending on market conditions. As Deno mentioned, we have accelerated or pulled in two advanced e-beam litho systems for North America and Asia for delivery in the next few months as a result of projected high-end demand later this year and into 2014. Payment terms for the non-financed portion of the tools are embedded in the $70 million to $90 million total for 2013.

Earlier today, we filed an 8-K indicating that we entered into a five-year, $30 million capital lease agreement for one of those advanced litho tools. We expect the majority of the capital lease to be recorded in the second half of the year upon acceptance of the tool. The lease is expected to carry a 2% interest rate. Currently, we plan to use our cash on hand for strategic initiatives, as well as reviewing opportunities in the future to reduce some of our higher yielding outstanding debt.

We do expect to continue to generate free cash flow once again in 2013, and our 2013 investments are geared towards high-end leading-edge projects for IC and FPD applications. The significant high-end revenue increases and market share gains we have seen over the past three years have certainly validated our high-end strategy. Our visibility, as always, continues to be limited as our backlog is one to two weeks. However, we are projecting revenue for the second quarter to be in the range of $106 million to $110 million. During 2013, our tax rate will be impacted by the flow of income from jurisdictions which we may have credits and upon our limited ability to recognize tax benefits in areas which we are taxable.

For the second quarter of fiscal 2013, this will equate to a range of $2 million to $3 million in whole dollar terms. For fiscal 2013, we estimate total taxes will range from $11 million to $13 million. As a result, based upon our current operating model, we estimate earnings per share for the second quarter to be in the range of $0.07 to $0.10 per diluted share. In summary, I'll leave you with a few key thoughts. First, we expect to report top and bottom-line improvement in Q2, and as Deno mentioned, we expect sequential improvement for the rest of the year.

Second, we are confident about our business model and our ability to weather any short-term softness in the market, while we continue to grow our share at the high end. We see continued opportunities in our customers' businesses and node migration plans and we have a strong financial position and excellent technology to capitalize on those plans. Finally, we expect to continue to build on the momentum that we've established over the past few years as a leader in advanced photomask technology. Although our visibility is limited, as always, we plan to match our operating structure to the market environment. Now I would like to turn the call over to the operator for questions-and-answers.

(Operator Instructions)

Krish Sankar, Bank of America.

This is Thomas Yay calling in for Krish Sankar. Just wanted to get a little bit more color on the pickup in the high-end IC orders you saw late in the quarter. IC revenue seems to have reached a new low during January Q, is it multiple customers you started seeing coming back? Should we expect to see IC revenues this quarter coming back to 4Q levels? Or are you baking in a slower recovery than that?

I will start Thomas and maybe turn it over to Peter or Chris. The quarter started slow, generally for all of IC applications. We saw a pickup in January and we expect that to continue. I believe it's broad-based, but perhaps Peter, if you want add some color to that?

Certainly, the mainstream business behaved more or less seasonal. So, it was down, I believe, 6% in the December quarter. That's pretty typical. As far as the high-end goes, as Sean said, November and December were quite slow. We saw a strong pickup in January, it's very broad-based and we are expecting that to continue into the coming quarter and beyond, really.

That's helpful. And then, can you give us a sense of your expectations for the size of the overall photomask market in 2013? And within that, maybe share any specific metrics you have for goals around market share and how it's split between new competitors and the captive market? Thanks.

This is Chris. Sure. The overall photomask market relatively flat, usually runs 1% to 2% of total IC. So, to the extent total IC grows, photomask will grow along with it. Was the second part of your question related to captive versus merchant or could you clarify that please?

Right. Just market share split and goals around gaining market share this year.

In terms of our goals around gaining market share, we see opportunities in all the major segments, that's foundry, logic, mainstream and high-end. Memory, we already have quite a strong position and we think we can solidify that and maybe pick up additional share with some new possible fab opportunities coming later in the year. And for microprocessor, there, we also think we can pick up some market share. Across all three main segments, we think we can do pretty well. In terms of the captives versus the merchants, the few captives that remain are investing fairly strongly, but we have good partnerships with all of them. They all maintain fairly strong outsourcing strategies and we are keeping up with them on their node transition. We think we can pick up some good business there as well through partnership arrangements.

Thanks. That's helpful.

Stephen Chin, UBS.

Thank you for taking my question. A question on FPD. Supply talked about some momentum in the supply business, can you give us some color on what is the lag between the equipment move-in to when the new mask orders are placed?

This is Chris again. I can make a few comments and then throw it back to the Brookfield team. It does vary. It varies by segment and application. Take the memory as the first example. In that case, we have a joint venture, as you know, with Micron. Most of the processes of record are established in the joint venture. When we bring equipment into service, that segment, it's roughly copying processes that are already qualified. So, we can ramp production, assuming demand is that we can ramp production quite quickly once equipment is installed.

On foundry, logic side, it does take a little bit longer. There are many, many more device types. It can take in a very accelerated way, a few months to as long as nine months, even to a year sometimes to get full qualifications done. In that case, the band is quite wide. On the microprocessor side, also can take a little bit more time. Something between foundry logic and memory in duration. So, quick answer is, pending demand, memory can ramp equipment very quickly once installed and foundry logic and microprocessor, 3 months optimistically, 9 months to 12 months a little more pessimistically.

On the FPD front, I think you were referring to Applied reports last night. So, they see an uptick in equipment orders. They then have to deliver those orders. So, there's normally more or less a six-month lag between when Applied sees an uptick in orders and when the equipment is shipped out the door and being installed. So, there's at least another three-month delay behind the uptick in orders added to the six months until the equipment comes online.

Display market is a bit different than the IC market in that we don't have the typical technology transitions that are occurring. There is technology movement, but it's not on a quote more is law like trajectory. So, from when Applied sees an uptick in orders, until we see an uptick in demand, is 9 to 12 months, typically as far as the installation of new equipment is concerned. As you know, an uptick in orders typically comes as a result in improvement in the business and our FPD orders were up in the quarter. The reason they are up in the quarter is because the overall market improved. So, there's really two answers to your question, I think I gave you both of them.

That was great. Thank you. Another question on the tool pull in that you talked about. Is that for FPD or IC? Is this based on new qualification wins and can you give us some color on the customer type?

The pull in of the high-end litho capacity is really, it's focused on the IC, not the FPD market. Just as I answered the other question, we see our customers pulling in their road maps and as their, what I would describe as their trusted partner, they want to be ready when their demand is really ramping. For us to take delivery of the tools in the next three months, it's going to take us another three months to install them, and as Chris said, in some cases, qualify them. So, pulling the tools into the next three months, really for us, means incremental revenue on those tools, really exiting this fiscal year and building strongly into next fiscal year. So, that's the reason why we pulled in those tools. Because, our customers are sharing with us their road maps and their expected demand and we need to be there when they need us.

Got it. Thank you. And question on the high-end IC mask. One of the big themes in the foundry business is the shift of a large customer from Korean foundry to Taiwan. Given that you have quite a strong share at the Korean foundry, can you give us some color on how does this impact you and if you are taking any actions?

We certainly have plans in place in our capital spend in our tool deployment, to handle any uptick in business which we anticipate in Taiwan, in Korea, and North America.

I guess the other comment I would make on that, to the extent the large Korean foundry loses, if it happens, loses a high-volume wafer customer, I think they will not let that capacity sit idle and they will go out and acquire additional fabless companies. That does lead to demand for masks, because there are a lot more prototypes, a lot more test chips as they try to bring in new customers. To some extent, it could actually result in an increase in demand on that particular foundry side.

Got it. Thank you. That was very helpful. And, a question on your new qualification wins. Can you give us some color on when do you expect those new wins that you had mentioned on the last call?

We have a queue, so to speak, of new qualification wins. One of the reasons why we are bullish on the coming quarter is, we're going to start to see conversion of some of the logic balls this coming quarter into real revenue. So, we have one wave, I think, where over the next quarter or two, in high-end foundry logic where we expect to see more business. Then, as you know, we have a partner, a very close partner, that's coming upon the anticipated conclusion of a significant merger. I believe it's fair to say that we expect to see some radical demand from that, late-summer type timeframe. Then we have another wave of high-end qualifications where we expect revenues to start materializing from them at the end of our fiscal year building into next fiscal year. So, there's really a continuum of uptick in business we can see, either as a result of quals being completed or as a result of our partners expanding their business.

Got it. Thank you. That's all I had.

Edwin Mok, Needham & Company.

Thanks for taking my question. My first question is I guess a follow through to your last comment there. So, you guys are expecting sequential growth beyond the second quarter into the third and fourth quarter and sounds like it's mostly in the IC side. Do you expect similar trends in the flat-panel display side as well, or any way you can get some color around that?

I think, Edwin, this is Sean. We don't break out in our guidance, the IC and FPD side. As Peter alluded to, FPD demand was strong. There's a lot of prototyping going on, which requires masks. We did have a rather robust quarter and there's no reason why we wouldn't think that would stay somewhat strong as we move forward. But, to quantify the exact amount, it's embedded in our guidance.

Okay. That's helpful. Then, my second question is really to the effect of the yen, which is foreign, right? I was wondering if you start to see more price competition coming from your competitor as a result? On the mainstream side? And, I think that your (inaudible) do you see some benefit in terms of the cost of the tools at all? Can you quantify that?

Generally, there's a positive impact for our balance sheet P&L and our future commitments. We do buy certain tools based in Japanese yen, and certainly in our forecast, the yen has moved quite significantly over the last six to seven weeks. We will have some uptick there. We do not necessarily compete with our competitors on the mainstream side. So, we don't believe on the mainstream side will have any impact on our business, at all.

I think, to clarify that, our mainstream competitors, they are doing transactional business locally. So, the yen dollar exchange rate really is not affected. The pricing dynamic in the mainstream, in the mainstream market, but I would say there was a question earlier about market share and the market share tends to be tented up in dollars. With the dollar strengthening relative to the yen, the value of our competitor's Japanese business is going to be diminished at the end of the year we count up market share. So I do think from a second order effect, our market share this year is going to go up substantially, because our Japanese competitors, the value of their business in dollars is going to come down. The benefit of that over the last two years to three years, we will get likewise the benefit on the other side coming out. So, in summary, our tool costs are going down in dollar terms, that's good news. The pricing environment not really affected, and there is a second order market share affect that's not real, but as far as unit volumes go. But, is very real in dollar terms and we will see that, I think, when the numbers are tallied at the end of the year.

Okay. Great. That was helpful. Then, lastly, on -- I guess going back to the tool that you guys are pulling in right? You mentioned there was cost matching on the customer road map. Can you quantify how much of that was driven by logic versus foundry versus memory? Because, I think you mentioned a few of those, I'm just trying to understand, if one particular customer is really driving that, or is that more broad-based?

It's broad-based, Edwin. As we mentioned, we are deploying one of the tools in North America. Obviously, that would be in Boise, and one of the tools in Asia. It's really the complement of all our high-end customers and opportunities.

Okay. Great. That's all I have. Thank you.

(Operator Instructions)

Patrick Ho, Stifel Nicholas.

Thank you very much Maybe a little more color on the flat-panel display side. Aside for the prototyping that you mentioned, what have your customers qualitatively have told you that gives you confidence that that business may also be seeing a recovery, similar to the IC side?

Patrick, this is Chris. Qualitatively, I think they're seeing a somewhat increase in demand. You saw the Applied announcement, of course, where capacity and capability are being added to the fab. That's driven by general demand in the space. But, also looking to differentiate their display products, for sure, leading to stronger design cycles on mobile displays AMOLED, adding additional features to LCD type displays and also going to high-resolution, so-called high-definition formats. There's a lot of work that needs to be done there to make that commercially viable at the consumer level. So, we are seeing a broad-based activity on design, R&D, and then the expectation that overall demand will increase driven by larger format mobile applications and also higher definition TV.

Great. That's helpful. Going back to the IC side of things for a second, you mentioned that the pull-ins for the two tools. Now those typically have long lead times for you guys. When you mentioned pull-ins, were these things that you had ordered already and had a shipment date? And you were pulling it in? Or was this something that came at the last minute where you accelerated, I guess, an order as well as a delivery date?

Patrick, as you know, these tools do have -- you are correct, do have long lead times. We actually secured two slots for the two advanced e-beam tools earlier in fiscal 2012 and actually paid cash last year about 20% of that amount last year. For the combined two tools. As the business softened in the fall, we evaluated our opportunities whether we pushed the delivery dates out or -- into 2014 -- and as a result of the last six or seven weeks, what we are seeing, we decided to pull them in. There is flexibility to do so. We will hit the ground running with our natural customer road map. We did evaluate quite for a long time in the fall whether we could push it out or leave the original delivery dates. What we've done is actually pull them in.

Great. That's it for me. Thank you very much.

Tom Diffely, D.A. Davidson.

Good morning, got a question on the new litho tools. Do these new tools, do they add capabilities? Or do they just add capacity with your existing capabilities?

Tom, I can make a few comments. This is Chris. Definitely, they add capability. These are state-of-the-art litho tools, multi node kind of compatibility, multi node forward kind of compatibility. Really, the leading edge work horses of the mask industry we see over the next few nodes. Definitely adding capability but also the way we use them, they also add capacity at existing nodes. I think the answer is both. Primarily it's road map capability to meet what we see as increased demand from our customers at the leading edge.

Will this take you down into the teens as far as the nanometer node goes and give you capabilities of doing 3D transistors as well?

It should. 28 and 20, for sure, slot in very well to these types of tools. 14-nanometer is accessible with these tools, at least for initial production. So, you are looking at a three node kind of platforms, potentially. So, the answer to that part, I think, is yes. In terms of the 3D transistor, that drives a different set of challenges on mask making. Not all of them push the lithography step in the same way as standard technologies. However, we will say another benefit of these new equipment is the throughput or the speed. Our ability to write these very, very complicated masks that a faster rate increases with these tools. So, effectively we get more capacity and better cost of ownership with these kinds of tools. So, from that point of view, 3D which drives larger mask counts is also enabled by some of these additional platforms.

Okay. And then, Sean, when you look at the CapEx for these tools, what's the impact of whether it's straight out purchase versus a capital lease? How does that impact the CapEx on a timing or dollar value?

The capital these is paid out over five years. So, is not going to have a significant drain on our cash as we move forward and the other tool that we paid out, or going to purchase, we're actually going to make payments on that tool in 2013 and into 2014. So, go ahead, Deno.

We have some previous amounts of leases with equipment and some are paid down.

Right. So, what we are going to plan to do is from a cash flow standpoint, as I mentioned earlier, we still expect to be free cash flow positive for this year. Our goal is to still have net cash as we exit the year, but, very favorable terms and conditions on the leasing at the 2% rate, minimizes any big -- any big pay downs, and certainly the softness in the market enabled us to negotiate better terms and conditions with respect to our tool vendors.

Okay. And then, when you look at the high-end capacity at this point, anybody quantify once these tools are installed what your high-end capacity is?

I think the right way, there is a financial way to quantify it, maybe Sean will do that. But, from a competitive point of view, I think without a doubt, we are going to have more horsepower at the 28, 20 and 14-nanometer nodes than our competitors once those tools are in place. So, I gave you the competitive answer, Sean might want to give you the financial answer.

I think the financial answer is we, as Peter mentioned earlier, we expect to get some revenue the latter part of 2013, but really, it's going to hit in 2014. And I think we will provide additional color when we have our analyst day as things progress over the next six to seven weeks. Certainly, we believe it's a great opportunity for us. We've planned ahead. We have evaluated our position and we have the confidence that we will generate cash with those tools and market share.

All right, so sounds like it still supports a pretty aggressive ramp in high-end ICs for the next couple of years then?

Yes.

Okay, Chris one more question on the memory side. DRAM and NAND prices have both been going up lately. There's a lot of talk about how NAND growth is going to take off the second half of this year. From your point of view, does it matter if it's DRAM or NAND from a mass point of view? Is there a big benefit of one over the other?

There is not a big benefit in one over the other. I'd say from a mask manufacturing perspective, DRAM is more challenging than NAND. But, there's not a huge benefit between them. We run a stronger NAND mask business inside Photronics right now than DRAM. We see that almost immediately on the NAND side if capacity is added there. DRAM, the integration of the mask takes a little bit longer, it's a little bit more protracted and it's a little more lag in terms of new capacity and mask volume. The short answer is a healthy mix between those two, memory technologies is the best case. We have a different for item pricing and mask complexity for each node.

Okay, great. And final question here. Applied did talk about how there has been strength in the high-end, but the smaller screens on the flat-panel side for the tablets and the phones, they also said, though, that the TVs are starting to pick up for the first time in a while with the 60-inch and the 4K screens. Any more chatter about Gen 10 at this point?

I would say not really. Of course, Gen 10 was a node that a lot of the flat-panel people thought was pretty well assured. There are -- one Gen 10 project that's been in our estimation fairly limited success. It's a fairly difficult node for TV for a lot of reasons. We don't hear a lot of robust talk on that and replanning on that at the current time. But, to the extent that these price points go down on the very large screens, that could pressurize the Gen 10 conversation again. Nothing major, I think, we would consider, now.

Okay. Thank you.

Thanks, Tom.

And I'm not showing any further questions at this time. I'd like to turn the conference back to our host for closing comments.

I'd like to thank all the participants and thank you very much. Have a good day.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.