Photronics Inc (PLAB) 2016 Q2 法說會逐字稿

Welcome to the Photronics second-quarter earnings call.

(Operator Instructions)

As a reminder, this conference is being recorded, Wednesday, May 18, 2016.

I would now like to turn the conference over to Troy Dewar.

Thank you, Candace. Good morning, everyone. Welcome to our review of Photronics 2016 second-quarter financial results.

Joining me this morning are: Dr. Peter Kirlin, Chief Executive Officer; Sean T. Smith, Senior Vice President and Chief Financial Officer; and Dr. Christopher Progler, Vice President, Chief Technology Officer and Strategic Planning. The press release we issued this morning, along with the presentation material which accompanies our remarks, are available on the investor relations section of our webpage.

Comments made by any participant on today's call may include forward-looking statements that include such words as anticipate, believe, estimate, expect, forecast, may, should, or the negative thereto, within the meaning of US Federal Securities laws. The forward-looking statements are based upon a number of risks, uncertainties and other factors that are difficult to predict. Actual results may differ materially from those expressed or implied.

A more complete disclosure regarding these forward-looking statements can be found at the bottom of our press release. Photronics assumes no obligation to update any forward-looking information.

Finally, during the course of our discussion, we will refer to certain non-GAAP financial metrics. These numbers are useful for analysts, investors and management to evaluate our ongoing performance. A reconciliation of these metrics to GAAP financial results is provided in our presentation materials.

At this time, I will turn the call over to Peter.

Thank you, Troy. Good morning, everyone.

As expected, second-quarter sales fell slightly from last quarter and last year, generally following the trends we discussed during our Q1 conference call. High-end FPD was strong, as panel manufacturers continue to roll out new and innovative products such as AMOLED mobile displays.

High-end logic was soft due to lackluster demand from our large foundry customers in Asia. And mainstream followed expected seasonal trends with a recovery in US and Europe, and lower demand in Asia due to Chinese New Year.

The only deviation from our previous commentary was lower memory demand, as our customers reacted to negative end-market conditions and we saw a pause in the 3D NAND ramp, weakness in 3X nanometer foundry memory as customers transition to 2X nanometer technologies, along with commodity DRAM entering the final [partrilling] phase of the 20 nanometer node ramp.

Earnings were down due to the impact of lower sales. Despite lower sales and profits, cash flow from operations was positive, minimizing the reduction in our cash position due to payment to bondholders in April. In total, we reduced debt by $60 million and increased net cash by $23 million during the second quarter.

Sean will go through the details in a few moments, but I want to remind everyone of the significant strides we have made as an Organization to improve our balance sheet. Just a few years ago, we had a net debt position and high leverage ratios. After several years of hard work and focus on improving our balance sheet, we are in a much healthier position today.

The most common question we get from investors now is what are you going to do with all of that cash? This is a good problem to have. It took a total of team effort to achieve and I'm proud of the position we have built together. As you will hear throughout our comments this morning, we have very clear and achievable plans to invest the cash [in an effort] to deliver profitable growth.

Looking out to next quarter, customer discussions, order patterns, and industry commentary continues to support the view that conditions are improving for high-end logic. For example, one of our leading foundry customers is expecting strong 28 nanometer tape-outs in the second half of calendar 2016. If this occurs, the impact should be positive for Photronics. They continue to remain extremely optimistic regarding FPD photomask demand, where our capacity remains sold out and we see no signs of that changing any time soon.

We recently saw the expiration of our MP mask JV with Micron. While this legal entity will now shift back to Micron control and we receive payment for our ownership, our relationship with Micron remains strong. We have a technology agreement which will carry us to the next two nodes and a supply agreement which ensures we will capture the majority of the masks they outsource.

That being said, it is obvious that this move now positions Micron to source more masks internally. Our challenge is beginning new business to offset any decrease in Micron demand.

To this end, it is fortunate that several memory manufacturers rely on the Micron bit cell; as the largest merchant mass producer in the world, we have relationships with these companies. Therefore, we are well positioned to sell them masks as they develop and manufacture their chips, and in many cases our technology is already process of record. We have already qualified and/or are qualifying this customer base. There is also the beginning of memory production in China and we are well positioned to sell masks to the first movers.

Finally, the memory technology landscape is fluid, with entirely new products being brought to market such as 3D XPoint, joint developed by Intel and Micron, and we are actively engaged in these efforts. With this total opportunity mix, I will be disappointed if the memory business is not larger 12 months from now than it is today. It will not be easy and it will not be a linear progression. Few things in our business are, but I believe there is a clear line to realizable growth in memory for Photronics.

Longer term, there are several growth sectors that we are focused on. The first is FPD. Based upon the number of questions we receive from investors, AMOLED in particular is an intense area of interest. As we have noted over the last few quarters, our current asset base in FPD is running at full capacity. Any revenue growth is limited except for our ability to increase product mix and, therefore, blended average ASP.

In order to answer FPD mask business, we are announcing today investments to increase capacity and capability, and have placed orders for additional running capacity at the high end. We anticipate taking delivery of these tools in mid-2017 in order to be prepared for anticipated industry growth going into the second half of next year. We are a clear market and technology leader in FPD photomasks, and this investment will help us to maintain or possibly expand our leadership position.

Beyond 2017, the next significant driver for us will be geographic expansion into China, both to serve the IC and FPD markets. Our senior leadership team has spent significant time in the country, along with local leadership, to evaluate the options and opportunities. We're not quite ready to announce a final decision, but I do like the direction our planning process is going, and anticipate being able to share more with you soon. As we've stated before, this country can be a significant growth driver.

The semiconductor market is a target for investment by government, domestic manufacturers, and foreign entities. Some of our largest IC customers are in the process of building capacity there, and other customers are adding capacity that could provide us with the opportunity to serve them in a bigger way than we do today. In addition, dramatic FPD market growth appears to be coming, as the construction of several new manufacturing facilities, primarily for large-screen LCD and OLED, is well under way.

Our total investment in China will likely be a mix of new tool purchases and the transfer of tools from other facilities, in addition to bricks and mortar. Many of the target customers in China are already served by our facilities in Taiwan, Korea and the US. So being able to utilize some existing tools will minimize cost and lead time.

As we've stated before, sales to China are small but growing, becoming more material to our results. We are excited about the opportunity this country presents for Photronics.

In summary, our Business is going in the right direction, and we have several attractive options in front of us to grow our top and bottom line. That being said, on a quarter-to-quarter basis, our results can be variable given the nature of our Business, particularly as we grow high-end IC and FPD market share where timing is more unpredictable and higher ASPs make any order meaningful to our Business. But as I've stated many times, I'm very pleased with our position, and believe we have the ability to make targeted investments to drive growth and deliver shareholder value.

Before turning the call over to Sean, I would like to thank all the Photronics employees for their commitment and dedication to improving our Company in Q2. I will now ask Sean to provide more details on our second-quarter performance.

Thanks, Peter, and good morning, everyone.

Second-quarter sales fell 5% sequentially to $122.9 million and 3% year over year, as strong FPD growth was offset by softness in IC demand. Sales of FPD photomasks improved 36% compared with last year and 6% sequentially. High-end FPD sales increased sequentially to 78% of total sales.

Demand remains strong for advanced LCD and OLED displays, and we have been able to prioritize high-end orders bringing positive mix. Additionally, in some areas we have been successful in realizing higher pricing.

Backlog remains above average, and we continue to run at full capacity. Our next phase of capacity installation should come online in mid-2017, which should allow additional growth. Until then, expect sales to remain flat, limited by our installed capacity, with potential benefits from both mix and pricing.

IC sales were down $8.9 million sequentially, the majority of which was high end, which was down $8 million, primarily related to the reduced high-end memory demand that Peter alluded to. High-end logic was also down slightly due to lower foundry sales in Asia.

As Peter's alluded to, mainstream sales rebounded in the US and Europe, but were down sequentially, primarily due to the Chinese New Year. On a year-over-year basis, mainstream was down due to lower foundry demand, principally in Asia.

Breaking out sales geographically, 67% of total sales were from Asia; 26% from North America; and 7% from Europe. Gross margin for the second quarter was 25.5%, down 180 basis points sequentially as a result of reduced volumes, principally high-end memory and Asian mainstream.

SG&A expenses were down $1.2 million sequentially, due principally to cost reduction programs and, to a lesser extent, the deferment of certain costs. The operating margin for Q2 was 12.1% as compared to 13.5% sequentially. And EBITDA was $34 million for the quarter and $176 million for the trailing 12 months. Other expense net was $3 million, primarily related to unfavorable foreign currency, principally from Taiwan.

Income tax expense includes a non-recurring net bottom-line benefit of $3 million related to the recognition of certain tax benefits in Taiwan. Since part of the benefit was recognized by our PDMC JV, the accounting of the benefit is a little complex.

The bottom-line impact was $3 million, but the impact on our tax expense line was approximately a benefit of $4.2 million. Of this, $1.2 million is our partner share, thus reducing the minority interest line. So, excluding the total tax benefit, tax expense for Q2 would have been $1.9 million, just below the low end of our guided range of $2 million.

GAAP net income was $11.9 million or $0.16 per diluted share. And excluding the bottom-line tax item previously mentioned, non-GAAP net income was $8.9 million or $0.13 per diluted share.

Turning to the balance sheet, we ended the second quarter with cash balance of $194 million, bringing our net cash position to $124 million, an improvement of $85 million since Q2 of last year. On a pro forma basis, including the payment from Micron we received after the quarter closed, our net cash position is in excess of $200 million.

We did have a few changes in our balance sheet during the quarter, so I will walk everyone through those changes. First, $57.5 million of our convertible debt matured on April 1. At the time of the maturity, our stock was trading slightly above the conversion price of $10.37. As a result, only about $7.4 million of the debt converted to equity, raising our total shares outstanding by approximately 700,000. The remaining $50.1 million of debt did not convert, and we repaid the principal amount back to those holders from our cash balance.

As a result of the convertible debt maturing, our diluted share count fell about approximately 4.8 million shares, although the total was not reflected in our Q2 share count because the change occurred on April 1 and EPS is calculated based upon weighted average shares. The total share count adjustment will be reflected in our Q3 results, and is included in our Q3 guidance which I will discuss in a few minutes.

During Peter's comments, he referred to the tremendous turnaround of our balance sheet over the last several years. To put his comments into perspective, at the end of 2008, the height of the recession, we had total debt of $224 million and net debt of $140 million, and our debt-to-EBITDA ratio was over 2 times.

Since then, we have reduced our debt to $70 million and have $217 million in net cash on a pro forma basis, and a debt-to-EBITDA ratio of 0.4 times. This was achieved even as we invested in leading edge capability and capacity. And over the last several years, our CapEx has averaged nearly 20% of our sales, demonstrating that we have remained committed to becoming both the market and technology leader within the photomask industry.

CapEx for the quarter was $13 million. We anticipate spending approximately $60 million to $70 million in cash CapEx this year. CapEx for the FPD investments mentioned earlier will occur through 2017.

Before providing third-quarter guidance, I just want to remind everyone that our visibility is always limited and our backlog is typically only 1 to 2 weeks. Also, the demand for some of our products, such as high-end IC foundry logic, is inherently lumpy and difficult to predict. Finally, as our high-end business has grown, ASP for these mask sets are higher, and a relatively few number of high-end orders can have a significant impact on our sales for the quarter.

Given those caveats, we expect third-quarter sales to be between $118 million and $128 million. This range assumes FPD remains strong and IC mainstream sees incremental improvement from Asian seasonality and market growth, and high-end IC is mixed with anticipated logic growth but lower demand in memory as Micron may reduce outsourcing following the JV expiration.

Based upon this revenue expectation and our current operating model, we estimate earnings for the third quarter to be in the range of $0.10 to $0.18 per diluted share. The first half of the year, which is typically our softest given seasonality of our major markets, has been a bit more tepid than we anticipated about six months ago. However, we have done a tremendous job of controlling costs, and have continued to generate cash despite the lower demand environment.

We still remain optimistic regarding the long-term demand trends, and believe we have several attractive areas for investment to achieve profitable growth in the future. We are certainly well positioned to support these growth initiatives, and with our strong balance sheet, and we look forward to continuing to build upon our leadership position.

Thank you for your interest. I will now turn the call over to the operator for your questions.

Thank you.

(Operator Instructions)

Steven Chin, UBS.

Thanks. Just a couple of questions on the CapEx investment in flat-panel of $40 million. Just curious what you estimate the Company's revenue capacity can be once this additional CapEx is integrated into the Company? It currently looks like your annual peak sales for high-end for the masks are about $100 million a year. What do you estimate the new peak revenue could be for this business segment after this CapEx flows through?

Sure. What we try to target to monetize that investment within one year of being installed and qualified, so we're presently at about $120 million, $125 million run rate, so we would expect it to go up incrementally once those tools are up and running. This would mean market conditions remain strong.

Okay. A follow-up to that, so does Photronics have customer purchase orders for these high-end flat-panel masks for delivery in later 2017? Or is this more of an opportunistic CapEx investment with the Company relying on the sales force to win more mask sales once the new capacity is available? I'm just trying to think about how to model sales in the second half of 2017.

If we go back to the last incremental addition of capacity to SPD, we ramped that investment last year from a dead stop to fully loaded in the space of three months, which is - - I been doing this for 30 years and it is the fastest I've ever seen.

What's driving this investment for us primarily is one particular opportunity that we have. We have an agreement with a customer to monetize the value of that investment. Beyond that, the overall market itself for us is quite strong. So we're very confident that when that capacity comes online, it will ramp quickly.

Okay. Thanks for sharing, Peter.

Tom Diffely, D.A. Davidson.

Maybe a quick follow-up. Is the flat-panel tool that you're going to install next year similar to what you already have and so obviously qualification comes up much quicker or is it going to be a newer, more advanced tool that has more capabilities but perhaps is longer to get qualified?

Tom, as you know, we are the only merchants to have the next generation FPD capability. And the incremental add will be more of what we have, so there will be no qualification delays.

Okay, great. And if you look at the rest of the capital spending for this year, the $60 million to $70 million, what is that being spent on? If the logic side of the business is fairly soft this year, it seems like you could've pushed off some of that spending.

If you look at our capital spending for the year, the terms we generally get for FPD equipment, given the supply chain there, are unfortunately the worst in the business. So the adjustment in the CapEx spend that you heard Sean make is reflective of the fact that we made investments in FPD and the cash flow aspects of those investments are inferior to IC.

And you're right, there's not a lot of money being spent this year on incremental IC capacity. I think you know we've out-invested our competitors and in a soft demand environment there is not any compelling reason to add there.

And just to add, Tom, to Peter's comments, some of the CapEx spend, the cash spend this year, $60 million, $70 million, is related to installed capacity that went in in the latter part of 2015 and 2016. We were able to get extended payment terms in certain cases.

Yes.

Okay. And, Sean, you also mentioned that some of the reduction in the costs quarter over quarter were for some deferred expenses. Do you expect those to come back then in the next quarter or two?

I think we ended the quarter about $11.1 million in SG&A. I do think we'll probably get back to a normalized run rate of maybe $500,000 plus or minus. But primarily the reductions were related to cost controls in place.

Okay. And then, Peter, when you just look out at the landscape right now on the memory side, how do you view the DRAM business and the 3D NAND business? It sounded like DRAM was very strong last year, it started to wane a bit, 3D NAND started to pick up, so it sounds like 3D NAND most recently is a little softer. Is what you're seeing more a function of the JV ending or is it just some cross currents in the end markets themselves?

Yes. It really -- the softness in the memory business in our Q2 really had little to nothing to do with the JV ending. If you look at the overall memory market, right, it's been poor for too long, I guess is the way I would describe it.

So what we, I think, observed last quarter was an overall slowdown in the entirety of the memory market that's the result of the business being sick for an extended period. So 3D NAND paused. The [savry] memory business, which was largely 3X technology, stopped, just stopped dead, because our customers can't make money bringing 3X Nanometer foundry DRAM to market.

The good news is the qualifications for [25 and 20], slamdunk, no issues, best yield they've ever seen, but there's a lag between when they implement the next node and when their customers start taping out to them. So the whole memory business is sick. Just sick. I think there's lots of optimism when you talk to the customers that will improve in the second half of the year but we powered through the memory market softness for several quarters, but it's just been too bad for too long.

Yes. Okay. And finally you talked about potentially some nice growth at 28 Nanometers in the second half of the year. What are you seeing on the 14 Nanometer side? Is there a chance with some customers moving their customer base around a bit that you see 14 Nanometer ramp as well for the high-end IC?

Hi, Tom, this is Chris. I can answer that one. Yes, 14 is still pretty slow adoption in the foundry there are not that many high-end devices running yet. But the foundries are coming out with new low-power, lower-cost versions of their 14, they're starting to integrate RF. I think there's a lot of effort in the biggest foundries to make it more accessible for a broader range of chip designers and chip applications.

So 14 has not really taken hold, I would say, in the deepest sense for a foundry product, but there is a lot of effort going on in the space now to make that a more viable node for more users. We are qualified with multiple customers at 14. We do have capacity, so we are looking for 14 to pick up in 2016.

Great. Thanks, Chris.

Edwin Mok, Needham & Company.

Thanks for taking my question. First, just going back for the FPD, I guess two-part question. One is is it possible that you guys do some outsourcing of production for low-end masks to drive some additional revenue on that? And then in terms of the CapEx, while you need to spend this [$14] million, should we expect your cash CapEx to really go up that much, though, given the [distribute] of [$60 million to $70 million] has some cash from last year as well? How do we (inaudible)?

Unfortunately, our competitors are not interested, generally speaking, in assisting us in gaining market shares. So sadly, there's not any option really to outsource the FPD. Regarding our cash CapEx next year we don't expect -- we haven't given guidance yet, but we don't expect a significant change in our CapEx spend, absent China. But there's not been a question yet, but we see in China right now, more than a dozen new factories in FPD actively going up. It's amazing.

So we do what we always do and that is we hold, we put our finger on the trigger and we hold and we hold and we hold and when we believe we can make an investment and monetize it quickly, we pull the trigger. So we are very optimistic that there will be a significant step-up in demand in 2018 beyond AMOLED in 2017 and just as we had done leading up to the last ramp in our business that we just observed, we're trying to stage our investments so that as the market emerges, we can monetize it.

Now if there's a greenfield in China, or when there's a greenfield in China I think is a better way to describe it now, that will cause a deviation from our recent CapEx trajectory.

Edwin, if I could just add on a quick thing on Peter's comments, when we talked about $40 million to be spent through 2017 on this FPD equipment, some of that is baked in to the guidance for 2016 as well. I had mentioned that earlier, given the terms.

Right. Okay, that's helpful. On moving on to the memory softness that you guys are talking about, our understanding is that your leading memory customer and their partners is -- have some plans to invest and build 3-D NAND capacity in the coming quarters. Do you see that slowing that by -- and you mentioned that 3 NAND has been pretty slow, so do you see that slowing that might drag out and have impact on -- obviously some say it's impacting on July quarter, but do you see that dragging out and impacting in October or even January quarter?

It's a bit tough to call, right? As far as 3-D NAND goes, for that to really ramp strongly for us, some of, I think, the CapEx that you guys are all talking about needs to be spent and installed. So we're actually watching that closely, but we can't make any commentary on that because it's simply too transparent, what the origin of it is.

Okay. That's fair. You mentioned on the call that high-end IC expects some nice growth going on with 20 Nanometer coming in the coming quarter. What kind of product is driving that growth, right? Is it just low-end handset? Is it some of these IoT that people talk about? Just curious what do you think is driving this growth in the 28 Nanometer? And is that called -- my understanding at least one of your customer has built up a nice capacity in China. Does that allow you to at least start to get some greater footprint in China?

Yes. You're certainly right about with your latter comment. I mean, it's not new demand. What it is, is it's shift of market share to one of our customers away from the 800-pound gorilla. So for us, it's new business.

I see. Okay, that's helpful. Lastly, Sean, just look at the guidance, if I look at the midpoint it's basically you're flat on the top line in guidance. If I look at midpoint, it is actually up by [$0.08], but you just said that SG&A will be up this quarter. So I'm wondering what drives -- and actually this quarter your non-GAAP [cap] is actually on the low end of your guidance range, right, so I'm just trying to do the math and wondering why EPS would be up if that's the case?

We've been averaging the last three quarters prior to this one about $12 million plus or minus a couple hundred thousand on SG& A. It's down because some improvement in cost containment programs in place. But what I mentioned could be up to $500,000 or so, it is not a significant amount and wouldn't really drive EPS one way or another.

We also had unfavorable FX during the quarter and for the year, it was only $600,000, so -- and the share count has also changed as well. If you look at the slides, I think it's we [ended] at $74 million, because of the conversion of some of those shares. Also if you look at our performance year to date, our operating income, revenues are essentially flat and operating income's sitting $32.5 million versus $26.5 million the first six months of last year.

So we are doing what we always do. And that is every quarter, every day, we're at the salt mine taking cost out of our business. So on flat revenues, our operating income's going up by $6 million and if you look at the current quarter, it's essentially flat operating income against revenues that are down $4 million. So we're not going to stop our cost reduction efforts in any shape, form, or fashion. They will continue.

All right. Great. That's all I have. Thank you, guys.

Okay.

(Operator Instructions)

Patrick Ho, Stifel.

Thank you very much. First on the high-end logic and the 28 Nanometer foundry situation, do you believe the second half pickup that you're kind of looking at right now is more related to them getting their capacity up online or improvements on the yield front?

Hi, Patrick, it's Chris.

I think 28 Nanometer, the logic node, is a very strong node it brings a lot of value to the designers, so first and foremost that node is going to be around a long time and it's going to have wide adoption. I think specifically your question on what we see on the pickup, partially yield improvements and then customer costs going down but I think still you're seeing it more and more be an attractive entry point for different kinds of application processes and designs people are willing to take that risk and move into it, particularly with 14 still being a pretty big jump from a cost perspective. So I think improving yields, lower wafer costs, more capacity in the so-called Tier 2 foundries will help a lot.

And, second, I think just the realization that 28 is a node that's going to be around a long time and the chip designers really have to move to it if they want to [give] value for their next-generation devices.

Yes, and there's also no doubt, as you mentioned, Patrick, that one of our large customers where we have dominant market share is bringing a significant slug of 28 Nanometer capacity online. They've said that publicly. So we expect the benefit from -- we expect to directly benefit from that.

Okay, great; that's helpful. And then maybe moving to the memory IC, or the high-end IC front there. You talked about some of the pause in the 3D NAND business right now. Do you believe that's more also because right now they're adding the capacity, so you haven't seen, quote, the tapeouts yet, but that's something that you could probably see toward the latter half of this year into 2017 as that capacity gets up online from the industry?

Yes. I think, as you know, photomasks basically go - - silicone wafer starts are a really poor proxy to our business, right? Incremental CapEx spend is a poor proxy.

The best proxy is the overall size of the semiconductor industry. So our business tends to go at the highest level as the R&D budgets of our customers go for new products and it's basically if photomasks are 1% of semi, so as that new 3D NAND capacity comes online, we would expect the photomask demand to follow their revenue potential that capacity generates. So if it's $3 [billion] worth of revenue, then it's at least $30 million worth of photomask business. So that's kind of how it goes.

And, Patrick, the cost crossover for 3D NAND is still not great. I think a lot of the chip makers are -- still marvel at how much ex capacity they need and how much wafer space. So the cost picture is still not great, which means 3D is still right now suitable for a fairly narrow slice of NAND applications. But as that capacity comes online and equipment starts to get depreciated, I think you'll see it used with more flash memory uses and then there are more tapeouts and designs connected to it.

And Chris makes, I think, an important point and that is it's really not until you get to the second generation of 3D NAND flash that the industry generally gets to the cross-curve crossover.

Great. And final question for me, as you look at China long-term, and some of the possible investments that you'll need to make, I guess what's going to be the kind of inflection both in terms of, I guess, the customer demand that's out there in China versus, I guess, a lot of investments that are going to be needed in the country for yourself? Or are you able to leverage for the time being, say, Taiwan and even Korea to satisfy the growing Chinese demand?

Yes, Patrick, that's what we've been doing quietly. You may recall that about more than a year ago we opened a sales and application office in China. I think in our Q4 conference call year end, I mentioned that for the first time China revenues were material to Photronics. So we've been very quietly and deliberately developing the market there.

And now with one of our largest customers bringing a mega fab online the second half of this year, we have another large customer that is building a factory in China. We had NAND flash business we talked about earlier coming to fruition in China.

In addition to that, we have the business I just described that we quietly built growing in China. There is more than a dozen FPD factories being constructed in China. The decision is right front of us.

Great. Thank you very much.

Thank you. And I'm showing no further questions at this time. I'd like to turn the conference back over to Mr. Kirlin for closing remarks.

Thank you once again for taking time to join our discussion this morning. As expected, 2016 is presenting lots of challenges as well as opportunities. We like our position as we navigate through the next few quarters and look forward to updating you along the way.

Ladies and gentlemen, that concludes the conference for today. We thank you for your participation and ask that you please disconnect your line. Have a great day, everyone.